Ferrari
Annual Report 2023

Plain-text annual report

FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F 1 2 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F3 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSTABLE OF CONTENTS Board Report Board of Directors Independent Registered Public Accounting Firm Letter from the Chairman and the Chief Executive Officer Introduction Certain Defined Terms and Note on Presentation Forward-Looking Statements Creating Value for Our Shareholders Risk Factors Overview Industry Overview Overview of Our Business Financial Overview Results of Operations Liquidity and Capital Resources 2024 Outlook Major Shareholders Corporate Governance Report of the Non-Executive Directors Non Financial Statement Ferrari Group Double Materiality Analysis and Stakeholder Engagement Proactively Fostering Best Practice Governance Exceeding Expectations Being the Employer of Choice 4 09 12 12 14 18 18 19 20 21 46 48 51 92 100 108 120 120 122 164 171 174 176 184 194 198 TABLE OF CONTENTS Reducing Our Environmental Footprint Creating and Sharing Value with the Community Risk Management Process and Internal Control Systems Remuneration of Directors Controls and Procedures Statement by the Board of Directors Financial Statements Consolidated Financial Statements at and for the year ended December 31, 2023 Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity Notes to the Consolidated Financial Statements Company Financial Statements at and for the year ended December 31, 2023 Income Statement / Statement of Comprehensive Income Statement of Financial Position Statement of Cash Flows Statement of Changes in Equity Notes to the Company Financial Statements Other Information Additional Information for Netherlands Corporate Governance Additional Information Form 20-F Cross Reference Notes 5 216 246 266 279 304 307 309 311 312 313 314 315 317 318 385 386 387 388 389 390 417 418 419 453 461 6 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F7 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSPART I BOARD REPORT 9 00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem IpsumBOARD REPORT INDEX 12 Board of Directors 21 Risk Factors 122 Corporate Governance 12 Independent Registered Public 46 Overview 164 Report of the Non-Executive Accounting Firm Directors 48 Industry Overview 14 Letter from the Chairman and 266 Risk Management Process and the Chief Executive Officer 51 Overview of Our Business Internal Control Systems 18 Introduction 92 Financial Overview 279 Remuneration of Directors 18 Certain Defined Terms and 100 Results of Operations 304 Controls and Procedures Note on Presentation 19 Forward-Looking Statements Directors 108 Liquidity and Capital Resources 307 Statement by the Board of 120 2024 Outlook 20 Creating Value for Our 120 Major Shareholders Shareholders 11 00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum BOARD OF DIRECTORS [Executive Chairman] John Elkann [Chief Executive Officer] Benedetto Vigna [Vice Chairman] Piero Ferrari [Directors] Delphine Arnault Francesca Bellettini Eddy Cue Sergio Duca John Galantic Maria Patrizia Grieco Adam Keswick Mike Volpi INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte Accountants B.V. (AFM Annual Report filing(*) Deloitte & Touche S.p.A. (Form 20-F filing)(*) (*) Refer to “Introduction—About this Report” for additional information relating to the AFM Annual Report filing and the Form 20-F filing. 12 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F13 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTLETTER FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER Dear Shareholders, We are pleased to report that 2023 has been another year of growth and achievement for Ferrari. This is reflected in the record values evinced by all financial indica- tors. For the first time, our net profit, up 34%, exceeded 1 billion Euro and the annual EBITDA margin rose to 38.2%. And, as we grow and evolve, we will continue to stay true to our unique approach – we are committed to preserving our brand’s exclusivity and maintaining its positioning in ab- solute luxury. To begin with racing, Ferrari’s victory at Le Mans in June will remain etched on all our memories for years to come. It was a special result for many reasons – it saw our return to the top class of the World Endurance Championship for the first time in five decades, and it took place on the centenary of this legendary 24-hour race. Perhaps, the most gratifying aspect of the Ferrari 499P’s win is that it was a true team effort – every area of our company worked together seam- lessly to contribute to our success. Of course our drivers, technicians and engineers deserve huge credit, but Sports cars and Lifestyle also played their part in making this an even richer, more unique experience. There were promising signs for Scuderia Ferrari too, even though the last Formula 1 season was a difficult one, often short on satisfaction. We are working tirelessly to return to the competitive level that our tifosi rightly expect of us. Everything we do at Ferrari is driven by a continuous will to progress – and the new models which we launched in 2023 truly exemplify this ethos. The Roma Spider, the SF90 XX Stradale and the SF90 XX Spider each raise the bar of technology and design still further, to meet and ex- ceed our clients’ desires in line with our plan. This extends to our most passionate racing clientele too: last October, during Finali Mondiali at the Mugello Circuit, we unveiled the 296 Challenge and the 499P Modificata, both of which will set new benchmarks in track driving thrills. Our Ferrari community is bonded by a unique sense of belonging, which we nurture through memorable events such as Finali Mondiali and our Cavalcades, this year taking our clients to Rome, Tuscany and Mo- rocco. Then there was the unforgettable Ferrari Gala, held in New York last October – an exclusive opportunity to celebrate the special bond be- tween Ferrari and the United States. In an increasingly digital world, there is still little to match the power of living and sharing experiences together. While we continue to evolve, we stay true to our heritage, as shown by the progress of our lifestyle dimension. One of Ferrari’s principal brand values is of tradition and innovation – the ability to combine rev- 14 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Folutionary technological solutions with exceptional craftsmanship. Our latest collections, presented during the Milan Fashion Weeks, demon- strated our potential in this field. Our lifestyle activities are key to build- ing a stronger bond with fans, as shown by the record popularity of our museums, which last year saw over 700,000 visits. In parallel, our col- laborations with carefully selected partners have led to the creation of many exclusive and desirable products. One common factor underlies the success of each of our brand’s souls – the people of Ferrari. They are our greatest strength, and are at the heart of our company’s initiatives. To enable our people to continue to grow and innovate, we support them in many different ways. In 2023, we became the first company in the luxury sector to achieve Equal-Salary Certification on a global level. Plus, we have provided our staff with more than 135,000 hours of training over the year. There is also the renewal of the Competitiveness Award Agree- ment, and our initiatives aimed at employee well-being, which pay extra attention to health and work-life balance. Last but not least, we were de- lighted to introduce a broad-based share ownership plan for our approxi- mately 5,000 employees, reinvigorating their involvement in company life and inspiring the sense of belonging that makes our organisation unique. These initiatives reflect the value we place on our people and ac- knowledge their boundless ability to innovate, one of the key factors that will help us attain our goal of becoming carbon neutral by 2030. This is a priority objective which we will reach by taking concrete and measur- able steps via a scientific and holistic approach… and by listening to our people’s ideas. Last year they submitted hundreds of valuable proposals for improvement to make our work processes even more efficient, near- ly 400 of which focused on reducing our carbon footprint. In 2023, thanks to some of these suggestions, we were able to reduce the direct emissions by 7% in the year, and we built our first prototype engine from recycled aluminum. We also installed solar panels providing an extra 2.4 megawatts peak (MWp) in capacity compared to last year. An additional 1 MWp will become available in the coming months for the Renewable Energy Community – the first ever energy community in Italy to be backed by an industrial company for the benefit of its local area. In Maranello, the transformation and expansion of our facilities con- tinues apace, across an area of about 100,000 square meters. Construc- tion of the e-building, where we will also make the electric cars of the fu- ture, is on schedule. As we expand, our historic links with our local area grow ever stronger. At the heart of this relationship is our commitment to education – a cause that was dear to our founder. We remain convinced that education is the most effective way to ensure a promising future for the younger generation. We confirmed our support for education by adding the proceeds from the New York Gala’s charity auction, allowing us to focus even more on local projects with global ambitions. This is just one example of the ac- tive role Ferrari intends to play in the years to come. Everything we have achieved in 2023 is thanks to the invaluable support of you, our shareholders. Together, we will pursue continuous learning and improvement, providing impactful answers and concrete solutions – not only for Ferrari and the automotive world, but for our community as a whole. February 22, 2024 John Elkann [Executive Chairman] Benedetto Vigna [Chief Executive Officer] 15 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT16 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F17 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTINTRODUCTION ABOUT THIS REPORT This document, referred to hereafter as the “Annu- al Report and Form 20-F” or “Annual Report”, consti- tutes both the statutory annual report in accordance with Dutch legal requirements (“AFM Annual Report”) and the annual report on Form 20-F (“Form 20-F”), ap- plicable to Foreign Private Issuers, pursuant to Sec- tion 13 or 15(d) of the United States (“U.S.”) Securities Exchange Act of 1934, for Ferrari N.V. for the year ended December 31, 2023, except as noted below. For the cross-references of the content of this document to the Form 20-F requirements please refer to the “Form 20-F Cross Reference” section in- cluded elsewhere in this document. This Annual Report is filed with the Netherlands Authority for Financial Markets (Autoriteit Financiële Markten, the “AFM”). The following sections have been removed for our Annual Report filing with the AFM: • Form 20-F cover page; • Corporate Governance — Differences between Dutch Corporate Governance Practices and NYSE Listing Standards; • Report of Independent Registered Public Ac- counting Firm in respect of Internal Control over Financial Reporting for the SEC filing; • Report of Independent Registered Public Ac- counting Firm in respect of the PCAOB audits of the 2023 financial statements for the SEC filing; • Exhibits; and • Signatures. This Annual Report and the exhibits hereto are filed with the U.S. Securities and Exchange Commission (“SEC”) and unless otherwise stated, all references in this document to “Form 20-F” refer to the SEC fil- ing. The following sections have been removed for our Form 20-F filing with the SEC: tive Officer; Conflict minerals; Client Satisfaction; sponsible Supply Chain; • Letter from the Chairman and the Chief Execu- • Overview of Our Business — Procurement — Re- • Overview of Our Business — Procurement — • Overview of Our Business — Client Relations — • 2024 Outlook; • Corporate Governance — Disclosures pursuant • Corporate Governance — Responsibilities in re- • Non Financial Statement; • Controls and procedures — Statement by the • Company Financial Statements; • Other Information — Additional Information for to Decree Article 10 EU-Directive on Takeovers; spect to the Annual Report; Board of Directors; Netherlands Corporate Governance; and • Independent auditor’s report — Report on the audit of the financial statements 2023 included in the Annual Report in respect of the AFM filing. DOCUMENTS ON DISPLAY The SEC maintains an internet site that contains re- ports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including the Company, at http://www. sec.gov. The address of the SEC’s website is provided solely for information purposes and is not intended to be an active link. Reports and other information con- cerning the business of Ferrari may also be inspect- ed at the offices of the New York Stock Exchange, 11 Wall Street, New York, NY 10005, United States. We also make our periodic reports as well as other information filed with or furnished to the SEC available, free of charge, through our website at https://www.ferrari.com/en-EN/corporate as soon as reasonably practicable after those reports and other information are electronically filed with or fur- nished to the SEC. The information on our website or the websites of any other entity is not incorporated by reference in this document. This document is a PDF copy of the Annual Re- port of Ferrari N.V. at and for the year ended Decem- ber 31, 2023 and is not presented in the ESEF-format as specified in the Regulatory Technical Standards on ESEF (Delegated Regulation (EU) 2019/815). The official Annual Report of Ferrari N.V. in ESEF single reporting package, as filed with the AFM, is available on Ferrari’s website. CERTAIN DEFINED TERMS AND NOTE ON PRESENTATION CERTAIN DEFINED TERMS In this report, unless otherwise specified, the terms “we”, “our”, “us”, the “Group”, the “Company” and “Fer- rari” refer to Ferrari N.V., individually or together with its subsidiaries as the context may require. Ref- erences to “Ferrari N.V.” refer to the registrant. NOTE ON PRESENTATION This Annual Report includes the consolidated fi- nancial statements of Ferrari N.V. at December 31, 2023 and 2022, and for the years ended December 31, 2023, 2022 and 2021 prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), as well as IFRS as ad- opted by the European Union. There is no effect on these consolidated financial statements resulting from differences between IFRS as issued by the IASB and IFRS as adopted by the European Union. The consolidated financial statements and the notes to the consolidated financial statements are 18 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Freferred to collectively as the “Consolidated Finan- cial Statements”. Basis of Preparation of the Consolidated Financial Statements The Group’s financial information is presented in Euro. In some instances, information is presented in U.S. Dollars. All references in this document to “Euro” and “€” refer to the currency introduced at the start of the third stage of European Economic and Monetary Union pursuant to the Treaty on the Functioning of the European Union, as amended, and all references to “U.S. Dollars” and “$” refer to the currency of the Unit- ed States of America (the “United States” or the “U.S.”). The language of this Annual Report is English. Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable law. The financial data in the section “Financial Over- view” is presented in millions of Euro, while the per- centages presented are calculated using the under- lying figures in thousands of Euro. Certain totals in the tables included in this docu- ment may not add due to rounding. Except otherwise disclosed within this Annual Report, no significant change has occurred since the date of the Consolidated Financial Statements. FORWARD-LOOKING STATEMENTS Statements contained in this Annual Report, par- ticularly those regarding our possible or assumed future performance, competitive strengths, costs, dividends, reserves and growth as well as industry growth and other trends and projections, are “for- ward-looking statements” that contain risks and un- certainties. In some cases, words such as “may”, “will”, “expect”, “could”, “should”, “intend”, “estimate”, “antic- ipate”, “believe”, “remain”, “continue”, “on track”, “suc- cessful”, “grow”, “design”, “target”, “objective”, “goal”, “forecast”, “projection”, “outlook”, “prospects”, “plan”, “guidance” and similar expressions are used to identi- fy forward-looking statements. These forward-look- ing statements reflect the respective current views of Ferrari with respect to future events and involve significant risks and uncertainties that could cause actual results to differ materially from those indicat- ed in the forward-looking statements. Such risks and uncertainties include, without limitation: the Ferrari brand; • our ability to preserve and enhance the value of • our ability to attract and retain qualified personnel; • the success of our racing activities; • our ability to keep up with advances in high per- formance car technology, to meet the challeng- es and costs of integrating advanced technolo- gies, including hybrid and electric, more broadly into our car portfolio over time and to make ap- pealing designs for our new models; • the impact of increasingly stringent fuel econ- omy, emissions and safety standards, including the cost of compliance, and any required chang- es to our products, as well as possible future bans of combustion engine cars in cities and the potential advent of self-driving technology; shortages of components and raw materials; • increases in costs, disruptions of supply or • our low volume strategy; • our ability to successfully carry out our controlled growth strategy and, particularly, our ability to in- crease our presence in growth market countries; • global economic conditions, macro events, pan- demics and conflicts, including the ongoing con- flict between Russia and Ukraine and the more recent hostilities between Israel and Hamas; • changes in the general economic environment (including changes in some of the markets in which we operate) and changes in demand for luxury goods, including high performance luxu- ry cars, demand for which is highly volatile; trends; bile industry; • competition in the luxury performance automo- • changes in client preferences and automotive • our ability to preserve our relationship with the • disruptions at our manufacturing facilities in Ma- • climate change and other environmental im- automobile collector and enthusiast community; ranello and Modena; pacts, as well as an increased focus of regulators and stakeholders on environmental matters; • our ability to maintain the functional and effi- cient operation of our information technology systems and to defend from the risk of cyberat- tacks, including on our in-vehicle technology; • the ability of our current management team to operate and manage effectively and the reliance upon a number of key members of executive management and employees; which we depend for sales and services; • the performance of our dealer network on • product warranties, product recalls and liability • the sponsorship and commercial revenues and claims; expenses of our racing activities, as well as the popularity of motor sports more broadly; • the performance of our lifestyle activities; • our ability to protect our intellectual property rights and to avoid infringing on the intellectual property rights of others; tions of various jurisdictions; • our continued compliance with customs regula- • labor relations and collective bargaining agree- • our ability to ensure that our employees, agents ments; and representatives comply with applicable law and regulations; • changes in tax, tariff or fiscal policies and regula- tory, political and labor conditions in the jurisdic- tions in which we operate; • our ability to service and refinance our debt; 19 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT• exchange rate fluctuations, interest rate chang- • our ability to provide or arrange for adequate ac- es, credit risk and other market risks; cess to financing for our dealers and clients, and associated risks; • the adequacy of our insurance coverage to pro- • potential conflicts of interest due to director and tect us against potential losses; officer overlaps with our largest shareholders; and • other factors discussed elsewhere in this docu- ment. We expressly disclaim and do not assume any liabil- ity in connection with any inaccuracies in any of the forward-looking statements in this document or in connection with any use by any third party of such forward-looking statements. Actual results could differ materially from those anticipated in such forward-looking statements. We do not undertake an obligation to update or revise publicly any for- ward-looking statements. Additional factors which could cause actual re- sults and developments to differ from those ex- pressed or implied by the forward-looking state- ments are included in the section “Risk Factors” of this Annual Report. These factors may not be ex- haustive and should be read in conjunction with the other cautionary statements included in this Annu- al Report. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties. CREATING VALUE FOR OUR SHAREHOLDERS Ferrari is among the world’s leading luxury brands with unique, world-class capabilities, and a vision built on our historic foundations and strengths. We are fiercely protective of our brand, which is among the most iconic and recognizable in the world and is critical to our value proposition to all of our stakeholders. We strive to maintain and enhance the power of our brand and the passion we inspire in clients and the broader community of automotive enthusiasts by continuing our rigorous production and distribution model, which promotes excellence in innovation, design and uniqueness. We also support our brand value by promoting a strong connection to our company and our brand among the community of Ferrari enthusiasts. We fo- cus relentlessly on strengthening this connection by rewarding our most loyal clients through a range of initiatives, such as driving events and client activities in Maranello and, most importantly, by providing our most loyal and active clients with preferential access to our newest, most exclusive and highest value cars. As a result, in 2023, we sold approximately 74% of our new cars to existing Ferrari clients and 40% to cli- ents being current owners of more than one Ferrari, which reinforces the demand for our cars and the image of luxury and exclusivity inherent in our brand. Our commitment to excellence and our pursuit of innovation, state-of-the-art performance and distinc- tion in design and engineering in our luxury cars is inseparable from our commitment to integrity, trans- parency and responsibility in conducting our busi- ness. By fully integrating environmental and social considerations with economic objectives we are able to identify potential risks and capitalize on additional opportunities, resulting in a process of continuous improvement. Sustainability is a core element of our governance model and executive management plays a direct and active role in developing and achieving our sustainability objectives under the direction of our Board of Directors. As a clear demonstration of this commitment, we have strengthened the integra- tion of environmental topics in our strategic plan by presenting, in June 2022, a decarbonization strategy that will help us reach carbon neutrality by 2030. The foundation of a responsible company rests on being fully attentive to the nature and extent of this in- terconnection and our understanding of both the po- tential effects of our activities and how those effects can be mitigated through responsible management. All of the above is strictly linked to our values: • INDIVIDUAL AND TEAM: Our talented individuals are our greatest resource. However they can only pursue the extraordinary by working to- gether as a team. By fostering integrity, excel- lence and generosity, we give each of our people the possibility to express their own full potential - and to be part of something greater. • TRADITION AND INNOVATION: Tradition and in- novation drive each other. The ongoing quest for lasting firsts is what fuels the Ferrari legend. Our ability to combine revolutionary technological solutions with exceptional artisanal craftsman- ship is what enables us to create icons that stay timeless in a fast-changing world. • PASSION AND ACHIEVEMENT: Ferrari’s racing spirit lives on in emotions that transcend the road and the track, ultimately becoming an au- thentic attitude towards life. Nothing excites us more than setting ambitious targets and expec- tations - and then exceeding them, to push ev- ery boundary. It is how the power of passion be- comes the beauty of achievement. Ferrari audaciously redefines the limits of possible. To ensure tangible long-term value creation and a continuing integration of our sustainability strate- gy, we place particular emphasis on: • a governance model based on transparency and • a safe and eco-friendly working environment in- integrity, fostering best practices; cluding excellent working conditions and the ut- most respect for human rights; • continuing professional development of our em- ployees; 20 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F• mutually beneficial relationships with busi- ness partners and the communities in which we operate; • mitigation of environmental impacts from our production processes and the luxury cars we produce, addressing direct and indirect GHG emissions, focusing on energy and materials, in addition to our electrification journey. The Non Financial Statement of our 2023 Annual Re- port addresses those aspects of our sustainability ef- forts that we have identified as being of greatest im- portance to our internal and external stakeholders. RISK FACTORS We face a variety of risks and uncertainties in our business. Those described below are not the only risks and uncertainties that we face. Additional risks and uncertainties that we are unaware of, or that we currently believe to be immaterial, may also become important factors that affect us. RISKS RELATED TO OUR BUSINESS, STRATEGY AND OPERATIONS WE MAY NOT SUCCEED IN PRESERVING AND ENHANCING THE VALUE OF THE FERRARI BRAND, WHICH WE DEPEND UPON TO DRIVE DEMAND AND REVENUES. Our financial performance is influenced by the perception and recognition of the Ferrari brand, which, in turn, depends on many factors such as the design, performance, quality and image of our cars, the appeal of our dealerships and stores, the success of our promotional activities including public relations and marketing, as well as our gen- eral profile, including our brand’s image of exclusiv- ity. The value of our brand and our ability to achieve premium pricing for Ferrari-branded products may decline if we are unable to maintain the value and image of the Ferrari brand, including, in par- ticular, its aura of exclusivity. Maintaining the value of our brand will depend significantly on our ability to continue to produce luxury performance cars of the highest quality. The market for luxury goods generally and for luxury automobiles in particular is intensely competitive, and we may not be success- ful in maintaining and strengthening the appeal of our brand. Client preferences, particularly among luxury goods, can vary over time, sometimes rapid- ly. We are therefore exposed to changing percep- tions of our brand image, particularly as we seek to attract new generations of clients and, to that end, we continuously renovate and expand the range of our models. For example, the expansion of hybrid engine technology and electric engine technology is introducing a significant change in the overall driver experience compared to the combustion en- gine cars of our historical models and the customer long term response to the change, particularly with respect to fully electric models, remains unknown. Any failure to preserve and enhance the value of our brand may materially and adversely affect our ability to sell our cars, to maintain premium pricing, and to extend the value of our brand into other ac- tivities profitably or at all. More broadly, our lifestyle strategy will signifi- cantly increase the deployment of our brand in non- car products and experiences, including a large va- riety of Ferrari-branded accessories and apparel. If this strategy is not successful, our brand image may be diluted or tainted. We selectively license the Fer- rari brand to third parties that produce and sell Fer- rari-branded luxury goods and therefore we rely on our licensing partners to preserve and enhance the value of our brand. If our licensees or the manufac- turers of these products do not maintain the stan- dards of quality and exclusivity that we believe are consistent with the Ferrari brand, or if such licens- ees or manufacturers otherwise misuse the Ferrari brand, our reputation and the integrity and value of our brand may be damaged and our business, oper- ating results and financial condition may be materi- ally and adversely affected. In addition, given the popularity, competitive- ness and demographic penetration of social media, Ferrari must maintain a presence on the principal established and emerging social media platforms. If we cannot cost effectively use these marketing tools, if we fail to promote our products and services efficiently and effectively or to properly comply with the applicable laws and regulations, or if our social media campaigns attract negative media attention or customer feedback, the value of our brand may be negatively impacted, as well as our results of op- erations. The popularity and reach of social media and other online platforms has also made it increas- ingly easier for individuals and groups to communi- cate and share opinions and views. Any negative or adverse publicity about us, whether or not truthful, could rapidly disseminate and harm customer and community perceptions as well as confidence in our brand and ultimately impact our business, results of operation and financial condition. IF WE ARE NOT ABLE TO ATTRACT AND RETAIN QUALIFIED PERSONNEL, WE MAY NOT BE ABLE TO MAINTAIN OUR COMPETITIVE POSITION OR TO IMPLEMENT OUR BUSINESS STRATEGY. Our success depends, in part, on our continuing abil- ity to attract, recruit, develop and retain qualified talent. Failure to do so effectively would adversely affect our business. Competition to attract talent- ed employees is intense, and there can be a limited availability of individuals with the requisite knowl- edge and relevant experience. In addition, we may not succeed in instilling our corporate culture and values in our personnel and we may not be able to attract, assimilate, develop or retain qualified per- 21 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTsonnel in the future. Failure to do so could adversely affect our business, including our ability to execute our global business strategy. OUR BRAND IMAGE DEPENDS IN PART ON THE SUCCESS OF OUR RACING ACTIVITIES, PARTICULARLY OUR FORMULA 1 TEAM. The prestige, identity, and appeal of the Ferrari brand depends in part on the success of our racing activities, which are a key component of our mar- keting strategy and may be perceived by our clients as a demonstration of the technological capabilities of our cars, which also support the appeal of other Ferrari-branded luxury goods. In particular, we are focused on improving the results of our Scuderia Ferrari racing team in the Formula 1 World Cham- pionship and restoring our historical position as the premier racing team in Formula 1, as our most recent Drivers’ Championship and Constructors’ Championship were in 2007 and 2008, respective- ly. If we are unable to attract and retain the neces- sary talent to succeed in international competitions or devote the capital necessary to fund successful racing activities, the value of the Ferrari brand and the appeal of our cars and other luxury goods may suffer. Even if we are able to attract such talent and adequately fund our racing activities, there is no as- surance that this will lead to competitive success for our racing teams. The success of our racing teams depends in par- ticular on our ability to attract and retain top drivers, racing team management and engineering talent. Our primary Formula 1 drivers, team managers and other key employees of Scuderia Ferrari are critical to the success of our Scuderia Ferrari racing team and if we were to lose their services, this could have a material adverse effect on our success and corre- spondingly the Ferrari brand. If we are unable to find adequate replacements or to attract, retain and in- centivize drivers and team managers, other key em- ployees or new qualified personnel, the success of our racing teams may suffer. In addition, the caps on spending imposed by the Formula 1 governing body may hinder our ability to restore our racing preem- inence (See “Our revenues from Formula 1 activities may decline and our related expenses may grow”). Be- cause the success of our racing teams forms a large part of our brand identity, a sustained period without racing success could detract from the Ferrari brand and, as a result, from potential clients’ enthusiasm for the Ferrari brand and their perception of our cars, which could have an adverse effect on our business, results of operations and financial condition. IF WE ARE UNABLE TO KEEP UP WITH ADVANCES IN HIGH PERFORMANCE CAR TECHNOLOGY, OUR BRAND AND COMPETITIVE POSITION MAY SUFFER. lead- Performance cars are characterized by ing-edge technology that is constantly evolving. In particular, advances in racing technology often lead 22 to improved technology in road cars. Although we invest heavily in research and development, we may be unable to maintain our leading position in high performance car technology and, as a result, our competitive position may suffer. As technologies change, we plan to upgrade or adapt our cars and introduce new models in order to continue to pro- vide cars with the latest technology. However, our cars may not compete effectively with our com- petitors’ cars if we are not able to develop, source and integrate the latest technology into our cars. For example, in the next few years luxury performance cars will increasingly transition to hybrid and elec- tric technology, albeit at a slower pace compared to mass market vehicles. See “The introduction of electric technology in our cars is costly and its long- term success is uncertain”. We are also investing in connectivity, which requires significant investments in research and development; we expect that the fu- ture generation of cars will feature a higher degree of connectivity for purposes of infotainment, safety and regulatory compliance. These in-car features may also in the near-to-medium term be driven by advances in artificial intelligence (or AI) which may need to be sourced externally and integrated into the car technology. Developing or acquiring and applying new auto- motive technologies is costly, and may become even more costly in the future as available technology ad- vances and competition in the industry increases. If our research and development efforts do not lead to improvements in car performance relative to the competition, or if we are required to spend more to achieve comparable results, the sales of our cars or our profitability may suffer. IF OUR CARS DO NOT PERFORM AS EXPECTED OUR ABILITY TO DEVELOP, MARKET AND SELL OUR CARS COULD BE HARMED. Our cars may contain defects in design and manu- facture that may cause them not to perform as ex- pected or that may require repair. There can be no assurance that we will be able to detect and fix any defects in the cars prior to their sale to consumers. Our cars may not perform in line with our clients’ evolving expectations or in a manner that equals or exceeds the performance characteristics of oth- er cars currently available. For example, our new- er cars may not have the durability or longevity of current cars, and may not be as easy to repair as other cars currently on the market. Any product de- fects or any other failure of our performance cars to perform as expected could harm our reputation and result in adverse publicity, lost revenue, deliv- ery delays, product recalls, product liability claims, harm to our brand and reputation, and significant warranty and other expenses, and could have a ma- terial adverse impact on our business, operating results and financial condition. BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FIF OUR CAR DESIGNS DO NOT APPEAL TO CLIENTS, OUR BRAND AND COMPETITIVE POSITION MAY SUFFER. Design and styling are an integral component of our models and our brand. Our cars have historically been characterized by distinctive designs combin- ing the aerodynamics of a sports car with powerful, elegant lines. We believe our clients purchase our cars for their appearance as well as their perfor- mance. However, we will need to renew over time the style of our cars to differentiate the new mod- els we produce from older models, and to reflect the broader evolution of aesthetics in our markets. We devote great efforts to the design of our cars and most of our current models are designed by the Ferrari Design Centre, our in-house design team. The design of our electric cars and, more general- ly, of our future models with increased connectivity features will depart from past designs in appear- ance and functionality, thereby requiring new skills and presenting new challenges. If the design of our future models fails to meet the evolving tastes and preferences of our clients and prospective clients, or the appreciation of the wider public, our brand may suffer and our sales may be adversely affected. THE INTRODUCTION OF ELECTRIC TECHNOLOGY IN OUR CARS IS COSTLY AND ITS LONG-TERM SUCCESS IS UNCERTAIN. We are gradually introducing electric technology in our cars and we currently plan to introduce the first full electric Ferrari in 2025. In accordance with our strategy, we believe electric technology, together with hybrid and other advanced technologies, will be key to providing continuing performance up- grades to our sports car customers, and will also help us capture the preferences of the urban, afflu- ent car purchasers whom we are increasingly tar- geting, while helping us meet increasingly stricter emissions requirements. The integration of electric technology more broadly into our car portfolio over time may pres- ent challenges and costs. We expect to continue to increase research and development spending in the medium term, particularly on electric technolo- gy-related projects. Although we expect to price our cars appropriately to recoup the investments and expenditures we are making, we cannot be certain that these expenditures will be fully recovered or that they will be recovered with our desired mar- gins. In addition, this transformation of our car tech- nology creates risks and uncertainties such as the impact on driver experience and the impact on the cars’ residual value over time. Other manufactur- ers of luxury sports cars may be more successful in implementing electric technology. In the long-term, although we believe that combustion engines will continue to be fundamental to the Ferrari driver ex- perience for the foreseeable future, hybrid and pure electric cars may become the prevalent technology for performance sports cars thereby displacing combustion engine models. See also “If we are un- able to keep up with advances in high performance car technology, our brand and competitive position may suffer.”. Because electric technology is a core compo- nent of our strategy, and in the medium term we plan to increase the portion of our shipments that feature vehicles with electric technology, if the introduction of electric cars proves too costly or is unsuccessful in the market, our business and results of operations could be materially adversely affected. NEW OR CHANGING LAWS, REGULATIONS OR POLICIES OF GOVERNMENTAL ORGANIZATIONS REGARDING, AMONG OTHER THINGS, INCREASED FUEL ECONOMY REQUIREMENTS, REDUCED GREENHOUSE GAS OR POLLUTANT EMISSIONS, OR VEHICLE SAFETY, MAY HAVE A SIGNIFICANT EFFECT ON OUR COSTS OF OPERATION AND/OR HOW WE DO BUSINESS. We are subject throughout the world to comprehen- sive and constantly evolving laws, regulations and policies. We expect the extent of the legal and regu- latory requirements affecting our business and our costs of compliance to continue to increase signifi- cantly in the future. Failure to comply with applicable laws and regulatory requirements, in addition to the fines it may attract, may negatively impact our busi- ness, results of operation and financial condition as well as our reputation. In Europe and the United States, for example, significant governmental regulation is driven by en- vironmental, fuel economy, vehicle safety and noise emission concerns. Evolving regulatory require- ments could significantly affect our product devel- opment plans and may limit the number and types of cars we sell and where we sell them, which may affect our revenue and profitability. Governmental regulations may increase the costs we incur to de- sign, develop and produce our cars and may affect our product portfolio. Regulation may also result in a change in the character or performance character- istics of our cars, which may render them less ap- pealing to our clients. We anticipate that the number and extent of these regulations, and their effect on our cost structure and product line-up, will increase significantly in the future. In the United States, there is increasing focus on emissions and pollution regulations in light of chang- ing policies under the current administration. New regulations are in the process of being developed, and many existing and potential regulatory initiatives are subject to review by federal or state agencies or the courts. However, the coming federal elections throw considerable uncertainty on future changes. In May 2023, the US Environmental Protection Agen- cy (EPA) released its 2027 and later Multi-Pollutant Rulemaking proposal, introducing among other re- quirements, stricter emission standards (e.g. par- ticulate matter) and a potential ban of fuel enrich- 23 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTment for component protection. Moreover, special provisions for SVMs have almost been completely eliminated; i.e. GHG alternative standards are re- moved from model year 2025 and no flexibility on exhaust emission standards are provided. Depend- ing on the requirements included in the final rule, the costs of compliance associated with Multi-Pollutant Rulemaking may be substantial. In addition, we are subject to legislation relating to the emission of other air pollutants such as, among others, the EU “Euro 6” standards and Real Driving Emissions (RDE) standards, the “Tier 3” Motor Vehi- cle Emission and Fuel Standards issued by the U.S. Environmental Protection Agency (“EPA”), and the Zero Emission Vehicle regulation in California, which are subject to similar derogations for Small Volume Manufacturers (“SVMs”). We lost our status as an SVM for the United States National Highway Traffic Safety Administration (“NHTSA”) in 2019, because our global production exceeded 10,000 vehicles, but we have not lost our SVM status for EU CO2 regulations or for EPA GHG regulations in the United States. In 2021, 2022 and 2023, our global production exceed- ed 10,000 vehicles again and therefore we were no longer considered a SVM by the NHTSA for the mod- el years 2021, 2022 and 2023. We purchased the fuel economy (“CAFE”) credits needed to fulfill both our 2021 and 2022 deficits and we are currently evalu- ating the purchase of credits for 2023. We expect to continue to purchase credits in the coming years if required. We could lose our status as an SVM in the EU, the United States and other countries if we do not continue to meet all of the necessary eligibility criteria under applicable regulations as they evolve, not only in relation to volumes but also in relation to the con- ditions of operational independence. In order to meet these criteria we may need to modify our growth plans or other operations. Furthermore, even if we continue to benefit from derogations as an SVM, we may have a substantial impact on our financial results. As the state of California has been granted special authority under the Clean Air Act to set its own vehi- cle emission standards, the California Air Resourc- es Board (“CARB”) enacted regulations under which manufacturers of vehicles for certain model years that are in compliance with the EPA greenhouse gas emissions regulations are also deemed to be in com- pliance with California’s greenhouse gas emission regulations (the so-called “deemed to comply” pro- vision). These regulations have evolved over time. In 2018, the CARB amended its existing regulations to clarify that the “deemed to comply” provision would not be available for certain model years if the EPA stan- dards for those years were altered via an amendment of federal regulations and, in 2019, EPA announced a decision to withdraw California’s waiver of preemp- tion under the Clean Air Act. In this decision, the EPA also affirmed the NHTSA’s authority to set nationally applicable regulatory standards under the preemp- tion provisions of the Energy Policy and Conservation Act (EPCA). On March 9, 2022, the EPA rescinded its withdrawal of the waiver for California’s light-duty ve- hicle GHG and zero emission vehicle (ZEV) standards. California and Section 177 states may again enforce those standards. Subsequently, CARB clarified that the compliance with CARB’s GHG regulations is ex- 24 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fpected from model year 2021 for all manufacturers. Ferrari meets the requirements to be classified as an SVM based on the relevant regulations in the state of California. Therefore, in 2023, in agreement with CARB, Ferrari petitioned for SVM 2021-2025 alterna- tive standards. No official approval has been received from CARB to date. It may be necessary also to in- crease the number of tests to be performed in order to follow the CARB specific procedures. In relation to the safety legislation framework, in December 2023, NHTSA published an advanced notice of proposed rulemaking as a first regulatory step to introduce a new FMVSS regulation providing requirements for new technologies to prevent driver distraction, drowsiness, and drunk impaired driving. The costs of compliance associated with these and similar rulemaking may be substantial. Other governments around the world, such as those in Canada, South Korea, China and certain Middle Eastern countries, are also creating new policies to address these issues which could be even more stringent than the U.S. or European requirements. As in the United States and Europe, these government policies if applied to us could significantly affect our product development plans. Under these existing regulations, as well as new or stricter rules or poli- cies, we could be subject to sizable civil penalties or have to restrict or modify product offerings drasti- cally to remain in compliance. We may have to incur substantial capital expenditures and research and development expenditures to upgrade products and manufacturing facilities, which would have an impact on our cost of production and results of operation. In the future, the advent of self-driving technology may result in regulatory changes that we cannot predict but may include limitations or bans on hu- man driving in specific areas. In 2020 the European Commission issued its new digital strategy policies and in 2022 its new digital strategy, which represent a priority in the European Commission’s regulatory agenda. Although no regulations have been issued in this regard, the European Commission has showed a determination to strengthen Europe’s digital sov- ereignty and role as a standard setter, with a clear focus on data, technology, and infrastructure. Similarly, driving bans on combustion engine vehicles could be imposed, particularly in metropol- itan areas, as a result of progress in electric and hy- brid technology. Several others regulations are also emerging to take into account the non-exhaust emis- sions such as brakes and tires particulate emissions and the environmental impact of the electric and hy- brid vehicles components, with a particular focus on batteries and waste batteries. To comply with current and future environmen- tal rules in all markets in which we sell our cars, we may have to incur substantial capital expenditure and research and development expenditure to up- grade products and manufacturing facilities, which would have an impact on our cost of production and results of operations. For a description of the regulations referred to in the paragraphs above please see “Overview of Our Business—Regulatory Matters”. 25 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTWE DEPEND ON OUR SUPPLIERS, MANY OF WHICH ARE SINGLE SOURCE SUPPLIERS; AND IF THESE SUPPLIERS FAIL TO DELIVER NECESSARY RAW MATERIALS, COMPONENTS, PARTS, SYSTEMS, SERVICES OR INFRASTRUCTURE OF APPROPRIATE QUALITY IN A TIMELY MANNER, OUR OPERATIONS MAY BE DISRUPTED. Our business depends on a significant number of suppliers, which provide the raw materials, com- ponents, parts, systems, services and infrastruc- ture we require to manufacture cars and parts and to operate our business. We use a variety of raw materials in our business, including aluminum, and precious metals such as palladium and rhodium. We source materials from a limited number of sup- pliers. We cannot guarantee that we will be able to maintain access to these raw materials, and in some cases this access may be affected by factors out- side of our control and the control of our suppliers. In addition, prices for these raw materials fluctuate and while we seek to manage this exposure, we may not be successful in mitigating these risks. As with raw materials, we are also at risk of supply disruption and shortages in parts and components we purchase for use in our cars. We source a vari- ety of key components from third parties, including transmissions, brakes, driving-safety systems, navi- gation systems, mechanical, electrical and electron- ic parts, plastic components as well as castings and tires, which makes us dependent upon the suppliers of such components. In coming years, we will also require a greater number of components for hybrid and electric engines as we continue to deploy hybrid and electric technology in our cars, and we expect producers of these components will be called upon to increase the levels of supply as the shift to hybrid or electric technology gathers pace in the industry. While we obtain components from multiple sources whenever possible, similar to other small volume car manufacturers, most of the key components we use in our cars are purchased by us from single source suppliers. We generally do not qualify alternative sources for most of the single-sourced components we use in our cars and we do not maintain long-term agreements with a number of our suppliers. Further- more, we have limited ability to monitor the financial stability of our suppliers. While we believe that we may be able to estab- lish alternate supply relationships and can obtain or engineer replacement components for our sin- gle-sourced components, we may be unable to do so in the short term, or at all, at prices or costs that we believe are reasonable. Qualifying alternate sup- pliers or developing our own replacements for cer- tain highly customized components of our cars may be time consuming, costly and may force us to make costly modifications to the designs of our cars. Moreover, as the lifecycle of several components becomes shorter in light of the technological shift affecting the industry, a number of the components we use in our production processes may become in the near term obsolete, which will require us to im- plement new procurement strategies. Those strate- gies may not be successful and we may not be able to source new components in a timely manner or at competitive prices, and our results of operations may be adversely affected. In the past, we have replaced certain suppliers because they failed to provide components that met our quality control standards. The loss of any single or limited source supplier or the disruption in the supply of components from these suppliers could lead to delays in car deliveries to our clients, which could adversely affect our relationships with our clients and also materially and adversely affect our operating results and financial condition. The supply of raw materials, parts and components may also be disrupted or interrupted by natural disasters, or by unexpected fluctuations in market demand and sup- ply, such as the global shortage of semiconductors that impacted the automotive industry in particular, primarily in 2021. If any major disasters occur, such as earthquakes, fires, floods, hurricanes, wars, ter- rorist attacks, pandemics or other events, our sup- ply chain may be disrupted, which may stop or delay production and shipment of our cars. The ongoing conflict between Russia and Ukraine, the recogni- tion by Russia of the independence of the self-pro- claimed republics of Donetsk and Luhansk, in the Donbas region of Ukraine and the resulting geopolit- ical tensions continue to have a significant impact on the global economy resulting in a sharp increase in energy prices and higher prices for certain raw ma- terials and goods and services, which in turn is con- tributing to higher inflation globally. The Russian/ Ukrainian conflict has continued to escalate without a resolution expected in the near future, with the short and long-term impact on financial and busi- ness conditions in Europe remaining highly uncer- tain. Many governments around the world, including those of the United States, the European Union and Japan, have announced the imposition of sanctions on certain industry sectors and parties in Russia and the regions of Donetsk and Luhansk, as well as enhanced export controls on certain industries and products, including luxury goods, and the exclusion of certain Russian financial institutions from the SWIFT system. On March 11, 2022, the President of the United States issued an executive order prohib- iting exports to Russia of luxury goods (including luxury transportation items such as automobiles and racing cars). Shortly thereafter, on March 15, 2022, the Council of the European Union imposed new sanctions on Russia prohibiting the export of luxury goods having a value in excess of €300 per item. These and any additional sanctions and export controls, as well as any counterresponses by the governments of Russia or other jurisdictions, could adversely affect, directly or indirectly, our supply chain, with negative implications on the availabili- ty and prices of raw materials, and our customers, as well as the global financial markets and financial services industry. See also “We are subject to risks 26 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F27 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTrelated to pandemics or public health crises that may materially and adversely affect our business” for a discussion of widespread public health crises which may affect our supply chain directly or indirectly. Changes in our supply chain have in the past resulted and may in the future result in increased costs and delays in car production. We have also ex- perienced cost increases from certain suppliers in order to meet our quality targets and development timelines and because of design changes that we have made, and we may experience similar cost in- creases in the future. We are negotiating with ex- isting suppliers for cost reductions, seeking new and less expensive suppliers for certain parts, and attempting to redesign certain parts to make them less expensive to produce. If we are unsuccessful in our efforts to control and reduce supplier costs while maintaining a stable source of high quality supplies, our operating results will suffer. Addition- ally, cost reduction efforts may disrupt our normal production processes, thereby harming the quality or volume of our production. Furthermore, if our suppliers fail to provide com- ponents in a timely manner or at the level of quality necessary to manufacture our cars, our clients may face longer waiting periods which could result in neg- ative publicity, harm our reputation and relationship with clients and have a material adverse effect on our business, operating results and financial condition. OUR LOW VOLUME STRATEGY MAY LIMIT POTENTIAL PROFITS, AND IF VOLUMES INCREASE OUR BRAND EXCLUSIVITY MAY BE ERODED. A key to the appeal of the Ferrari brand and our mar- keting strategy is the aura of exclusivity and the sense of luxury which our brand conveys. A central facet to this exclusivity is the limited number of models and cars we produce and our strategy of maintaining our car waiting lists to reach the optimal combina- tion of exclusivity and client service. Our low volume strategy is also an important factor in the prices that our clients are willing to pay for our cars. This focus on maintaining exclusivity limits our potential sales growth and profits compared to manufacturers less reliant on the exclusivity of their products. On the other hand, our current growth strategy contemplates a measured but significant increase in car sales above current levels as we target a larger customer base and modes of use, we increase our focus on reaching a younger customer base and creating new Ferrari collectors, and our product portfolio evolves with a broader product range. We sold 13,663 cars in 2023 compared to 11,155 cars in 2021 and 7,255 cars in 2014, the year before our ini- tial public offering, and sales are expected to contin- ue to increase gradually. In pursuit of our strategy, we may be unable to main- tain the exclusivity of the Ferrari brand. If we are unable to balance brand exclusivity with increased production, we may erode the desirability and ulti- mately the consumer demand or relative pricing for our cars. As a result, if we are unable to increase car production meaningfully or introduce new car mod- els without eroding the image of exclusivity in our brand we may be unable to significantly increase our revenues. THE SMALL NUMBER OF CAR MODELS WE PRODUCE AND SELL MAY RESULT IN GREATER VOLATILITY IN OUR FINANCIAL RESULTS. We depend on the sales of a small number of car models to generate our revenues. Our current product portfolio consists of eight Range models, four Special Series models and one strictly limited edition Icona model. In 2022, with the launch of the Purosangue and the 296 GTS, we met our previously announced objective of introducing 15 new models by 2022 (as announced at our Capital Markets Day in September 2018), which is unprecedented for Fer- rari over a similar time frame. At our Capital Markets Day in June 2022, we announced our plan to introduce 15 new models over the period from 2023 to 2026. In 2023, we launched five new models: the Roma Spi- der, the SF90 XX Stradale and SF90 XX Spider (the first ever street legal XX models), the 296 Challenge and the 499P Modificata. Despite our expanded of- fering, a limited number of models will continue to account for a large portion of our revenues at any given time in the foreseeable future, compared to other automakers. Therefore, a single unsuccess- ful new model would harm us more than it would other automakers. There can be no assurance that our cars will continue to be successful in the mar- ket, or that we will be able to launch new models on a timely basis compared to our competitors. It gen- erally takes several years from the beginning of the development phase to the start of production for a new model and the car development process is cap- ital intensive. As a result, we would likely be unable to replace quickly the revenue lost from one of our main car models if it does not achieve market accep- tance. Furthermore, our revenues and profits may also be affected by our Special Series and limited edition models (including the Icona limited editions) that we launch from time to time and which are typ- ically priced higher than our range models. There can be no assurance that we will be successful in de- veloping, producing and marketing additional new cars (including our Special Series and limited edition models) to sustain sales growth in the future. OUR CONTROLLED GROWTH STRATEGY EXPOSES US TO RISKS. Our growth strategy includes a controlled expansion of our sales and operations, including the launch- ing of new car models and expanding sales, as well as dealer operations and workshops, in targeted growth regions internationally. In particular, our growth strategy includes the opportunity for us to expand operations in regions and markets that we have identified as having relatively high growth po- 28 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Ftential. We may encounter difficulties in entering and establishing ourselves in these markets, including in establishing new successful dealership networks and facing more significant competition from com- petitors that are already present in those regions. Our growth depends on the continued success of our existing cars, as well as the successful introduc- tion of new cars. Our ability to create new cars and to sustain existing car models is affected by whether we can successfully anticipate and respond to con- sumer preferences and car trends. The failure to de- velop successful new cars or delays in their launch that could result in others bringing new products and leading-edge technologies to the market first, could compromise our competitive position and hinder the growth of our business. As part of our growth strat- egy, we broadened the range of our models to cap- ture additional customer demand for different types of vehicles and modes of utilization. In 2022, with the launch of the Purosangue and the 296 GTS, we met our previously announced objective of introducing 15 new models by 2022 (as announced at our Capital Markets Day in September 2018), which is unprece- dented for Ferrari over a similar time frame. At our Capital Markets Day in June 2022, we announced our plan to introduce 15 new models over the peri- od from 2023 to 2026. In 2023, we launched five new models: the Roma Spider, the SF90 XX Stradale and SF90 XX Spider (the first ever street legal XX models), the 296 Challenge and the 499P Modificata. In addi- tion, we are gradually but rapidly expanding the use of hybrid and electric technology in our road cars as we broaden and expand our product portfolio. In 2023, hybrid cars represented 44% of our shipments. While we will seek to ensure that these changes re- main fully consistent with the Ferrari car identity, we cannot be certain that they will prove profitable and commercially successful. Our controlled growth strategy may expose us to new business risks that we may not have the ex- pertise, capability or the systems to manage. This strategy will also place significant demands on us by requiring us to continuously evolve and improve our operational, financial and internal controls. Con- tinued expansion also increases the challenges in- volved in maintaining high levels of quality, manage- ment and client satisfaction, recruiting, training and retaining sufficiently skilled management, technical and marketing personnel. If we are unable to man- age these risks or meet these demands, our growth prospects and our business, results of operations and financial condition could be adversely affected. We continuously improve our international net- work footprint and skill set. We also plan to open addi- tional retail stores in international markets. We do not yet have significant experience directly operating in many of these markets, and in many of them we face established competitors. Many of these countries have different operational characteristics, including but not limited to employment and labor, transporta- tion, logistics, real estate, environmental regulations and local reporting or legal requirements. Consumer demand and behavior, as well as tastes and purchasing trends may differ in these markets, and as a result, sales of our products may not be suc- cessful, or the margins on those sales may not be in line with those we currently anticipate. Furthermore, such markets will have upfront short-term invest- ment costs that may not be accompanied by suffi- cient revenues to achieve typical or expected opera- tional and financial performance and therefore may be dilutive to us in the short-term. In many of these countries, there is significant competition to attract and retain experienced and talented employees. if our Consequently, international expansion plans are unsuccessful, our business, results of op- erations and financial condition could be materially adversely affected. GLOBAL ECONOMIC CONDITIONS AND MACRO EVENTS MAY ADVERSELY AFFECT US. Our sales volumes and revenues may be affect- ed by overall general economic conditions within the various countries in which we operate. Deteri- orating general economic conditions may affect disposable incomes and reduce consumer wealth impacting client demand, particularly for luxury goods, which may negatively impact our profitabil- ity and put downward pressure on our prices and volumes. Furthermore, during recessionary peri- ods, social acceptability of luxury purchases may decrease and higher taxes may be more likely to be imposed on certain luxury goods including our cars, which may affect our sales. Adverse econom- ic conditions may also affect the financial health and performance of our dealers in a manner that will affect sales of our cars or their ability to meet their commitments to us. The luxury performance car market is generally affected by global macroeconomic conditions and many factors affect the level of consumer spending in the luxury performance car industry, including the state of the economy as a whole, stock market per- formance, interest and exchange rates, inflation, po- litical uncertainty, the availability of consumer credit, tax rates, unemployment levels and other matters that influence consumer confidence. In general, al- though our sales have historically been compara- tively resilient in periods of economic turmoil, sales of luxury goods tend to decline during recessionary periods when the level of disposable income tends to be lower or when consumer confidence is low. Global economic growth slowed sharply in the re- cent years and a recovery in 2024 is uncertain. In ad- dition, significant inflationary pressures appeared in 2021 in many of the markets in which we operate and this trend was exacerbated in 2022. While infla- tion recorded in 2023 was more moderate than in 2022, if inflation remains elevated or increases in the future we could face further increases in the costs we incur for raw materials, utilities or services, which could adversely affect our business and re- sults of operations if we are not able to pass on the 29 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTincreased costs to our customers or successfully implement other mitigating actions. Following the rise in inflation, several main central banks raised in- terest rates rapidly over the course of 2022 and part of 2023. While certain central banks now appear to follow a softer monetary stance, a higher cost of borrowing compared to recent historical periods may persist in the market. Such increases could impact our ability to obtain affordable financing or could make our cars less affordable to clients, which could cause consumers to delay the purchase of our cars or to purchase less expensive cars. We distribute our products internationally and we may be affected by downturns in general eco- nomic conditions or uncertainties regarding future economic prospects that may impact the countries in which we sell a significant portion of our prod- ucts. In particular, the majority of our current sales are in the EU and in the United States; if we are un- able to expand in other growth markets, a down- turn in mature economies such as the EU and the United States may negatively affect our financial performance. In addition, uncertainties regarding future trade arrangements and industrial policies in various countries or regions create additional mac- roeconomic risk. In the United States, any policy to discourage import into the United States of vehicles produced elsewhere could adversely affect our op- erations. Any new policies may have an adverse ef- fect on our business, financial condition and results of operations. In general, the banking, economic and monetary crisis, as well as the escalating energy prices triggered by the ongoing conflict between Russia and Ukraine, as well as conflicts elsewhere in the world (including the conflict between Israel and Hamas which has the potential for escalation in the region), may reduce customers’ interest for, and financial ability to buy, luxury products. Although Mainland China, Hong Kong and Taiwan only repre- sented 10 percent of our net revenues in 2023 and is expected to represent a limited proportion of our growth in the short term, slowing economic condi- tions in Mainland China, Hong Kong and Taiwan may adversely affect our revenues in that region. A sig- nificant decline in the EU, the global economy or in the specific economies of our markets, or in con- sumers’ confidence, could have a material adverse effect on our business. See also “Developments in China and other growth markets may adversely af- fect our business”. Additionally, sanctions and export controls which could be introduced as a result of geopoliti- cal tensions and conflicts could adversely affect, di- rectly or indirectly, our supply chain and customers, as well as the global financial markets and financial services industry. See also “We depend on our sup- pliers, many of which are single source suppliers; and if these suppliers fail to deliver necessary raw materials, systems, components and parts of appro- priate quality in a timely manner, our operations may be disrupted”. WE ARE SUBJECT TO RISKS RELATED TO EPIDEMICS, PANDEMICS OR OTHER PUBLIC HEALTH CRISES THAT MAY MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS. Public health crises such as epidemics, pandemics or similar outbreaks could adversely impact our business. From 2020 to 2022, the global spread of COVID-19, including variants thereof, led to govern- ments around the world mandating increasingly re- strictive measures to contain the pandemic, includ- ing social distancing, quarantine, “shelter in place” or similar orders, travel restrictions and suspension of non-essential business activities. The COVID-19 pandemic caused significant disruption to the global economy, including changes in consumer spending and behavior, disruption to supply chains and finan- cial markets, as well as restrictions on business and individual activities, leading to a global economic slowdown and a severe recession in several of the markets in which we operate, which may reverber- ate after all restrictions are lifted. Our operations were also profoundly disrupted, with our produc- tion suspended at our two plants for several months in 2020, and our suppliers and dealers were similar- ly affected. Governmental restrictions were lifted and partly reintroduced reflecting developments in the pandemic. Future pandemics may have similar, or worse, impacts on our operations. Furthermore, pandemics or other widespread public health crises may lead to financial distress for our suppliers or dealers, as a result of which they may have to permanently discontinue or substantial- ly reduce their operations. Any of the foregoing could limit customer de- mand or our capacity to meet customer demand and have a material adverse effect on our business, results of operations and financial condition. Pandemics or other widespread public health crises may also exacerbate other risks disclosed in this section, including, but not limited to, our com- petitiveness, demand for our products, shifting consumer preferences, exchange rate fluctuations, customers’ and dealers’ access to affordable fi- nancing, and credit market conditions affecting the availability of capital and financial resources. WE FACE COMPETITION IN THE LUXURY PERFORMANCE CAR INDUSTRY. We face competition in all product categories and markets in which we operate. We compete with oth- er international luxury performance car manufac- turers which own and operate well-known brands of high-quality cars, some of which form part of larger automotive groups and may have greater financial resources and bargaining power with suppliers than we do, particularly in light of our policy to maintain low volumes in order to preserve and enhance the exclusivity of our cars. In addition, several other man- ufacturers have recently entered or are attempting to enter the upper end of the luxury performance 30 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fcar market, including with advanced electric tech- nology, thereby increasing competition. We believe that we compete primarily on the basis of our brand image, the performance and design of our cars, our reputation for quality and the driving experience for our customers. If we are unable to compete success- fully, our business, results of operations and financial condition could be adversely affected. OUR BUSINESS IS SUBJECT TO CHANGES IN CLIENT PREFERENCES AND TRENDS IN THE AUTOMOTIVE AND LUXURY INDUSTRIES. Our continued success depends in part on our abili- ty to originate and define products and trends in the automotive and luxury industries, as well as to antic- ipate and respond promptly to changing consum- er demands and automotive trends in the design, styling, technology, production, merchandising and pricing of our products. Our products must appeal to a client base whose preferences cannot be pre- dicted with certainty and are subject to rapid change. Evaluating and responding to client preferences has become even more complex in recent years, due to our expansion in new geographical markets. The in- troduction of hybrid and electric technology and the associated changes in customer preferences that may follow are also a challenge we will face in future periods. See also “If we are unable to keep up with advances in high performance car technology, our brand and competitive position may suffer” and “The introduction of electric technology in our cars is cost- ly and its long-term success is uncertain”. In addition, there can be no assurance that we will be able to pro- duce, distribute and market new products efficiently or that any product category that we may expand or introduce will achieve sales levels sufficient to gen- erate profits. Furthermore this risk is particularly pronounced as we expand in accordance with our strategy into adjacent segments of the luxury indus- try, where we do not have a level of experience and market presence comparable to the one we have in the automotive industry. Any of these risks could have a material adverse effect on our business, re- sults of operations and financial condition. DEMAND FOR LUXURY GOODS, INCLUDING LUXURY PERFORMANCE CARS, IS VOLATILE, WHICH MAY ADVERSELY AFFECT OUR OPERATING RESULTS. Volatility of demand for luxury goods, in particular luxury performance cars, may adversely affect our business, operating results and financial condition. The market in which we sell our cars is subject to volatility in demand. Demand for luxury automobiles depends to a large extent on general, economic, po- litical and social conditions in a given market as well as the introduction of new vehicles and technologies. Global economic growth slowed sharply in 2022, stabilized in 2023 and the outlook for 2024 is uncer- tain. As a luxury performance car manufacturer and low volume producer, we compete with larger auto- mobile manufacturers many of which have greater financial resources in order to withstand changes in the market and disruptions in demand. Demand for our cars may also be affected by factors direct- ly impacting the cost of purchasing and operating automobiles, such as the availability and cost of fi- nancing, prices of raw materials and parts and com- ponents, fuel costs and governmental regulations, including tariffs, import regulation and other taxes, including taxes on luxury goods, resulting in limita- tions to the use of high performance sports cars or luxury goods more generally. Volatility in demand may lead to lower car unit sales, which may result in downward price pressure and adversely affect our business, operating results and financial condition. The impact of a luxury market downturn may be par- ticularly pronounced for the most expensive among our car models, which generate a more than pro- portionate amount of our profits, therefore exacer- bating the impact on our results. In addition, these effects may have a more pronounced impact on us given our low volume strategy and relatively smaller scale as compared to large global mass-market au- tomobile manufacturers. THE VALUE OF OUR BRAND DEPENDS IN PART ON THE AUTOMOBILE COLLECTOR AND ENTHUSIAST COMMUNITY. An important factor in the connection of clients to the Ferrari brand is our strong relationship with the global community of automotive collectors and en- thusiasts, particularly collectors and enthusiasts of Ferrari automobiles. This is influenced by our close ties to the automotive collectors’ community and our support of related events (such as car shows and driving events) at our headquarters in Maranello and through our dealers, the Ferrari museums and affiliations with regional Ferrari clubs. The support of this community also depends upon the percep- tion of our cars as collectibles, which we also sup- port through our Ferrari Classiche services, and the active resale market for our automobiles which en- courages interest over the long-term. The increase in the number of cars we produce relative to the number of automotive collectors and purchasers in the secondary market may adversely affect our cars’ value as collectible items and in the secondary market more broadly. If there is a change in collector appetite or dam- age to the Ferrari brand, our ties to, and the support we receive from, this community may be dimin- ished. Such a loss of enthusiasm for our cars from the automotive collectors’ community could harm the perception of the Ferrari brand and adversely impact our sales and profitability. WE DEPEND ON OUR MANUFACTURING FACILITIES IN MARANELLO AND MODENA. We assemble all of the cars that we sell and manu- facture, and all of the engines we use in our cars, at 31 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTour production facility in Maranello, Italy, where we also have our corporate headquarters. We manu- facture all of our car chassis in a nearby facility in Modena, Italy. Our Maranello or Modena plants could become unavailable either permanently or tempo- rarily for a number of reasons, including contamina- tion, power shortage or labor unrest. Alternatively, changes in law and regulation, including export, tax and employment laws and regulations, or econom- ic conditions, including wage inflation, could make it uneconomic for us to continue manufacturing our cars in Italy. In the event that we were unable to continue production at either of these facilities or it became uneconomic for us to continue to do so, we would need to seek alternative manufacturing ar- rangements which would take time and reduce our ability to produce sufficient cars to meet demand. Moving manufacturing to other locations may also affect the perception of our brand and car quality among our clients. Such a transfer would materially reduce our revenues and could require significant investment, which as a result could have a material adverse effect on our business, results of opera- tions and financial condition. Maranello and Modena are located in the Emil- ia-Romagna region of Italy which has the potential for seismic activity. For instance, in 2012 a major earth- quake struck the region, causing production at our facilities to be temporarily suspended for one day. If major disasters such as earthquakes, fires, floods, hurricanes, wars, terrorist attacks, pandemics or other events occur, our headquarters and produc- tion facilities may be seriously damaged, or we may stop or delay production and shipment of our cars. Such damage from disasters or unpredictable events could have a material adverse impact on our busi- ness, results from operations and financial condition. WE ARE SUBJECT TO RISKS ASSOCIATED WITH CLIMATE CHANGE AND OTHER ENVIRONMENTAL IMPACTS, AS WELL AS AN INCREASED FOCUS OF REGULATORS AND STAKEHOLDERS ON ENVIRONMENTAL MATTERS. Global climate change is resulting, and is expected to continue to result, in natural disasters and extreme weather, such as drought, wildfires, storms, sea-lev- el rise, flooding, heat waves and cold waves, occur- ring more frequently or with greater intensity. Such extreme events are driving changes in market dy- namics, stakeholder expectations, local, national and international climate change policies and regulations. We are subject to climate-related risks where we conduct our business. Physical impacts of cli- mate change, including natural disasters and ad- verse weather, could result in disruptions to us, our suppliers, vendors, customers and logistics hubs. These risks may also exacerbate other risks disclosed in this “Risk Factors” section, including but not limited to, our competitiveness, demand for our products, shifting consumer preferences, availability and price of raw materials, and concen- tration of our production activities in Maranello and Modena. The global automotive industry in particular is currently experiencing significant developments due to an increased focus on climate change and evolving regulatory requirements relating to fuel efficiency, electrification and greenhouse gas emissions, among others. These evolving requirements and technologi- cal changes have caused us, and are expected to con- tinue to cause us, to adapt and change certain aspects of our operations, our future plans and strategies and the allocation of our resources. Failure to effectively manage these aspects may result in increased costs, reputational risks, limits in our ability to manufacture or market certain of our products, or otherwise neg- atively impact our business, results of operations, profitability and competitive position. Additionally, our stakeholders, including our cus- tomers, employees, suppliers and investors, are in- creasingly focused on environment, social and gover- nance (“ESG”) matters. From time to time, in alignment with our sustainability strategy, we establish and pub- licly announce goals and commitments to improve our environmental performance and we have been taking deliberate actions to achieve carbon neutrality by 2030. There can be no assurance that our stake- holders will agree with our sustainability strategy or will be satisfied with our actions in relation to these matters. Additionally, if we fail (or are perceived to fail) to execute our sustainability strategy or achieve our environmental goals, if our sustainability strat- egy or environmental goals do not meet the expec- tations and standards of our stakeholders, or if we improperly report our progress in the execution of our sustainability strategy or the achievement of our environmental goals, our reputation could be nega- tively impacted, causing our customers, employees, suppliers and investors to lose confidence in us and our brand, which could negatively impact our busi- ness, access to capital or have an adverse effect on our revenues and profitability. A DISRUPTION IN OUR INFORMATION TECHNOLOGY, INCLUDING AS A RESULT OF CYBERCRIMES, COULD COMPROMISE CONFIDENTIAL, PROPRIETARY AND SENSITIVE INFORMATION. We depend on our information technology and data processing systems to operate our business, and a significant malfunction or disruption in the operation of our systems, human error, interruption to power supply, or a security breach that compromises the confidential and sensitive information stored in those systems, could disrupt our business and adversely impact our ability to compete. A leak of proprietary technical information relating to our cars and our production processes, for example, could cause significant competitive harm. Our ability to keep our business operating effectively depends on the func- tional and efficient operation by us and our third party service providers of our information, data process- ing and telecommunications systems, including our 32 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fcar design, manufacturing, inventory tracking and billing and payment systems. We rely on these sys- tems to enable a number of business processes and help us make a variety of day-to-day business deci- sions as well as to track transactions, billings, pay- ments and inventory. Such systems are susceptible to malfunctions and interruptions due to equipment damage, power outages, and a range of other hard- ware, software and network problems. Those sys- tems are also susceptible to cybercrime, or threats of intentional disruption, which are increasing in terms of sophistication and frequency, especially considering that such cyber incidents may remain undetected for long periods of time. For example, in March 2023 we were the subject of a ransomware attack. Ferrari decided not to pay the ransomware, and rejection of the ransom request led to the leak of a significant amount of customers’ personal identifi- able information and we were provided evidence of such leak with respect to several hundred custom- ers. We notified our customers of the potential data exposure and the nature of the incident and we have worked with third party experts to further reinforce our systems. Future breaches may adversely affect our operations and reputation. Additionally, a significant portion of our office personnel moved to a “remote work” model in re- sponse to the COVID-19 pandemic and part-time re- mote work arrangements are currently in place for our personnel. Remote work relies heavily on the use of remote networking and online conferencing ser- vices, which expose us to additional cybersecurity risks. For any of these reasons, we may experience system malfunctions or interruptions. Although our systems are diversified, including mul- tiple server locations, several layers of cybersecurity countermeasures and controls, a range of software applications for different regions and functions, and we periodically assess and implement actions to re- duce risks to our systems and disruptions to our information technology systems and business con- tinuity, a significant or large scale malfunction or interruption of our systems could adversely affect our ability to manage and keep our operations run- ning efficiently, and damage our reputation if we are unable to track transactions and deliver products to our dealers and clients. A malfunction that results in a wider or sustained disruption to our business could have a material adverse effect on our business, re- sults of operations and financial condition. In addition to supporting our operations, we use our systems to collect and store confidential and sensitive data, in- cluding information about our business, our clients and our employees. As our technology continues to evolve, we antic- ipate that we will collect and store even more data in the future, and that our systems will increasing- ly use remote communication features that are sensitive to both willful and unintentional security breaches. Much of our value is derived from our confidential business information, including car de- sign, proprietary technology and trade secrets, and to the extent the confidentiality of such information is compromised, we may lose our competitive ad- vantage and our car sales may suffer. We also col- lect, retain and use certain personal information, 33 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTincluding data we gather from clients for product development and marketing purposes, and data we obtain from employees. Therefore we are subject to a variety of ever-changing data protection and pri- vacy laws on a global basis, including the EU General Data Protection Regulation. We expect that future generations of cars will feature an increasing degree of connectivity for pur- poses of infotainment, safety and regulatory compli- ance, and the increased demand for a “connected car” has led to increased digitization of car systems, the wide application of software, and the creation of new, fully digital mobility services. This technology is capable of transmitting and storing an increasing amount of personal information belonging to our customers. These new features may increase the cyber security risk of our cars. Any unauthorized ac- cess to in-vehicle information technology systems may compromise the car security or the privacy of our customers’ information and expose us to claims as well as reputational damage. In addition, third par- ties with which we contract could also be subject to external cyber-attacks. Should the third party be con- nected to our system, the cyber attacker could poten- tially penetrate our information technology systems. Although we prioritize cybersecurity on all of our cars and when processing personal data, any signifi- cant compromise in the integrity of our data security could have a material adverse effect on our business. Cybersecurity is the object of increasing regu- latory updates and we will be required to keep our internal systems updated to comply with the new rules that may come into force. For instance, pursu- ant to the UN-ECE regulations, we will be required to maintain over time, and to periodically renew, the Cyber Security Management System (“CSMS”) to register and sell our cars, as well as to demonstrate that we are able to deal with, and aware of, potential cyber risks, both for our cars and for our enterprise. Failure to maintain the Cyber Security Management System Certification could result, for the countries where the regulations are applicable, in impossibility to homologate and sell new vehicles. OUR SUCCESS DEPENDS LARGELY ON THE ABILITY OF OUR CURRENT MANAGEMENT TEAM TO OPERATE AND MANAGE EFFECTIVELY. Our success depends on the ability of our senior executives and other members of management to effectively manage our business as a whole and in- dividual areas of the business. Most of our senior executives and employees, including many highly skilled engineers, technicians and artisans, are re- quired to work from our offices and production fa- cilities in and around Maranello, Italy. If we were to lose the services of any of these senior executives or key employees, this could have a material adverse effect on our business, operating results and finan- cial condition. We have developed incentive plans aimed at retaining and incentivizing our senior exec- utives and employees, as well as management suc- cession plans that we believe are appropriate in the circumstances, although it is difficult to predict with any certainty that we will replace these individuals with persons of equivalent experience and capabil- ities. If we are unable to find adequate replacements or to attract, retain and incentivize senior execu- tives, other key employees or new qualified person- nel, our business, results of operations and financial condition may suffer. WE RELY ON OUR DEALER NETWORK TO PROVIDE SALES AND SERVICES. We do not own our Ferrari dealers and virtually all of our sales are made through our network of deal- erships located throughout the world. If our dealers are unable to provide sales or service quality that our clients expect or do not otherwise adequately project the Ferrari image and its aura of luxury and exclusivity, the Ferrari brand may be negatively af- fected. We depend on the quality of our dealership network and our business, operating results and financial condition could be adversely affected if our dealers suffer financial difficulties or otherwise are unable to perform to our expectations. Further- more, we may experience disagreements or dis- putes in the course of our relationship with our deal- ers or upon termination which may lead to financial costs, disruptions and reputational harm. Our growth strategy also depends on our ability to attract quality new dealers to sell our products in new areas. We may face competition from other lux- ury performance car manufacturers in attracting quality new dealers, based on, among other things, dealer margin, incentives and the performance of other dealers in the region. If we are unable to at- tract new dealers in targeted growth areas, our prospects could be materially adversely affected. WE ARE EXPOSED TO RISKS IN CONNECTION WITH PRODUCT WARRANTIES AS WELL AS THE PROVISION OF SERVICES. A number of our contractual and legal requirements oblige us to provide extensive warranties to our cli- ents, dealers and national distributors. There is a risk that, relative to the guarantees and warranties grant- ed, the calculated product prices and the provisions for our guarantee and warranty risks have been set or will in the future be set too low. There is also a risk that we will be required to extend the guarantee or warranty originally granted in certain markets for legal reasons, or provide services as a courtesy or for reasons of reputation where we are not legally obliged to do so, and for which we will generally not be able to recover from suppliers or insurers. CAR RECALLS MAY BE COSTLY AND MAY HARM OUR REPUTATION. We have in the past and we may from time to time in the future be required to recall our products to 34 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Faddress performance, compliance or safety-re- lated issues. We may incur costs for these recalls, including replacement parts and labor to remove and replace the defective parts. In addition, regula- tory oversight of recalls, particularly in the vehicle safety, has increased recently. Any product recalls can harm our reputation with clients, particularly if consumers call into question the safety, reliability or performance of our cars. Any such recalls could harm our reputation and result in adverse publicity, lost revenue, delivery delays, product liability claims and other expenses, and could have a material ad- verse impact on our business, operating results and financial condition. WE MAY BECOME SUBJECT TO PRODUCT LIABILITY CLAIMS, WHICH COULD HARM OUR FINANCIAL CONDITION AND LIQUIDITY IF WE ARE NOT ABLE TO SUCCESSFULLY DEFEND OR INSURE AGAINST SUCH CLAIMS. We may become subject to product liability claims, which could harm our business, operating results and financial condition. The automobile industry ex- periences significant product liability claims and we have inherent risk of exposure to claims in the event our cars do not perform as expected or malfunction resulting in personal injury or death. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a prod- uct liability claim could generate substantial negative publicity about our cars and business, adversely af- fecting our reputation and inhibiting or preventing commercialization of future cars, which could have a material adverse effect on our brand, business, operating results and financial condition. While we seek to insure against product liability risks, insur- ance may be insufficient to protect against any mon- etary claims we may face and will not mitigate any reputational harm. Any lawsuit seeking significant monetary damages may have a material adverse ef- fect on our reputation, business and financial condi- tion. We may not be able to secure additional product liability insurance coverage on commercially accept- able terms or at reasonable costs when needed, par- ticularly if we face liability for our products and are forced to make a claim under such a policy. OUR REVENUES FROM FORMULA 1 ACTIVITIES MAY DECLINE AND OUR RELATED EXPENSES MAY GROW. Revenues from our Formula 1 activities depend principally on the income from our sponsorship agreements and on our share of Formula 1 reve- nues from broadcasting and other sources. See “Overview of Our Business—Racing—Formula 1”. If we are unable to renew our existing sponsorship agreements or if we enter into new or renewed sponsorship agreements with less favorable terms, our revenues would decline. In addition, our share of profits related to Formula 1 activities may decline if either our team’s performance worsens compared to other competing teams, or if the overall Formula 1 business suffers, including potentially as a result of increasing popularity of other racing events. Fur- thermore, in order to compete effectively on track we have been investing significant resources in re- search and development and to competitively com- pensate the best available drivers and other racing team members. These expenses also vary based on changes in Formula 1 regulations that require modification to our racing engines and cars. These expenses are expected to continue, and may grow further, including as a result of any changes in For- mula 1 regulations, which would negatively affect our results of operations. Compliance with the FIA Formula One regula- tions, which are periodically amended by the For- mula One Commission and then approved by the FIA World Motorsport Council, requires significant changes to our racing cars, processes and opera- tions. If we are unable to effectively adapt our cars to comply with changes in FIA Formula One regula- tions, our performance in races may suffer. These changes may result in adverse effects on our reve- nues and results of operations. Starting from 2021, new FIA Formula One fi- nancial regulations have been introduced. These provide for a cap on spending for all chassis costs and expenses (excluding, among others, the activi- ties to enable the supply of the current power units, marketing costs, drivers’ salaries and the top three personnel at each team) and a similar cap was intro- duced also for the development of the power units that will be used in the 2026 season and is applicable for spending starting in 2023. The budget cap for the 2023 Formula 1 season was €140 million in relation to the development and manufacturing of the rac- ing car chassis and $90 million relating to the power units that will be used in the 2026 season. The afore- mentioned budget caps on spending are defined for each season based on several factors, including the number of races and inflation. The budget cap for the 2024 season is currently in the process of being defined but is expected to be higher than in 2023. The cap on expenses affects the amount of resourc- es that we are allowed to allocate to Formula 1 ac- tivities, with potential adverse effects on our team’s performance if we are not able to optimize such resources. Because Formula 1 is key to our brand marketing, the FIA spending cap may also adversely affect our ability to support our brand through re- newed racing success. WE RELY ON OUR LICENSING AND FRANCHISING PARTNERS TO PRESERVE THE VALUE OF OUR LICENSES AND THE FAILURE TO MAINTAIN SUCH PARTNERS COULD HARM OUR BUSINESS. We currently have multi-year agreements with li- censing partners for various Ferrari-branded prod- ucts in the sports, lifestyle and luxury retail seg- ments. We also have multi-year agreements with franchising partners for our Ferrari stores and 35 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTtheme park. In the future, we may enter into addition- al licensing or franchising arrangements. Many of the risks associated with our own products, includ- ing risks relating to the image of the Ferrari brand and its aura of exclusivity, as well as to the demand for luxury goods, also apply to our licensed products and franchised stores. In addition, there are prob- lems that our licensing or franchising partners may experience, including risks associated with each li- censing partner’s ability to obtain capital, manage its labor relations, maintain relationships with its sup- pliers, manage its credit and bankruptcy risks, and maintain client relationships. While we maintain sig- nificant control over the products produced for us by our licensing partners and the franchisees run- ning our Ferrari stores and theme parks, any of the foregoing risks, or the inability of any of our licensing or franchising partners to execute on the expected design and quality of the licensed products, Ferrari stores and theme park, or otherwise exercise oper- ational and financial control over its business, may result in loss of revenue and competitive harm to our operations in the product categories where we have entered into such licensing or franchising ar- rangements. While we select our licensing and fran- chising partners with care, any negative publicity surrounding such partners could have a negative effect on licensed products, the Ferrari stores and theme parks or the Ferrari brand. Further, while we believe that we could replace our existing licens- ing or franchising partners if required, our inability to do so for any period of time could materially ad- versely affect our revenues and harm our business. In connection with our new lifestyle strategy, we continue to streamline our existing arrangements with licensing partners. This may adversely affect our results from brand activities, particularly in the short to medium term while our broader lifestyle strategy is carried out. WE DEPEND ON THE STRENGTH OF OUR TRADEMARKS AND OTHER INTELLECTUAL PROPERTY RIGHTS. Given the importance of our brand’s recognition on our financial performance and strategy, we believe that our trademarks and other intellectual property rights are fundamental to our success and market position. Therefore, our business depends on our ability to protect and promote our trademarks and other intellectual property rights. Accordingly, we devote substantial efforts to the establishment and protection of our trademarks and other intellectual property rights such as registered designs and pat- ents on a worldwide basis. We believe that our trade- marks and other intellectual property rights are adequately supported by applications for registra- tions, existing registrations and other legal protec- tions in our principal markets. However, we cannot exclude the possibility that our intellectual property rights may be challenged by others, or that we may be unable to register our trademarks or otherwise adequately protect them in some jurisdictions, espe- cially in those foreign countries that do not respect and protect intellectual property rights to the same extent as do the United States, Japan and European countries. If a third party were to register our trade- marks, or similar trademarks, in a country where we have not successfully registered such trademarks, it could create a barrier to our commencing trade under those marks in that country. WE MAY FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL AND INDUSTRIAL PROPERTY RIGHTS AGAINST INFRINGEMENT OR MISAPPROPRIATION BY THIRD PARTIES. Our success and competitive positioning depend on, among other factors, our registered intellectual property rights, as well as other industrial or intel- lectual property rights, including confidential know- how, trade secrets, database rights and copyrights. To protect our intellectual property, we rely on intel- lectual property laws, agreements for the protec- tion of trade secrets, confidentiality and non-dis- closure agreements, and other contractual means. Such measures, however, may be inadequate and our intellectual property rights may be infringed or challenged by third parties, and our confidential know-how or trade secrets could be misappropri- ated or disclosed to the public without our consent. Consultants, vendors and current and former em- ployees, for example, could violate their confidenti- ality obligations and restrictions on the use of Fer- rari’s intellectual property. Ferrari may not be able to prevent such infringements, misappropriations or disclosures, with potential adverse effects on our brand, reputation and business. In particular, our components may be subject to product piracy, where our components are counterfeited, which may result in reputational risk for Ferrari. The risks described above arise particularly in our Brand ac- tivities (see “Overview of Our Business—Lifestyle”). If we fail to adequately protect our intellectual property rights, this may adversely affect our re- sults of operations and financial condition, as other manufacturers may be able to manufacture simi- lar products at lower cost, with adverse effects on our competitive position. In addition, counterfeited products, or products illegally branded as “Ferrari”, may damage our brand. In addition, we may incur high costs in reacting to infringements or misappro- priations of our intellectual property rights. THIRD PARTIES MAY CLAIM THAT WE INFRINGE THEIR INTELLECTUAL PROPERTY RIGHTS. We believe that we hold all the rights required for our business operations (including intellectual property rights and third-party licenses). However, we are ex- posed to potential claims from third parties alleging that we infringe their intellectual property rights, since many competitors and suppliers also submit patent applications for their inventions and secure 36 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fpatent protection or other intellectual property rights. If we are unsuccessful in defending against any such claim, we may be required to pay damag- es or comply with injunctions which may disrupt our operations. We may also as a result be forced to en- ter into royalty or licensing agreements on unfavor- able terms or to redesign products to comply with third parties’ intellectual property rights. WE FACE RISKS ASSOCIATED WITH OUR INTERNATIONAL OPERATIONS, INCLUDING UNFAVORABLE REGULATORY, POLITICAL, TAX AND LABOR CONDITIONS AND ESTABLISHING OURSELVES IN NEW MARKETS, ALL OF WHICH COULD HARM OUR BUSINESS. We currently have international operations and subsidiaries in various countries and jurisdictions in Europe, North America and Asia that are subject to the legal, political, regulatory, tax and social re- quirements and economic conditions in these juris- dictions. Additionally, as part of our growth strategy, we will continue to expand our sales, maintenance, and repair services internationally. However, such expansion requires us to make significant expendi- tures, including the establishment of local operat- ing entities, hiring of local employees and establish- ing facilities in advance of generating any revenue. We are subject to a number of risks associated with international business activities that may increase our costs, impact our ability to sell our cars and require significant management attention. These risks include: • conforming our cars to various international regulatory and safety requirements where our cars are sold, or homologated; foreign operations; • difficulty in establishing, staffing and managing • difficulties attracting clients in new jurisdictions; • foreign government taxes, regulations and per- mit requirements, including foreign taxes that we may not be able to offset against taxes im- posed upon us in Italy; • fluctuations in foreign currency exchange rates and interest rates, including risks related to any interest rate swap or other hedging activities we undertake; • our ability to enforce our contractual and intel- lectual property rights, especially in those for- eign countries that do not respect and protect intellectual property rights to the same extent as do the United States, Japan and European coun- tries, which increases the risk of unauthorized, and uncompensated, use of our technology; • European Union and foreign government trade restrictions, customs regulations, tariffs and price or exchange controls; • foreign labor laws, regulations and restrictions; • preferences of foreign nations for domestically • changes in diplomatic and trade relationships; produced cars; 37 • political instability, natural disasters, pandemics or other widespread public health crises, war or events of terrorism; and • the strength of international economies. If we fail to successfully address these risks, many of which we cannot control, our business, operat- ing results and financial condition could be materi- ally harmed. DEVELOPMENTS IN GROWTH MARKETS MAY ADVERSELY AFFECT OUR BUSINESS. We operate in a number of growth markets, both di- rectly and through our dealers, and our exposure to those markets may increase as we may pursue ex- panded sales in those regions. We believe we have potential for further success in these markets, in particular in Asia, recognizing the increasing per- sonal wealth of consumers. While demand in these markets has increased in recent years due to sus- tained economic growth and growth in personal income and wealth, we are unable to foresee the extent to which economic growth will be sustained. For example, rising geopolitical and social tensions, pandemics or similar public health crises, or slow- downs in the rate of growth in these markets could limit the opportunity for us to increase unit sales and revenues in those regions in the near term. Furthermore, in certain markets in which we or our dealers operate, required government approvals may limit our ability to act quickly in making decisions on our operations in those markets. Other govern- ment actions may also impact the market for luxury goods in these markets, such as tax changes or the active discouragement of luxury purchases. Consum- er spending habits in these markets may also change due to other factors that are outside of our control. For instance, since August 2021 the President of the People’s Republic of China has repeatedly signaled the government’s intention to regulate the spending patterns of individuals and families with ultra-high incomes. Resulting regulatory action or similar state- ments by governmental authorities may affect the so- cial acceptability of spending on luxury goods. Maintaining and strengthening our position in these growth markets is a component of our glob- al growth strategy. However, initiatives from sev- eral global luxury automotive manufacturers have increased competitive pressures for luxury cars in several growth markets. As these markets continue to grow, we anticipate that additional competitors, both international and domestic, will seek to enter these markets and that existing market participants will try to aggressively protect or increase their market share. Increased competition may result in pricing pressures, reduced margins and our inabil- ity to gain or hold market share, which could have a material adverse effect on our results of operations and financial condition. See also “Global economic conditions, pandemics and macro events may ad- versely affect us”. FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTLABOR LAWS AND COLLECTIVE BARGAINING AGREEMENTS WITH OUR LABOR UNIONS COULD IMPACT OUR ABILITY TO OPERATE EFFICIENTLY. The majority of our employees are represented by trade unions, are covered by collective bargaining agreements and/or are protected by applicable la- bor relations regulations that may restrict our abil- ity to modify operations and reduce costs quickly in response to changes in market conditions. These regulations and the provisions in our collective bar- gaining agreements may impede our ability to or- ganize our business successfully to compete more efficiently and effectively, which could have a mate- rial adverse effect on our results of operations and financial condition. IMPROPER CONDUCT OF EMPLOYEES, AGENTS, OR OTHER REPRESENTATIVES COULD ADVERSELY AFFECT OUR REPUTATION AND OUR BUSINESS, OPERATING RESULTS, AND FINANCIAL CONDITION. Our compliance controls, policies, and procedures may not in every instance protect us from acts com- mitted by our employees, agents, contractors, or collaborators that would violate the laws or regula- tions of the jurisdictions in which we operate, includ- ing employment, foreign corrupt practices, environ- mental, competition, and other laws and regulations. Such improper actions could subject us to civil or criminal investigations, and monetary and injunctive penalties. In particular, our business activities may be subject to anti-corruption laws, regulations or rules of other countries in which we operate. If we fail to comply with any of these regulations, it could adversely impact our operating results and our fi- nancial condition. In addition, actual or alleged viola- tions could damage our reputation and our ability to conduct business. Furthermore, detecting, investi- gating, and resolving any actual or alleged violation is expensive and can consume significant time and attention of our executive management. CHANGES IN TAX, TARIFF OR FISCAL POLICIES COULD ADVERSELY AFFECT DEMAND FOR OUR PRODUCTS. Imposition of any additional taxes and levies de- signed to limit the use of automobiles could adverse- ly affect the demand for our vehicles and our results of operations. Changes in corporate and other tax- ation policies, including those relating to the Patent Box tax regime in Italy, as well as changes in export and other incentives given by various governments, or import or tariff policies, could also adversely af- fect our results of operations. See also “We currently benefit or seek to benefit from certain special tax re- gimes, which may not be available in the future”. The impact of any such tariffs on our operations and re- sults is uncertain and could be significant, and we can provide no assurance that any strategies we implement to mitigate the impact of such tariffs or other trade actions will be successful. While we are managing our product development and production operations on a global basis to reduce costs and lead times, unique national or regional standards can re- sult in additional costs for product development, testing and manufacturing. Governments often require the implementation of new requirements during the middle of a product cycle, which can be substantially more expensive than accommodating these requirements during the design phase of a new product. The imposition of any additional taxes and levies or change in government policy designed to limit the use of high performance sports cars or automobiles more generally, or any decisions by policymakers to implement taxes on luxury automo- biles, could also adversely affect the demand for our cars. The occurrence of the above may have a mate- rial adverse effect on our business, results of opera- tions and financial condition. IF WE WERE TO LOSE OUR AUTHORIZED ECONOMIC OPERATOR CERTIFICATE, WE MAY BE REQUIRED TO MODIFY OUR CURRENT BUSINESS PRACTICES AND TO INCUR INCREASED COSTS, AS WELL AS EXPERIENCE SHIPMENT DELAYS. Because we ship and sell our cars in numerous coun- tries, the customs regulations of various jurisdic- tions are important to our business and operations. To expedite customs procedure, we obtained the European Union’s Authorized Economic Operator (“AEO”) certificate. The AEO certificate is granted to operators that meet certain requirements regard- ing supply chain security and the safety and com- pliance with law of the operator’s customs controls and procedures. Operators are audited periodically for continued compliance with the requirements. The AEO certificate allows us to benefit from special expedited customs treatment, which significantly facilitates the shipment of our cars in the various markets where we operate. If we were to lose the AEO status, including for failure to meet one of the certification’s requirements, we would be required to change our business practices and to adopt stan- dard customs procedures for the shipment of our cars. This could result in increased costs and ship- ment delays, which, in turn, could negatively affect our results of operations. OUR DEBT COULD ADVERSELY AFFECT OUR OPERATIONS AND WE MAY FACE DIFFICULTIES IN SERVICING OR REFINANCING OUR DEBT. As of December 31, 2023, our debt was €2,477 million (which includes our financial services). See “Financial Overview—Non-GAAP Financial Measures—Net Debt and Net Industrial Debt” for additional information. Our current and long-term debt, of which 58 per- cent and 42 percent bore floating rates of interest at December 31, 2023 and 2022, respectively, requires us to dedicate a portion of our cash flow to service interest and principal payments and, if interest rates 38 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Frise, this amount may increase. In addition, our exist- ing debt may limit our ability to raise further capital or incur additional indebtedness to execute our growth strategy or otherwise may place us at a competitive disadvantage relative to competitors that have less debt. To the extent we become more leveraged, the risks described above would increase. We may also have difficulty refinancing our existing debt or in- curring new debt on terms that we would consider to be commercially reasonable, if at all. WE ARE SUBJECT TO RISKS ASSOCIATED WITH EXCHANGE RATE FLUCTUATIONS, INTEREST RATE CHANGES, CREDIT RISK AND OTHER MARKET RISKS. We operate in numerous markets worldwide and are exposed to market risks stemming from fluctu- ations in currency and interest rates. In particular, changes in exchange rates between the Euro and the main foreign currencies in which we operate affect our revenues and results of operations. The exposure to currency risk is mainly linked to the dif- ferences in geographic distribution of our sourcing and manufacturing activities from those in our com- mercial activities, as a result of which our cash flows from sales are denominated in currencies different from those connected to purchases or production activities. For example, we incur a large portion of our capital and operating expenses in Euro while we receive the majority of our revenues in curren- cies other than Euro. In addition, foreign exchange movements might also negatively affect the relative purchasing power of our clients which could also have an adverse effect on our results of operations. In 2023, the U.S. Dollar depreciated against the Euro (going from 1.0666 U.S. Dollars for 1 Euro at Decem- ber 31, 2022 to 1.1050 at December 31, 2023), the Pound Sterling recovered while the Japanese Yen continued to depreciate against the Euro over the course of the year. To date in early 2024 the Euro has not experienced any significant appreciation or de- preciation versus the currencies to which Ferrari is exposed, with the exception of the Japanese Yen, which has continued to depreciate against the Euro. If the U.S. Dollar or some other currencies were to depreciate against the Euro, we expect that it would adversely impact our revenues and results of opera- tions. The extent of adverse impacts from exchange rate fluctuations could increase if the portion of our business in countries outside of Eurozone increas- es. See “Financial Overview—Trends, Uncertainties and Opportunities”. We seek to manage risks associated with fluc- tuations in currency through financial hedging in- struments. Although we seek to manage our foreign currency risk in order to minimize any negative ef- fects caused by rate fluctuations, including through hedging activities, there can be no assurance that we will be able to do so successfully, and our busi- ness, results of operations and financial condition could nevertheless be adversely affected by fluc- tuations in market rates, particularly if these condi- tions persist. Moreover, the valuation of hedging in- struments is influenced by the market dynamics of several financial factors, such as exchange rates, in- terest rates and implied volatility, that can negatively impact our cost of hedging and the valuation of our outstanding hedging transactions at fair value. Additionally, changes in interest rates impact the interest costs we incur on our debt. See also “Our debt could adversely affect our operations and we may face difficulties in servicing or refinancing our debt” and “Car sales depend in part on the availability of affordable financing”. Our financial services activities are also subject to the risk of insolvency of dealers and retail clients, as well as unfavorable economic conditions in mar- kets where these activities are carried out. Despite our efforts to mitigate such risks through the cred- it approval policies applied to dealers and retail cli- ents, there can be no assurances that we will be able to successfully mitigate such risks, particularly with respect to a general change in economic conditions. CAR SALES DEPEND IN PART ON THE AVAILABILITY OF AFFORDABLE FINANCING. In certain regions, financing for new car sales has been available at relatively low interest rates for several years due to, among other things, expan- sive government monetary policies. To the extent that interest rates may rise generally based on gov- ernmental monetary policies or actions of central banks, market rates for new car financing are ex- pected to rise as well, which may make our cars less affordable to clients or cause consumers to pur- chase less expensive cars, adversely affecting our results of operations and financial condition. Econ- omies around the world have recently experienced inflation significant measures in the United States, Europe and the Unit- ed Kingdom reaching levels not recorded for sever- al decades. In response, monetary authorities have taken anti-inflationary measures including rapid in- creases in interest rates which are gradually trans- ferring to market credit rates. If consumer interest rates increase substantially or if financial service providers tighten lending standards or restrict their lending to certain classes of credit, our clients may choose not to, or may not be able to, obtain financing to purchase our cars. inflationary pressures, with WE MAY NOT BE ABLE TO PROVIDE ADEQUATE ACCESS TO FINANCING FOR OUR DEALERS AND CLIENTS, AND OUR FINANCIAL SERVICES OPERATIONS MAY BE DISRUPTED. Our dealers enter into wholesale financing arrange- ments to purchase cars from us to hold in invento- ry or to use in showrooms and facilitate retail sales, and retail clients use a variety of finance and lease programs to acquire cars. In most markets, we rely either on controlled or associated finance companies or on commercial 39 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTrelationships with third parties, including third par- ty financial institutions, to provide financing to our dealers and retail clients. Finance companies are subject to various risks that could negatively affect their ability to provide financing services at compet- itive rates, including: • the performance of loans and leases in their portfolio, which could be materially affected by delinquencies or defaults; • higher than expected car return rates and the residual value performance of cars they lease; and • fluctuations in interest rates and currency ex- change rates. Furthermore, to help fund our retail and wholesale fi- nancing business, our financial services companies in the United States also access forms of funding available from the banking system in each market, including sales or securitization of receivables either in negotiated sales or through asset-backed financ- ing programs. At December 31, 2023, an amount of $1,289 million was outstanding under revolving securitizations carried out by Ferrari Financial Ser- vices Inc. See “Financial Overview—Non-GAAP Finan- cial Measures—Net Debt and Net Industrial Debt” for additional information.  Should we lose the ability to access the securitization market at advantageous terms or at all, the funding of our controlled or asso- ciated finance companies would become more dif- ficult and expensive and our financial condition may therefore be adversely affected. Any financial services provider, including our controlled finance companies, will face other de- mands on its capital, as well as liquidity issues relat- ing to other investments or to developments in the credit markets. Furthermore, they may be subject to regulatory changes that may increase their costs, which may impair their ability to provide competi- tive financing products to our dealers and retail cli- ents. To the extent that a financial services provider is unable or unwilling to provide sufficient financing at competitive rates to our dealers and retail clients, such dealers and retail clients may not have suffi- cient access to financing to purchase or lease our cars. As a result, our car sales and market share may suffer, which would adversely affect our results of operations and financial condition. Our dealer and retail customer financing in Eu- rope are mainly provided through Ferrari Financial Services GmbH, our partnership with CA Auto Bank S.p.A. (“CA Auto Bank”), which is a fully owned sub- sidiary of Crédit Agricole Consumer Finance S.A. (“CACF”) and was formerly FCA Bank S.p.A. (“FCA Bank”) and a joint venture between CACF and FCA Italy S.p.A. (a subsidiary of Stellantis N.V. (hereinaf- ter also “Stellantis” and together with its subsidiar- ies, the “Stellantis Group”)). If we fail to maintain our partnership with CA Auto Bank, we may not be able to find a suitable alternative partner with similar resources and experience and continue to offer fi- nancing services to support the sales of Ferrari cars in key European markets, which could adversely af- fect our results of operations and financial condi- tion. Following the change of control that lead to the creation of CA Auto Bank through CACF’s acquisition of the 50 percent ownership interest in the former FCA Bank previously owned by the Stellantis Group, Ferrari and CA Auto Bank are currently discussing future developments in relation to their partnership. OUR INSURANCE COVERAGE MAY NOT BE ADEQUATE TO PROTECT US AGAINST ALL POTENTIAL LOSSES TO WHICH WE MAY BE SUBJECT, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS. We maintain insurance coverage that we believe is adequate to cover normal risks associated with the operation of our business. However, there can be no assurance that any claim under our insurance pol- icies will be honored fully or timely, our insurance coverage will be sufficient in any respect or our insurance premiums will not increase substantial- ly. Accordingly, to the extent that we suffer loss or damage that is not covered by insurance or which exceeds our insurance coverage, or have to pay higher insurance premiums, our financial condition may be affected. RISKS RELATED TO OUR COMMON SHARES THE MARKET PRICE AND TRADING VOLUME OF OUR COMMON SHARES MAY BE VOLATILE, WHICH COULD RESULT IN RAPID AND SUBSTANTIAL LOSSES FOR OUR SHAREHOLDERS. The market price of our common shares may be highly volatile and could be subject to wide fluctu- ations. In addition, the trading volume of our com- mon shares may fluctuate and cause significant price variations to occur. If the market price of our common shares declines significantly, a sharehold- er may be unable to sell their common shares at or above their purchase price, if at all. The market price of our common shares may fluctuate or decline significantly in the future. Some of the factors that could negatively affect the price of our common shares, or result in fluctuations in the price or trad- ing volume of our common shares, include: • variations in our operating results, or failure to • publication of research reports about us, the au- meet the market’s earnings expectations; tomotive industry or the luxury industry, or the failure of securities analysts to cover our com- mon shares; • departures of any members of our management team or additions or departures of other key personnel; • adverse market reaction to any indebtedness we • actions by shareholders; may incur or securities we may issue in the future; 40 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F• changes in market valuations of similar companies; • changes or proposed changes in laws or regula- tions, or differing interpretations thereof, affect- ing our business, or enforcement of these laws and regulations, or announcements relating to these matters; • adverse publicity about the automotive industry or the luxury industry generally, or particularly scandals relating to those industries, specifically; • litigation and governmental investigations; and • general market and economic conditions. THE LOYALTY VOTING PROGRAM MAY AFFECT THE LIQUIDITY OF OUR COMMON SHARES AND REDUCE OUR COMMON SHARE PRICE.  The implementation of our loyalty voting program could reduce the trading liquidity and adversely affect the trading prices of our common shares. The loyalty voting program is intended to reward our shareholders for maintaining long-term share ownership by granting initial shareholders and per- sons holding our common shares continuously for at least three years the option to elect to receive special voting shares. Special voting shares can- not be traded and, if common shares participating in the loyalty voting program are sold they must be deregistered from the loyalty register and any cor- responding special voting shares transferred to us for no consideration (om niet). This loyalty voting program is designed to encourage a stable share- holder base and, conversely, it may deter trading by shareholders that may be interested in participating in our loyalty voting program. Therefore, the loyalty voting program may reduce liquidity in our common shares and adversely affect their trading price. THE INTERESTS OF OUR LARGEST SHAREHOLDERS MAY DIFFER FROM THE INTERESTS OF OTHER SHAREHOLDERS. Exor N.V. (“Exor”) is our largest shareholder, hold- ing approximately 24.65 percent of our outstanding common shares and approximately 36.48 percent of our voting power (as of February 9, 2024). There- fore, Exor has a significant influence over matters submitted to a vote of our shareholders, including matters such as adoption of the annual financial statements, declarations of annual dividends, the election and removal of the members of our board of directors (the “Board of Directors”), capital in- creases and amendments to our articles of associ- ation. In addition, as of February 9, 2024, Trust Piero Ferrari, a Jersey trust established by Piero Ferrari, the Vice Chairman of Ferrari, holds approximately 10.48 percent of our outstanding common shares. Piero Ferrari holds the usufruct over such shares in- cluding the right to exercise the voting rights of such shares, corresponding to approximately 15.51 per- cent of voting interest in us (as of February 9, 2024). The percentages of ownership and voting power above are calculated based on the number of out- 41 standing shares net of treasury shares. As a result, Piero Ferrari also has influence in matters submitted to a vote of our shareholders. Exor and Piero Ferrari informed us that they have entered into a sharehold- er agreement, recently amended to reflect adher- ence by Trust Piero Ferrari, pursuant to which they have undertaken to consult for the purpose of form- ing, where possible, a common view on the items on the agenda of shareholders meetings. See “Major Shareholders—Shareholders’ Agreement”. The inter- ests of Exor and Piero Ferrari may in certain cases differ from those of other shareholders. In addi- tion, the sale of substantial amounts of our common shares in the public market by Trust Piero Ferrari or the perception that such a sale could occur could adversely affect the prevailing market price of the common shares. WE MAY HAVE POTENTIAL CONFLICTS OF INTEREST WITH STELLANTIS AND EXOR AND ITS RELATED COMPANIES. Questions relating to conflicts of interest may arise between us and Fiat Chrysler Automobiles N.V., our former largest shareholder, renamed Stellantis N.V., in a number of areas relating to common share- holdings and management, as well as our past and ongoing relationships. There are certain overlaps among the directors and officers of us and Stel- lantis. For example, Mr. John Elkann, our Executive Chairman, is the Chairman and an executive direc- tor of Stellantis and Chairman and Chief Executive Officer of Exor. Certain of our other directors and officers may also be directors or officers of Stellan- tis or Exor, our and Stellantis’s largest shareholder. These individuals owe duties both to us and to the other companies that they serve as officers and/or directors, which may create conflicts as, for exam- ple, these individuals review opportunities that may be appropriate or suitable for both us and such oth- er companies, or we pursue business transactions in which both we and such other companies have an interest. Exor holds approximately 24.65 percent of our outstanding common shares and approximately 36.48 percent of the voting power in us (as of Febru- ary 9, 2024), while it holds approximately 14.90 per- cent of the outstanding common shares in Stellantis (based on SEC filings). The percentages of owner- ship and voting power above are calculated based on the number of outstanding shares net of trea- sury shares. Exor also owns a controlling interest in CNH Industrial N.V. and Iveco Group N.V., which were part of the former Fiat Group before being spun-off several years ago. These ownership interests could create actual, perceived or potential conflicts of interest when these parties or our common direc- tors and officers are faced with decisions that could have different implications for us and Stellantis or Exor, as applicable. FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTOUR LOYALTY VOTING PROGRAM MAY MAKE IT MORE DIFFICULT FOR SHAREHOLDERS TO ACQUIRE A CONTROLLING INTEREST IN FERRARI, CHANGE OUR MANAGEMENT OR STRATEGY OR OTHERWISE EXERCISE INFLUENCE OVER US, WHICH MAY AFFECT THE MARKET PRICE OF OUR COMMON SHARES. The provisions of our articles of association which establish the loyalty voting program may make it more difficult for a third party to acquire, or attempt to acquire, control of our company, even if a change of control were considered favorably by sharehold- ers holding a majority of our common shares. As a result of the loyalty voting program, a relatively large proportion of the voting power of Ferrari could be concentrated in a relatively small number of share- holders who would have significant influence over us. As of February 9, 2024, Exor had approximately 24.65 percent of our outstanding common shares and a voting interest in Ferrari of approximately 36.48 percent. As of February 9, 2024, Trust Piero Ferrari, a Jersey trust established by Piero Ferrari held voting rights relating to approximately 10.48 percent of our outstanding common shares. Piero Ferrari holds the usufruct over such shares including the right to ex- ercise the voting rights of such shares, correspond- ing to, as a result of the loyalty voting mechanism, approximately 15.51 percent of the voting power in our shares. The percentages of ownership and vot- ing power above are calculated based on the number of outstanding shares net of treasury shares. In ad- dition, Exor and Piero Ferrari informed us that they have entered into a shareholder agreement, recently amended to reflect adherence by Trust Piero Ferrari, summarized under “Major Shareholders—Sharehold- ers’ Agreement”. As a result, Exor and Piero Ferrari may exercise significant influence on matters in- volving our shareholders. Exor and Piero Ferrari and other shareholders participating in the loyalty voting program may have the power effectively to prevent or delay change of control or other transactions that may otherwise benefit our shareholders. The loyal- ty voting program may also prevent or discourage shareholder initiatives aimed at changing Ferrari’s management or strategy or otherwise exerting influ- ence over Ferrari. See “Corporate Governance—Loy- alty Voting Program”. WE ARE A DUTCH PUBLIC COMPANY WITH LIMITED LIABILITY, AND OUR SHAREHOLDERS MAY HAVE RIGHTS DIFFERENT TO THOSE OF SHAREHOLDERS OF COMPANIES ORGANIZED IN THE UNITED STATES. The rights of our shareholders may be different from the rights of shareholders governed by the laws of U.S. jurisdictions. We are a Dutch public com- pany with limited liability (naamloze vennootschap). Our corporate affairs are governed by our articles of association and by the laws governing companies incorporated in the Netherlands. The rights of our shareholders and the responsibilities of members of our Board of Directors may be different from the rights of shareholders and the responsibilities of members of board of directors in companies governed by the laws of other jurisdictions includ- ing the United States. In the performance of its du- ties, our Board of Directors is required by Dutch law to consider our interests and the interests of our shareholders, our employees and other stakehold- ers, in all cases with due observation of the princi- ples of reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, your interests as a shareholder. WE EXPECT TO MAINTAIN OUR STATUS AS A “FOREIGN PRIVATE ISSUER” UNDER THE RULES AND REGULATIONS OF THE SEC AND, THUS, ARE EXEMPT FROM A NUMBER OF RULES UNDER THE EXCHANGE ACT OF 1934 AND ARE PERMITTED TO FILE LESS INFORMATION WITH THE SEC THAN A COMPANY INCORPORATED IN THE UNITED STATES. As a “foreign private issuer,” we are exempt from rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that impose certain disclosure and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, our officers, Directors and principal share- holders are exempt from the reporting and “short- swing” profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of our common shares. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. com- panies whose securities are registered under the Exchange Act, nor are we required to comply with Regulation FD, which restricts the selective disclo- sure of material information. Accordingly, there may be less publicly available information concerning us than there is for U.S. public companies. OUR ABILITY TO PAY DIVIDENDS ON OUR COMMON SHARES MAY BE LIMITED AND THE LEVEL OF FUTURE DIVIDENDS IS SUBJECT TO CHANGE. Our payment of dividends on our common shares in the future will be subject to business conditions, financial conditions, earnings, cash balances, com- mitments, strategic plans and other factors that our Board of Directors may deem relevant at the time it recommends approval of the dividend. Our dividend policy is subject to change in the future based on changes in statutory requirements, market trends, strategic developments, capital requirements and a number of other factors. In addition, under our arti- cles of association and Dutch law, dividends may be declared on our common shares only if the amount of equity exceeds the paid up and called up capital plus the reserves that have to be maintained pursu- ant to Dutch law or the articles of association. Fur- ther, even if we are permitted under our articles 42 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fof association and Dutch law to pay cash dividends on our common shares, we may not have suffi- cient cash to pay dividends in cash on our common shares. We are a holding company and our opera- tions are conducted through our subsidiaries. As a result, our ability to pay dividends primarily depends on the ability of our subsidiaries, particularly Ferrari S.p.A., to generate earnings and to provide us with the necessary financial resources. OUR MAINTENANCE OF TWO EXCHANGE LISTINGS MAY ADVERSELY AFFECT LIQUIDITY IN THE MARKET FOR OUR COMMON SHARES AND COULD RESULT IN PRICING DIFFERENTIALS OF OUR COMMON SHARES BETWEEN THE TWO EXCHANGES. Our shares are listed on both the New York Stock Ex- change (“NYSE”) and the Euronext Milan. The dual list- ing of our common shares may split trading between the NYSE and the Euronext Milan, adversely affect the liquidity of the shares and the development of an active trading market for our common shares in one or both markets and may result in price differentials between the exchanges. Differences in the trading schedules, as well as volatility in the exchange rate of the two trading currencies, among other factors, may result in different trading prices for our com- mon shares on the two exchanges. IT MAY BE DIFFICULT TO ENFORCE U.S. JUDGMENTS AGAINST US. We are organized under the laws of the Netherlands, and a substantial portion of our assets are outside of the United States. Most of our Directors and senior management and our independent registered pub- lic accounting firm are resident outside the United States, and all or a substantial portion of their re- spective assets may be located outside the United States. As a result, it may be difficult for U.S. inves- tors to effect service of process within the United States upon these persons. It may also be difficult for U.S. investors to enforce within the United States judgments against us predicated upon the civil lia- bility provisions of the securities laws of the United States or any state thereof. In addition, there is un- certainty as to whether the courts outside the Unit- ed States would recognize or enforce judgments of U.S. courts obtained against us or our Directors and officers predicated upon the civil liability provi- sions of the securities laws of the United States or any state thereof. Therefore, it may be difficult to en- force U.S. judgments against us, our Directors and officers and our independent registered public ac- counting firm. RISKS RELATED TO TAXATION CHANGES TO TAXATION OR THE INTERPRETATION OR APPLICATION OF TAX LAWS COULD HAVE AN ADVERSE IMPACT ON OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION. Our business is subject to various taxes in different jurisdictions (mainly Italy), which include, among oth- ers, the Italian corporate income tax (“IRES”), region- al trade tax (“IRAP”), value added tax (“VAT”), excise duty, registration tax and other indirect taxes. We are exposed to the risk that our overall tax burden may increase in the future. Changes in tax laws or regulations or in the posi- tion of the relevant Italian and non-Italian authorities regarding the application, administration or inter- pretation of these laws or regulations, particularly if applied retrospectively, could have negative effects on our current business model and have a materi- al adverse effect on our business, operating results and financial condition. In order to reduce future potential disputes with tax authorities, in June 2023 we entered into an advance pricing agreement (APA) with the tax authorities for transfer pricing on intercompany transactions between Ferrari S.p.A. and its foreign subsidiaries. The APA covers the next 5 fiscal years and may be renewed for an additional period with the consent of both parties. We were admitted to the Cooperative Compli- ance Regime in Italy by the Italian Revenue Agency, which provides for constant and preventive discus- sions between the taxpayer and the Italian tax au- thorities on the most significant transactions. This admission is effective as of 2022 (the year in which the application was filed), and was preceded by the adoption and validation by Italian tax authorities of an internal tax risk control system, referred to as the Tax Control Framework (TCF). In addition, tax laws are complex and subject to subjective valuations and interpretive decisions, and we will periodically be subject to tax audits aimed at assessing our compliance with direct and indirect taxes. The tax authorities may not agree with our in- terpretations of, or the positions we have taken or intend to take on, tax laws applicable to our ordinary activities and extraordinary transactions. In case of challenges by the tax authorities to our interpreta- tions, we could face long tax proceedings that could result in the payment of penalties and have a materi- al adverse effect on our operating results, business and financial condition. THERE MAY BE POTENTIAL “PASSIVE FOREIGN INVESTMENT COMPANY” TAX CONSIDERATIONS FOR U.S. HOLDERS. Shares of our stock would be stock of a “passive for- eign investment company,” or a PFIC, for U.S. federal income tax purposes with respect to a U.S. holder if 43 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT44 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fuse of intellectual property assets. Business income derived from the use of each qualified intangible as- set is partially exempted from taxation for both IRES and IRAP purposes. We are currently applying the Patent Box tax regime for the period from 2020 to 2024, in line with applicable tax regulations in Italy. Law Decree No. 146 as amended by the 2022 Italian budget law, replaced the former Patent Box regime (which allowed taxpayers to exempt from corporate income tax (IRES) and regional income tax (IRAP) up to 50% of their income derived from the direct or indirect exploitation of intangibles) by introducing a new Patent Box regime with a 110% “super tax de- duction” for research and development expenses related to eligible intangible assets registered start- ing from 2021. The decree provides for a specific transitional procedure between the two regimes. The amount of the related tax benefits (if any) that the Group may receive from the Patent Box or other tax regimes remains subject to uncertainty. In addition, we benefit from the measures intro- duced in Italy by art. 110 of Law Decree no. 104/2020, converted into Law no.126/2020, which reopened the voluntary step up of tangible and intangible as- sets, with the application of a three-percent substi- tutive tax rate. Furthermore, we currently calculate taxes due in Italy based, among other things, on certain tax breaks recognized by Italian tax regulations for R&D expenses and for the investments on manufacturing equipment, the Allowance for Corporate Equity (ACE) and tax credits for energy costs, which result in tax savings. 2023 was the last year in which both ACE and tax credits for energy costs were permitted. These measures continue to mitigate the tax burden in Italy. Significant changes in regulations or interpretation might adversely affect the availability of such exemptions and result in higher tax charges. See also “Changes to taxation or the interpretation or application of tax laws could have an adverse impact on our results of operations and financial condition.”. for any taxable year in which such U.S. holder held shares of our stock, after the application of applica- ble “look-through rules” (i) 75 percent or more of our gross income for the taxable year consists of “pas- sive income” (including dividends, interest, gains from the sale or exchange of investment property and rents and royalties other than rents and royal- ties which are received from unrelated parties in connection with the active conduct of a trade or busi- ness, as defined in applicable Treasury Regulations), or (ii) at least 50 percent of our assets for the taxable year (averaged over the year and determined based upon value) produce or are held for the production of “passive income”. U.S. persons who own shares of a PFIC are subject to a disadvantageous U.S. fed- eral income tax regime with respect to the income derived by the PFIC, the dividends they receive from the PFIC, and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC. While we believe that shares of our stock are not stock of a PFIC for U.S. federal income tax purpos- es, this conclusion is based on a factual determina- tion made annually and thus is subject to change. Moreover, our common shares may become stock of a PFIC in future taxable years if there were to be changes in our assets, income or operations. THE CONSEQUENCES OF THE LOYALTY VOTING PROGRAM ARE UNCERTAIN. No statutory, judicial or administrative authority di- rectly discusses how the receipt, ownership, or dis- position of special voting shares should be treated for Italian or U.S. tax purposes and as a result, the tax consequences in those jurisdictions are uncertain. The fair market value of the special voting shares, which may be relevant to the tax consequences, is a factual determination and is not governed by any guidance that directly addresses such a situa- tion. Because, among other things, our special vot- ing shares are not transferable (other than, in very limited circumstances, together with the associat- ed common shares) and a shareholder will receive amounts in respect of the special voting shares only if we are liquidated, we believe and intend to take the position that the fair market value of each special voting share is minimal. However, the relevant tax authorities could assert that the value of the special voting shares as determined by us is incorrect. The tax treatment of the loyalty voting program is unclear and shareholders are urged to consult their tax advisors in respect of the consequences of acquir- ing, owning and disposing of special voting shares. WE CURRENTLY BENEFIT OR SEEK TO BENEFIT FROM CERTAIN SPECIAL TAX REGIMES, WHICH MAY NOT BE AVAILABLE IN THE FUTURE. Italian Law no. 190/2014, as subsequently amended and supplemented, introduced an optional Patent Box regime in the Italian tax system. The Patent Box regime is a tax exemption related to, inter alia, the 45 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTOVERVIEW Ferrari is among the world’s leading luxury brands, focused on the design, engineering, production and sale of the world’s most recognizable luxury per- formance sports cars. Our brand symbolizes exclu- sivity, innovation, state-of-the-art sporting perfor- mance and Italian design and engineering heritage. Our name and history and the image enjoyed by our cars are closely associated with our Formula 1 racing team, Scuderia Ferrari, the most successful racing team in the history of Formula 1. From the in- augural year of Formula 1 in 1950 through the pres- ent, Scuderia Ferrari has won 243 Grand Prix races, 16 Constructors’ World titles and 15 Drivers’ World titles. We are the only team which has taken part in all the editions of the Championship, racing in more than 1,000 Formula 1 Grand Prix races. We design, engineer and produce our cars in Maranello, Italy, and sell them in over 52 markets worldwide through a network of 178 authorized dealers operating 196 points of sale as of the end of 2023. We believe that our cars are the epitome of de- sign, performance and driving thrills. Our product offering comprises four main pillars: Range, Spe- cial Series, Icona and Supercar. Our current prod- uct portfolio (including cars presented in 2023, for which shipments will commence in future years) is comprised of nine Range models (three V8 in- ternal combustion engine (“ICE”) models: Portofi- no M, Roma and Roma Spider; two V12 ICE models: 812 GTS and Purosangue; two V6 hybrid models: 296 GTB and 296 GTS; two V8 hybrid models: SF90 Stradale and SF90 Spider), four Special Series mod- els (812 Competizione, 812 Competizione A, SF90 XX Stradale and SF90 XX Spider), and our latest Icona (Daytona SP3). In 2023, we launched five new mod- els: the Roma Spider, the SF90 XX Stradale and SF90 XX Spider, the first ever street legal XX models, the 296 Challenge and the 499P Modificata, and we completed the shipments of the F8 Tributo and the F8 Spider, while the Portofino M is approaching the end of its lifecycle in early 2024. We also from time to time produce limited edi- tion Supercars and One-Off cars. Our most recent Supercar model, the LaFerrari Aperta, the spider version of the LaFerrari, was launched in 2016 to cel- ebrate our 70th anniversary. In 2023, we shipped 13,663 cars and recorded net revenues of €5,970 million, Operating profit (EBIT) of €1,617 million, net profit of €1,257 million and net profit before income tax expense, financial expens- es, net and amortization and depreciation (EBITDA) of €2,279 million. For additional information regard- ing EBITDA, including a reconciliation of EBITDA to net profit, as well as other non-GAAP financial mea- sures we present, see “Financial Overview—Non- GAAP Financial Measures”. Whilst broadening our product portfolio to tar- get a larger customer base, we continue to pursue a low volume production strategy in order to maintain a reputation for exclusivity and scarcity among pur- chasers of our cars and we carefully manage our production volumes and delivery waiting lists to pro- 46 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fmote this reputation. We divide our regional mar- kets into (i) Europe, Middle East and Africa (“EMEA”), (ii) Americas, (iii) Mainland China, Hong Kong and Taiwan, and (iv) Rest of Asia-Pacific (“APAC”), which represented respectively 44.4 percent, 27.9 per- cent, 10.9 percent and 16.8 percent of units shipped in 2023. The geographic allocation of our shipments and their mix by product reflects our deliberate al- location strategy over the lifecycle of the individual models and is generally impacted by the phase-in/ phase-out pace of the models, as well as the length of waiting lists and other market-specific factors and conditions, including our commercial strategy and the potential for future growth. We focus our marketing and promotion efforts on the investments we make in our racing activities and in particular, our participation in the FIA Formu- la 1 World Championship with Scuderia Ferrari and the FIA World Endurance Championship with the Ferrari Endurance Team, the former being the pin- nacle of motorsport and one of the most watched annual sports series in the world, with 3.1 billion website and social media page views for the 2023 season and an average television audience of 66.6 million viewers per Grand Prix (Source: Formula 1). Although our most recent Formula 1 world title was in 2007, we continuously enhance our focus on For- mula 1 activities with the goal of improving racing results and restoring our historical position as the premier racing team in Formula 1. We believe that these activities support the strength and awareness of our brand among motor enthusiasts, clients and the general public. Beyond Formula 1, we engage in several other competitive motorsport events and in 2023 we recorded victories in some of the world’s prominent endurance races, including the centena- ry 24 Hours of Le Mans. Ferrari’s presence in the broader luxury land- scape is a unique opportunity to ensure brand rel- evance across present and future generations and to amplify the cultural relevance of our brand. As one of the world’s primary luxury brands, we op- erate in carefully selected luxury and lifestyle cat- egories - personal luxury goods, collectibles and experiences, the role of which is to fuel long-term growth by broadening our customer base and ex- panding our unique value proposition beyond our core business, while preserving the brand’s DNA, its heritage and values. See below “Overview of Our Business—Lifestyle”. As part of our lifestyle activities, we launched our own Ferrari fashion collections with dedicated fashion shows in June 2021 and we have continued with successive showcases culminating in the lat- est displays in February 2023 and September 2023. We also license the Ferrari brand to a limited num- ber of producers and retailers of luxury and lifestyle sectors, including theme parks that, we believe, en- hance the brand experience of our loyal clients and Ferrari enthusiasts. The world of Ferrari can also be experienced in our Ferrari Museum in Maranello and in the Enzo Ferrari Museum in Modena. Our international network of Ferrari Stores con- sisted of 14 Ferrari-owned directly operated stores and 2 franchised stores as of December 31, 2023, where visitors can find our fashion collection, as well as on our website and in selected multi-brand points of sale. We will continue focusing our efforts on pro- tecting and enhancing the value of our brand to pre- serve our strong financial profile and fuel long term growth in existing and emerging markets, while ex- panding the Ferrari brand to carefully selected life- style categories. HISTORY OF THE COMPANY Ferrari N.V. was incorporated as a public limited lia- bility company (naamloze vennootschap) under the laws of the Netherlands on September 4, 2015 with an indefinite duration. Our official seat (statutaire ze- tel) is in Amsterdam, the Netherlands, and our corpo- rate address and principal place of business are lo- cated at Via Abetone Inferiore n. 4, I-41053 Maranello (MO), Italy. Ferrari is registered with the Dutch Trade Register of the Chamber of Commerce under num- ber 64060977. Its telephone number is +39-0536- 949111. The name and address of the Company’s agent in the United States is: Ferrari North America, Inc., 250 Sylvan Avenue, Englewood Cliffs, NJ 07632. Its telephone number is +1 (201) 816 2600. Our company is named after our founder Enzo Ferrari. An Alfa Romeo driver since 1924, Enzo Fer- rari founded his own racing team, Scuderia Ferrari, in Modena in 1929 initially to race Alfa Romeo cars. In 1939 he set up his own company, initially called Auto Avio Costruzioni. In late 1943, Enzo Ferrari moved his headquarters from Modena to Maranello, which re- mains our headquarters to this day. In 1947, we produced our first racing car, the 125 S. The 125 S’s powerful 12 cylinder engine would go on to become synonymous with the Ferrari brand. In 1948, the first road car, the Ferrari 166 Inter, was produced. Styling quickly became an integral part of the Ferrari brand. In 1950, we began our participation in the For- mula 1 World Championship, racing in the world’s second Grand Prix in Monaco, which makes Scude- ria Ferrari the longest running Formula 1 team. We won our first Constructor World Title in 1952. Our success on the world’s tracks and roads extends beyond Formula 1, including victories in some of the most important car races such as the 24 Hours of Le Mans, the world’s oldest endurance automobile race, and the 24 Hours of Daytona. The Fiat group acquired a 50 percent stake in Ferrari S.p.A. in 1969 and increased its stake to 90 percent in 1988 following the death of Enzo Ferrari, with the remaining 10 percent held by Enzo Ferrari’s son, Piero Ferrari. Ferrari became an independent, publicly traded company following its separation from FCA (follow- ing the merger with Peugeot S.A. in January 2021, Stellantis), which was completed on January 3, 2016 47 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT(the “Separation”) and occurred through a series of transactions including (i) an intragroup restruc- turing which resulted in the Company’s acquisition of the assets and business of Ferrari North Europe Limited and the transfer by FCA of its 90 percent shareholding in Ferrari S.p.A. to the Company, (ii) the transfer of Piero Ferrari’s 10 percent shareholding in Ferrari S.p.A. to the Company, (iii) the initial public offering of common shares of the Company on the New York Stock Exchange in October 2015 under the ticker symbol RACE, and (iv) the distribution, fol- lowing the initial public offering, of FCA’s remaining interest in the Company to FCA’s shareholders. On January 4, 2016, the Company also completed the listing of its common shares on the Mercato Telem- atico Azionario (“MTA”, subsequently renamed Eu- ronext Milan), under the ticker symbol RACE. INDUSTRY OVERVIEW Within the luxury goods market, as of 2023, we de- fine our target market for luxury performance cars powered by engines producing more than 500 hp and selling at a retail price in excess of Euro 180,000 (Italian market price including VAT has been used as reference). The luxury performance car market his- torically has followed relatively closely growth pat- terns in the broader luxury market. The luxury per- formance car market is generally affected by global macroeconomic conditions and, although we and certain other manufacturers have proven relatively resilient, general downturns can have a dispropor- tionate impact on sales of luxury goods in light of the discretionary nature of consumer spending in this market. Furthermore, because of the emotional nature of the purchasing decision, economic confi- dence and factors such as expectations regarding future income streams as well as the social accept- ability of luxury goods may impact sales. Following the sharp recession of 2008-2009, the luxury performance car market has been resil- ient to further economic downturns and stagnation in the broader economy, driven by an increase in new product launches. A sustained period of wealth creation in several Asian countries and, to a less- er extent, in the Americas, has led to an expanding population of potential consumers of luxury goods. Developing consumer preferences in the Asian markets, where the newly affluent are increasing- ly embracing western brands of luxury products, have also led to higher demand for cars in our seg- ment, which are primarily produced by established European manufacturers. In turn, the changing de- mographic of customers and potential customers is driving an evolution towards luxury performance cars also suited to an urban and more frequent use. Additionally, the growing appetite of younger afflu- ent purchasers for luxury performance cars has led to new entrants to the industry, which in turn has re- sulted in higher sales overall in the market. After the challenges brought by the onset of the COVID-19 pandemic in 2020, which depressed indus- try volumes, the luxury performance car market ex- perienced a V-shaped recovery in 2021; in 2022 it sur- passed 2019 pre-pandemic levels, growing again in 2023. Ferrari shipments surpassed the 2019 pre-pan- demic levels in 2021 (a year earlier than the luxury per- formance car market), benefiting from actions im- plemented by the group to mitigate the impact of the COVID-19 pandemic and to maintain production ca- pacity. Ferrari continued with strong growth in ship- ments again in both 2022 and 2023, in line with plans. As of 2023, Ferrari commenced deliveries of the Purosangue: the first four-door, four wheel-drive and four-seater Ferrari. Given this broadening of Ferrari’s car production, the reference Luxury Per- formance Car Industry in which Ferrari competes has been enlarged to include also high-riding four- door luxury performance cars offering more than 500 hp and priced in excess of Euro 180,000 (Italian market price including VAT as reference). Unlike in other segments of the broader luxury market, in the Luxury Performance Car Industry, a significant portion of demand is driven by new prod- uct launches. The market share of individual pro- ducers fluctuates over time reflecting the timing of product launches. New launches tend to drive sales volumes even in difficult market environments be- cause the novelty, exclusivity and excitement of a new product is capable of creating and capturing its own demand from clients. The luxury performance car market also experienced an increased demand for personalization and digital connectivity, with sev- eral industry players introducing customized solu- tions to serve local markets. In line with the characteristics of the market as noted above, one of the key elements driving the positive performance of the Luxury Performance Car Industry in 2021, 2022 and 2023 was the re- newed product offering by several competitors, de- spite several adverse global events like supply chain issues, the semi-conductor crisis, rising inflation and the ongoing conflicts between Russia-Ukraine and Israel-Hamas. Most of the producers in the Lux- ury Performance Car Industry managed to navigate through these difficulties by adjusting their supply chain policies and by revising their pricing strate- gies, as well as through the aforementioned renewal of their product offerings. Growing environmental concerns are lead- ing to the implementation of increasingly stringent emissions regulations and an increase in demand for both hybrid and electric vehicles. Cost and lim- ited charging infrastructure are currently limiting factors in the demand for electric vehicles, but ad- vancements in battery technology in coming years are expected to boost sales of hybrid and electric high-performance luxury vehicles, although at a slower pace compared to mass market vehicles. The ability to combine driving experience with hybrid and electric technology will be key for the commer- cial success of high performance luxury vehicles. 48 VOLUMES FERRARI UNITS 13,000 ENLARGED & LUXURY CAR INDUSTRY UNITS 100,000 11,815 76,695 45,534 Dec 31, 2004 Dec 31, 2023 Dec 31, 2004 Dec 31, 2023 0 0 Ferrari Luxury Performance Car Industry Enlarged Luxury Performance Car Industry BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FAs shown in the chart below, our volumes have historically proven less volatile than our competitors’. We believe this is due to our strategy of maintaining low volumes compared to demand, as well as to the higher number of models in our product portfolio and our more frequent prod- uct launches compared to our competitors. VOLUMES FERRARI UNITS 13,000 ENLARGED & LUXURY CAR INDUSTRY UNITS 100,000 11,815 76,695 45,534 0 Ferrari Dec 31, 2004 Dec 31, 2023 Dec 31, 2004 Dec 31, 2023 0 Luxury Performance Car Industry Enlarged Luxury Performance Car Industry Ferrari, Luxury Performance Car ciation-DataClub; Russia-AEBRUS; vehicles. As a result, in addition to the Industry & Enlarged Luxury Perfor- Taiwan-Ministry of Transportation and “Luxury Performance Car Industry” mance Car Industry data are updated Communications; Australia-VFACTS-S; historically considered, we also iden- to December 31, 2023. Data is based Japan-JAIA; Indonesia-GAIKINDO; New tified the “Enlarged Luxury Perfor- on units registered (in Brazil, Japan, Zealand-VFACTS; Singapore-LTA, MTA mance Car Industry”: a broader market Taiwan, United Kingdom, Germany, (Land Transport Authority, Motor Trad- segment which also includes high-rid- France, Switzerland, Italy, Poland, Hun- er Associations); South Korea-KAIDA. ing four door luxury performance cars gary, Czech Republic, Spain, Sweden, offering more than 500 hp and priced Netherlands, Belgium and Austria) or We identify the Luxury Performance in excess of Euro 180,000 (Italian mar- sold (in USA, Canada, South Korea, Car Industry to include all two-door ket price including VAT as reference), Mainland China, Russia, Australia, New luxury sports cars with power above mostly sold by the same aforemen- Zealand, Singapore and Indonesia). 500 hp, and retail price above Euro tioned competitors with the addition of Source: USA-US Maker Data Club; 180,000 (Italian market price including Land Rover. Brazil-JATO; Canada-JATO; Austria- VAT as reference) sold by Aston Martin, OSZ; Belgium-FEBIAC; France-SIV; Audi, Bentley, BMW, Ferrari, Ford, Ferrari data based on internal informa- Germany-KBA; UK-SMMT; Italy-UNRAE; Honda/Acura, Lamborghini, Maserati, tion for the 25 Top Countries (exclud- Netherlands-VWE; Poland-CEPiK; McLaren, Mercedes Benz, Porsche and ing Middle East countries) for Ferrari Hungary-Ministry of the Interior; Czech Rolls-Royce. Republic-Cars Importers Association; annual registrations and sales (which accounted for approximately 91% of Spain-TRAFICO; Sweden-BranschData; With the Purosangue, Ferrari entered the total Ferrari shipments in 2023). Switzerland-ASTRA; Mainland Chi- a new segment of four-door and na-China Automobile Industry Asso- four-wheel drive high performance 49 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTIn 2023, Ferrari’s volumes in the largest 25 markets increased compared to 2022, primarily driven by the contribution from our enlarged product range. The charts below set forth our market shares in 2023 based on volumes in our largest 25 markets by geographical area. LUXURY PERFORMANCE CAR INDUSTRY MARKET SHARE MARKET Top 25 Market EMEA Americas Mainland China & Taiwan Rest of APAC 25% 24% 20% 43% 38% 0 100% MARKET SHARE ENLARGED LUXURY PERFORMANCE CAR INDUSTRY MARKET SHARE MARKET Top 25 Market EMEA Americas Mainland China & Taiwan Rest of APAC 15% 16% 12% 20% 23% 0 100% MARKET SHARE In 2023, we had a market share of 25% in Netherlands, Belgium and Austria) or Zealand-VFACTS; Singapore-LTA, MTA the Luxury Performance Car Industry, sold (in USA, Canada, South Korea, (Land Transport Authority, Motor Trad- which is our historic reference market. Mainland China, Russia, Australia, New er Associations); South Korea-KAIDA. Zealand, Singapore and Indonesia). In 2023, we had a market share of 15% Source: USA-US Maker Data Club; We identify the "Luxury Performance in the Enlarged Luxury Performance Brazil-JATO; Canada-JATO; Austria- Car Industry" to include all two-door Car Industry, in which also high riding OSZ; Belgium-FEBIAC; France-SIV; luxury sports cars with power above four-door luxury performance cars Germany-KBA; UK-SMMT; Italy-UNRAE; 500 hp, and retail price above Euro are included. Netherlands-VWE; Poland-CEPiK; Hun- 180,000 (Italian market price including gary- Ministry of the Interior; Czech VAT as reference) sold by Aston Martin, Ferrari, Luxury Performance Car Republic-Cars Importers Association; Audi, Bentley, BMW, Ferrari, Ford, Industry & Enlarged Luxury Perfor- Spain-TRAFICO; Sweden-BranschDa- Honda/Acura, Lamborghini, Maserati, mance Car Industry data are updated ta; Switzerland-ASTRA; Mainland McLaren, Mercedes Benz, Porsche and to December 31, 2023. Data is based China-China Automobile Industry Rolls-Royce. Ferrari is market leader in on units registered (in Brazil, Japan, Association-DataClub; Russia-AEBRUS; several countries, including Italy, Japan, Taiwan, United Kingdom, Germany, Taiwan-Ministry of Transportation and Mainland China, Taiwan, Singapore and France, Switzerland, Italy, Poland, Hun- Communications; Australia-VFACTS-S; South Korea among others. gary, Czech Republic, Spain, Sweden, Japan-JAIA; Indonesia-GAIKINDO; New 50 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FLUXURY PERFORMANCE CAR INDUSTRY MARKET SHARE 25% 24% 20% 43% 38% MARKET Top 25 Market EMEA Americas Mainland China & Taiwan Rest of APAC MARKET Top 25 Market EMEA Americas Mainland China & Taiwan Rest of APAC 0 0 15% 16% 12% 20% 23% ENLARGED LUXURY PERFORMANCE CAR INDUSTRY MARKET SHARE MARKET SHARE 100% MARKET SHARE 100% With the Purosangue, Ferrari entered high-riding four-door luxury per- in Italy, Taiwan, Singapore and Japan in a new segment of four-door and formance cars offering more than among others. four-wheel drive high performance 500 hp and priced in excess of Euro vehicles. As a result, in addition to 180,000 (Italian market price includ- Ferrari data based on internal informa- the “Luxury Performance Car In- ing VAT as reference), mostly sold by tion for the 25 Top Countries (exclud- dustry” historically considered, we the same aforementioned competi- ing Middle East countries) for Ferrari also identified the “Enlarged Luxury tors with the addition of Land Rover. annual registrations and sales (which Performance Car Industry”: a broader With respect to the Enlarged perim- accounted for approximately 91% of market segment which also includes eter, Ferrari maintains its leadership the total Ferrari shipments in 2023). While we monitor our market share as an indica- tor of our brand appeal, we do not regard market share as particularly relevant as compared to oth- er segments of the automotive industry. We are not focused on market share as a performance metric. Instead, we deliberately manage our supply relative to demand, to defend and promote our brand exclu- sivity and premium pricing. COMPETITION Competition in the luxury performance car market is concentrated in a fairly small number of produc- ers, including both large automotive companies that own luxury brands as well as small produc- ers exclusively focused on luxury cars, like us. Our main competitors are Lamborghini, McLaren, Aston Martin, Rolls-Royce and Bentley, as well as Porsche, Mercedes, Audi, BMW and Land Rover in certain segments of the market, and may vary based on the technical characteristics and target customer seg- ment for each model. Competition in the luxury performance car mar- ket is primarily driven by the strength of the brand and the appeal of the products in terms of perfor- mance, driving thrills, styling and innovation as well as by the manufacturers’ ability to regularly renew their product offerings to continue to stimulate cus- tomer demand. Competition among similarly positioned luxury performance cars is also driven by price and total cost of ownership. Resilience of the car value after a period of ownership is an important competitive dimension among similarly positioned luxury cars, because higher resilience decreases the total cost of ownership and promotes repeat purchases: we believe this is a strong competitive advantage of Ferrari cars. OVERVIEW OF OUR BUSINESS SPORTS CAR LINE-UP SPORTS CAR LINE UP RANGE MODELS SPECIAL SERIES ICONA SUPERCAR Our product offering comprises four main pillars: Range, Special Series, Icona and Supercar. Our cur- rent product portfolio includes nine Range models (three V8 internal combustion engine (“ICE”) models: Portofino M, Roma and Roma Spider; two V12 ICE models: 812 GTS and Purosangue; two V6 hybrid models: 296 GTB and 296 GTS; two V8 hybrid mod- els: SF90 Stradale and SF90 Spider), four Special Se- ries models (812 Competizione, 812 Competizione A, SF90 XX Stradale and SF90 XX Spider), and one lim- ited edition Icona model (Daytona SP3). We also from time to time produce limited edition Supercars and One-Off cars. Our most recent Supercar model, the LaFerrari Aperta, was launched in 2016 to celebrate our 70th anniversary. In 2023, we launched five mod- els (the Roma Spider, SF90 XX Stradale and SF90 XX Spider, the 296 Challenge and the 499P Modificata) and we completed the shipments of the F8 Tributo and F8 Spider, while the Portofino M is approaching the end of its lifecycle in early 2024. 51 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTOur diversified product offering may include different architectures (such as front-engine and mid-rear engine), engine sizes (V6, V8 and V12), technologies (natural aspirated, turbo-charged, hybrid), body styles (such as coupes, spiders, targa and 4-doors) and seats (2 seaters, 2+ seaters, 4 seaters). ROAD CARDS RANGE MODELS 296 GTB V6 Hybrid 296 GTS V6 Hybrid SF90 Stradale V8 Hybrid SF90 Spider V8 Hybrid Roma V8 Roma Spider V8 Portofino M V8 812 GTS V12 Purosangue V12 SPECIAL SERIES ICONA SUPERCAR 812 Competizione/A V12 SF90 XX/ Sp. V8 Hybrid Daytona SP3 V12 ONE OFF KC23 SP-8 KC23 V8 SP-8 V8 52 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FROAD CARDS RANGE MODELS TRACK CARS FERRARI CHALLENGE THE XX PROGRAMME COMPETIZIONI GT RACING CLIENTI 296 GTB V6 Hybrid 296 GTS V6 Hybrid SF90 Stradale V8 Hybrid SF90 Spider V8 Hybrid 296 Challenge V6 FXX K EVO V12 296 GT3 V6 499P Modificata V6 We target end clients seeking high performance cars with distinctive design and state-of-the-art technology. Our broad product portfolio is designed to fulfill the strategy of “different Ferrari for different Ferraris- ti, different Ferrari for different moments”, which means being able to offer a highly differentiated product line-up that can meet the varying needs of current and new customer segments (in terms of sportiness, comfort, on-board space and design, amongst others) and that can al- low our existing clients to use a Ferrari in various moments of their lives. We believe that our target end clients can be divided into two main cat- egories: on the one hand, the “Sports Car Driver”, a client looking for an elegant and understated design, who likes driving their car in a variety of locations and conditions, alone or with passengers, and who uses their Ferrari for longer journeys; on the other hand, the “Pilot”, a client looking for a high performing and extreme sports car, who intends to drive their car on track and on challenging roads, and who is looking for an exciting driving experience. ICONA SUPERCAR TARGET END CLIENTS SPORTCAR DRIVER PILOT We are also actively engaged in after sales activities driven, among oth- er things, by the objective of preserving and extending the market value of the cars we sell. We believe our cars’ performance in terms of value preservation after a period of ownership significantly exceeds that of any other brand in the luxury car segment. High residual value is import- ant to the primary market because clients, when purchasing our cars, take into account the expected resale value of the car in assessing the overall cost of ownership. Furthermore, a higher residual value poten- tially lowers the cost for the owner to switch to a new model thereby sup- porting client loyalty and promoting repeat purchase. 53 Roma V8 Roma Spider V8 Portofino M V8 812 GTS V12 Purosangue V12 SPECIAL SERIES 812 Competizione/A V12 SF90 XX/ Sp. V8 Hybrid Daytona SP3 V12 ONE OFF KC23 SP-8 KC23 V8 SP-8 V8 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTThe following chart shows the percentage of our unit shipments(1) by pillar(2) for the years ended December 31, 2023, 2022 and 2021: PERCENTAGE OF UNIT SHIPMENTS BY PILLAR 2% 1% 97% <1% 3% 96% 1% 6% 93% SHARE 100% 0% 2021 2022 2023 Icona Special Series Range (1) Excluding the XX Programme, racing cars, one-off and pre-owned cars. (2) There were no shipments of Supercars during the period from 2021 to 2023. The following chart shows the percentage of our unit shipments(1) by geo- graphic market for the years ended December 31, 2023, 2022 and 2021: PERCENTAGE OF UNIT SHIPMENTS BY GEOGRAPHIC MARKET SHARE 100% 0% 17.3% 8.1% 25.4% 49.2% 17.1% 11.7% 26.1% 45.1% 16.8% 10.9% 27.9% 44.4% 2021 2022 2023 Rest of Apac Mainland China, Hong Kong and Taiwan Americas EMEA (1) Excluding the XX Programme, racing cars, one-off and pre-owned cars. See also “Financial Overview—Trends, Uncertainties and Opportunities—Shipments”. 54 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FPERCENTAGE OF UNIT SHIPMENTS BY PILLAR PERCENTAGE OF UNIT SHIPMENTS BY ENGINE TYPE The following chart shows the percentage of our unit shipments(1) by engine type for the years ended December 31, 2023, 2022 and 2021: SHARE 100% 2% 1% 97% <1% 3% 96% 1% 6% 93% 2021 2022 2023 0% Special Series Icona Range SHARE 100% PERCENTAGE OF UNIT SHIPMENTS BY GEOGRAPHIC MARKET 17.3% 8.1% 25.4% 49.2% 17.1% 11.7% 26.1% 45.1% 16.8% 10.9% 27.9% 44.4% 2021 2022 2023 0% Rest of Apac Americas EMEA Mainland China, Hong Kong and Taiwan SHARE 100% 15% 85% 22% 78% 44% 56% 2021 2022 2023 0% Hybrid ICE (1) Excluding the XX Programme, racing cars, one-off and pre-owned cars. RANGE Our Range line comprises products designed for both our Pilot and our Sports Car Driver clients. Range models designed for Pilot clients are characterized by compact bodies, a design guided by performance and aerodynamics, that often ben- efit from technologies initially developed for our For- mula 1 single-seaters or other racing activities. They favor performance over comfort, seeking to pro- vide the driver with an immediate response and su- perior handling, leveraging state-of-the-art vehicle dynamics, components and controls. We currently offer five such models: the SF90 Stradale and the SF90 Spider, our first series production cars which feature PHEV technology that combines a V8 en- gine (780 hp) with three electric motors allowing the car to reach 1,000 hp; the 812 GTS, equipped with a front V12 engine (800 hp); the 296 GTB and the 296 GTS, which also feature PHEV technology and are powered by the first 6-cylinder engine installed on a Ferrari road car, producing 830 hp of total power output delivered by the new 120° V6 engine (663 hp), coupled with an electric motor capable of delivering a further 122 kW (167 hp) – an unprecedented per- formance for a V6 car. Range models designed for Sports Car Driv- er clients, which also exhibit the performance ex- pected of a Ferrari, are characterized by more re- fined interiors with a higher focus on comfort and on-board life quality. We currently offer three such models: two models equipped with our V8 engine; the Roma (620 hp) and the Roma Spider (620 hp), and one model equipped with our V12 naturally aspirat- ed engine, the Purosangue (725 hp) launched in Sep- tember 2022. In 2023 we also offered the Portofino M (620 hp), which is equiped with our V8 engine and is approaching the end of its lifecycle in early 2024. SPECIAL SERIES From time to time, we also design, engineer and produce Special Series cars which can be limited in time or volume and are usually based on some of our Range models but introduce novel product concepts. These cars are characterized by signif- icant modifications designed to enhance perfor- mance and driving thrills. Our Special Series cars are particularly targeted to collectors and, from a commercial and product development stand- point, they facilitate the transition from existing to new Range models. In 2021, we launched the 812 Competizione, shipments of which commenced in 2022, and the 812 Competizione A, for which ship- ments commenced in 2023. The 812 Competizione and the 812 Competizione A, respectively a coupe and targa, both feature 830 hp engines with an ex- traordinary weight to power ratio of 1.79 kg/hp, which puts them at the top of our V12 car catego- ry, reaching 0-100 km/h in 2.85 seconds and 0-200 km/h in 7.7 seconds. In 2023, we launched the SF90 XX Stradale and SF90 XX Spider, the new pinnacle of performance and technological content, and the first XX street legal cars. The coupè reaches 0-100 km/h in 2.3 seconds and 0-200 km/h in 6.5 seconds, and set the Fiorano lap time record for street legal cars with 1 minute and 17.3 seconds. Shipments of these cars are expected to start in 2024. 55 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTICONA In September 2018, we introduced a new pillar of our product portfolio: the Icona, a unique concept that takes inspiration from the iconic concepts of our history and reinterprets them in a modern fash- ion, pairing timeless design with state-of-the-art materials and technology. The first example of this strictly limited-edition product line-up is the Ferra- ri Monza SP1/SP2, which is inspired by the classic collectible barchetta cars, the 750 Monza and 860 Monza, and currently out of production. In 2021, the Daytona SP3 was unveiled. This limited-edition targa takes inspiration from legendary Ferrari sports pro- totypes of the 1960s and sports a naturally aspirat- ed V12 engine, mid-rear-mounted in typical racing car style. The most iconic of all Ferrari’s engines, this power unit delivers 840 hp – along with 697 Nm of torque and maximum revs of 9500 RPM – making it the most powerful naturally aspirated road engine ever built by Ferrari. SUPERCARS In line with our tradition of Supercars starting with the GTO (288 GTO) in 1984, and including the F40 in 1987, the F50 in 1995, the Enzo in 2002, the LaFerrari in 2013 and the LaFerrari Aperta, our latest super- car launched in 2016, we also produce limited edi- tion Supercars. These are the highest expression of Ferrari road car performance at the time and are of- ten the forerunners of technological innovations for future Range models, with innovative features and futuristic design. TRACK CARS We also develop special track racing cars that are based on our range and special series models. These PRODUCT OFFERING STRATEGIC PILLARS cars are not registered for use on the road and may only be used on track in competitive and non-compet- itive race events, including for our XX Programme, Endurance and Racing Clienti activities. ONE-OFFS In order to meet the varying needs of our most loyal and discerning clients, we also produce a very lim- ited number of One-Off models. While based on the chassis and equipped with engines of one of the cur- rent models for homologation and registration pur- poses, these cars reflect the exact exterior and inte- rior design specifications requested by the clients, and are produced as a single, unique car. Some of the most iconic models emerged from our One-Off program include the SP12 EC (inspired by the 512 BB and created in 2011), the F12 TRS (a radical two-seat roadster created on the platform of the F12 Ber- linetta in 2014), the Ferrari SP38 (a superlative mid- rear V8 turbo taking inspiration from the legendary Ferrari F40), the 458MM Speciale (the last mid rear model with a V8 naturally aspirated engine in 2016), the Ferrari P80/C, a real track car taking inspiration from past Ferrari Sport Prototipo models, and the Ferrari Omologata, based on the 812 Superfast V12 platform. The last models include the BR20, a very el- egant V12 based on the GTC4 Lusso and produced in 2021, and the SP48 Unica, based on the F8 Trib- uto, and SP51, based on the 812 Superfast but with an open-air configuration, both launched in 2022. In 2023, we produced the KC23, a non-homologated car based on the 488 GT3 and featuring a futuristic design, as well as the SP-8, which is based on the F8 Tributo and features a particular targa design and visible carbon fiber in the front part of the car. The following chart shows our product offer- ing’s strategic pillars in terms of their appeal to Fer- raristi and collectors respectively. Future Ferraristi Ferraristi Collectors Range Special Series Icona Supercar 56 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FPERSONALIZATION OFFER One-Off Tailor made Special Equipment Personalization Program “Carrozzeria Scaglietti” Maranello TM Center @Maranello @New York @Shangai Atelier @Maranello @New York @Shangai Dealership with Special Equipment Dealership PERSONALIZATION OFFER All of our models feature highly customizable inte- rior and exterior options, which are included in our personalization catalogue. Some of these options in- clude performance contents like carbon fiber parts, carbon fiber wheels, titanium exhaust systems, alter- native brake caliper colors, parking cameras, Mag- naRide dual mode suspension, various door panel configurations, steering wheel inserts and state-of- the-art custom high fidelity sound systems. Starting with the SF90 Stradale and the SF90 Spider, we have also introduced the “Assetto Fiorano” configuration, which provides numerous exclusive features for those who seek extreme performance and design. This specific configuration is also available for the 296 GTB and 296 GTS. For models launched in 2023, we added new personalization features for our cli- ents to choose from, including the possibility to have the soft top in different fabrics/colors (Roma Spider) or the body of the car in natural carbon-fiber with a clear lacquer finish (Daytona SP3 and SF90 XX). With our “Special Equipment & Atelier” program, we offer clients additional customization choices for their cars. Our specialists are able to guide clients in creating a highly personalized car through a wide catalogue of special items such as different types of rare leathers, custom stitching, special paints, spe- cial carbon fiber, and personalized luggage sets de- signed to match the car’s interior. In 2023, we also launched a dedicated livery celebrating the partici- pation in the WEC series (crowned by Ferrari’s vic- tory at Le Mans). The “Tailor Made” program provides an addi- tional level of personalization to meet the increased expectations of our clients. A dedicated Ferrari de- signer assists clients in selecting and applying virtu- ally any specific design element of their choice. Our clients benefit from a large selection of finishes and accessories in an array of different materials (rang- ing from cashmere to denim), treatments and hues. To assist our clients’ choice, we also offer three col- lections inspired by Ferrari’s own tradition: Scuderia (taking its lead from our sporting history), Classica (bringing a modern twist to the styling cues of our signature Range models) and Inedita (highlighting more experimental and innovation-led personaliza- tion). In 2023, we developed several innovative proj- ects, including one which supported a charity event in New York. The “One-off” program is the maximum level of personalization and exclusivity. See “—One-Offs” above for additional details. DESIGN Design is a fundamental and distinctive aspect of our products and our brand. The design of a Ferra- ri is a structural part of our innovation process, and everything we do to develop the lines of our cars is functional to increase their performance and driv- ing thrills. Our designers, modelers and engineers work together to create car bodies that incorporate the most innovative aerodynamic solutions in the sleek and powerful lines typical of our cars. The in- teriors of our cars seek to balance functionality, aes- thetics and comfort. Cockpits are designed to maxi- mize the driving experience, tending towards more sporty or more comfortable depending on the mod- el. The interiors of our vehicles boast elegant and so- 57 PRODUCT OFFERING STRATEGIC PILLARS Future Ferraristi Ferraristi Collectors Range Special Series Icona Supercar FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTphisticated trims and details that enhance the ergo- nomic layout of all main controls, many of which are clustered on the steering wheel. A guiding principle of our design is that each new model represents a clear departure from prior models and introduces new and distinctive aesthetic elements, delivering constant innovation within the furrow of tradition. For the design of our cars we have relied histor- ically on Italian coachbuilders such as Carrozzeria Touring, Vignale, Scaglietti and Pininfarina. These partnerships helped Ferrari in defining its design lan- guage at the forefront of design advance. Through- out the years this area of excellence has been rec- ognized repeatedly by a long series of awards being bestowed upon Ferrari cars. In 2010 we established the Ferrari Design Cen- tre, our in-house design department, with the ob- jective of improving control over the entire design process and ensuring long-term continuity of the Ferrari style. The mission of the Ferrari Design Cen- tre is to define and evolve the stylistic direction of the marque, imprinting all new products with a modern stamp, according to a futuristic, uncompromised vision. The name and logo “Ferrari Design” denotes all concepts and works of the Ferrari Design Cen- tre (see “—Intellectual Property”). The Ferrari Design Centre handles all aspects of automotive styling for the Ferrari road cars product range, encompassing the styling of all bodywork, external components and interior trim, applied to series production mod- els for the Range, Special Series, Supercars, Icona, One-Offs, concept cars and some track-only mod- els. The Ferrari Design Centre also includes a Col- or  & Trim unit which manages the choice of mate- rials and finishes for both exterior and interior trim and, in addition, is responsible for the Tailor Made program in conjunction with the Product Market- ing department. The Ferrari Design Centre is also often involved in the styling and conceptual defini- tion of Ferrari branded products produced by our licensees (see “—Lifestyle”). In 2019, we created the Advanced Design team, a laboratory that aims at defining the brand’s design vision, developing new concepts and formal languages through so far un- explored methods and tools, and trying to achieve simplification and formal purity while staying true to the Ferrari DNA which has characterized its history. The Ferrari Design Centre is organized as an integrated automotive design studio, employing a total workforce of approximately 60 employees (in- cluding designers, 3D surfacing operators, physical modelers and graphic artists), as well as contrac- tors. It operates a modeling studio fully equipped with 5-axis milling machines with the capacity to de- velop various full-scale models (interior and exteri- or) in parallel. In September 2018, we opened a new building for the Ferrari Design Centre, which is our first fa- cility fully dedicated to our in-house design depart- ment. The new building hosts two Ateliers and the Tailor Made department to engage clients with Fer- rari’s rich personalization services. The Ferrari De- sign Centre has designed our most recent cars, in- cluding our entire current line-up. During its 14 year history, the Ferrari Design Cen- tre has received many prestigious design awards 58 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Ffor the cars it designed, including the following in the last 2 years: • Ferrari Purosangue: Car Design Award (2023); Red Dot Best of The Best Award (2023); iF Design Award (2023); EyesOn Design Award - Best Pro- duction Vehicle (2023); AUTONIS Award- Auto Motor und Sport (2023); Best Award (2023); • Ferrari Vision Gran Turismo: Red Dot Best of The • Ferrari 296 GTS: Red Dot Design Award (2023); • Ferrari Daytona: iF Design Award (2023); • Ferrari Roma Spider: AUTONIS Award- Auto Mo- tor und Sport (2023); Sunday Times - Dream Car Award (2023); • Ferrari Design Centre: Car Design Award 2023 – • Ferrari Daytona SP3: Red Dot Best of The Best Ferrari brand design language (2023); (2022); EyesOn Design Award (2022); Grand Prix du Design- Automobile Awards (2022); • Ferrari 296 GTB: iF Design Award (2022); Red Dot Design Award (2022); Car Design Award (2022); PRODUCT DEVELOPMENT AUTONIS - Auto Motor und Sport - Best Design In- novation (2022); Supercar Of The Year – Top Gear Awards (2022); • Ferrari 812 Competizione: • Ferrari 812 Competizione A: iF Design Award (2022); Red Dot Design Award (2022); iF Design Award (2022); Red Dot Design Award (2022). The multi-year collaboration with the creative col- lective LoveFrom, which started in September 2021, continues today and the partnership brings togeth- er Ferrari’s legendary performance and excellence and LoveFrom’s experience and creativity that has defined extraordinary world changing products. PRODUCT DEVELOPMENT AND TECHNOLOGICAL INNOVATION Our development efforts take into account the three pillars of competitive advantage of Ferrari cars: de- sign, performance and driving thrills. Design Performance Driving thrills Design: sight is the first sense to enjoy a Ferrari and the design of a Ferrari is a structural part of our in- novation process. Everything we do to develop the design of our cars is functional to increase their per- formance and driving thrills. Performance: features such as power, aerody- namics, weight, driveline and mechatronics all con- tribute to determine the lap time on track. We strive to ensure that every Ferrari is the best performing car in its segment. Driving thrills: a key differentiator of Ferrari cars. There are five main elements to driving thrills: longitudinal acceleration, lateral acceleration, brak- ing, gear change and sound. INNOVATION PRINCIPLES Our goal with innovation is to enhance the perfor- mance and driving thrills of our cars. The unique Ferrari way of developing a car involves the follow- ing main elements: know-how; • leveraging on Formula 1 and racing-specific • prioritizing innovations in core hardware and • tailoring existing solutions available on the mar- • developing distinctive and iconic components. software, including through open innovation; ket; and In addition to these internally driven factors, regula- tion is key in determining the direction of innovation. Furthermore, being prepared for change is part of our DNA, and climate change is a further stimu- lus for us to innovate. In the nearW future, we expect Ferrari’s innovation program to be focused not only on electric transition but also on innovative materi- als, alternative fuels, lubricants and coolants, as well as on aerodynamics. In this regard, we have placed significant focus on introducing new materials, such as recycled alu- minum, for which CO2 emissions could be reduced by up to 90%, and we are working with partners on the use of alternative fuels, such as hydrogen, E-Fu- 59 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTels, coolants and lubricants which would allow us to reduce emissions while continuing to use internal combustion engines that preserve our heritage. Our goal is to find technological solutions that will allow us to be compliant with applicable regula- tions, without penalizing the performance and driv- ing thrills of our cars. on combustion engine cooling systems to devel- op the best and most efficient solutions for our future electric engines; and • the performance software - the performance software, as we apply everything we have learned over the years in the combustion world to the new challenges of the electrification era. KEY FEATURES OF OUR OFFER Ferrari Dynamic and Sensors Sensors and the relevant know-how built over de- cades contribute to the driving thrills and perfor- mance, as well as reliability and car safety. Our first sensor, a position sensor, was adopted in 1980 on the Ferrari 308GTBi. Now, a Ferrari car can have hundreds of sensors, including acceler- ometers, gyroscopes, microphones, and others, which improve vehicle dynamics as well as perfor- mance and driving thrills. In the near future, our cars will be equipped with new sensors that will allow us to further improve the existing features and enable new functions, and that will play a fundamental role on battery manage- ment, increasing the life of the battery as well as the safety of our cars. Longer term, new sensors tech- nology will allow for new applications and a step-up in performance. By combining sensors and software, it will be possible to further improve the performance and driving thrills of our cars. For example, comparing a Ferrari with a 6D sensor and one without it, we have reduced our braking distance by approximately 10% thanks to the information collected through acceler- ometers, gyroscopes, and the deep control vehicle software know-how. Another example is the FAST (“Ferrari Active Suspension Technology”), a technol- ogy first introduced on the Purosangue that enables our cars to apply the best suspension for every driv- ing condition by keeping the vehicle body at the best elevation for riding. FAST controls body roll in cor- ners as well as the tire contact patch over high-fre- quency bumps. Architecture The other principal technical area we are focusing on is architecture. Our architecture covers all princi- pal technical specifications of future Ferrari models. We expect that innovation requirements will arise principally from: the evolution of engine families; the level of hybridization and electrification; modes of traction; the number of seats up to a real four-seat- er; and the body style, which will vary much more significantly than in the past. We expect that our core architectures will be the rear-mid-engine architecture and the front-mid-en- gine architecture, each comprising several variants. Three Powertrains with Distinctive Driving Emotions Ferrari engines are characterized by prime perfor- mance in a key parameter for cars’ engines: specif- ic power (power for displacement and power for mass/weight). We intend to broaden the powertrain offering to include full electric, hydrogen and oth- er technologies as well as the internal combustion engine (ICE) which continues to represent Ferrari’s heritage. Ferrari targets a well-diversified prod- uct portfolio, composed of ICE, hybrid engines and full electric engines, each one delivering distinctive driving emotions. • ICE – Ferrari will continue to pursue the internal combustion engine evolution and, with the sup- port of partners, will develop solutions in energy efficiency and alternative fuels to build on an es- sential part of the Company’s heritage. • Hybrid – our cars have shown that hybrid is the right technology for increasing pure per- formance, and we have taken advantage of the technology transfer from the racing world. Ferrari firmly believes that the hybrid power- train can further increase performance, as evi- denced by the four hybrid cars currently in our product portfolio. • Electric – leveraging strong commonalities with the internal combustion engine, including tech- nology transfer from the racing world, precision mechanics, fluid-dynamics and performance software, electric technology will also provide unique elements, driving emotions and the thrills of a true Ferrari. The worlds of electric and combustion engines have many similarities, including: • the racing world - Formula 1 and other racing competitions were and will be the starting point for the development and test of new contents to use on our range cars. For instance, the archi- tecture of our electric engine is racing derived; but the challenge has been to industrialize that engine, in order to move from unitary produc- tion to that of thousands of units. A challenge that we have met thanks to the precision mechanics know-how already existing in Maranello; • the fluid dynamics - cooling systems are key to, among other things, the performance and dura- bility of electric engines. We use our know-how 60 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFERRARI ARCHITECTURE: MAXIMUM PERFORMANCE AND FLEXIBILITY ENGINE ICE HYBRID FULL ELECTRIC DRIVELINE V6 V8 V12 V6 V8 2 WD 4 WD TECHNOLOGY AS A MEAN TO PROVIDE A WIDER OFFERING Autonomous driving and connectivity While we do not intend to develop self-driving cars, we will adopt certain features of autonomous driv- ing technology in response to regulatory develop- ments and customer preferences, especially in the Range segment. For example, in 2018 we launched initial functionalities for Advanced Driving Assistant Systems (ADAS) such as predictive braking and au- tomatic cruise control on current models, and fur- ther innovations will be introduced in future models. Ferrari is carefully monitoring the evolution of autonomous driving technologies, including sen- sors, new chips, artificial intelligence and connec- tivity, and we will select and customize those inno- vations compatible with the Ferrari experience and the highest security standards. These technologies combined with the hybridization and the incoming cybersecurity requirements will also have an im- portant impact on the electronic architecture of our cars and we are presently developing our future electrical and electronic architecture to take into ac- count these requirements. “MAKE OR BUY” APPROACH Ferrari will continue to develop and produce its core components in-house with a strong focus on innova- tion, while co-developing and tailoring best-in-class existing solutions with selected partners. Strategic partnerships in non-core hardware and software areas will provide access to state-of-the-art technol- ogies, helping to maintain a disciplined approach to- wards investment whilst enhancing design, perfor- mance and driving thrills. MANUFACTURING Our production facilities are located in Maranello and in Modena, Italy (see “—Properties”). Our produc- tion processes include supply chain management, production and distribution logistics of cars in our Range models and Special Series, as well as assem- bly of prototypes and avanseries. Notwithstanding the low volumes of cars pro- duced, our production process requires a great va- riety of inputs (over 70,000 product identifier codes sourced from approximately 500 total suppliers) entailing complex supply chain management to en- sure continuity of production. Our stock of supplies is warehoused in or near Maranello, and its manage- ment is outsourced to a third party logistics company. Production of our cars starts with the aluminum bodyworks at our plant in Modena (Carrozzeria Sca- glietti) and the remainder of the manufacturing pro- cess takes place at our plant in Maranello, including aluminum alloy casting in our foundry, engine con- struction, mechanical machining, painting, car as- sembly and bench testing. All parts and components not produced in house at Ferrari are sourced from our panel of suppliers (see “—Procurement”). In recent years we have made significant invest- ments in our manufacturing facilities. Equipment may require substantial investment with the intro- duction of new models or to maintain state-of-the- art technology, particularly in the case of shell tools for the foundry, tools for machining, feature tools for body welding and special mounting equipment for the assembly. Since 2021 we have been acquir- ing additional resources and production equip- ment, mainly in relation to Battery Electric Vehicles (“BEVs”), to successfully manage the new technolog- ical advancements and related challenges resulting from the transition to electrification. Our BEVs and related components will be produced in our e-build- ing, a strategic asset that is expected to be inaugu- rated in June 2024. For additional information relat- ing to our e-building see “—Properties”) As at December 31, 2023, our production pro- cesses employed 1,701 engineers, technicians and other personnel (177 white collar employees and 1,524 blue collar, of which 475 were agency produc- 61 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTtion workers). We have a flexible production organi- zation, which allows us to adjust production capacity to accommodate our expected production require- ments. This is primarily due to the low volume of cars we produce per year and to our highly skilled and flexible employee base that can be deployed across various production areas. In addition, we can adjust our make-or-buy strategies to address fluctu- ations in the level of demand on our internal produc- tion resources. Our facilities can accommodate an increase in production compared to current output with the increase of weekend shifts to address spe- cial peaks in demand. Since 2021 we have increased production with the introduction of a second shift on car assembly lines in addition to the single shift operated on the V8 assembly line. We constantly work to increase the utilization rate and reduce the internal scrap rate and we closely monitor an index of our production efficiency. We are also committed to continually improving the reliability of our cars, reducing defects, and optimize finishing. Unlike most low volume car producers, we op- erate our own foundry and machining department producing several of the main components of our engines, such as engine blocks, cylinder heads and crankshafts. We believe this accelerates product development and results in components that meet our specifications more closely. Engine Production Our engines are produced according to a vertical structure, from the casting of aluminum in our found- ry up to the final assembly and testing of the engine. Several of the main components of our engines, such as blocks and cylinder heads are produced at our foundry in Maranello. For this purpose, we use a special aluminum alloy that includes seven percent silicon and a trace of iron, which improves mechani- cal integrity, as well as our own shell and sand casting molds. Once all components are ready, engines are assembled on different lines for our V12 engines, our V8 and V6 engines, and the V6 engines for Maserati. The assembly process is a combination of automatic and manual operations. At the start of the assembly process, each engine is identified with a barcode and operations are recorded electronically. Every engine goes to the test benches to ensure it delivers the ex- pected performance: approximately 90 to 95 per- cent of engines are cold tested and approximately 5 to 10 percent of engines are also hot tested and mea- sured for power and torque. In 2023, we produced an average of approximately 89 engines per day, in- cluding 16 V12 engines on two-shifts and 52 V8/V6 engines (including 5 V8 turbo engines for Maserati), as well as 21 V6 engines for Maserati. The production of engines for Maserati stopped at the end of 2023 (see “—Manufacturing—Engines for Maserati”). Body Assembly In parallel with the assembly of our engines, we pre- pare our body-shells at our body shop Carrozzeria Scaglietti in Modena. At Carrozzeria Scaglietti we have two different production lines dedicated to the assembly of our V6, V8 and V12 aluminum bodies 62 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fand two dedicated lines respectively for the assem- bly of the Purosangue and the special carbon fiber body for the Daytona SP3. The main components of the body-shells are not produced internally but are sourced from manufacturers of chassis, bodies and carbon fiber parts. We carefully assemble and check the geometric alignment of the various parts with electronic templates and gauges. We then car- ry out aesthetic controls on the surface of the alumi- num panels in order to eliminate any imperfections by either filing or panel beating. Our highly qualified specialists manage specific phases of body-shell manufacturing, such as the completely manual exe- cution of the “aesthetic welding”, a unique joint weld between flank and roof of certain models, including the Roma, giving the impression that the body is one single piece. Personalization and Road Tests During the assembly process of our cars we man- age the fitting of all bespoke interiors, components and special equipment options that our clients choose as part of our personalization program (see “—Sports Car Line-Up—Personalization Offer”). After the assembly phase, every car completes a 40-kilo- meter road test-drive. Finishing and Cleaning After the road test all cars go to the finishing depart- ment. There, we thoroughly clean interior and exte- rior, perform a comprehensive review of the whole car, and polish and finish the bodies to give them their final appearance. Painting Engines for Maserati When transferred to our paint shop, the bodies are mounted on a loading bay, immersed in the catapho- resis tanks and subsequently transferred to a fix- ing gas fired oven at 180°C. After the cataphoresis, the sealing phase of the body is largely automated. Primers are then applied and fixed at 190°C until the completely grey body-shell is ready for painting. All body-shells are cleaned with automatic pressure blowers (to avoid the electrostatic effect) and care- fully brushed with emu feathers (because of their natural electrostatic properties) to clean off any dirt particles or impurities before painting. The painting process is automated for larger surfaces, while it is done by hand for some other localized areas. In 2019, we replaced the robot which performs the applica- tion of the base coat. The whole car is painted at the same time to ensure color harmony. The bodies are finally polished with lacquer to fix the paint and give the bodies their final finish. In 2018, we substituted our clear coat with a new generation 2K (bi-compo- nent) transparent coat that allows us to decrease the temperature of the oven from 140°C to 90°C; this is a very innovative process that allows us to simultane- ously paint aluminum and carbon fiber parts. At the end of the process “aesthetic blacks” are realized by painting any gaps in the car matte black finish. Assembly Line and Final Checks The final assembly of our cars takes place in Ma- ranello. We have three different lines placed at ground level and the first floor of the building. For each model, the initial assembly operations take place simultaneously on different lines and sections to maximize efficiency so while the body is assem- bled on the main line, the powertrain, as well as the cockpit and the doors, are prepared on a separate sub-line. In 2018, the line on the first floor increased from one shift to two shifts. On the first floor there is also the assembly line for the Daytona SP3; since April 2021 the line on the ground floor also increased to two shifts. We produced engines for Maserati from 2003 un- til December 2023, when the contract pursuant to which such engines were produced expired. In 2023, we sold approximately 5,600 engines to Maserati. The engines we produced for Maserati include both engines produced as variants of engines pro- duced for Ferrari cars, such as the V8 engines, which were mounted on Maserati’s highest performing models, such as the Quattroporte and Levante (tur- bo engines), the GranTurismo and the GranCabrio (aspirated engines) and engines produced exclu- sively for Maserati, mainly the F160 3.0-liter V6 Tur- bo engines, to be installed on the Quattroporte and Ghibli, and the F161 engines, to be installed on the Le- vante, Maserati’s SUV. The facilities that were used for the production of Maserati engines have been reallocated to other production activities of the Group. PROCUREMENT We source a variety of components, raw materials, supplies, utilities, logistics and other services from numerous suppliers. We recognize the contribution of our suppliers to our success in pursuing excel- lence in terms of luxury and performance, therefore we carefully select suppliers that are able to meet our high standards. For the sourcing of certain key components with highly technological specifications, we have devel- oped strongly synergic relationships with some of our suppliers, which we consider “key strategic in- novation partners”. We currently rely on selected key strategic innovation partners, including for the supply of transmissions and brakes. We have also developed strong relationships with other industrial partners for bodyworks and chassis manufacturing and for powertrain and transmissions, among oth- er things. Pursuant to our make-or-buy strategy, we generally retain production in-house whenever we have an interest in preserving or developing techno- logical know-how or when we believe that outsourc- 63 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTing would impair the efficiency and flexibility of our production process. Therefore, we continue to in- vest in the skills and processes required for low-vol- ume production of components that we believe im- prove product quality. For the year ended December 31, 2023, the pur- chases from our ten largest suppliers by value ac- counted for approximately 20 percent of total pro- curement costs, and no supplier accounted for more than 10 percent of our total procurement costs. Responsible Supply Chain Our focus on excellence, in terms of luxury, quality, aesthetics and performance, requires us to imple- ment a responsible and efficient supply chain man- agement in order to select suppliers and partners that are able to meet our high standards. Notwith- standing the low volume of cars manufactured, our production process requires a great variety of in- puts entailing a complex supply chain management to ensure continuity of production. We source a va- riety of components (among which transmissions, brakes, driving-safety systems and others), raw materials (such as aluminum or special steel), sup- plies, utilities, logistics and other services from nu- merous suppliers. We encourage the adoption and sharing of sus- tainable practices among our business partners, suppliers and dealers. All suppliers must respect the Ferrari Code of Conduct, which includes the set of values recognized, adhered to and promot- ed by our Company. The Code of Conduct was up- dated to include specific guidelines relating to the respect of human rights, environmental protec- tion, ethical and integrity principles also consider- ing the value chain. The Group make its best effort to ensure that the Code of Conduct is regarded as a best practice of business conduct and is followed by third par- ties, including long lasting relationships and busi- ness partners such as suppliers, dealers, advisors and agents. The selection of suppliers is based not only on the quality and competitiveness of their products and services, but also their adherence to social, ethical and environmental principles. Strategic suppliers are assessed through a risk analysis that aims at identifying critical suppliers, thanks to a mix of financial-compliance and industrial as- sessments. Their growth capability is analyzed to identify where we need to support the develop- ment of our business partners to help them meet the requests of the Group. Furthermore, we have strengthen our suppliers’ qualification and se- lection processes in order to verify not only their technical capability and financial solidity, but also - through a screening methodology - their reliability in terms of ethics, integrity and reputation (the so- called “Compliance Evaluation”). Since 2021, we quantify our CO2eq emissions along the whole value chain. Indirect upstream GHG emis- sions, which accounts for about 55% of our total emis- sions, relates mainly to our supply chain procurement process. In particular, the majority of this stream comes from raw material extraction and component production. For this reason, we are developing en- gagement activities and partnerships with our sup- pliers to identify effective solutions to reduce GHG emissions and to drive the low-carbon transition. In 2023, we identified and engaged 177 suppli- ers who were among the most impactful in terms of GHG emissions in relation to our activities through the CDP Supply Chain questionnaire. In addition, we continue a structured engagement of our supplier base (both Tier 1 and Tier 2 suppliers) to collect quali- tative and quantitative information regarding the cli- mate change impacts of their activities, specifically through Life Cycle Assessments, and to investigate their maturity on environmental issues through the definition of a rating. The information collected al- lows us to identify the activities to be implemented to raise awareness among our suppliers. In particular, most of the direct suppliers were involved to identify emission hotspots on which to focus improvement efforts. Moreover, we are carrying out targeted ti- er-n engagement activities for all major raw materi- als suppliers (aluminum, steel, platinum-group met- als, plastics, carbon fiber), particularly on small- and medium-sized suppliers, in order to search for sus- tainable and low-carbon solutions. In 2022, we started a due diligence process, which was strengthened by joining Drive Sustain- ability(1) in 2023. With this partnership, we were able to engage a selected base of our suppliers (approx- imately 50% of active suppliers of direct materials, accounting for more than 90% of our Annual Pur- chase Value, and about 15% of active suppliers of indirect materials) and to collect comprehensive information on their ESG performance through a structured questionnaire. Suppliers were select- ed based on risk criteria (strategic relevance, geo- graphical location, company size, supplier strategy, product category or service). These initiatives are the starting point of a struc- tured ESG due diligence activity, which will be ex- tended to all suppliers in the coming years. Before engaging a new supplier(2), the competent depart- ments of the Ferrari Group conduct an adequate Compliance Evaluation on the potential supplier to examine its ethical reliability and reputation, its in- volvement in a legitimate and lawful business, and its commitment to share Ferrari’s values of integrity, fairness and compliance. The Compliance Evalua- tion is capable of identifying potential risks for Fer- rari under different perspectives, such as: anticor- ruption, trade sanctions, money-laundering, conflict of interests, ethics and reputation. To further monitor and promote a responsible supply chain, we have appointed a Financial Suppli- er Risk Manager, who convenes a dedicated com- mittee, the Supplier Risk Committee (“SRC”), every three months. The SRC committee is composed of, among others: Group CFO; Head of Purchasing; 64 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Frepresentatives of the Internal Audit, Risk and Com- pliance Department; Group Chief Accounting Offi- cer; Financial Supplier Risk team; Group Treasurer; Purchasing Controller. Other entities otherwise in- volved, or needed for information or advice, are in- volved and invited to participate to the committee’s meetings as necessary. The SRC’s aim is to convey management lines on financially critical suppliers, approving current action plans and mitigating ac- tions, requesting further action plans to mitigate risks that could come from supply relationships or existing critical situations. Conflict minerals Ferrari supports the goal of preventing the exploita- tion of minerals violating human rights, with spe- cific reference to tantalum, tin, tungsten and gold (collectively, “3TG” or “Conflict Minerals”) originated from high-risk or conflict affected countries (“Cov- ered Countries”), that may be included in our cars and/or products. As part of Ferrari’s commitment to respect and promote human rights and the sus- tainability of its operations, Ferrari selects suppliers based not only on the quality and competitiveness of their products and services, but also on their adher- ence to social, ethical and environmental principles, as outlined in Ferrari’s Code of Conduct. Therefore, we place a high priority on responsi- ble sourcing and the integrity of our suppliers, and we strive to ensure that the livelihoods of individuals in Covered Countries are not harmed by our efforts. In particular, Ferrari has developed actions and strategies aimed at complying with the applicable Conflict Minerals National and International rules and regulations, such as by way of example Section 1502 of the Dodd-Frank Act and the subsequent rules pro- mulgated by the U.S. Securities and Exchange Com- mission, requiring companies to determine whether 3TG in their supply chain originated from the Demo- cratic Republic of Congo and its adjoining countries, and whether the procurement of those minerals supported the armed conflict. Due to the complexity of our supply chain, we are dependent upon suppliers to provide the infor- mation necessary to correctly identify the smelters and refiners that produce the 3TG contained in our products and take appropriate action to determine that these smelters and refiners source respon- sibly. In accordance with the Organization for Eco- nomic Co-operation and Development (“OECD”) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict- Affected and High-Risk Areas, we have established an internal management system in relation to the supply of Conflict Minerals with the objective, inter alia, of: • minimizing the trade in Conflict Minerals that directly or indirectly finance or benefit armed groups anywhere in the world; and • enabling legitimate minerals from conflict and high-risk regions to enter Ferrari’s global supply chain, thereby supporting the economies and the local communities that depend on the export of such minerals. Specifically, we: • expect our suppliers to assure that the 3TG in their products do not directly or indirectly fi- nance or benefit armed groups in the Covered Countries; and • require all of our 3TG suppliers to conduct the necessary due diligence and provide us with adequate information on the country of origin and source of the materials used in the products they supply to us. With reference to 2022, 95% of Ferrari’s direct sup- pliers by purchased value submitted responses to our survey. We are strongly committed to increas- ing the coverage of our analysis and the response rate through targeted actions. SALES AND AFTER-SALES Our commercial team is organized in four geo- graphic areas, covering our principal regional end markets: (i) EMEA, (ii) Americas, (iii) Mainland China, Hong Kong and Taiwan, and (iv) Rest of APAC. Dealer Network We sell our cars exclusively through a network of authorized dealers (with the exception of one-offs and track cars which we sell directly to end cli- ents). In our larger markets we act as importer ei- ther through wholly owned subsidiaries or, in China, through a subsidiary partly owned by a local part- ner, and we sell the cars to dealers for resale to end clients. In smaller markets we generally sell the cars to a single importer/dealer. We regularly assess the composition of our dealer network in order to maintain the highest level of quality. At December 31, 2023, our network comprised 178 dealers operating 196 points of sale. We do not presently own dealerships and, while our strategy does not structurally contemplate own- ing dealerships, we retain flexibility to adapt to evolv- ing market requirements over time. We believe that our careful and strict selection of the dealers that sell our cars is a key factor for pro- moting the integrity and success of our brand. Our selection criteria are based on the candidates’ rep- utation, financial stability and proven track records. We are also intent on selecting dealers who are able to provide a purchase and after-sales experience aimed at exceeding our clients’ high expectations. Furthermore, our dealers are committed to promot- ing and marketing our cars in a manner intended to preserve the Ferrari brand integrity and to ensure the highest level of client satisfaction. While dealers may hold multiple franchises, we enjoy a high degree of prominence and level of rep- 65 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTresentation at each point of sale, where the great majority of the client interface and retail experience is exclusive to Ferrari. Our network and business de- velopment team works with all dealers to ensure our operating standards are met. Our rigorous design, layout and corporate identity guidelines guarantee uniformity of the Ferrari image and client interface. Our dealer network has consistently and proac- tively invested in its facilities in recent years and the majority of our dealer network’s worldwide facilities have been upgraded with the latest Ferrari corpo- rate identity guidelines, in order to provide clients with a superior experience while delivering a unique luxury environment and digital touchpoints to com- plement the physical space. Furthermore, at the end of 2023, Ferrari present- ed to its dealer network the Company’s vision on the new Ferrari point of sale, which will be implement- ed starting in 2024, continuing to invest in a strategy aimed at delivering a superior client experience and to foster the relationship between Ferrari and its cli- ent community to an even higher level. Ferrari also uses an omni-touchpoint strategy and continues to engage with dealers and clients at different levels. The client engagement typically takes place at the dealerships, whose ability to pro- mote the client-community life has been reinforced via a new corporate identity implemented in recent years, but also through digital touchpoints such as the MyFerrari App, and through a plan of exclusive experiences organized at our headquarters in Ma- ranello, as well as at a regional or dealer level. Client engagement activities typically feature various car driving opportunities, both on track and on the road. We have also developed and implemented several engagement activities aimed at gathering the cli- ent community and promoting the discovery of our brand, including through experience touchpoints. The Casa Ferrari hospitality has been proposed for several years and 2023 saw the second application of the Universo Ferrari brand exhibition take place in Seoul, South Korea, after the first edition outside of Maranello was held in Sydney, Australia, in Novem- ber 2022. Other important formats of client engage- ment were launched in 2023, with a special focus on driving events, where two new international for- mats were inaugurated: • the Tribute to Le Mans, a tour of modern Ferraris driven by our clients to Le Mans on the occasion of Ferrari’s participation in the 24 Hours race in June 2023; and • the first Ferrari Legacy Tour, a tour that will be dedicated each year to an iconic model of the Company’s history, and open only to such mod- els driven by their current owners. The inaugu- ral 2023 edition was dedicated to the Ferrari F40, while the 2024 edition will be dedicated to the GTO, also commonly referred to as 288GTO. Competence building and training are also key to the implementation of our strategy. Through our 66 in-house Ferrari Academy we provide training to dealers for sales, after-sales and technical activi- ties. This ensures that our dealer network delivers a consistent level of market leading standards across diverse cultural environments. In recent years we have adapted our training strategy by introducing and enhancing virtual-training solutions, including as a result of COVID-19-related restrictions, while continuing to foster expertise in the network at the highest level. We also introduced new courses in ar- eas such as digital commercial execution and luxury experience management, as well as design applied to the personalization experience for clients, with the aim of delivering the best possible client experience. We collect and observe data relating to dealer profitability and financial health to prevent or mit- igate any adverse experience for clients arising from a dealer ceasing to do business or experienc- ing financial difficulties. Our regional executives visit dealerships regularly to monitor and measure performance and compliance with our operating standards. We have the right to terminate dealer re- lationships in a variety of circumstances, including failure to meet performance or financial standards, or failure to comply with our guidelines. Dealer turn- over is relatively low, reflecting the strength of the franchise and our selection processes, but is suffi- cient to guarantee an orderly renewal over time and to stimulate the network’s health and performance. We provide a suggested retail price or a maxi- mum retail price for all of our cars, but each dealer is free to negotiate different prices with clients and to provide financing. Although many of our clients in certain markets purchase our cars from dealers without financing, we offer direct or indirect finance and leasing services to retail clients and to dealers. (See “—Financial Services”). The total number of our dealers as well as their geographical distribution tends to closely reflect the development or expected development of sales vol- umes to end clients in our various markets over time. The chart on the next page sets forth the geo- graphic distribution of our 196 points of sale at De- cember 31, 2023. Our sales are diversified across our dealer net- work, with the largest dealer representing approx- imately 2.9% of our shipments, and our 15 largest dealers representing approximately 23% of our shipments in 2023. As part of our supply and demand management, we determine allocations based on various metrics including expected developments in the relevant market, the number of cars sold historically by the various dealers, current order book of dealers and the average waiting time of the end client in the rel- evant market. Our order reporting system allows us to collect and monitor information regarding end cli- ent orders and is able to assist us in production plan- ning, allocation and dealer management. BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FGEOGRAPHIC DISTRIBUTION OF POINTS OF SALE (POS) AT DECEMBER 31, 2023 HQ Ferrari - Maranello HUBS FNA 56 POS EMEA 92 POS FGC 21 POS APAC 26 POS 67 REGIONS U.S.A. 44 POS Canada POS 5 Latin America 7 POS North Europe 15 POS Central Europe 13 POS West Europe 22 POS East Europe POS 14 South Europe 17 POS Middle East 11 POS Mainland China 17 POS Taiwan POS 3 Hong Kong 1 POS North East Asia 11 POS South East Asia 7 POS Australasia 8 POS FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTParts We supply parts for current and older models of Ferrari to our authorized dealer network. In addition to substitution of spare parts during the life of the car, sales are driven by clients’ demand for parts to customize their cars and maximize performance, particularly after a change in ownership, as well as parts required to compete in the Ferrari  Challenge and other client races. We also supply parts to Fer- rari models currently out of production, with stocks dating back to 1995. The stock of parts for even old- er models is currently owned and managed by a third party which in some cases also manufactures out-of-stock parts based on our designs. The sale of parts is a profitable component of our product mix and is expected to benefit from the increase in the number of Ferrari cars in circulation. After-Sales Dealers provide after-sales services to clients, ei- ther at facilities adjacent to showrooms or in stand- alone service points across 247 facilities worldwide at December 31, 2023. After-sales activities are very important for our business to ensure the client’s continued enjoyment of the car and the experience. Therefore, we enforce a strict quality control on our dealers’ services activities and we provide continued training and support to the dealers’ service person- nel. This includes our team of “flying doctors,” Ferrari engineers who regularly travel to service centers to address difficult technical issues for our clients. We sell cars together with a scheduled program of recommended maintenance services in order to ensure that these cars are maintained to the highest standards to meet our strict requirements for per- formance and safety. Our 7 Year Maintenance Program (free of charge for customers since 2011 on any new cars) is of- fered to further strengthen customer retention in the official network and has been coupled with the possibility to extend the statutory warranty term of our standard warranty terms through the Power warranty coverage program up to the 15th year of life of the car. For certain strictly limited series cars (for example, the LaFerrari and the LaFerrari Aperta) we introduced a Full Warranty Coverage Extension that can be applied after the 36-month commercial contractual warranty. After the 7th year of life, a car (if in perfect main- tenance condition) can be included in the Main Pow- er warranty coverage program (Maintenance and Power) through to the car’s 15th year of life. Between the 15th year of life and the Classiche eligibility (20 year old car) Ferrari provides its customers, in ad- dition to standard maintenance items, also certain specific maintenance kits (Ferrari Premium) to pre- serve car performance and safety systems. When a car follows the full maintenance program up to the 20th year of life, it automatically obtains the Ferrari Classiche certification. While we do not have any direct involvement in pre- owned car sales, we seek to support a healthy sec- ondary market in order to promote the value of our brand, benefit our clients and facilitate sales of new cars. Our dealers provide an inspection service for clients seeking to sell their car which involves de- tailed checks on the car and a certification on which the client can rely, covering, among other things, the authenticity of the car, the conformity to original technical specifications, and the state of repair. Fur- thermore, we offer owners of classic Ferrari cars maintenance and restoration services through the 73 Officina Ferrari Classiche workshops that form part of our service network. In addition, owners of our classic cars can seek assistance in car and engine restorations at our Fer- rari Classiche department in Maranello. FINANCIAL SERVICES We offer retail client financing for the purchase of our cars through the operations of Ferrari Financial Services (“FFS”): • directly in the United States through our fully owned subsidiary Ferrari Financial Services Inc. (“FFS Inc”); • through Ferrari Financial Services GmbH (in partnership with CA Auto Bank) in certain mar- kets in EMEA (primarily the UK, Germany and Switzerland); and • through various partnerships in other Europe- an countries and other major international mar- kets, such as Japan and Mainland China (which may also provide financing to our dealers). Through FFS, we offer a range of flexible, bespoke financial and ancillary services to clients (both cur- rent and new) interested in purchasing a wide range of cars, from our current product range to older pre-owned and classic models. FFS also provides special financing arrangements to a selected group of our most valuable and loyal customers. At December 31, 2023, the consolidated financial services portfolio was €1,451 million and entirely originated in the United States. CLIENT RELATIONS Our clients are the backbone of our business to- gether with our brand and our technology. We do not promote our brand or our cars through general advertising. Our main brand marketing and promo- tional activities have two principal targets. Firstly, we target the general public. Our most sig- nificant effort in this respect is centered on our rac- ing activities and the resonance of Scuderia Ferrari (see “—Racing—Formula 1”). We also reach the gener- al public through the activities of our lifestyle division, through the sale of luxury goods at our stores and online, the brand’s experience parks and museums, and collectibles. We also engage in other brand-pro- 68 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fmotional activities through digital platforms such as eSports, and our official social media channels. Secondly, we target existing and prospective clients on both new car and preowned car sales, seeking to promote clients’ knowledge of our prod- ucts, and their enjoyment of our cars both on road and on track, and to foster long-term relationships with our clients, which is key to our success. In 2023, almost 74% of our new cars were sold to existing Ferrari owners. In recent years, we have pursued a carefully designed enlargement and rejuvenation of our client base, while always respecting the prin- ciple of exclusivity. From January 2022 to January 2023, we have continued to grow our active client base by 10%, re- juvenated our loyal client base with 40% of new cli- ents below 40 years old, and nurtured our best col- lectors who have increased the average number of Ferrari cars they own by 10%. By purchasing our cars, clients become part of a select community sharing a primary association with the Ferrari image and we foster this sense of fellow- ship with a number of initiatives. We strive to max- imize the experience of our clients throughout their period of interaction with Ferrari – from first contact, through purchasing decision process, to waiting-time management and car delivery and enjoyment. Recognizing the importance of digital touch- points to enhance the overall client experience, Fer- rari continues to develop the MyFerrari App, avail- able exclusively for Ferrari clients to enhance and foster their connection to the Ferrari world through the direct distribution of tailored content. This chan- nel enables clients to directly access features and services, strengthening their relationship with the brand and their preferred official Ferrari dealer. Moreover, Ferrari dedicates specific attention to Ferrari clients who have ordered a new car by en- riching their waiting time with dedicated digital con- tent to reinforce their engagement and connection with the Ferrari world. Client and Brand Events These events are a key aspect and attraction for loyal clients to feel the sense of belonging to the Fer- rari community. • In March 2023, the Ferrari Roma Spider was pre- sented to clients with an exclusive event at the El Badi Palace in Marrakesh. • June 2023 was the busiest month for our event calendar. At the beginning of the month, the sec- ond Universo Ferrari brand exhibition outside of Maranello was held in Seoul, South Korea. Guests were offered the opportunity to enjoy various as- pects of the Ferrari experience with special mod- els on display as well as the Regional Premiere of the Purosangue. • At the end of the month, we launched from the En- durance Racing & Corse Clienti building in Fiora- no the SF90 XX Stradale and SF90 XX Spider. • In October 2023, we held a the three-day exhibi- tion at the Hudson Yards complex in New York City that culminated with an exclusive charity auction on October 17th, aimed at supporting the Company’s belief in providing education within communities and offering opportunities for stu- dents from all walks of life. Throughout 2023, the Esperienza Ferrari program based in Fiorano offered clients the opportunity to have a full brand experience at Maranello and to test drive our newest models, the Ferrari Purosangue and the 296 GTB. Clients also had the opportunity to benefit from the exclusive and dedicated Casa Fer- rari hospitality around the world in selected venues, including Formula 1 race weekends in Melbourne, Miami, Silverstone, Singapore and Abu Dhabi, as well as important automotive gatherings like Goodwood Festival of Speed in England and Pebble Beach in Monterey, California. Client Experience on Road Driving events serve the dual objective of allowing clients to enjoy the best emotions of driving a Ferrari, and to foster client loyalty and repeat purchases by creating enhanced opportunities to experience new Ferrari cars. The Ferrari community is a passionate group supported by a wide array of experiences tai- lored to the dreams of modern car owners, classic car connoisseurs, and racetrack enthusiasts. We see nurturing our clients’ passion for driving as a key asset for our future commercial success, particularly in markets where racing traditions are less pronounced. We offer our prospective and existing clients interested in new Ferrari models our Esperienza Ferrari program, which consists of driving sessions with a team of highly qualified and skilled Ferrari instructors and technicians. In ad- dition, we also offer to our clients on-track driving courses (Corso Pilota), catering to different levels of skill and experience and teaching essential driving skills for high performance cars. In selected mar- kets, such as China, we also offer complimentary driving courses on-track to any new car buyer. In addition to on-track activities, we organize var- ious on-the-road driving events for Ferrari owners, both under proprietary formats (Ferrari Cavalcade, including the Cavalcade Classiche that are dedi- cated to our collectors) and with our own branded presence within established driving events. For ex- ample, in the Ferrari Tribute to Mille Miglia and the Ferrari Tribute to Targa Florio, modern Ferrari cars take part in their own dedicated competition before the start of the main racing. There is also a calendar of Ferrari tours organized in various countries al- lowing all Ferrari owners to enjoy their cars on spe- cially curated road journeys. The Ferrari Roma Spider World Premiere event was also part of the experience lived by the partici- pants of the International Cavalcade 2023, which com- prised over 80 Ferrari vehicles travelling through 69 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTMorocco along a 1,000 kilometer route. We held this event, which brought together collectors and clients from all over the world, in Marrakesh, in the Agafay desert and along the Atlantic coast. Models such as LaFerrari and LaFerrari Aperta, Ferrari Monza SP1 and SP2, Daytona, F50 and the one-off P540 Super- fast Aperta paraded before the eyes of passers-by in Marrakesh, Essaouira and Aït Benhaddou. Also in 2023, Ferrari organized its own very spe- cial tribute to celebrate Le Mans’ centenary: some of Maranello’s greatest cars, driven by their owners, un- dertook a five-day tour that culminated in watching the 499P Hypercar storm to victory in the famous 24- hour race. The tribute Le Mans programme included a Ferrari parade around the legendary La Sarthe cir- cuit on the Saturday morning before the race. Finally, this year we launched a new driving event format dedicated to Classiche and their owners: the Legacy Tour. This year’s, and the first edition of the Legacy Tour ended at Fiorano on September 30, af- ter an epic three-day journey on some of Italy’s fin- est roads and was dedicated to the F40, one of the Prancing Horses most celebrated models. Another exclusive driving experience is the Cor- so Pilota Classiche course, led by experts of the Fer- rari Classiche team and aimed at classic car enthu- siasts and clients interested in learning more about the Ferrari Classiche certification program and the storied archives at our Officine Classiche resto- ration department. The initiative also offers the op- portunity to experience on-track driving of the mod- els celebrated on our Fiorano race circuit. Client Experience On Track In the activities organized by the Corse Clienti de- partment, this year the Ferrari Challenge Trofeo Pirelli has crossed the finish line of its 31st season, reaffirming its status as the world’s longest-running single-make championship. Throughout the year, customers have taken part in the Europe, North America, UK series, and the new national series in Japan, which had a successful inaugural season in terms of driver and team participation. During the Finali Mondiali held at the Mugello In- ternational Circuit from October 24 to 29, the sin- gle-make championship recorded a record-break- ing participation with 103 registered drivers representing 24 nationalities competing for the world titles. Additionally, at the Finali Mondiali, two new cars were unveiled: the Ferrari 296 Challenge and the 499P Modificata. The Ferrari 296 Challenge will make its on-track debut at the 2024 Ferrari Challenge Tro- feo Pirelli in the Europe and North America series; from 2025, it will also feature in the UK and Japan se- ries. The Ferrari 499P Modificata is a strictly limited production car designed for non-competitive track use, derived from the Hypercar 499P that won the 24 Hours of Le Mans, with substantial modifications. With the Ferrari 499P Modificata, we launched the new Sport Prototipi Clienti program, allowing its owners to participate in a dedicated event calendar in 2024, shared with F1 Clienti – from the Mugello event in March to the Finali Mondiali in Imola in October – with full Ferrari assistance for vehicle maintenance and technical and logistical support for on-track use. This year, the F1 Clienti and XX Programme achieved remarkable results in terms of participation in internationally organized events, confirming the growth trend already highlighted in the second half of 2022. The 2023 season, concluded at the Finali Mon- diali of Mugello, saw a record attendance of 19 and 56 cars, respectively in the F1 Clienti and the XX Pro- gramme, with a total of 75 units brought to the track by 88 customers from 25 different nationalities. Participation in the activities of the Endurance Club is on the rise, allowing customers to take part in exclusive non-competitive events on the world’s most iconic tracks, with 37 pilots representing 14 nationalities at the 2023 Finali Mondiali. The Corso Pilota program offered customers track driving courses catering to different skill lev- els and experiences, teaching essential skills for high-performance cars. Ferrari Classiche The Ferrari Classiche department supports Ferrari customers in managing their historic Ferrari vehi- cles (over 20 years from their production) with the objective of keeping as many of these classic cars on the road as possible. Services include the certifi- cation of the authenticity of classic Ferrari cars and vehicles of particular historical relevance, the man- agement of Ferrari restoration and repair activities, as well as the management of Ferrari spare parts, including when these are no longer available on the market. The department also provides advice on repair operations carried out on Ferrari Classiche cars within its network. Ferrari Classiche aims to create a platform of information and technical expertise to preserve and enhance over time the awareness and value of Ferrari’s heritage and brand. We view the surviving Ferrari vehicles of historical value as the tangible legacy and incarnation of our brand. The Ferrari Classiche department also supports and encour- ages the direct participation of clients in strategic historical events. The Ferrari Classiche department in Maranello consists of an office of specialists and a workshop in which historic cars are checked, restored and re- paired. In addition, in order to provide an enhanced service to owners away from the main workshop in Maranello, starting from 2017 Ferrari Classiche authorized a new service network with 73 Officina Ferrari Classiche workshops active to date, primar- ily for vehicle repairs and the certifications’ inspec- tions or revalidation. The network is expected to ex- pand in the future. The authenticity of the car with respect to the initial specifications is checked via a technical in- spection, performed either at the Ferrari Classiche 70 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Ffacility in Maranello or at an authorized workshop, and benefits from a comprehensive archive con- taining drawings of each of the individual chassis and details of historical components. Based on the evidence gathered during this inspection, the car is then presented to an expert committee, chaired by the founder’s son, Piero Ferrari, for the certification. At the Maranello workshop, Ferrari Classiche car- ries out full restorations using either original compo- nents and spare parts or replicas manufactured in accordance with the original specifications. Our ser- vice offers our clients the opportunity to restore any classic Ferrari to its original pristine conditions. The Ferrari Classiche department also provides basic technical and instructional support to the Fer- rari Classiche  Academy, a new driving school proj- ect that launched in 2019 for vintage Ferrari cars, in- cluding the Ferrari 308, Ferrari 328, 550 Maranello, MondialT, 250 GT Lusso, 365 GTB4. The Ferrari Classiche department also offers assistance services to customers willing to attend driving events (such as 1000 Miglia or other rally and tour) or static events (such as concours of elegance). Client Satisfaction We are devoted to the highest level of client satis- faction. We have a structured process to assess the overall client satisfaction on product, service provided, events organized by us and the overall client experience with the car. In 2023, we sold ap- proximately 74% of our new cars to existing Ferrari clients, and 40% to clients being current owners of more than one Ferrari. Specific KPIs are constantly monitored and analyzed by the Marketing Intelligence department. The KPIs are measured through bespoke surveys for each car launch and collected for every new model, from range vehicles to special and limited editions. A sim- ilar approach is adopted for evaluating the quality of service and satisfaction of our events. The assessment process can involve proactive- ly submitting online questionnaires and conducting telephone interviews with a sample of customers, or the customers directly reaching out to us. Product satisfaction is evaluated through three different survey typologies in different time frames, which enables us to gather client comments and feedback: • Early stage: at the commercial launch of a new Ferrari model, client/prospect satisfaction is monitored with Demo Test Drives of the new car at dealers’ showrooms (still not purchased). • Second stage: after approximately 3 to 4 weeks of ownership, the first clients of the new mod- el receive a survey, “Report200”, to gather their first impressions of the recently purchased car. A brief questionnaire, managed by the Ferrari Customer Care, is conducted by phone with the initial customers and is terminated after the first 200 replies have been collated. • Third stage: a few months following the launch, a third survey named New Car Buyer Satisfaction (“NCBS”) is sent by email to the initial clients. The NCBS is a more complete, in-depth and detailed 71 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTassessment on the car, and is composed of more than 100 online questions aimed at gathering a thorough feedback of the vehicle. Service satisfaction is monitored through an on- line survey and is evaluated through two different indices: Customer Satisfaction Index (“CSI”) and Ferrari Relationship Index (“FRI”). The purpose of both indices is to evaluate client satisfaction with respect to the sale and after-sale service. CSI fo- cuses more on the latest service offered by the dealer, while FRI focuses on the long-term relation- ship between clients and Ferrari. The results are gathered and analyzed through a statistical model at our headquarters. The results of the product and service satisfac- tion analyses are used to outline any necessary ac- tion plans for current models and, additionally, to identify potential features to be added to the next generation of vehicles. Recent surveys show that client satisfaction for Ferrari products and services has constantly stayed at a very high level. Starting from 2017, to improve the main events for customers’ experience (such as Esperienza Ferrari, Digital or Physical World Premiere, Facto- ry Tour etc.) organized by Ferrari’s headquarters, we have started evaluation of the level of customer satisfaction as well through an online survey using FLOW BETWEEN CLIENTS, DEALERS AND FERRARI digital tools. The results of our analysis are gathered and shared with Operative Marketing. Likewise, the results of surveys aimed at measuring the level of client satisfaction for our Ferrari Driving Courses worldwide (US, Europe, Mainland China), have also been shared with the Corse Clienti department and Hub representatives. Customer Contact Service is centralized at the Group level, except for Mainland China, Hong Kong and the Taiwan region, where the service is provid- ed locally. When a client contacts the customer ser- vice, including the one in Mainland China, Hong Kong and Taiwan, every single inquiry is categorized, monitored and managed until resolved and all spe- cifics are integrated in a globally and centrally-man- aged shared database. We produce period detailed reports to assess the status of inquiries. These re- ports are subsequently shared with the relevant Company departments and made available to deal- ers. All client complaints are addressed and avail- able for consulting through a dynamic dashboard. We developed an integrated system between our customer care, dealers, marketing department and area managers to track all contacts with clients, manage inquiries and share the results of client and dealer satisfaction analysis. The chart below shows the flow between clients, dealers and Ferrari. Questionnaires feedbacks and inquires Questionnaires Ferrari clients Dealer Area Manager Marketing Intelligence Customer care Questionnaires Questionnaires feedback Scorecard and Report Report and Analysis Client inquires Replies to inquires Market research activities (questionnaires and reports) Development (for future models) Production (for current models) 72 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFerrari clientsCustomer careDevelopment(for future models)Production(for current models)DealerMarketingIntelligenceArea ManagerRACING Participation in the FIA Formula 1 World Champi- onship with Scuderia Ferrari and in the World En- durance Championship with the Ferrari Endurance Team is a core element of our marketing effort and promotional activities, as well as an important source of innovation for the support of the techno- logical advancement of Ferrari’s product portfolio. We also compete in the F1 Esports Championship with the Scuderia Ferrari Esports Team and we own the Mugello racing circuit in Scarperia, near Flor- ence, which we rent to racing events organizers. Each of these items is further discussed below. Formula 1 The FIA Formula 1 World Championship is the pin- nacle of motorsports and one of the most watched annual sports series in the world, with 3.1 billion website and social media page views for the 2023 season and an average television audience of 66.6 million viewers per Grand Prix (Source: Formula 1). Formula 1 cars rely on advanced technology, powerful hybrid engines and cutting edge aerody- namics. While Europe is the sport’s traditional base, longstanding non-European venues such as Aus- tralia, Brazil, Canada, Japan, Mexico and the United States have been joined in the last two decades by racing venues in China, Bahrain, United Arab Emir- ates, Singapore, Qatar, Saudi Arabia, Russia and Azerbaijan (although Russia will not host races in 2024). This provides participants in the Formula 1 World Championship exceptional visibility on the world stage. Scuderia Ferrari has been racing in the For- mula 1 World Championship since the series was launched in 1950, and won its first Grand Prix in 1951. We are the only team that has competed in each sea- son since launch and the oldest and most success- ful in the history of Formula 1, with 243 Grand Prix wins. Throughout our racing history, we have won 15 Drivers’ Championships and 16 Constructors’ Championships, more than any other team. Many of the best known drivers in the sport’s history have raced in Scuderia Ferrari’s distinctive red cars in- cluding Alberto Ascari, Juan-Manuel Fangio, Mike Hawthorn, Phil Hill, John Surtees, Niki Lauda, Jody Scheckter, Gilles Villeneuve, Michael Schumach- er and Kimi Raikkonen. Our drivers’ line-up in 2023 comprised Charles Leclerc, the first graduate of the Ferrari Driver Academy training scheme to race for our Formula 1 racing team, and Carlos Sainz, a tal- ented and experienced Spanish driver. In 2021, the new FIA financial regulations en- tered into force and are now applicable as updated in 2023, imposing a cap on certain expenses and in- vestments related to operations and the chassis of the cars which may be incurred by any single For- mula 1 team. Moreover, development activities were also limited by the new regulation and only one de- velopment per component was allowed power units. In December 2021, the World Motor Sport Council validated the framework for the 2026 Power Unit (PU) Regulations, which include technical, operation- al and financial guidelines. The framework identifies key objectives related to, among other things, the en- vironmental impact, cost reduction measures and competitiveness of the FIA Formula 1 World Cham- pionship. A detailed document setting out the 2026 Power Unit Regulations was submitted to the World Motor Sport Council during the course of 2022. They will apply to power units starting from the 2026 season of the FIA Formula 1 World Championship and, consistent with the framework proposed to the Council, are mainly focused on the sustainabili- ty and innovation challenges of Formula 1. The 2026 Formula 1 Power Unit Regulations were approved in August 2022 and apply starting in 2023 for motors to be used in the 2026 season. In 2022, the World Motor Sport Council also approved changes to the 2022 and 2023 Formula 1 Technical Regulations to address safety matters. The Formula 1 2023 World Championship was originally scheduled to include 24 races. However, due to the difficulties linked to the COVID 19 pan- demic, the Chinese Grand Prix was cancelled and, due to heavy flooding in the Emilia Romagna region, the Italian Grand Prix in Imola was also cancelled. In terms of results, the season ended with third place for the Scuderia Ferrari in the Constructors’ Championship, with 406 points, one victory, nine po- diums, seven pole positions, and with fifth and sev- enth place finishes in the Drivers’ Championship, for Charles Leclerc and Carlos Sainz, respectively. Scuderia Ferrari’s continuing participation in the FIA Formula 1 World Championship over the five year period from 2021 to 2025 is governed by two agreements – widely known as New Concorde Agreement - signed on August 18, 2020. The first of such agreements governs the regulatory and gov- ernance aspects of the sport, and the second gov- erns the commercial aspects. The New Concorde Agreement recognizes the historical role of Ferrari, the only team that has participated in all Formula 1 World Championship editions since its inception. In exchange for their participation in Formula 1 races, the participating teams receive a share of a prize fund based on the profits earned from Formula 1-re- lated commercial activities managed by Formula 1, including in particular, promoters’ fees, television broadcasting royalties, partnership agreements and other sources. Shares in the prize fund are paid to the teams, largely based on the relative ranking of each team in the championship. We use our share of these payments to offset a portion of the costs as- sociated with Scuderia Ferrari, including the costs of designing and producing the race cars each year and the costs associated with managing a racing team, including the salaries of the drivers, who are typically among the most highly paid athletes in the world. Please see “Risk Factors—Our revenues from Formula 1 activities may decline and our related ex- penses may grow”. 73 FLOW BETWEEN CLIENTS, DEALERS AND FERRARI Questionnaires feedbacks and inquires Questionnaires Ferrari clients Marketing Intelligence Customer care Questionnaires Questionnaires feedback Scorecard and Report Report and Analysis Client inquires Replies to inquires Market research activities (questionnaires and reports) Development (for future models) Production (for current models) Dealer Area Manager FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTFerrari clientsCustomer careDevelopment(for future models)Production(for current models)DealerMarketingIntelligenceArea ManagerImprovements in technology and, from time to time, changes in regulations typically require the design and production of a new racing car every year. Therefore, in addition to our long-term research and development efforts, we begin designing our cars each year in the spring, in anticipation of the start of the racing season the following March. While the chassis and the power unit we build each year are designed to be used throughout the racing season, the majority of other components fitted on our cars are adjusted from race to race depending on the characteristics of the circuits. To maximize the performance, efficiency and safety of our Formula 1 cars, while complying with the strict technical rules and restrictions set out by the FIA, our research and development team plays a key role in the development of our road cars and their engines. We often transfer technologies initial- ly developed for racing to our road cars. Examples include steering wheel paddles for gear-shifting, the use and development of composite materials, which make cars lighter and faster, and technology related to hybrid propulsion. Our road cars (especially our sports car models) have benefited from the know-how acquired in the wind tunnel by our racing car development teams, enjoying greater stability as they reach high speeds on and off the track. Our research and development team focus on combining minimal lap times with maximum efficiency, leading to advances in kinetic energy recovery systems, or ERS, technology. Cur- rent advanced ERS features two electric motor/ generator units in every car, which allow the car to recover, store and deploy energy generated both by the vehicle during braking and by the exhaust gases through a turbocharger. ten sell older Formula 1 cars to customers for use in amateur racing or collection. The great visibility, both on traditional media and on digital platforms, that Scuderia Ferrari obtains thanks to its participation in the FIA Formula 1 World Championship continues to attract significant spon- sorships. The visibility and placement of partner lo- gos on the car and team uniforms reflect their re- spective level of sponsorship. We use the platform provided by Formula 1 for a number of associated marketing initiatives, such as the hosting of clients and other key partners in Fer- rari Formula 1 Club Hospitality to watch and expe- rience the Grand Prix races with Scuderia Ferrari, and our Formula 1 drivers’ participation in various promotional activities for our road cars. We also of- More generally, Formula 1 racing allows us to promote and market our brand and technology to a global audience without resorting to traditional ad- vertising activities, therefore preserving the aura of exclusivity around our brand and limiting the mar- keting costs that we, as a company operating in the luxury industry, would otherwise incur. World Endurance Championship Ferrari returned to compete in the top class of the FIA World Endurance Championship half a century after its last appearance, with two 499P cars in the Hypercar class, achieving very positive results. The 74 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fseason saw Ferrari win a second place in the Con- structors’ standings, while the crews of cars num- bered 50 and 51 ranked third and fourth, respec- tively, in the Drivers’ standings. The Ferrari team – AF Corse secured six podium and finished with seven championship rounds and two pole positions, debuting at Sebring and Le Mans. Highlight of the season was Ferrari’s performance at the Centena- ry 24 Hours of Le Mans, held on June 10-11, where the 499P car number 51 driven by Pier Guidi-Cala- do-Giovinazzi secured victory in front of a record crowd at the Circuit de La Sarthe, totaling 325 thou- sand spectators. The world’s most important endur- ance race had two Ferraris starting from the front row, with the Hyperpole ending in fifth place with Fuoco-Molina-Nielsen, ahead of their teammates. In the LMGTE Am class, Ferrari concluded the season with a third-place finish in the Drivers’ stand- ings for Flohr-Castellacci-Rigon, who secured a vic- tory at the 6 hour race of Fuji. The second seasonal win for the Prancing Horse was achieved by Perez Companc-Rovera-Wadoux at the 6 hour race of Spa-Francorchamps. Other GT Races The season marked the debut of the 296 GT3, mak- ing its first appearance at the 24 Hours of Daytona in January. The new car, derived from the series in May, achieved extraordinary success at the 24 Hours of Nürburgring, marking the first victory in the history of the Prancing Horse, with Frikadelli Racing Team, and a Pro Am class win with WTM by Rinaldi Racing. Additionally, the 296 GT3 secured a double victory in the overall standings in the final race of the GT World Challenge Europe – Endurance Cup in Barcelona in September, with the AF Corse Francorchamps Mo- tors team. Scuderia Ferrari Esports Team To further enhance the Ferrari experience, we have been increasing our focus on E-sports and the Scu- deria Ferrari Esports Team now competes in the F1 Esports Sim Racing GT Challenge, Formula Sim Rac- ing, VEC and SRO Esports Championship. In 2023, the Ferrari Esports Series expanded to cover Eu- rope, North America, and Asia Pacific with the aim to find new drivers for the Ferrari Esports Team and a program to reach a younger audience worldwide. Mugello Circuit Located in Scarperia just outside Firenze, for more than 100 years the Mugello Circuit has been one of the leading motorsport venues globally. Internation- ally renowned as the host venue for the Italian Mo- toGP Grand Prix since 1976 (and consecutively since 1994), the Formula 1 Grand Prix of Tuscany Ferrari 1000 in 2020, and numerous international motor- sports competitions, the 5,245 metres circuit mim- icking the natural slopes of the Tuscan hills is also famed for its ultimate driving experience and mod- ern facilities. Originally a 66 km road circuit, the first motor- sport events held at Mugello starting from 1914 were regularity. Enzo Ferrari won in 1921 on an Alfa Romeo class 4.500. The current facilities were designed in the early 70’s and later re-modelled in 1988 when Ferrari bought the circuit. Year after year the track has seen consistent improvements in terms of safe- ty with FIA Grade 1 and FIM Grade A certifications, the highest levels of homologation for a racetrack. In 2023, the circuit hosted 248 days of track ac- tivities and 15 race weekends. The circuit was awarded the prize for the Best Grand Prix circuit for a MotoGP event five times (1995, 1996, 1997, 2000, 2011), and is also a lead- er in terms of its sustainability practices. It was the first circuit in the world to obtain FIA’s prestigious “Achievement of Excellence” in 2015 and to be cer- tified according to the sustainable event manage- ment system ISO 20121. In July 2023, the annual analysis carried out by Enovation Consulting ltd. on 97 circuits worldwide, 23 of which host or have host- ed a Formula 1 GP, featured the Mugello Circuit on top of the Sustainable Circuits Index, that ranks the sustainability performance of global circuits against seven key sustainability factors: certifications, ac- creditations, awards, environmental performance, social performance, economic impact, and sustain- ability approach and engagement. In 2023 all certifications were renewed, includ- ing for the international standards for sustainable and event management as well as the system of safety and health management on work places. LIFESTYLE Ferrari’s presence in the wider luxury landscape is a unique opportunity to ensure brand relevance across generations. The role of Ferrari lifestyle is to fuel long term growth by broadening our cus- tomers’ base and expanding our value proposition beyond our core business, while preserving our brand’s DNA, its heritage and values. The goal and mission of our lifestyle strategy is that of bringing to life a universe that encapsu- lates Ferrari’s DNA while accompanying our clients through different stages and moments of their lives. Over the past six years, to strengthen brand de- sirability, Ferrari: 1 Entered into the personal luxury goods segment, a critical segment to broaden our client base, amplifying cultural relevance for the brand es- pecially for future generations. We also launched our clothing and apparel collection through ded- icated fashion shows. 2 Created a new organizational structure, formed by a dedicated and talented team with fashion and luxury expertise based in Milan and working closely with our team in Maranello. 3 Rationalized its licenses by terminating approxi- 75 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTmately half of its license agreements where the product offering and distribution was not con- sistent with the positioning of the Ferrari brand. 4 Completed the rationalization of the retail net- work by closing 7 franchised stores and 4 di- rectly operated stores considered unsuitable for Ferrari’s luxury positioning. We have since relocated and restyled our existing flagship boutiques and opened 3 new ones in the Unit- ed States. Our international network of Ferrari Stores consisted of 14 Ferrari-owned directly operated stores and 2 franchised stores as of December 31, 2023. Ferrari Lifestyle has three pillars: (1) Personal Luxury Goods, (2) Collect- ibles and (3) Experience. 1 Personal Luxury Goods – Will be dedicated to our own refined collec- tion – accessories, apparel and selected merchandising – embodying the style, creativity and quality that we stand for, balancing exclusive- ness and inclusiveness through a carefully combined mix of product categories. Importantly, we will continue to strengthen partnerships with selected licensees, which will allow us to play in complementary territories/categories while being loyal to our brand’s DNA and posi- tioning. Through our network of directly operated stores, we offer a wide range of Ferrari branded products, including our fashion col- lection and selected merchandising and licenses. FERRARI STORE MARANELLO - NEW CONCEPT 2 Collectibles – Will build on the concept of collectability by enlarging and customizing the portfolio of available Ferrari tokens and the of- fer of Ferrari branded products such as high-end watches and high- end writing instruments, consumer electronics, sportswear, toys, leading video games, and other accessories. We will expand the offer of products such as limited editions and one-off artifacts embodying the inherent craftsmanship and innovative spirit that lie behind the creation, design and manufacture of our cars. We believe that this may even become the natural platform to venture into NFTs while le- veraging one block chain technology. 76 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FCOLLECTIBLES AND MEMORABILIA FERRARI STORE MARANELLO - NEW CONCEPT 3 Experience – Through this pillar we intend to nurture our heritage and celebrate our craftsmanship through dedicated and tailor-made experiences. We will capture the essence of the Ferrari spirit by im- mersing customers in the racing history, passion and values of Fer- rari, through our Ferrari museums in Modena and Maranello (which attracted more than 743,000 visitors in 2023), Il Cavallino restaurant in Maranello and our theme parks in Abu Dhabi and Spain. MUSEUM AND PARKS 77 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTINTELLECTUAL PROPERTY We own a number of registered designs and utility patents. We expect the number to grow as we con- tinue to pursue technological innovations and to de- velop our design and brand activities. We file patent applications in Europe, and around the world (including in the United States) to protect technology and improvements considered import- ant to our business. No single patent is material to our business as a whole. REGISTERED TRADEMARKS, DESIGNS AND PATENTS We also own a number of registered trademarks, designs and patents, including approximately 520 trademarks (word or figurative), registered in sev- eral countries and across a number classes. In par- ticular, we ensure that the maximum level of protec- tion is given to the following iconic trademarks, for which we own approximately 4,260 applications/ registrations in approximately 150 countries, in most of the main classes for goods and services: “FERRARI” (WORD) “FERRARI” LOGOTYPE THE “PRANCING HORSE” (FIGURATIVE) FERRARI THE TRADEMARK (FIGURATIVE) THE RACING SHIELD (FIGURATIVE) SCUDERIA FERRARI (WORD & FIGURATIVE) The names of our Range, Special Series and Icona car models and Formula 1 single-seater models are also registered as trademarks (and logotypes) and we also register their domain names and the cars’ design. The protection of intellectual property is also in- creasingly important in connection with our design and brand activities. Therefore, we adopt and follow internal processes and procedures to ensure both that all necessary protection is given to our intellec- tual property rights and that no third party rights are infringed by us. In addition, we are particularly active in seeking to limit any counterfeiting activities regarding our Ferrari branded products around the world. To reach this goal we closely monitor trade- mark applications and domain names worldwide, actively interact with national and local authorities and customs and avail ourselves of a network of ex- perienced outside counsels. PROPERTIES Our principal manufacturing facility is located in Ma- ranello (Modena), Italy. It has an aggregate covered area of approximately 832 thousand square meters. Our Maranello plant hosts our corporate offices and most of the facilities we operate for the design, de- velopment and production of our road and track cars, as well as of our Formula 1 single-seaters. (See “—Manufacturing”). Except for some leased techni- cal equipment, we own all of our facilities and equip- ment in Maranello. In recent years, we have made significant invest- ments in our manufacturing facilities. In 2015, we completed construction of the new building entirely dedicated to our Formula 1 team and racing activi- ties, as well as the new wind tunnel 4WD. In 2018, we completed the new building for the Ferrari Design Centre, which covers more than 7 thousand square meters. In 2019, we completed the office area and workshop area of the New Technical Center for the development of engines and hybrid systems. The en- tire building and the engine and hybrid test benches cover an area of approximately 20 thousand square meters and were completed in 2021. In 2021, we completed the construction of the new building related to new GT sport activities (which covers an area of approximately 6 thousand 78 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FREGISTERED TRADEMARKS, DESIGNS AND PATENTS “FERRARI” (WORD) “FERRARI” LOGOTYPE THE “PRANCING HORSE” (FIGURATIVE) FERRARI THE TRADEMARK (FIGURATIVE) THE RACING SHIELD (FIGURATIVE) SCUDERIA FERRARI (WORD & FIGURATIVE) 79 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTsquare meters near the Fiorano track), the new building for our Formula 1 simulator and the renova- tion of the offices used by our Marketing and Com- mercial department. Between 2019 and 2022 Ferrari acquired land and buildings near its Maranello plants and start- ed the construction of the e-building, which is ex- pected to be inaugurated in June 2024. With a total floor space of over 40 thousand square meters, the e-building is a strategic asset for the construction of electric motors, batteries, electric axles and en- tire automobile assemblies. It features two floors, designed to achieve maximum levels of energy per- formance with heat pump air conditioning systems and a 1.3 MW photovoltaic system installed on the roof. Externally, the building is mainly made with both opaline and transparent glass panels which guarantee a high internal diffusion of natural light and high visual comfort, also supported by the study of colors and modern lighting materials. In addition to condensing the best characteristics of environmental sustainability, the building offers in- ternal and external spaces intended for the well-be- ing of people through the presence of numerous relaxation areas. In 2023 Ferrari added an additional 8 thousand square meters to the New Technical Center in order to speed up the development of electrification activ- ities and boost the ability to test the strategic prod- uct range components. Furthermore, to support the development and production of Formula 1 compo- nents, the Mechanical department was expanded by approximately 2 thousand square meters. The increasing number of employees has made it nec- essary to construct, expand and modernize offices and workspaces. The new Marketing and Commer- cial Department offices and the 4WD Wind Tunnel enlargement, which enables the entire Product De- velopment to accommodate more resources in line with the range plan, have been identified as the most significant buildings in 2023. The total area of these recently constructed buildings is about 4 thousand square meters. In order to attract the attention of Ferrari collaborators, we also moved forward with the development and restructuring of certain re- lated facilities (company restaurant, health & care rooms, and infirmary). Adjacent to the plant is our Fiorano track, built in 1972 and remodeled in 1996, and which covers ap- proximately 3 thousand meters. The track also houses the Formula 1 logistics offic- es. Additional facilities in Maranello include a prod- uct development center, a hospitality area and the Ferrari museum. We also own the Mugello racing circuit in Scarpe- ria, near Florence, which we rent to racing events organizers (see “—Racing—Mugello Circuit”). We own a second plant in Modena, named Car- rozzeria Scaglietti. At this approximately 26 thou- sand square meter plant we manufacture aluminum bodyworks for our regular Range, Special Series and prototype cars. The total carrying value of our property, plant and equipment at December 31, 2023 was €1,575 million. 80 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FEMPLOYEES Human capital is a crucial factor in our success, build- ing on our position as a global leader in the luxury performance car sector and creating long-term, sus- tainable value. To recognize excellence, encourage professional development and create equal opportu- nities, we adopt a number of initiatives, including our appraisal system to assess our middle-managers and white collar employees through performance management metrics; our talent management and succession planning, in addition to assessment plans for blue collars; training and skill-building initiatives; employee satisfaction and engagement surveys, in- cluding our so-called “Pit Stop”, “Pole Position” and “Formula Cultura” programs; and flexible work ar- rangements, commuting programs and a dedicat- ed welfare program, Formula Benessere, which in- cludes, among other programs, Formula Benessere Donna and Formula Benessere Junior (offering med- ical assistance to employees and their families) and Formula Estate Junior (offering Summer Campus to the children of employees). In November 2023 we launched new welfare ini- tiatives starting in 2024 aimed at the employees of the Italian companies of the Group: a medical-health check-up offered annually to all employees to be carried out in-house during working hours and the extension of the Formula Benessere Junior project to the 4-18 age group (compared to the current 5-15 age group). Initiatives to support parenthood were also announced, which include greater flexibility for those who can work in agile mode and paid leave for employees with children up to the age of 10. At December  31, 2023, we had a total of 4,988 employees, including 161 managers and senior managers. Of these employees, 4,666 were based at our Maranello facility and 322 were based in offices around the world (including 27 managers and senior managers), mostly in North America and China. White-collar employees and middle-managers Italy Rest of the world Blue-collar employees Italy Rest of the world Managers and senior managers December 31, 2022 2,441 2,163 278 2,326 2,317 9 152 2023 2,568 2,282 286 2,259 2,250 9 161 2021 2,276 2,039 237 2,190 2,180 10 143 Total 4,988 4,919 4,609 Approximately 12 percent of the employees were trade union members in 2023. Our employees’ prin- cipal trade unions are Federazione Italiana Met- almeccanici (FIM-CISL), Unione Italiana Lavoratori Metalmeccanici (UILM-UIL), Federazione Italiana Sin- dacati Metalmeccanici e Industrie Collegate (FISMIC) and Federazione Impiegati Operai Metallurgici (FI- OM-CGIL). All of our managers are covered by collective bargaining agreements signed by the Italian trade union, Federmanager, signed on April 28, 2023. Our other employees are covered by two agreements: the first one entered into by FCA, CNH Industrial, Iveco and Ferrari with FIM-CISL, UILM-IUL, FISMIC, UGL and AQCF, signed on March 8, 2023; the second one en- tered into by Ferrari and FIM-CISL, UILM-IUL, FISMIC, signed on November 13, 2023 and named “Accor- do Premio di Competitività Ferrari”, which includes, among other things, the payment of bonuses linked to performance for certain categories of employees. in November 2023, Ferrari an- nounced 250 new hires to be carried out in the first six months of 2024, half of which should be con- In addition, firmed in January. In addition, we will also launch a se- ries of welfare initiatives aimed at providing an even greater support for our employees, including the parenting support and the health check-ups. More- over, a broad-based share ownership plan will be launched in the early months of 2024. Each employ- ee will be given the option to become a shareholder of Ferrari, receiving a one-off grant of shares, free of charge, worth up to a maximum of approximately Euro 2,065, in line with the relevant tax regulations. The Company plans to extend this plan to the em- ployees of all non-Italian subsidiaries, in accordance with applicable national legislations. In addition to the collective bargaining agree- ments, we have individually negotiated agreements with several of our managers and other key employ- ees providing for long-term incentives, exclusivity and non-compete provisions. REGULATORY MATTERS We manufacture and sell our cars around the world and our operations are therefore subject to a variety 81 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTof laws and regulations relating to environmental, health and safety and other matters. These laws reg- ulate our cars, including their emissions, fuel con- sumption and safety, as well as our manufacturing facilities and operations, setting strict requirements on emissions, treatment and disposal of waste, wa- ter and hazardous materials and prohibitions on environmental contamination. Our vehicles, togeth- er with the engines that power them, must comply with extensive regional, national and local laws and regulations, and industry self-regulations (including those that regulate vehicle safety). However, we cur- rently benefit from certain regulatory exemptions, because we qualify as an SVM or similar designa- tion in certain jurisdictions where we sell cars. As outlined below, these exemptions provide a range of benefits, from less stringent emissions caps and compliance date extensions, to exemptions from zero emission vehicle production requirements. We are in substantial compliance with the rele- vant regulatory requirements affecting our facilities and products around the world. We constantly mon- itor such requirements and adjust our operations as necessary to remain in compliance. APPROVAL AND MARKET SURVEILLANCE In 2018, the European Parliament and European Council issued Regulation 2018/858, establishing the new framework for the approval and market surveillance of motor vehicles (repealing Direc- tive 2007/46/EC). While the previous regulatory framework of Directive 2007/46/EC was focused on technical standards, the new regulation has a broader scope by including market surveillance re- quirements in order to ensure the enforcement of applicable standards. The key objectives of Regula- tion 2018/858 are: enhancing the independence of technical services (i.e. the approved testing labora- tories) as well as improving the quality of the testing of vehicles and setting stricter requirements for technical services; introducing market surveillance in order to verify the conformity of vehicles on the market to the applicable standards, and requiring corrective measures in case of non-compliance or where a vehicle poses a safety risk or a risk to the environment; strengthening the type approval sys- tem with more stringent oversight by the EU. The Commission has the power to suspend, restrict or withdraw the designation of technical services, to order recalls, and to impose financial penalties. GREENHOUSE GAS/CO2/FUEL ECONOMY LEGISLATION European legislation limited fleet average green- house gas emissions for new passenger cars to 130 grams of CO2 per kilometer for the period 2015-2019. Due to our SVM status under EU regulations we ben- efited from a derogation from the 130 grams per kilometer emissions requirement available to small volume and niche manufacturers during that pe- riod. Pursuant to that derogation, we were instead required to meet yearly CO2 emissions targets, be- ginning in 2012, reaching a target level of 290 grams per kilometer in 2016 for our fleet of EU-registered vehicles that year. Despite global shipments ex- ceeding 10,000 vehicles in 2019, Ferrari continued to qualify as an SVM under EU regulations, because its total number of registered vehicles in the EU per year is less than 10,000 vehicles. In 2014, the European Union set new 2020 emis- sions targets, calling for 95 percent of a manufac- turer’s full fleet of new passenger cars registered in the EU in 2020 to average 95 grams of CO2 per kilo- meter, rising to 100 percent of the fleet in 2021. The 2014 regulation extends the small volume and niche manufacturers derogation. Pursuant to the deroga- tion approved by the European Commission follow- ing our petition, we were required to meet certain CO2 emissions target levels in the 2017-2021 period, reaching a target of 277 grams per kilometer in 2021 for our fleet of EU-registered cars that year. In 2019, the European Union set new 2025 and 2030 emissions targets, calling for respectively a 15 percent and 37.5 percent reduction of the target applicable in 2021. An incentive mechanism for zero and low emission vehicles was also introduced. This new regulation (EU 2019/631) continues to state that it is not appropriate to use the same method to de- termine the emissions reduction targets for large volume manufacturers as for small volume man- ufacturers that are considered as independent. Therefore, Ferrari and other SVMs have the possi- bility to continue to apply for alternative emissions reduction and are required to submit the application at the latest by October 31 of the year in which the related derogation shall apply. The regulation EU 2019/631 sets out new EU rules on monitoring and reporting of average emis- sions: the Commission will have to ensure the re- al-world representativeness of the CO2 emission values based on data from the fuel consumption meters installed in new cars and will be obliged to publish the performance of each manufacturer. For this purpose, the Commission issued in March 2021 the Implementing Regulation EU 2021/392 requiring manufacturers to collect and report the real-world on-board fuel consumption monitoring (OBFCM) data and the vehicle identification numbers of new cars registered starting from January 1, 2021, unless the vehicle owner expressly refuses to make that data available. The European Commission will then publish real-world data on an annual basis, aggre- gated at the level of manufacturer for comparison of the same set of vehicles between data recorded in the certificates of conformity and the real-world data. In addition, regulation EU 2019/631 requires the European Commission to evaluate the possibility of a common methodology for the assessment and the consistent data reporting of full life-cycle emis- sions from cars. The regulation also includes pro- visions on in-service conformity testing and on de- tecting strategies which may artificially improve the 82 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FCO2 performance. Because of these requirements, the European Commission developed the Delegat- ed Regulation (EU) 2023/2867 setting out the guid- ing principles for defining the in-service verifica- tion procedures. Detailed technical provisions (e.g. test procedures, statistical evaluations, tolerances, pass/fail criteria, etc.) for the in-service verification procedures have been defined in the Implementing Regulation EU 2023/2866. The European Green Deal, adopted by the Euro- pean Commission in December 2019, has at its core combating climate change and reaching the objec- tives of the Paris Agreement and other environmen- tal goals (including addressing air pollution). One of its central elements is the 2050 climate neutrality objective. The European Commission enshrined the 2050 climate neutrality objective into EU law entered into force in July 2021. In order to set the EU on a sus- tainable path to achieve climate neutrality by 2050, the European Commission has also presented a net EU-wide, economy-wide plan to reduce greenhouse gas emissions by at least 55 percent by 2030, com- pared to 1990 levels. Building on the existing legislation and the EU’s 2030 climate ambitions, the European Commission also published the “Fit for 55” Package on July 14, 2021, which includes a proposed amendment to the regulation EU 2019/631. Regulation (EU) 2023/851 amending Regulation (EU) 2019/631 on CO2 emis- sion performance standards for new passenger cars and for new light commercial vehicles was published in the EU Official Journal on 25 April 2023 and entered into force in May 2023. In particular, the provision granting a derogation from the specific emissions targets to manufacturers responsible for between 1,000 and 10,000 new passenger cars in a calendar year will remain until 2035 included. Moreover, both the proposals to increase the 2030 CO2 emissions target from a 37.5% to a 55% reduc- tion compared to 2021 and introduce a 2035 target whereby CO2 emissions from new cars and vans would have to be 100% lower compared to 2021 have been confirmed. For the first time, the Com- mission has introduced in this Regulation a legal basis for registering vehicles beyond 2035 running exclusively on CO2 neutral fuels. However, specific regulatory instruments are needed to implement this possibility. Similarly to the EU, Switzerland introduced CO2 emission regulations for new cars in July 2012. De- spite the existence of some specificities within the Swiss regulation, derogations aligned with EU reg- ulation have been granted to SVMs up to and includ- ing 2021. Switzerland has historically adopted the targets approved by the European Commission. On November 24, 2021, the Swiss Federal Council amended the CO2 emission regulations for cars and vans. This regulation was repealed starting from January 1, 2022 and the vehicles of niche and small volume manufacturers have to meet the same CO2 emission targets as the large volume manufactur- ers. This change in legislation is expected to result in additional costs for Ferrari, either through penal- ties or the purchase of emissions credits from other manufacturers. Such additional costs were not ma- terial in 2022-2023 and Ferrari does not expect that they will be material in the future. In the United States, both Corporate Average Fuel Economy (“CAFE”) standards and greenhouse gas emissions (“GHG”) standards are imposed on manu- facturers of passenger cars. Because the control of fuel economy is closely correlated with the control of GHG emissions, the United States Environmental Protection Agency (“EPA”) and the National Highway Traffic Safety Administration (“NHTSA”) have sought to harmonize fuel economy regulations with the regulation of GHG vehicle emissions (primarily CO2). These agencies have set the federal standards for passenger cars and light trucks to meet an estimat- ed combined average fuel economy (CAFE) level that is equivalent to 35.5 miles per U.S. gallon for 2016 model year vehicles (250 grams CO2 per mile). In Au- gust 2012, these agencies extended this program to cars and light trucks for model years 2017 through 2025, targeting an estimated combined average emissions level of 163 grams per mile in 2025, which is equivalent to 54.5 miles per gallon. On September 27, 2019 the EPA and the NHTSA issued the “Safer Affordable Fuel-Efficient (SAFE) Ve- hicles Rule Part One: One National Program” (SAFE I Rule). These rules would exert federal preemption authority under the CAFE statute over California’s ability to regulate greenhouse gases and would re- voke the current EPA waiver under the Clean Air Act which had authorized California to regulate GHG from motor vehicles. The state of California along with other states and certain NGOs filed challeng- es to these rules in both US District Court for the District of Columbia and the United States Court of Appeals D.C. Circuit. In May 2021, the NHTSA issued a notice of proposed rulemaking proposing to fully repeal the SAFE I Rule. In December 2021, NHTSA’s proposal was finalized. On March, 31, 2020 the EPA and the NHTSA issued the final SAFE Vehicles Rule (Part Two) setting CAFE and carbon dioxide emissions standards for model years 2021-2026 passenger cars and light trucks. Under the SAFE Vehicles Rule (Part Two), the overall stringency of the federal standards is significantly reduced from the levels previously set as the final rule will increase stringency of CAFE and CO2 emis- sions standards by 1.5 percent each year through model year 2026, as compared with the standards issued in 2012, which would have required annual in- creases of approximately 5 percent. In August 2021, the EPA published a notice of proposed rulemaking proposing to strengthen federal GHG emissions standards for passenger cars and light trucks by set- ting stringent requirements for reductions from for model years 2021-2026. This rulemaking has been finalized in December 2021. Consistently with the EPA’s approach, in September 2021 the NHTSA pub- lished a notice of proposed rulemaking proposing revised fuel economy standards for passenger cars 83 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTand light trucks for model years 2024-2026. In July 2022, the NHTSA’s final rule on CAFE standards for model years 2024 through 2026 entered into force. Specifically, model years 2024 and 2025 standards increase in stringency by 8% each year relative to the prior year, model year 2026 standards increase by 10%. The CAFE standards reach approximate- ly 49 miles per gallon in 2026 (U.S. fleet average) as compared to 36 mpg in model year 2021, individual manufacturer’s standards will vary from these fig- ures depending on fleet and vehicle size mix. EPA re- leased its 2027 and later Multi-Pollutant Rulemaking notice of proposed rulemaking, introducing among other requirements, stricter emission standards of GHGs as well as criteria and air toxic pollutants from light- and medium-duty vehicles. Moreover, SVM’s special provisions have almost been completely eliminated; specifically, GHG alternative standards have been removed from MY 2025. Ferrari actively engaged in discussions with EPA, also submitting comments on the proposed rulemaking. Anticipat- ing the publication of the final rule in 2024, Ferrari remains attentive to developments in this regard. In August 2023, also NHTSA published a Notice of Pro- posed Rulemaking setting more stringent fuel econ- omy standards for passenger cars for the model years 2027-2032. Under current regulation, for model years 2017- 2026, the EPA allows a SVM, defined as an operation- ally independent manufacturer with less than 5,000 yearly unit sales in the United States, to petition for a less stringent standard. The EPA has granted us SVM status. We therefore petitioned the EPA for al- ternative standards for the model years 2017-2021 and 2022-2025, which are aligned to our technical and economic capabilities. On July 31, 2019 the EPA published a Notice in the U.S. Federal Register (Fed- eral Register /Vol. 84, No. 147) that in part proposed that Ferrari be permitted an alternative standard substantially in line with the alternative standard that Ferrari proposed to the EPA for model years 2017-2021. The EPA approved Ferrari proposed standards for model years 2017-2020, whereas it required a small reduction for the model year 2021 standard. On June 25, 2020, the EPA Administrator signed the final determination for alternative GHG standards for SVMs for model years 2017 through 2021. Ferrari actively engaged in discussions with the EPA throughout the years, submitting in 2018 a petition for alternative standards in the model years 2022-2025. No response has been received from the EPA regarding this petition. However, in the afore- mentioned 2027 and later Multi-Pollutant Rulemak- ing notice of proposed rulemaking published in May 2023, it is noteworthy that the EPA allows SVMs to ad- here to the 2021 standard until the model year 2024 is included. Starting with model year 2025, SVMs should comply with mainstream standards with a certain phase-in. This potential adjustment could im- pact our operations and we will closely monitor de- velopments in the upcoming fiscal year. In September 2016, we petitioned the NHTSA for recognition as an independent manufacturer of less than 10,000 vehicles produced globally, and we proposed alternative CAFE standards, for model years 2017, 2018 and 2019. Then, in December, 2017, 84 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fwe amended the petition by proposing alternative CAFE standards for model years 2016, 2017 and 2018 instead, covering also the 2016 model year. In 2019, our global production exceeded 10,000 ve- hicles, and therefore we are not considered a SVM by the NHTSA for model year 2019. We previous- ly purchased the CAFE credits needed to fulfill this deficit. On July 15, 2020, we submitted to the NHT- SA a petition for an exemption from the CAFE stan- dards for the model year 2020. We proceeded with this submission because, although Ferrari original- ly intended to produce more than 10,000 vehicles in 2020, actual production was lower than 10,000 vehicles as a result of the COVID-19 pandemic and the related shutdown of our production facilities. Therefore since we met the NHTSA definition of a SVM, we have requested an alternative fleet aver- age CAFE standard for model year 2020 standard. In July 2022, NHTSA published a proposed decision to exempt Ferrari from the generally applicable CAFE standards for the model years petitioned and es- tablished alternative standards at the levels already achieved. The final decision is expected in the near future. We purchased the CAFE credits needed to fulfill our model year 2021-2022 deficit and we are currently evaluating the purchase of credits for 2023. We expect to continue to purchase credits in the coming years if required. As the state of California has been granted spe- cial authority under the Clean Air Act to set its own ve- hicle emission standards, the California Air Resourc- es Board (“CARB”) enacted regulations under which manufacturers of vehicles for model years 2012- 2016 which are in compliance with the EPA green- house gas emissions regulations are also deemed to be in compliance with California’s greenhouse gas emission regulations (the so-called “deemed to com- ply” provision). In November 2012, the CARB extend- ed these rules to include model years 2017-2025. In 2017 CARB performed a technical assessment re- garding greenhouse gas standards for model years 2022 through 2025, in parallel with the EPA and the NHTSA, and confirmed in March 2017 that the stan- dards defined in 2012 may be still considered appro- priate. On December 12, 2018 the CARB amended its existing regulations to clarify that the “deemed to comply” provision would not be available for model years 2021-2025 if the EPA standards for those years were altered via an amendment of federal regula- tions. On September 19, 2019, the NHTSA and the EPA established the “One National Program” for fuel economy regulation, taking the first step towards fi- nalizing the agencies’ August 2018 proposal by an- nouncing the EPA’s decision to withdraw California’s waiver of preemption under the Clean Air Act, and by affirming the NHTSA’s authority to set nationally ap- plicable regulatory standards under the preemption provisions of the Energy Policy and Conservation Act (EPCA). On March 9 2022, EPA rescinded its with- drawal of the waiver for California’s light-duty vehi- cle GHG and zero emission vehicle (ZEV) standards. California and Section 177 states may again enforce those standards. Subsequently, CARB clarified that the compliance with CARB’s GHG regulations is ex- pected from model year 2021 for all manufacturers. Ferrari meets the requirements to be classified as 85 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTan SVM based on the relevant regulations in the state of California. Therefore, in 2023, in agreement with CARB, Ferrari petitioned for SVM 2021-2025 alter- native standards. No official approval has been re- ceived from CARB to date. It may be necessary also to increase the number of tests to be performed in order to follow the CARB specific procedures. While Europe and the United States lead the im- plementation of these fuel consumption/CO2 emis- sions programs, other jurisdictions typically fol- low on with adoption of similar regulations within a few years thereafter. In China, for example, Stage IV targeted a national average fuel consumption of 5.0L/100km by 2020. In September 2017, the Chinese government issued the Administrative Measures on CAFC (Corporate Average Fuel Consumption) and NEV (New Energy Vehicle) Credits. This regulation establishes mandatory CAFC requirements, while providing additional flexibility for SVMs (defined as a manufacturer with less than 2,000 units import- ed in China per year that achieve a certain minimum CAFC yearly improvement rate). Manufactures that exceed the CAFC regulatory ceiling are required to purchase NEV credits. The Stage V regulation, issued on December 31, 2019, sets the fuel consumption fleet average tar- gets for the period 2021-2025, targeting a national average fuel consumption of 4.0 l/100km by 2025. Following the adoption of the Stage V fuel consump- tion regulation, an update to the Administrative Mea- sures on CAFC and NEV credits was published in June 2020, keeping the additional flexibility for SVMs and relaxing the minimum CAFC yearly improve- ment rate required. The stage VI regulation is cur- rently under development with the aim to strength- en 2026-2030 fuel consumption fleet average targets. In addition to the fuel consumption target on the entire fleet, the Chinese regulation GB 19578- 2021 sets specific fuel consumption limits on model types. Currently, this standard is only applicable to domestic cars, as it is not adopted by the China Cer- tification and Accreditation Administration (CNCA). In the current Ferrari portfolio, only the plug-in hy- brid models would be compliant with this regulation. Ferrari is closely monitoring the ongoing revision of the GB 19578-2021 standard, which currently in- volves more stringent limits. Assessing the potential implications, particularly its potential applicability to importers, remains a priority for us. Following the same approach also with respect to pure electric vehicles, during 2021 the relevant Chinese authori- ties have published a notice to call for participation in a working group that should define the energy consumption limit standards for electric vehicles; the working group was established in 2022 and re- searches are ongoing. In the future, driving bans on combustion engine vehicles could be imposed, particularly in metropol- itan areas, promoting progress in electric and hy- brid technology. On September 23, 2020, the Gover- nor of California issued an executive order requiring that all in-state sales of new passenger vehicles be zero-emission by 2035. CARB developed regulations among the Advanced Clean Cars II (ACC II) regula- tory package to implement such executive order. The ACC II regulations entered into force in Novem- ber 2022 and will seek to increase the number of zero-emission vehicles (ZEVs) for sale and reduce criteria and greenhouse gas emissions from new light- and medium-duty vehicles beyond the 2025 model year. During 2021, the state of Washington introduced legislation that could phase out sales of non-ZEVs. The Washington State House bill 1204 ti- tled “Clean Cars 2030” provides that all privately and publicly owned passenger and light duty vehicles of model year 2030 or later registered in Washing- ton state must be electric vehicles and the state’s transportation commission will now work on a scoping plan for achieving the 2030 requirement, anticipating the California target by five years. In November 2020, the UK Prime Minister, the Trans- port Secretary and the Business Secretary an- nounced, in the context of the 10-Point Plan for a Green Industrial Revolution, the end of the sale of new petrol and diesel cars in the United King- dom by 2030. On July 14, 2021 the UK Government published the Green Paper on a New Road Vehicle CO2 Emissions Regulatory Framework for the Unit- ed Kingdom. The commitment is to reach net zero carbon emissions by 2050. Following Brexit, the UK Government intends to define the legal framework to deliver the internal combustion engine vehicles phase out dates announced in November 2020 by the Prime Minister’s Ten Point Plan for a Green in- dustrial Revolution. To achieve this goal, the UK De- partment for Transport proposed an ambitious and challenging Zero Emissions Vehicle (ZEV) mandate, in terms of its starting point (i.e. 2024), annual tra- jectory targets and in terms of the announced very limited flexibility to achieve these targets. The final rule of the UK - ZEV Mandate and CO2 Emissions Reg- ulation was released in December 2023, establishing new annual targets for Stage I (2024 - 2030). Stage II (2031 - 2035) requirements will be defined in the future. The Regulation also includes recent updates from UK Government on the end of sale of new pet- rol cars, which has been postponed from 2030 to 2035. Manufacturers responsible of less than 2,500 registrations in UK per year can benefit from spe- cial provisions. This will put the United Kingdom on course to be the first G7 country to decarbonize cars and vans. EXHAUST AND EVAPORATIVE EMISSIONS REQUIREMENTS In 2007, the European Union adopted a series of up- dated standards for emissions of other air pollut- ants from passenger and light commercial vehicles, such as nitrogen oxides, carbon monoxide, hydro- carbons and particulates. These standards were phased in from September 2009 (Euro 5) and Sep- tember 2014 (Euro 6) for passenger cars. In 2016, the European Union established that Euro 6 limits shall 86 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fbe evaluated through Real Driving Emissions (RDE) measurement procedure and a new test-cycle more representative of normal conditions of use (World- wide Light Vehicles Test Procedure). SVMs (vehicle manufacturers with a worldwide annual production lower than 10,000 units in the year prior to the grant of the type-approval) are required to be compliant with RDE standards starting from 2020 while non- SVMs have been required to comply with RDE stan- dards starting from 2017. We believe all new Ferrari models are fully compliant with RDE requirements. In 2018, the European Commission issued Regula- tion 2018/1832 for the purpose of improving the emission type approval tests and procedures for light passenger and commercial vehicles, including those for in-service conformity and RDE and intro- ducing devices for monitoring the consumption of fuel and electric energy. Under the EU Regulation, which became applicable in January 2019, among other things, the extended documentation package provided by manufacturers to type approval author- ities to describe Auxiliary Emission Strategies (AES) is no longer required to be kept confidential, and the decision whether to allow access to such documen- tation package is left to national authorities. In addi- tion, the Regulation introduced a new methodology for checking In-Service Conformity (ISC) which in- cludes RDE tests. Compliance is tested based on ISC checks performed by the manufacturer, the grant- ing type approval authority (GTAA), and accredited laboratories or technical services. Test results will be publicly available; in addition, the GTAA will pub- lish annual reports on the ISC checks performed, in order to improve transparency. On December 13, 2018, the General Court of the Eu- ropean Union issued a ruling on the action started in mid-2016 by the cities of Madrid, Brussels and Paris on the legality of the Commission introducing in the second RDE Regulation (2016/646) RDE conformity factors (CF) which had the effect of increasing the emission limits. This led to the appeal proceedings during 2019 against the General Court’s judgment that annulled the conformity factors in the RDE leg- islation. The European Court of Justice delivered its judgment on January 13, 2022, overturning the Gen- eral Court’s decision. The European Court of Justice considered that since the cities of Paris, Brussels and Madrid are not directly concerned by the regu- lation they contested, their actions seeking its annul- ment must be dismissed as inadmissible. During 2019, the European Commission announced that it will propose more stringent air pollutant emis- sions standards for combustion-engine vehicles. The European Commission created an Advisory Group on Vehicle Emission Standards (AGVES), by joining all the relevant expert groups working on emission legislation, in order to provide technical advice for the development of the post-EURO 6/VI emission standards for motor vehicles. In March 2020, the European Commission launched a public consulta- tion on its roadmap outlining the policy options that it could pursue in revising the emission standards for light and heavy duty vehicles (Euro 7). This initia- tive is part of the European Green Deal, advocating the European automotive industry’s role as a lead- er in the global transition to zero-emission vehicles. 87 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTOn November 10, 2022, the European Commission presented its Euro 7 proposal combining the re- quirements laid down for light-duty and heavy-duty vehicles, inclusive of updated testing protocols and new pollutant emissions limits for fine particles and ammonia. However, the Commission decided not to tighten existing emission limits for internal combus- tion cars compared to the Euro 6 standard in light of the current geopolitical and economic circumstanc- es. According to the proposal, manufacturer of few- er than 10,000 new passenger cars registered in the European Union per calendar year could benefit from five years of additional lead time with respect to new registrations requirements and several oth- er accommodations. New non-exhaust emissions limits (i.e. brake emissions, tires abrasion, refueling emissions) and stricter existing non-emissions limits (i.e. evaporative emissions) have also been proposed, as well as a minimum performance threshold on bat- tery durability and real-time measurements through on-board-monitoring requirements (including com- munication over the air and cybersecurity obliga- tions). European co-legislators reached a provision- al agreement on the Euro 7 proposal on December 18, 2023. Euro 7 technical elements are expected to be laid down by implementing acts in the future. De- pending on the regulatory developments to come, the technological solutions required to ensure compliance with Euro 7 standards may affect cus- tomers’ expectations on performance, sound and driving experience. Despite the ongoing work related to Euro 7 rulemaking, in May 2022 the European Commis- sion submitted the draft Regulation amending EU 2017/1151 to a public consultation, with the pur- pose of introducing three additional phases in Euro 6 Regulation (i.e. Euro 6e, Euro 6e-bis, Euro 6e-bis- FCM). The final Regulation (EU) 2023/443 was pub- lished in the EU Official Journal on 2 March 2023 and entered into force as from 1 September 2023. The Regulation aims to adapt the European regu- lation to the technical progress achieved in the UN Regulations test procedures and, among others, it introduces an Auxiliary Emissions Strategy (AES) in- dicator to indicate when a vehicle runs in AES mode. Moreover, as recent European driving data showed that the real world share of plug-in hybrid vehicles total mileage in electric mode is much smaller than assumed for regulatory purposes, the proposal includes adjusting the current method for deter- mining the fuel and energy consumption values for those vehicles. The European Commission is also expected to assess and evaluate the current noise emissions lim- its, with the risk of more stringent thresholds. In the United States, the “Tier 3” Motor Vehicle Emission and Fuel Standards issued by the EPA were finalized in April 2014. With Tier 3, the EPA has estab- lished more stringent vehicle emission standards, requiring significant reductions in both tailpipe and evaporative emissions, including nitrogen oxides, volatile organic compounds, carbon monoxide and particulate matter. These standards are intended to harmonize with California’s standards for 2015-2025 model years (so called “LEV3”) and have been imple- mented over the same timeframe as the U.S. federal 88 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FCAFE and GHG standards for cars and light trucks de- scribed above. Because of our status as an operation- ally independent SVM, Ferrari obtained a longer, more flexible schedule for compliance with these stan- dards under both the EPA and California Program. In November 2022, the California Air Resources Board published the already mentioned ACC II regu- lations amending the Low Emission Vehicle (or LEV) Regulation to reduce both tailpipe and evaporative emissions. Several accommodations applicable to SVMs were included. In addition, California is moving forward with other stringent emission regulations for vehicles, includ- ing the Zero Emission Vehicle regulation (ZEV). The ZEV regulation requires manufacturers to increase their sales of zero emissions vehicles year on year, up to 100 percent of vehicles sold in the state by 2035. Because we currently sell fewer than 4,500 units in California, we are exempt from these re- quirements until model year 2035. Additional stringency of evaporative emissions also requires more advanced materials and techni- cal solutions to eliminate fuel evaporative losses, all for much longer warranty periods (up to 150,000 miles in the United States). In response to severe air quality issues in Beijing and other major Chinese cities, in 2016 the Chinese government published a more stringent emissions program (National 6), providing two different levels of stringency (6a and 6b) effective starting from 2020. In July 2018 China’s central government launched a three-year plan to reduce air pollution, extending tar- gets for reducing lung-damaging airborne particu- late pollution to the country’s 338 largest cities. This plan includes reductions in steel and other indus- trial capacity, reducing reliance on coal, promoting electric vehicles and cleaner transport, enhancing air-pollution warning systems, and increasing in- spections of businesses for air pollution infractions. Several autonomous regions and municipalities have implemented the requirements of the National 6 pro- gram even ahead of the mandated deadlines. During 2020, the Chinese Vehicle Emission Con- trol Center (VECC) launched the “Pre-study on Next Stage Emission Standards for Light duty Vehicles”, an ongoing research project expected to be final- ized in a more stringent emission program in the next years. During 2023, several workshops were conducted, and we actively participated, ensuring that we stayed abreast of the latest developments and insights in our field. Several others regulations are also emerging to take into account the non-exhaust emissions and the environmental impact of electric and hybrid vehicles components. Brake particulate emissions from passenger cars are currently not regulated by any UNECE or regional Regulations. However, a new UN Global Technical Regulation (i.e., UN GTR 24) on the topic of brake particulate emissions of light duty vehicle’s brake systems has been finalized during 2023. The Informal Working Group on Elec- tric Vehicles and Environment of the United Nations proposed during 2021 a Global Technical Regula- tion on in-vehicle battery durability that was finally adopted in 2022 (i.e., UN GTR 22). This regulation is applicable to both pure electric and plug-in hybrid vehicles and establishes provisions regarding state- of-health monitors, minimum performance require- ments and in-service conformity checks. A UN GTR is not binding for certification purposes. However, it could be transposed into a UN Regulation or a re- gional regulation required for the certification. The European Commission has expressed the will to in- clude these GTR requirements in Euro 7 regulation. Moreover, the European Commission published, in December 2020, a proposal for a new regulation on batteries and waste batteries. This proposal will ap- ply to all kind of batteries, including automotive and electric vehicle batteries, and significantly increases the scope and number of requirements relating to design, sustainability, labelling, information and end- of-life. Regulation (EU) 2023/1542 has been finalized in July 2023. In the evolving regulatory landscape, we antic- ipate new regulations on materials emerging from various markets. These regulations aim to restrict or ban the use of critical substances. In this con- text, the EU Commission presented its proposal for a new Regulation replacing Directive 2000/53/ EC “End-of-Life Vehicles” and Directive 2005/64/ EC “Type-approval of motor vehicles with regard to their Reusability, Recyclability and Recoverability”. The aim of this new EU regulation is to propose mea- sures to enhance the circularity of the automotive sector, covering the design, production and end-of- life treatment of vehicles. Moreover, the European Chemicals Agency (ECHA) has made available a draft dossier to recommend a universal per- and polyflu- oroalkyl substances (PFAS) restriction. It is crucial to acknowledge that such regulatory shifts may significantly impact material choices, necessitating substantial research and development efforts to up- hold performance standards amid these changes. To comply with current and future environmen- tal rules, we may have to incur substantial capital expenditure and research and development expen- diture to upgrade products and manufacturing fa- cilities, which would have an impact on our cost of production and results of operation. VEHICLE SAFETY Vehicles sold in Europe are subject to vehicle safe- ty regulations established by the EU or by individual member states. In 2009, the EU established a simpli- fied framework for vehicle safety, repealing more than 50 directives and replacing them with a single regulation (the “General Safety Regulation”) aimed at incorporating relevant United Nations standards. This incorporation process began in 2012. With re- spect to regulations on advanced safety systems, the EU now requires new model cars from 2011 on- wards to have electronic stability control systems and tire pressure monitoring systems. Regulations 89 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTon low-rolling resistance tires have also been in- troduced. The framework is reviewed periodically, and in May 2018, the European Commission adopt- ed a proposal for a regulation to make certain vehi- cle safety measures mandatory. On December 16, 2019, the revised General Safety Regulation (EU) 2019/2144 was published in the EU Official Journal. In 2022, new safety technologies became mandatory in European vehicles, such as Advanced Emergency Braking, Emergency Lane Keeping systems, crash- test improved safety belts, intelligent speed assis- tance and warning of driver drowsiness or distrac- tion. On November 16, 2022, Commission Delegated Regulation (EU) 2022/2236 setting out the technical requirements to be applied for the purpose of EU type-approval of vehicles produced in small series was published in the EU Official Journal. In particular, with regard to certain requirements introduced by the revised General Safety Regulation, an exemption to Intelligent Speed Assistance, Advanced Emergen- cy Braking System and Emergency Lane Keeping System has been granted for vehicles produced in small series and with specified characteristics re- lated to the installation of the camera. Moreover, the regulation provides for a lead time of at least two years with respect to the provisions applicable to vehicles produced in unlimited series. In November 2023, the expected Delegated Act implementing the fitment of the Advanced Driver Distraction Warning (ADDW), mandatory from 2024 for new types of ve- hicles as required by the Regulation (EU) 2019/2144 on General Safety, has been published on Official Journal. This regulatory act was the latest measure to be published within the General Safety Regulation (EU) 2019/2144 framework. In 2017, the EU published technical requirements for the Emergency Call (eCall) system, mandatory for new model cars starting from 2018. In 2023 the Eu- ropean Commission started a rulemaking process to revise the eCall framework by aligning it to the new 4G/5G “packed switched” technology, the final rule is expected in 2024. Starting from July 1, 2019, new types of pure electric vehicle and new types of hybrid electric vehicle capable of operating without propulsion from a combustion engine operating are required to be equipped with an Acoustic Vehi- cle Alerting System (AVAS), and from July 1, 2021 for all new vehicles of such types, in order to alert pe- destrians that a vehicle is moving at low speeds. At United Nations level, it has been identified the need for additional regulatory action for BEVs with sound enhancement systems other than AVAS regarding their noise emission, a specific regulatory process is currently ongoing. Starting from 2022, European authorities and United Nation’s contracting parties began enforcing regulations on cyber security and software updates. Starting from 2024, European au- thorities and United Nation’s contracting parties will begin enforcing amendments to the existing regu- lation on pedestrian protection, modifying the cur- rent test procedures and enhancing the measure- ment methods on extended vehicle areas such as the windscreen. In 2020, the European Commission issued its new digital strategy policies, which repre- sent a priority in its regulatory agenda. During 2021, several draft proposals were issued in this respect, including in relation to Real Time Traffic Information (RTTI), Connected and Intelligent Transport Systems (C-ITS) and Artificial Intelligence (AI). As of December 31, 2023, the RTTI and ITS proposals have been final- ized, through the adoption of the Commission Del- egated Regulation (EU) 2022/670 and the Directive (EU) 2023/2661, respectively. In 2022, the European Commission announced the intention to present a proposal amending the European Type Approval Framework (Regulation (EU) 2018/858) to lay down provisions on access to in-vehicle data, the measure would aim to address certain sector-specific issues such as bi-direction- al access to vehicle resources and the interplay be- tween access to data and cybersecurity. As regards software and cybersecurity management issues, the proposal is expected to include replacement parts, new categories of autonomous vehicles and replacement of batteries. In September 2022, the European Commission also presented a proposal of a new regulation setting up cybersecurity require- ments covering a wide range of digital products and related ancillary services. The proposal would be aimed at strengthening the cybersecurity of products placed on the EU market throughout their whole lifecycle, improving and extending the provi- sions and the scope of existing regulation. The final rule is expected in 2024. Under U.S. federal law, all vehicles sold in the United States must comply with Federal Motor Vehi- cle Safety Standards (“FMVSS”) promulgated by the NHTSA. Manufacturers need to provide certification that all vehicles are in compliance with those stan- dards. In addition, if a vehicle contains a defect that is related to motor vehicle safety or does not comply with an applicable FMVSS, the manufacturer must notify vehicle owners and provide a remedy at no cost to the owner. Moreover, the Transportation Re- call Enhancement, Accountability, and Documenta- tion Act (“TREAD”) requires manufacturers to report certain information related to claims and lawsuits involving fatalities and injuries in the United States if alleged to be caused by their vehicles, and other information related to client complaints, warranty claims, and field reports in the United States, as well as information about fatalities and recalls outside the United States. Several new or amended FMVSSs have taken effect in certain instances under phase- in schedules that require only a portion of a manu- facturer’s fleet to comply in the early years of the phase-in. These include an amendment to the side impact protection requirements that added several new tests and performance requirements (FMVSS No. 214), an amendment to roof crush resistance re- quirements (FMVSS No. 216), and a rule for ejection mitigation requirements (FMVSS No. 226). In 2024, the adoption of the amendment of occupant crash protection (FMVSS No. 208) is expected, to update 90 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fthe child restraint systems (CRSs). These CRSs are used by NHTSA in air bag suppression and low risk deployment testing. U.S. federal law also sets forth minimum sound requirements for hybrid and elec- tric vehicles (FMVSS No. 141). With the publication, on November 15, 2021, of the Infrastructure Invest- ment and Jobs Act, the Congress of United States empowered the Secretary of Transportation to pro- mulgate new regulations within safety framework. In June 2023, NHTSA published a proposal for a new regulation (FMVSS No. 127) on Automatic Emergency Braking System. The regulation would oblige manu- facturers to equip vehicles with a system that alerts the driver in case of imminent collision with a pedes- trian or a vehicle ahead and automatically applies the brakes, in case the driver fails to do so. The draft proposal is not aligned with other international stan- dards already in place in many countries. Regarding the standard implementation, NHTSA proposed a phase-in approach. In December 2023, NHTSA pub- lished an advanced notice of proposed rulemaking as a first regulatory step to introduce a new FMVSS regulation providing requirements for new technol- ogies to prevent driver distraction, drowsiness and impaired driving. On May 4, 2016, the NHTSA published a Consent Order Amendment to the November 3, 2015 Takata Consent Order regarding a defect which may arise in the non-desiccated Takata Corporation (“Taka- ta”) passenger airbag inflators manufactured using phase stabilized ammonium nitrate and mounted on certain vehicles, including Ferrari cars. As a result of this order and subsequent orders by the NHTSA relating to the non-desiccated Takata passenger air- bag inflators, in 2016 Ferrari initiated a global recall campaign to include all Ferrari cars produced in all model years mounting such airbag inflators, result- ing in the recognition of a provision for warranty costs of €37 million in 2016, the majority of which has been utilized to date. In 2017, the Chinese authorities published an updated version of the current local general safety standard which allows China to become the driv- er market for the Event Data Recorder mandatory installation starting from 2021. Technical require- ments were defined in mid-2019, through the for- mal adoption of the local standard. Among the Unit- ed Nations contracting parties, China has been the first country to propose an early adoption of updat- ed test procedures on high-voltage batteries for hy- brid and electric vehicles, which has been enforced starting in 2020. Several passive safety standards introducing more stringent requirements are cur- rently under revision (e.g. pedestrian protection, front and rear protective devices, roof crush, lateral and rear collision, safety-belts and restraint systems anchorages for occupants). The Chinese Authority (CATARC) is working on a new draft of the binding regulation GB/T 18488 on drive motor system (DMS) for electric vehicles, introducing more stringent technical requirements, test methods and inspec- tion requirements on electric motors. During 2021, 2022 and 2023, the Chinese authorities worked on several rulemaking initiatives related to active safe- ty (e.g. ADAS, eCall), vehicle digitalization, cyber se- curity and software updates which are not yet man- datory for certification purposes and contribute to the regulatory uncertainty in this market. The lack of harmonization of Chinese regulatory requirements is increasing in recent years. This situation could lead to substantial research and development ex- penditure, specifically for the Chinese market. 91 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE GROUP The following discussion of our financial condition and results of operations should be read together with the information included under “Overview”, “Overview of our Business” and the Consolidated Financial Statements included elsewhere in this document. This discussion includes forward-looking statements and involves numerous risks and uncertainties, including, but not limited to,those described under “Forward-Looking Statements” and “Risk Factors”. Actual results may differ materially from those contained in any forward-looking statements. FINANCIAL OVERVIEW TRENDS, UNCERTAINTIES AND OPPORTUNITIES SHIPMENTS Our net revenues and results of operations depend on, among other things, the achievement of internal volumes and mix targets established in our budgets and business plans, which we define in line with our low volume strategy to pursue controlled growth and preserve brand exclusivity. As part of this strat- egy, we seek to manage waiting lists in the various markets in which we operate in order to respond opti- mally to relative levels of demand, based on our order books, while being sensitive to local client expecta- tions in those markets. In certain markets, we believe that waiting lists have promoted the sense of exclu- sivity of our products and, accordingly, we monitor and manage waiting lists to maintain this exclusivity while ensuring the highest levels of client satisfaction. In order to maintain our brand’s reputation of exclu- sivity among purchasers of our cars, we have con- tinued our low volume strategy while responding to growing demand and to demographic changes as the size and spending capacity of our target cli- ents has grown, gradually increasing annual ship- ments(1) from 11,155 in 2021 to 13,221 in 2022 and 13,663 in 2023, resulting in average annual ship- ments of 12,680 over the three year period from 2021 to 2023. Our current plans reflect a continua- tion of this strategy, including the introduction of 15 new models over the period from 2023 to 2026 as announced at our Capital Markets Day in June 2022, and a measured increase in shipments above cur- rent levels as we broaden our product portfolio in line with our product strategy “Different Ferrari for Different Ferraristi” and “Different Ferrari for Differ- ent Moments”, and as we target a potentially larger and younger customer base, while preserving and enhancing the exclusivity and value of our brand. The following table sets forth our shipments(1) by geographic location: 92 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(Number of cars and % of total cars) For the years ended December 31, 2023 % 2022 % 2021 % EMEA Germany UK Italy France Switzerland Middle East (2) Other EMEA (3) Total EMEA Americas (4) 1,472 10.8% 1,439 10.9% 1,252 11.2% 1,011 7.4% 740 490 482 451 5.4% 3.6% 3.5% 3.3% 997 708 473 497 439 7.5% 5.4% 3.6% 3.8% 3.3% 996 668 473 481 334 8.9% 6.0% 4.2% 4.3% 3.0% 1,417 10.4% 1,405 10.6% 1,288 11.6% 6,063 44.4% 5,958 45.1% 5,492 49.2% 3,811 27.9% 3,447 26.1% 2,831 25.4% of which United States of America 3,262 23.9% 2,924 22.1% 2,362 21.2% Mainland China, Hong Kong and Taiwan 1,490 10.9% 1,552 11.7% of which Mainland China 1,221 8.9% 1,290 9.8% 899 681 8.1% 6.1% Rest of APAC (5) Total 2,299 16.8% 2,264 17.1% 1,933 17.3% 13,663 100.0% 13,221 100.0% 11,155 100.0% (1) Excluding the XX Programme, racing cars, one-off and pre- markets not separately identified. owned cars. (4) Americas includes the United States of America, Canada, (2) Middle East mainly includes the United Arab Emirates, Saudi Mexico, the Caribbean and Central and South America. Arabia, Bahrain, Lebanon, Qatar, Oman and Kuwait. (3) Other EMEA includes Africa and the other European (5) Rest of APAC mainly includes Japan, Australia, Singapore, Indonesia, South Korea, Thailand, India and Malaysia. We target our products to the upper end of the lux- ury car segment and buyers of our cars tend to be- long to the wealthiest segment of the population. As the size and spending capacity of our target cli- ent base has grown significantly in recent years, our addressable market and the sense of exclusiv- ity fostered by our low volume strategy have been further enhanced. Given that our shipment strategy is flexible, we are able to adjust the geographical al- location of our shipments to respond to changes in our key markets. The geographic allocation of our shipments and their mix by product reflects our de- liberate allocation strategy over the lifecycle of the individual models and is generally impacted by the phase-in/phase-out pace of the models, as well as the length of waiting lists and other market-specif- ic factors and conditions, including our commercial strategy and the potential for future growth. We expect that further growth in shipments will result primarily from our deliberate allocation strategy, as well as from targeting new customer groups, geog- raphies and modes of use through the expansion of our product portfolio. RESEARCH, DEVELOPMENT AND PRODUCT LIFECYCLE We engage in research and development activities aimed at further enhancing our technological edge through continuous innovation and improving the design, performance, driving thrills, advanced tech- nology, safety, efficiency and reliability of our cars, among other things. Costs we incur for the develop- ment of our cars and engines, as well as their relat- ed components and systems, are recognized as an asset if, and only if, the required conditions under IAS 38 - Intangible Assets are met, including, among others: (i) development costs can be measured reli- ably, (ii) the technical feasibility of the product, esti- mated volumes and expected pricing all support the reasonable expectation that the development expen- diture will generate future economic benefits, and (iii) the Group has the intention to complete the de- velopment and the ability to use the intangible asset. Capitalized development costs include all direct and indirect costs that may be directly attributed to the development process. All other research and devel- opment costs are expensed as incurred. Research and development costs are recognized net of any technology-related government incentives received. The level of our capitalized development costs is primarily affected by the timing of updates and renewals to our product portfolio, the pace of our innovation schedule and our decision to integrate newly-introduced powertrain technologies (includ- ing hybrid and electric) more broadly into our prod- uct portfolio. We continually launch new cars with enhanced technological innovations and design im- provements. In 2023, we launched five new models: the Roma Spider, the SF90 XX Stradale and SF90 XX 93 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTSpider, the 296 Challenge and the 499P Modificata, in line with our previously announced objective of in- troducing 15 new models over the period from 2023 to 2026 (as announced at our Capital Markets Day in June 2022), with a view to maintaining our product portfolio’s leading position and to respond quickly to market demand and technological breakthroughs. As discussed at our Capital Markets Day held in June 2022, a clear focus of ours is to maintain the three different powertrains (ICE, hybrid and electric) and to continue to integrate hybrid and electric technol- ogies in future models, and we plan to unveil our first full electric Ferrari in 2025. A portion of our research and development ef- forts are related to the development of the various components used in our models, and in particular, hybrid, electric, electronic and mechanical compo- nents. Our continued focus on component develop- ment has the objective of improving performance and reducing the costs to develop new models. Our strategy involves making core components in- house and collaborating with partners to co-devel- op and tailor best in class solutions for state-of-the- art technologies. Capitalized development costs are amortized on a straight-line basis from the start of production over the estimated lifecycle of the mod- el or the useful life of the related assets or compo- nents. Our Range models typically have a lifecycle of four to five years, while our Special Series, Icona and Supercar models typically have shorter lifecycles and the useful life of their components may be up to eight years. We also incur research and development costs in connection with our Formula 1 and other racing activities, including initiatives to maximize the per- formance, efficiency and safety of our racing cars. While we develop these technologies for initial use in our Formula 1 and other racing cars, we seek to transfer these technologies and components, where appropriate, to models in our current and fu- ture product portfolio. Technological developments and changes in the regulations of the Formula 1 World Championship generally lead us to design, de- velop and construct a new racing car to be used for one year only and therefore the costs incurred for the design, development and construction of a new racing car are generally expensed as incurred and classified as research and development costs in the income statement, unless the technology is expect- ed to be used for more than one year and the costs meet the capitalization criteria in IAS 38. Research and development costs for Formula 1 activities can vary from year to year and may be difficult to predict because they are subject to, among other things, the need to respond to our car’s performance relative to other racing teams and changes in racing regu- lations, including the number of races and inflation. Starting in 2021, Formula 1 financial regula- tions introduced a budget cap to limit the amount of spending for chassis costs (primarily relating to the development and manufacturing of the racing car chassis and excluding, among others, the activities to enable the supply of power units, marketing costs, drivers’ salaries and the top three personnel at each team) that may be incurred by the teams participat- ing in the Formula 1 World Championship. Starting 94 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fin 2023, a cap was also introduced for the develop- ment of the power units that will be used in the 2026 season. The aforementioned budget caps on spend- ing are defined for each season based on several factors, including the number of races and inflation. The budget cap for the 2023 Formula 1 season was €140 million in relation to the development and man- ufacturing of the racing car chassis and $90 million in relation to the power units that will be used in the 2026 season. The budget cap for the 2024 season is currently in the process of being defined but is ex- pected to be higher than in 2023, which, other things being equal, would lead to higher cost of sales and research and development costs in the period. As a result of our strategy to broaden and inno- vate our product portfolio and significantly increase our efforts relating to hybrid, electric and other ad- vanced technologies, our capitalized development costs have increased significantly during the peri- od from 2021 to 2023, from €363 million in 2021 to €416 million in 2022 and €448 million in 2023. This has contributed to an increase in the proportion of capitalized development costs compared to total research and development incurred, including the effects of the advancement through the stages of development for many of the technologies we are creating, as well as the cap on certain costs we may incur for the chassis of our Formula 1 racing cars and the development of the power unit to be intro- duced in 2026 (in accordance with applicable FIA financial regulations). In particular, capitalized de- velopment costs as a proportion of total research and development incurred (both capitalized and expensed) increased to 38.7 percent in 2021 to 44.5 percent in 2022 and 45.4 percent in 2023. The following table summarizes our research and development expenditure for the years ended December 31, 2023, 2022 and 2021: For the years ended December 31, 2023 2022 2021 (€ million) 448 539 987 343 882 416 518 934 258 776 363 574 937 194 768 Capitalized development costs (1) Research and development costs expensed (A) Total research and development incurred Amortization of capitalized development costs (B) Research and development costs as recognized in the consolidated income statement (A+B) (1) Capitalized to development costs within intangible assets during the year. CAR PROFITABILITY The relative profitability of the cars we sell tends to vary depending on a number of factors, includ- ing exclusivity of the offering, overall performance, technological advancement and content of the car, engine type and performance, level of personaliza- tion and the geographic market in which it is sold. For example, our strictly limited-edition Icona models (the latest is the Daytona SP3 for which shipments commenced in the fourth quarter of 2022), as well as our limited edition Supercars (the latest was the LaFerrari Aperta for which shipments concluded in 2018) have sales prices that are significantly higher than other models in the Ferrari product portfolio in light of their exclusivity, as well as the advanced technology and design integrated in these models. In general, these more exclusive offerings gener- ate higher revenues and provide better margins than those generated on shipments of our Range and Special Series models, and therefore they ben- efit our results in the periods in which they are sold. We plan to launch our Icona models more frequent- ly compared to our Supercars and we expect this to reduce the volatility in financial performance that we have at times experienced historically due to the cadence of launches of our Supercars. Additional- ly, car profitability may vary between countries as a result of, among other things, economic conditions, the maturity of the market, customs duties and tar- iffs, as well as emissions regulations. 95 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTWe leverage the continuous improvement of the performance, technology and other features of our cars, as well as the exclusivity of certain model of- ferings and the scarcity value resulting from our low volume strategy, to increase the average price point of our Range and Special Series models over time. In particular, in recent years we have been increasing the price of selected models in certain markets and we have introduced new models with higher aver- age selling prices compared to the corresponding predecessor models. Furthermore, as we continue to integrate advanced technologies more broadly into our car portfolio, including hybrid and electric powertrains, we expect that our average price point will continue to increase, reflecting the superior technological content of our new models. Our expe- rience to date suggests that the profitability of a spe- cific model is not necessarily impacted by the type of powertrain. Additionally, the interior and exterior technology and content of the cars we sell can be customized through our personalization offerings, which can be further enhanced through additional bespoke spec- ifications. Incremental revenues from personaliza- tion are a particularly favorable factor of our pricing and product mix due to the fact that we generate in- cremental margin on each additional option select- ed by our clients. COST OF SALES AND SELLING, GENERAL AND ADMINISTRATIVE COSTS Cost of sales primarily comprises costs incurred in the manufacturing and distribution of our cars and spare parts. The cost of materials, components and labor are the most significant elements of our cost of sales, while the remaining costs primarily include depreciation, insurance and transportation costs, as well as warranty and product liability-related costs, which are estimated and recorded at the time our cars or products are shipped. Interest expenses and other financial charges that are directly attributable to our financial services activities, including provi- sions for risks and write-downs of financial assets, are also reported in cost of sales. In manufacturing our cars, we incur costs (through production or purchase) for a variety of components (including mechanical, electrical, elec- tronic, aluminum, steel and plastic components, as well as castings and tires), raw materials (the most significant of which is aluminum) and supplies, as well as for utilities, logistics and other services from numerous suppliers. Fluctuations in the cost of sales are primarily related to the number of cars we pro- duce and sell, along with changes in the mix of mod- els in our product portfolio and, more recently, also inflation. Newer models generally have more tech- nologically advanced components and enhance- ments, including hybrid and electric technology, and therefore have higher costs per unit; however, we aim to price our cars appropriately to recover these costs in line with our profitability strategy. Our Ico- na, Supercar and One-Off models also tend to have higher costs per unit, but these higher costs tend to be more than offset by higher sales prices. Cost of sales is also affected by fluctuations of certain raw material prices, although we typically seek to man- age these costs and minimize their volatility through the use of long-term fixed price purchase contracts. Over time, we have made efforts to achieve technical and commercial efficiencies. In particular, technical efficiencies focus on efforts to produce components using innovative and cost-effective materials, without compromising the quality or per- formance of the components. In order to achieve these technical efficiencies, we perform in-house research and development activities and we invite our suppliers to present us with innovative techni- cal solutions that they have developed. Commercial efficiencies have been achieved through negotiat- ing discounts and entering into long-term contracts with our partners and suppliers, who commit up- front to pass on to us a portion of the efficiencies they achieve in performing our supply contracts. Furthermore, efforts are made to award new busi- ness to existing partners and suppliers, where ap- propriate, in order to negotiate favorable pricing. As cost of sales also includes depreciation of plant and equipment, cost of sales is affected by the number and timing of product launches as the start of pro- duction of new models triggers the commencement of depreciation of plant and equipment acquired specifically for those models. When new models are introduced, we also in- cur promotional costs in connection with product launch and marketing initiatives, which are generally recorded within selling, general and administrative costs. Our schedule of model launches through 2026 is expected to increase promotional costs compared to prior periods. Furthermore, we are currently mak- ing significant investments in brand development, which is also expected to increase selling, general and administrative costs in the coming periods. ECONOMIC CONDITIONS AND MACRO EVENTS Significant inflationary pressures appeared in 2021 in many of the markets in which we operate and this trend was exacerbated in 2022 and 2023. We expe- rienced increases in the costs of our raw materials, energy, utilities, financing costs and certain other goods and services, resulting in downward pres- sure on our Operating profit (EBIT) margin in both 2022 and 2023. Following the rise in inflation, several main cen- tral banks raised interest rates rapidly over the course of 2022 and part of 2023, including in the Unit- ed States where we offer retail client financing for the purchase of our cars through our fully owned subsidiary FFS Inc, and in EMEA where we offer retail client financing through our equity method invest- ment in Ferrari Financial Services GmbH, primarily in the UK, Germany and Switzerland. The increases in interest rates have resulted in a general increase 96 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fin the cost of borrowing, which has in turn increased the interest rates on loans we generate for new car financing as well as the cost of funds we use to fi- nance our financial services activities, resulting in a negative impact on our financial services margins of approximately 60 basis points in 2022 compared to 2021 and an additional approximately 15 basis points in 2023 compared to 2022. If the increase in market rates is not reversed, it is also likely to lead to high- er cost of ownership for customer who borrow for their vehicle, with adverse pressure on demand. The ongoing conflict between Russia and Ukraine that started in February 2022, and the resulting geo- political tensions have had a significant impact on the global economy, resulting in a sharp increase in energy prices and higher prices for certain raw materials and goods and services, which in turn is contributing to higher inflation globally. Many gov- ernments and supranational organizations around the world have imposed sanctions on certain indus- try sectors and Russian parties, as well as enhanced export controls on certain products and industries, including luxury goods. The short and long-term im- pact from the war on financial and business condi- tions in Europe remaining highly uncertain. Ferra- ri has very limited commercial interests in Russia, Ukraine and the areas of conflict, and on March 8, 2022, Ferrari donated €1 million to support Ukrai- nians in need and decided to suspend the shipment of vehicles to the Russian market. The effects of the aforementioned sanctions and other measures on our business have been contained and, in order to mitigate potential supply chain disruptions, we delib- erately maintained a higher level of inventory. Management is carefully monitoring the infla- tion outlook and changes to interest rates, as well as developments in the ongoing conflict between Russia and Ukraine, as well as conflicts elsewhere in the world (including the conflict between Israel and Hamas which has the potential for escalation in the region) and geopolitical tensions more generally, to appropriately address the potential impacts, direct or indirect, on our operations, order intake, supply chain (including the availability and prices of raw ma- terials), operating costs and financial expenses, as well as potential impacts on our customers, the glob- al financial markets and financial services industry. we present our consolidated financial statements in Euro, while the functional currency of each of our subsidiaries depends on the primary economic envi- ronment of that entity. In preparing the consolidated financial statements, we translate into Euro the as- sets and liabilities of foreign subsidiaries expressed in local functional currency other than Euro using the foreign currency exchange rates prevailing at the balance sheet date, while we translate income and expenses using the average foreign currency exchange rates for the period presented. Accord- ingly, fluctuations in the foreign currency exchange rates of the functional currencies of our subsidiaries against the Euro impacts our results of operations. Transaction impacts arise when our Group en- tities conduct transactions in currencies other than their own functional currency. Therefore, we are also exposed to foreign currency risks in connec- tion with scheduled receipts and payments in mul- tiple currencies. Our costs are primarily denominat- ed in Euro, while the majority of our revenues are generated in currencies other than the Euro, mainly in U.S. Dollars, Japanese Yen, Chinese Yuan, Pound Sterling, Swiss Franc and, to a lesser extent, certain other currencies. In general, an appreciation of the U.S. Dollar, and the other currencies in which we operate, against the Euro positively impacts our net revenues and re- sults of operations. Currency changes had a nega- tive impact in 2023 primarily due to the depreciation of the U.S. Dollar, the Japanese Yen and the Chinese Yuan against the Euro, but these were partially off- set by our hedges. Our risk management policies contemplate the use of derivative financial instruments to hedge for- eign currency exchange rate risk. In particular, we have used derivative financial instruments as cash flow hedges for the purpose of hedging the foreign currency exchange rate at which a predetermined proportion of forecasted transactions denominat- ed in foreign currencies will occur. Accordingly, our results of operations have not been fully exposed to fluctuations in foreign currency exchange rates. See Note 30 “Qualitative and Quantitative Informa- tion on Financial Risks” to the Consolidated Financial Statements included elsewhere in this document for additional information related to our foreign curren- cy exchange rate risk policies. EFFECTS OF FOREIGN CURRENCY EXCHANGE RATES REGULATION We are affected by fluctuations in foreign currency exchange rates through (i) the translation into Euro upon consolidation of foreign currency financial statements of our subsidiaries with functional cur- rencies other than Euro, which we refer to as the translation impact, and (ii) transactions by entities of the Group in currencies other than their own func- tional currencies, which we refer to as the transac- tion impact. Translation impacts arise in the preparation of the consolidated financial statements; in particular, We ship our cars throughout the world and are therefore subject to a variety of laws and regula- tions, including tariffs. These laws regulate our cars, including their emissions, fuel consumption and safety, as well as our manufacturing facilities. As we are currently a small volume manufacturer in cer- tain jurisdictions, we benefit from certain regulatory exemptions, including less stringent emissions caps. Developing, engineering and producing cars which meet continuously evolving regulatory require- ments, and can therefore be sold in the relevant 97 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTmarkets, requires a significant effort and expendi- ture of resources. See “Overview of Our Business— Regulatory Matters” for additional information. PATENT BOX BENEFIT Income taxes for the years ended December 31, 2023, 2022 and 2021 benefited from the application of the Patent Box tax regime by Article 1, par. 37-45 of Law No. 190 of December 23, 2014, as amended and supplemented from time to time, which provides tax benefits for companies that generate income through the use of intangible assets. Starting in 2020 the Group has implemented the Patent Box tax regime, covering the period from 2020 to the con- clusion of this regime in 2024, with the recognition of the associated tax benefit distributed over three equal annual installments. The Law Decree (Decree) n. 146 enacted by the Italian authorities, effective from October 22, 2021 and as amended by the 2022 Italian budget law, re- places the previous Patent Box tax regime with a new one that provides a 110% “super tax deduction” for certain costs related to eligible intangible assets. The Decree also outlines a transitional procedure for the coexistence of both regimes during their ap- plicable periods. For additional information see Note 10 “Income tax- es” to the Consolidated Financial Statements includ- ed elsewhere in this document. ASSET-BACKED FINANCING (SECURITIZATIONS) We pursue a strategy of autonomous financing for our financial services activities in the United States, which involves limiting or reducing dependency on intercompany funding and increasing the portion of self-liquidating debt with various securitization transactions. At December 31, 2023 and 2022 our funding under securitization programs amounted to €1,166 million and €1,105 million, respectively, and our receivables from financing activities, which relate entirely to the financial services portfolio in the United States, amounted to €1,451 million and €1,400 million, respectively. For additional information see Note 24 “Debt” and Note 18 “Current Receivables and Other Current Assets” to the Consolidated Financial Statements in- cluded elsewhere in this document. 98 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F99 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTRESULTS OF OPERATIONS CONSOLIDATED RESULTS OF OPERATIONS 2023 COMPARED TO 2022 AND 2022 COMPARED TO 2021 The following is a discussion of the results of operations for the year end- ed December 31, 2023 compared to the year ended December 31, 2022 and for the year ended December 31, 2022 compared to the year ended December 31, 2021. The presentation includes line items as a percentage of net revenues for the respective periods presented to facilitate year- over-year comparisons. For the years ended December 31, 2023 Percentage 2022 Percentage 2021 Percentage of net revenues of net revenues of net revenues (€ million, except percentages) Net revenues Cost of sales 5,970 100.0% 5,095 100.0% 4,271 100.0% 2,996 50.2% 2,649 52.0% 2,081 48.7% Selling, general and administrative costs Research and development costs Other expenses, net Result from investments 463 882 18 6 7.7% 14.8% 0.3% 0.1% 428 776 21 6 8.4% 15.2% 0.4% 0.1% 348 768 6 7 8.1% 18.0% 0.2% 0.2% Operating profit (EBIT) 1,617 27.1% 1,227 24.1% 1,075 25.2% Financial income Financial expenses Financial expenses, net Profit before taxes Income tax expense Net profit 132 147 15 2.2% 2.5% 0.3% 84 133 49 1.2% 2.2% 1.0% 43 76 33 0.5% 1.3% 0.8% 1,602 26.8% 1,178 23.1% 1,042 24.4% 345 5.7% 1,257 21.1% 239 939 4.7% 18.4% 209 833 4.9% 19.5% NET REVENUES The following table sets forth an analysis of our net revenues for each of the years ended December 31, 2023, 2022 and 2021: For the years ended December 31, Increase/(Decrease) 2023 Percentage 2022 Percentage 2021 Percentage 2023 vs. 2022 2022 vs. 2021 of net revenues of net revenues of net revenues (€ million, except percentages) 5,119 85.7% 4,321 84.8% 3,553 83.2% 798 18.5% 768 21.6% 572 9.6% 499 9.8% 451 10.6% 73 14.6% 48 10.6% 127 152 2.1% 155 3.0% 189 4.4% (28) (18.4%) (34) (18.0%) 2.6% 120 2.4% 78 1.8% 32 27.1% 42 54.2% Cars and spare parts (1)(5) Sponsorship, commercial and brand (2)(5) Engines (3) Other (4) Total net revenues 5,970 100.0% 5,095 100.0% 4,271 100.0% 875 17.2% 824 19.3% 100 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(1) Includes net revenues generated from shipments of our (5) Starting in 2023, sponsorship revenues relating to the cars, any personalization generated on these cars, as well Group’s WEC and other racing activities are presented as sales of spare parts. within sponsorship, commercial and brand as a result of (2) Includes net revenues earned by our racing teams (mainly the increased relevance of those activities for the Ferrari in the Formula 1 World Championship and in the World brand in 2023, primarily in connection with the return of Endurance Championship) through sponsorship agreements Ferrari to the top-tier “Hypercar” category of the FIA WEC and our share of the Formula 1 World Championship after 50 years. As a result, sponsorship revenues from commercial revenues, as well as net revenues generated WEC and other racing activities of €20,362 thousand and through the Ferrari brand, including fashion collection, €20,281 thousand for the years ended December 31, 2022 merchandising, licensing and royalty income. and 2021, respectively, which were previously presented (3) Includes net revenues generated from the sale of engines within cars and spare parts as they were treated as to Maserati for use in their cars and from the rental of incidental to the sale of our track cars, have been reclassified engines to other Formula 1 racing teams. retrospectively to sponsorship, commercial and brand to (4) Primarily relates to financial services activities, conform to the current presentation. management of the Mugello racetrack and other sports- related activities. 2023 COMPARED TO 2022 Net revenues for 2023 were €5,970 million, an in- crease of €875 million or 17.2 percent (an increase of 17.1 percent on a constant currency basis), com- pared to €5,095 million for 2022. The increase in net revenues was attributable to the combination of (i) a €798 million increase in cars and spare parts, (ii) a €73 million increase in spon- sorship, commercial and brand and (iii) a €32 million increase in other revenues, partially offset by (iv) a €28 million decrease in engines. Cars and spare parts Net revenues generated from cars and spare parts for 2023 were €5,119 million, an increase of €798 million or 18.5 percent, compared to €4,321 million for 2022. The increase in net revenues from cars and spare parts was primarily attributable to a more fa- vorable product and country mix, higher contribu- tion from personalization, higher volumes and pric- ing. Foreign currency exchange impact, including hedging transactions, was slightly negative, mainly driven by the depreciation of the Japanese Yen and Chinese Yuan, partially offset by the appreciation of the U.S. Dollar. Total shipments for the year ended December 31, 2023 were 13,663, an increase of 442 cars or 3.3 per- cent, compared to 13,221 for the year ended Decem- ber 31, 2022. The deliveries of the year included 11 internal combustion engine (ICE) models (including one ICE track car model) and 4 hybrid engine mod- els, which represented 55.8 percent and 44.2 per- cent of shipments, respectively. Both the number of hybrid cars and the proportion of hybrid cars to the total number of cars shipped more than doubled in 2023 compared to 2022, driven by the 296 and SF90 families. The increase in shipments was also driven by the 812 Competizione family, the Purosangue, which was in ramp up phase in the second half of the year, and the Portofino M, which was approach- ing the end of its lifecycle during the year, partially offset by lower shipments of the 812 GTS and the Roma, as well as the F8 Tributo and F8 Spider, which were phased out in the first and fourth quarters of 101 the year, respectively. Shipments of the Daytona SP3 were in line with our delivery plans for this phase of its lifecycle and we made our first shipments of the Roma Spider in the fourth quarter of 2023. The €798 million increase in net revenues from cars and spare parts was composed of: (i) a €442 million increase in EMEA driven primarily by favor- able mix, shipments of the Daytona SP3 and higher contribution from personalization, (ii) a €310 mil- lion increase in Americas and (iii) an €86 million in- crease in APAC, partially offset by (iv) a €40 million decrease in Mainland China, Hong Kong and Taiwan. The mix of net revenues by geography primarily re- flects deliberate volume and product allocation in different markets. Sponsorship, commercial and brand Net revenues generated from sponsorship, com- mercial agreements and brand management activ- ities for 2023 were €572 million, an increase of €73 million or 14.6 percent, compared to €499 million for 2022. The increase was primarily attributable to new racing sponsorships, higher Formula 1 commercial revenues and a better Formula 1 ranking in 2022 compared to 2021, as well as the contribution from lifestyle activities. Engines Net revenues generated from engines for 2023 were €127 million, a decrease of €28 million or 18.4 percent, compared to €155 million for 2022. The decrease was mainly attributable to fewer engines sold to Maserati, for which the contract expired in December 2023. Other Other net revenues for 2023 were €152 million, an increase of €32 million or 27.1 percent, compared to €120 million for 2022. The increase was mainly driv- en by an increase of financial services activities. FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT2022 COMPARED TO 2021 Net revenues for 2022 were €5,095 million, an in- crease of €824 million or 19.3 percent (an increase of 15.5 percent on a constant currency basis), com- pared to €4,271 million for 2021. The increase in net revenues was attributable to the combination of (i) a €768 million increase in cars and spare parts, (ii) a €48 million increase in spon- sorship, commercial and brand and (iii) a €42 million increase in other revenues, partially offset by (iv) a €34 million decrease in engines. Cars and spare parts Net revenues generated from cars and spare parts for 2022 were €4,321 million, an increase of €768 million or 21.6 percent, compared to €3,553 million for 2021. The increase in net revenues from cars and spare parts was primarily attributable to higher car volumes and personalizations, partially offset by a negative mix. In particular, the negative mix was driv- en by the Ferrari Monza SP1 and SP2, which reached the end of their limited series run in the first quar- ter of 2022. The increase in net revenues was also due to positive contribution from the appreciation of certain foreign currencies compared to the Euro (mainly the U.S. Dollar and the Chinese Yuan), partial- ly offset by the impact of hedging transactions. Total shipments increased by 2,066 cars, or 18.5 percent, from 11,155 cars for the year ended De- cember 31, 2021 to 13,221 cars for the year ended December 31, 2022. The increase in shipments in 2022 was driven by the Ferrari Portofino M and the SF90 family, as well as the 296 GTB and the 812 Com- petizione, which were in the ramp up phase. In the fourth quarter of the year we made the very first shipments of our latest Icona model, the Daytona SP3, while the Ferrari Monza SP1 and SP2 reached the end of their limited-series run at the end of the first quarter of 2022. The €768 million increase in net revenues from cars and spare parts was composed of: (i) a €294 million increase in Mainland China, Hong Kong and Taiwan, (ii) a €259 million increase in Americas, (iii) a €138 million increase in EMEA, and (iv) a €77 million increase in Rest of APAC. The mix of net revenues by geography was impacted by the deliberate geo- graphic allocation of shipments, which followed the pace of introduction of new models. Sponsorship, commercial and brand Net revenues generated from sponsorship, Formula 1 commercial agreements and brand management activities for 2022 were €499 million, an increase of €48 million, or 10.6 percent, from €451 million for 2021. The increase was primarily attributable to an improvement in our Formula 1 ranking against the prior year and lifestyle-related activities, partially offset by lower sponsorships. Engines Net revenues generated from engines for 2022 were €155 million, a decrease of €34 million or 18.0 percent, compared to €189 million for 2021. The decrease was primarily attributable to few engines sold to Maserati. The contract for sale of engines to Maserati expired in December 2023. Other Other net revenues for 2022 were €120 million, an increase of €42 million or 54.2 percent, compared to €78 million for 2021. The increase was primarily attributable to other supporting activities, mainly related to racing and to our financial services activ- ities (including positive foreign currency exchange impact), as well as to the Moto GP event held at our Mugello racetrack, which was held with full public attendance in 2022. COST OF SALES For the years ended December 31, Increase/(Decrease) 2023 Percentage 2022 Percentage 2021 Percentage 2023 vs. 2022 2022 vs. 2021 of net revenues of net revenues of net revenues (€ million, except percentages) Cost of sales 2,996 50.2% 2,649 52.0% 2,081 48.7% 347 13.1% 568 27.3% 2023 COMPARED TO 2022 Cost of sales for 2023 was €2,996 million, an in- crease of €347 million or 13.1 percent, compared to €2,649 million for 2022. As a percentage of net rev- enues, cost of sales was 50.2 percent in 2023 com- pared to 52.0 percent in 2022. The increase in cost of sales was primarily attributable to a change in prod- uct mix, higher car volumes and higher industrial costs (reflecting cost inflation and depreciation), as 102 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fwell as racing and other supporting activities, par- tially offset by fewer engines sold to Maserati and foreign currency exchange impact. 2022 COMPARED TO 2021 Cost of sales for 2022 was €2,649 million, an in- crease of €568 million or 27.3 percent, compared to €2,081 million for 2021. As a percentage of net rev- enues, cost of sales was 52.0 percent in 2022 com- pared to 48.7 percent in 2021. The increase in cost of sales was primarily attrib- utable to higher car volumes, including personal- izations, a change in product mix and higher indus- trial costs, including cost inflation (particularly for energy and raw materials) and depreciation, as well as negative contribution from racing activities and the appreciation of certain foreign currencies com- pared to the Euro (mainly the U.S. Dollar and the Chi- nese Yuan), and higher costs for lifestyle and other supporting activities. SELLING, GENERAL AND ADMINISTRATIVE COSTS For the years ended December 31, Increase/(Decrease) 2023 Percentage 2022 Percentage 2021 Percentage 2023 vs. 2022 2022 vs. 2021 of net revenues of net revenues of net revenues (€ million, except percentages) Selling, general and 463 7.7% 428 8.4% 348 8.1% 35 8.1% 80 23.0% administrative costs 2023 COMPARED TO 2022 2022 COMPARED TO 2021 Selling, general and administrative costs for 2023 were €463 million, an increase of €35 million or 8.1 percent, compared to €428 million for 2022. As a percentage of net revenues, selling, general and administrative costs were 7.7 percent in 2023 com- pared to 8.4 percent in 2022. The increase in selling, general and administra- tive costs mainly reflects continuing initiatives for digital infrastructure and organizational develop- ment, as well as brand investments. Selling, general and administrative costs for 2022 were €428 million, an increase of €80 million or 23.0 percent, compared to €348 million for 2021. As a percentage of net revenues, selling, general and administrative costs were 8.4 percent in 2022 com- pared to 8.1 percent in 2021. The increase in selling, general and administra- tive costs was mainly attributable to communica- tion and marketing activities, lifestyle and corporate events, and costs to support the Group’s organiza- tional development. RESEARCH AND DEVELOPMENT COSTS For the years ended December 31, Increase/(Decrease) 2023 Percentage 2022 Percentage 2021 Percentage 2023 vs. 2022 2022 vs. 2021 of net revenues of net revenues of net revenues (€ million, except percentages) Research and 539 9.1% 518 10.1% 574 13.4% 21 4.1% (56) (9.7%) development costs expensed during the year Amortization of capitalized development costs 343 5.7% 258 5.1% 194 4.6% 85 33.0% 64 32.5% Research and 882 14.8% 776 15.2% 768 18.0% 106 13.7% 8 1.0% development costs 103 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT2023 COMPARED TO 2022 2022 COMPARED TO 2021 Research and development costs for 2023 were €882 million, an increase of €106 million or 13.7 per- cent, compared to €776 million for 2022. As a per- centage of net revenues, research and development costs were 14.8 percent in 2023 compared to 15.2 percent in 2022. The increase of €106 million was attributable to (i) higher amortization of capitalized development costs of €85 million driven by a general increase in capital- ized development costs in recent years (€448 million in 2023, €416 million in 2022 and €363 million in 2021) in line with our strategy to innovate and broaden our product portfolio, as well as by (ii) higher research and development costs expensed of €21 million driv- en by Formula 1 and other racing activities. Research and development costs for 2022 were €776 million, an increase of €8 million or 1.0 percent, com- pared to €768 million for 2021. As a percentage of net revenues, research and development costs were 15.2 percent in 2022 compared to 18.0 percent in 2021. The increase in research and development costs was primarily attributable to an increase in amortiza- tion of capitalized development costs of €64 million driven by a general increase in capitalized develop- ment costs in recent years in line with our strategy to further innovate and broaden our product portfolio. This increase was partially offset by a decrease in re- search and development costs expensed of €56 mil- lion, mainly driven by an increase in the proportion of development costs capitalized (compared to costs expensed) as we advance through the stages of de- velopment for many of the technologies we are cre- ating, as well as the cap on certain costs we may in- cur for the chassis of our Formula 1 racing cars in accordance with applicable FIA financial regulations. OTHER EXPENSES, NET For the years ended Increase/(Decrease) December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (€ million, except percentages) 11 29 18 13 34 21 8 14 6 (2) (12.0%) 5 53.6% (5) (12.2%) 20 148.7% (3) (12.3%) 15 287.5% Other income Other expense Other expenses, net Other expenses primarily consist of indirect taxes, provisions and oth- er miscellaneous expenses. Other income primarily consists of rental income, gains on the disposal of property, plant and equipment and re- leases of previously recognized provisions (including the partial release of environmental provisions as a result of more favorable market condi- tions for car emissions credits), as well as other miscellaneous income. OPERATING PROFIT (EBIT) For the years ended December 31, Increase/(Decrease) 2023 Percentage 2022 Percentage 2021 Percentage 2023 vs. 2022 2022 vs. 2021 of net revenues of net revenues of net revenues (€ million, except percentages) Operating profit (EBIT) 1,617 27.1% 1,227 24.1% 1,075 25.2% 390 31.8% 152 14.1% 104 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F 2023 COMPARED TO 2022 exchange impact of €15 million (including foreign currency hedging instruments). Operating profit (EBIT) for 2023 was €1,617 million, an increase of €390 million or 31.8 percent, com- pared to €1,227 million for 2022. As a percentage of net revenues, operating profit (EBIT) increased from 24.1 percent in 2022 to 27.1 percent in 2023. The increase in operating profit (EBIT) was pri- marily attributable to the combined effects of (i) positive volume impact of €42 million (as further described in revenues above), (ii) positive product and country mix impact of €461 million, sustained by the Daytona SP3, the 812 Competizione and the SF90 families, as well as by the contribution from the Americas and Mainland China, Hong Kong and Taiwan and a higher contribution from personaliza- tion and pricing, (iii) negative contribution of €106 million from research and development costs, (iv) negative contribution of €35 million from selling, general and administrative costs, (v) positive con- tribution of €13 million from the combined effects of higher Formula 1 commercial revenues, a bet- ter Formula 1 ranking in 2022 compared to 2021, new racing sponsorships and a higher contribution from lifestyle activities, as well as a partial release of environmental provisions as a result of more fa- vorable market conditions for car emissions credits, partially offset by higher industrial costs, reflecting the effects of cost inflation and higher depreciation and amortization, and (vi) positive foreign currency 2022 COMPARED TO 2021 Operating profit (EBIT) for 2022 was €1,227 million, an increase of €152 million or 14.1 percent, com- pared to €1,075 million for 2021. As a percentage of net revenues, operating profit (EBIT) decreased from 25.2 percent in 2021 to 24.1 percent in 2022. The increase in operating profit (EBIT) was pri- marily attributable to the combined effects of (i) pos- itive volume impact of €261 million, (ii) negative prod- uct mix impact of €16 million, mainly impacted by lower shipments of the Ferrari Monza SP1 and SP2, which phased out in the first quarter of 2022, partially offset by positive contribution from personalizations and Range model mix, (iii) negative contribution of €109 million from higher industrial costs, including cost inflation (particularly for energy and raw materi- als) and depreciation, (iv) an increase in research and development costs of €8 million, (v) an increase in selling, general and administrative costs of €80 mil- lion, (vi) negative contribution of €15 million from rac- ing activities, and reduced engine shipments to Mase- rati (in line with plans), partially offset by a positive contribution from lifestyle activities, and (vii) positive foreign currency exchange impact of €119 million (including foreign currency hedging instruments). FINANCIAL EXPENSES, NET Financial income Financial expenses Financial expenses, net For the years ended Increase/(Decrease) December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (€ million, except percentages) 132 147 15 84 133 49 43 76 33 48 57.8% 14 10.4% 41 57 95.0% 75.0% (34) (69.7%) 16 49.2% 2023 COMPARED TO 2022 2022 COMPARED TO 2021 Financial expenses, net for 2023 decreased to €15 million compared to €49 million for 2022. The de- crease in financial expenses, net was driven by (i) foreign currency exchange impact (including the net costs of hedging), (ii) higher interest income on cash and cash equivalents and (iii) gains realized on the partial cash tender executed during the third quarter of 2023 on a bond due in 2025 (€8 million). Financial expenses, net for 2022 increased to €49 million compared to €33 million for 2021. The in- crease in financial expenses, net was primarily at- tributable to hedging costs for foreign exchange de- rivatives, as well as the remeasurement to fair value of financial investments held by the Group. 105 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT106 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FINCOME TAX EXPENSE For the years ended Increase/(Decrease) December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (€ million, except percentages) Income tax expense 345 239 209 106 44.6% 30 14.0% 2023 COMPARED TO 2022 2022 COMPARED TO 2021 Income tax expense for 2023 was €345 million, an increase of €106 million, compared to €239 million for 2022. Income taxes for both years benefited from the application of the Patent Box regime. See Note 10 “Income Taxes” to the Consolidated Financial Statements included elsewhere in this Report for additional information related to the Patent Box tax regime in Italy. Income tax expense for 2022 was €239 million, an increase of €30 million, compared to €209 million for 2021. Income taxes for both years benefited from the application of the Patent Box regime. See Note 10 “Income Taxes” to the Consolidated Financial Statements included elsewhere in this document for additional information related to the Patent Box tax regime in Italy. The increase in income tax expense was primar- ily attributable to an increase in profit before taxes in 2023 compared to 2022. The increase in income tax expense was primar- ily attributable to an increase in profit before taxes in 2022 compared to 2021. The effective tax rate was 21.5 percent in 2023 compared to 20.2 percent in 2022, mainly reflecting the estimate of the benefit attributable to the Patent Box, the Allowance for Corporate Equity (ACE) and tax incentives for eligible research and development costs and investments. The effective tax rate was 20.2 percent in 2022 compared to 20.1 percent in 2021. 107 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTLIQUIDITY AND CAPITAL RESOURCES LIQUIDITY OVERVIEW We require liquidity in order to fund our operations, meet our obligations, make capital investments and reward our shareholders. Short-term liquidity is re- quired, among others, to purchase raw materials, parts, components and utilities for car production, as well as for personnel and other operating costs. In addition to our general working capital and op- erational needs, we require cash for capital invest- ments to support continuous product portfolio re- newal and expansion, as well as for research and development activities aimed at continually innovat- ing and improving our cars, including the transition of our product portfolio to hybrid and electric tech- nology. We also make investments to enhance man- ufacturing efficiency, improve capacity, implement sustainability initiatives, ensure environmental and regulatory compliance and carry out maintenance activities, among others. We fund our capital ex- penditure primarily with cash generated from our operating activities. We also use liquidity to reward our shareholders through dividends and share re- purchases, for which we paid out €329 million and €461 million, respectively in 2023. At our Capital Markets Day held on June 16, 2022, we announced a new multi-year share repurchase program of ap- proximately €2 billion that is expected to be execut- ed by 2026, as well as an increase in our expected dividend payout ratio from 30 percent to 35 percent of adjusted net profit starting in 2022. We centrally manage our operating cash man- agement, liquidity and cash flow requirements with the objective of ensuring effective and efficient management of our funds. We believe that our cash generation together with our available liquidity, in- cluding committed credit lines granted from prima- ry financial institutions, will be sufficient to meet our liquidity requirements. See the “Net Debt and Net Industrial Debt” section below for additional details relating to our liquidity. CYCLICAL NATURE OF OUR CASH FLOWS Our working capital is subject to month to month fluctuations due to, among other things, production and sales volumes, our financial services activities, the timing of capital expenditures and, to a lesser extent, tax payments. In particular, our inventory levels generally increase in the periods leading up to the launch of new models and at the end of the second quarter of the year to support the summer plant shutdown. Inventory levels are also adjusted as we deem necessary for agile supply chain man- agement requirements. We generally receive payment for cars between 30 and 40 days after the car is shipped (or earlier when sales financing arrangements are utilized by us or by our dealers), while we generally pay most suppliers between 60 and 90 days after we receive the raw materials, components or other goods and services. Additionally, we also receive advance pay- ments from our customers, mainly for our Icona, limited edition and Special Series models, as well as certain Range models in selected markets. We main- tain sufficient inventory of raw materials and com- ponents to ensure continuity of our production lines, however delivery of most raw materials and compo- nents takes place monthly or more frequently in or- der to minimize inventories. The manufacture of one of our cars typically takes between 30 and 45 days, depending on the level of automation of the relevant production line, and the car is generally shipped to our dealers three to six days following the comple- tion of production, although in certain regions we may warehouse cars for longer periods of time to en- sure timely deliveries. As a result of the above, includ- ing the advances received from customers for cer- tain car models, we tend to receive payment for cars shipped before or around the time we are required to make payments for the raw materials, compo- nents or other materials used in the manufacturing of our cars. However, the advances we collect on cars may be subject to timing differences from pe- riod to period as a result of the number of models in our product portfolio for which we collect advanc- es and the stage of their lifecycle at a given point in time, which ultimately impacts our working capital. Our investments for capital expenditure and re- search and development are, among other factors, influenced by the timing and number of new mod- els launches. Our development costs, as well as our other investments in capital expenditure, generally peak in periods when we develop a significant num- ber of new models to renew or expand our product portfolio. Our investments in research and develop- ment are also influenced by the timing of research costs for our Formula 1 activities, for which expen- diture in a normal season is generally higher in the first and last quarters of the year, and also depends on the evolution of the applicable Formula 1 techni- cal regulations, as well as the number and cadence of races during the course of the racing season. We are currently undergoing a period of structur- ally higher capital spending as we broaden our car architectures, prioritize innovation and advanced technologies, and transition our product portfolio to hybrid and electric powertrains. We also continue to make significant capital investments in operating as- sets and infrastructure projects that are important for our continued growth and development, includ- ing for the ongoing construction of our new e-build- ing, which is expected to be inaugurated in June 2024 and will be used primarily for the production of BEVs and related components, as well as the paint shop. The payment of income taxes also affects our cash flows. We typically pay the first tax advance payment in the second quarter of the year, together with the remaining tax balance due for the previous year, and the remaining part of the advance pay- 108 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fment in the third and/or fourth quarters. Our tax expense and tax payments in 2023, 2022 and 2021 benefited from applying the Patent Box tax regime in Italy. See Note 10 “Income Taxes” to the Consol- idated Financial Statements included elsewhere in this document for additional information related to the Patent Box tax regime in Italy. CASH FLOWS The following table summarizes the cash flows from/(used in) operating, investing and financing activities for each of the years ended December 31, 2023, 2022 and 2021. For additional details of our cash flows, see our Con- solidated Financial Statements included elsewhere in this document. Cash and cash equivalents at beginning of the year Cash flows from operating activities Cash flows used in investing activities Cash flows used in financing activities Translation exchange differences Total change in cash and cash equivalents Cash and cash equivalents at end of the year For the years ended December 31, 2023 2022 2021 (€ million) 1,389 1,717 (867) (1,109) (8) (267) 1,122 1,344 1,403 (805) (554) 1 45 1,389 1,362 1,283 (733) (580) 12 (18) 1,344 2023 COMPARED TO 2022 For the year ended December 31, 2023 cash and cash equivalents held by the Group decreased by €267 million compared to an increase in cash and cash equivalents of €45 million for the year ended December 31, 2022. The difference in the net change in cash and cash equivalents in 2023 compared to 2022 of negative €312 million was mainly attribut- able to the combined effects of: (i) an increase in cash flows from operating activ- ities of €314 million in 2023 compared to 2022, driven by an increase in net profit excluding non- cash items of €506 million, partially offset by higher absorption of cash for working capital, mainly due to an increase in inventories driven by production planning and an enriched product mix, as well as by lower collection of advances for cars in 2023 compared to 2022, which bene- fited from the collection of advances for the Day- tona SP3; partially offset by: (ii) an increase in cash flows used in investing ac- tivities of €62 million in 2023 compared to 2022, driven by higher investments in property, plant and equipment and intangible assets, reflecting our initiatives for product and infrastructure de- velopment; and (iii) an increase in cash flows used in financing ac- tivities of €555 million in 2023 compared to 2022, driven by (i) higher repayments of debt of €583 million (€751 million in 2023 compared to €168 million in 2022), (ii) higher dividends paid of €82 million (€334 million in 2023 compared to €252 million in 2022) and (iii) higher share repurchas- es of €64 million (€461 million in 2023 compared to €397 million in 2022), partially offset by (iv) an increase in proceeds from debt of €174 million (€436 million in 2023 compared to €262 million in 2022). 2022 COMPARED TO 2021 For the year ended December 31, 2022 cash and cash equivalents held by the Group increased by €45 mil- lion compared to a decrease in cash and cash equiv- alents of €18 million for the year ended December 31, 2021. The difference in the net change in cash and cash equivalents in 2022 compared to 2021 of positive €63 million was primarily attributable to the combined effects of: (i) an increase in cash flows from operating activ- ities of €120 million in 2022 compared to 2021, mainly attributable to an increase in net profit ex- cluding non-cash items of €242 million and €170 million from other operating assets and liabili- ties, driven by the collection of advances for the Daytona SP3 and the 812 Competizione A, partial- 109 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTly offset by higher income tax paid of €196 mil- lion and an increase in cash used for inventories, trade receivables and trade payables of €91 mil- lion driven by higher overall volumes; and (ii) a decrease in cash flows used in financing ac- tivities of €26 million in 2022 compared to 2021, driven by net proceeds/repayments of debt (net proceeds of €95 million in 2022 compared to net repayments of €187 million in 2021), partially off- set by higher share repurchases of €166 million and higher dividends paid of €90 million in 2022 compared to 2021; partially offset by: (iii) an increase in cash flows used in investing ac- tivities of €72 million in 2022 compared to 2021, mainly driven by higher investments in intangible assets to support the development of our cur- rent and future product offering. Please refer to the following discussion and to the Consolidated Statement of Cash Flows included elsewhere in this document for additional informa- tion related to our cash flows. A summary of the cash flows from or used in op- erating, investing and financing activities for each year is provided below. OPERATING ACTIVITIES YEAR ENDED DECEMBER 31, 2023 For the year ended December 31, 2023, our cash flows from operating activities were €1,717 million, primarily attributable to: (i) net profit of €1,257 million, adjusted for €345 million of income tax expense, €662 million for depreciation and amortization expense, €147 million of financial expenses, €132 million of fi- nancial income and net other non-cash expenses of €139 million (mainly related to provisions, al- lowances, share-based compensation expense and the result from investments accounted for using the equity method); (ii) €49 million of cash generated from the change in other operating assets and liabilities, primarily driven by advances received for our cars; and partially offset by: (i) €300 million of cash absorbed from the net change in inventories, trade receivables and trade payables, attributable to inventories for €310 million driven by production planning and an enriched product mix and trade receivables for €33 million, partially offset by trade payables for €43 million; (ii) €107 million related to cash absorbed by receiv- ables from financing activities driven by an in- crease in the financial services portfolio due to volume growth; (iii) €51 million of net finance costs paid; and (iv) €292 million of income tax paid. OPERATING ACTIVITIES YEAR ENDED DECEMBER 31, 2022 For the year ended December 31, 2022, our cash flows from operating activities were €1,403 million, primarily attributable to: (i) net profit of €939 million, adjusted for €238 mil- lion of income tax expense, €546 million for de- preciation and amortization expense, €133 mil- lion of financial expenses, €84 million of financial income and net other non-cash expenses and income of €112 million (mainly related to provi- sions, allowances, share-based compensation expense and the result from investments ac- counted for using the equity method); and (ii) €140 million of cash generated from the change in other operating assets and liabilities, primarily driven by advances received for the Ferrari Day- tona SP3 and the 812 Competizione A; partially offset by: (i) €305 million of income tax paid; (ii) €188 million of cash absorbed by receivables from financing activities, driven by an increase in the financial services portfolio; (iii) €98 million of cash absorbed from the net change in inventories, trade receivables and trade payables, primarily attributable to higher overall volumes; and; (iv) €32 million of net finance costs paid. OPERATING ACTIVITIES YEAR ENDED DECEMBER 31, 2021 For the year ended December 31, 2021, our cash flows from operating activities were €1,283 million, primarily attributable to: (i) net profit of €833 million, adjusted for €209 mil- lion of income tax expense, €456 million for de- preciation and amortization expense, €33 million of financial expenses, net and net other non-cash expenses and income of €48 million (mainly relat- ed to provisions, allowances, share-based com- pensation expense and the result from invest- ments accounted for using the equity method); partially offset by: (i) €123 million related to cash absorbed by receiv- ables from financing activities driven by an in- crease in the financial services portfolio; (ii) €30 million of cash absorbed from the change in other operating assets and liabilities, primari- ly attributable to reversals of advances received for the Ferrari Monza SP1 and SP2, partially off- set by advances received for the 812 Compe- 110 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Ftizione and 812 Competizione A; equity incentive plans); (iii) €6 million of cash absorbed from the net change in inventories, trade receivables and trade pay- ables. In particular, the movement was attribut- able to: (a) cash absorbed by inventories of €81 million driven by higher volumes, partially offset by (b) cash generated from trade receivables of €2 million and (c) cash generated from trade payables of €73 million; (iv) €28 million of net finance costs paid; and (v) €109 million of income tax paid. INVESTING ACTIVITIES YEAR ENDED DECEMBER 31, 2023 For the year ended December 31, 2023 our net cash used in investing activities was €867 million, primar- ily attributable to capital expenditures of (i) €487 mil- lion for intangible assets, mainly related to external- ly acquired and internally generated development costs, and (ii) €382 million for property, plant and equipment. For a detailed analysis of additions to in- tangible assets and property, plant and equipment see “—Capital Expenditures” below. INVESTING ACTIVITIES YEAR ENDED DECEMBER 31, 2022 For the year ended December 31, 2022, our net cash used in investing activities was €805 million, primari- ly attributable to: (i) €457 million of additions to intan- gible assets and, (ii) €348 million of additions to prop- erty, plant and equipment. For a detailed analysis of additions to intangible assets and property, plant and equipment see “—Capital Expenditures” below. INVESTING ACTIVITIES YEAR ENDED DECEMBER 31, 2021 For the year ended December 31, 2021, our net cash used in investing activities was €733 million, primar- ily attributable to: (i) €385 million of additions to in- tangible assets and, (ii) €352 million of additions to property, plant and equipment, partially offset by proceeds from the disposals. For a detailed analysis of additions to intangible assets and property, plant and equipment see “—Capital Expenditures” below. FINANCING ACTIVITIES YEAR ENDED DECEMBER 31, 2023 For the year ended December 31, 2023, net cash used in financing activities was €1,109 million, pri- marily attributable to: (i) €385 million for the full repayment upon maturi- ty of a bond previously issued in 2016 and €191 million for the partial repayment of a bond due in 2025 following a tender offer by the Group; (ii) €461 million to repurchase common shares un- der the Company’s share repurchase program (including the “Sell-to-Cover” practice under the (iii) €334 million of dividends paid (of which €329 million was to owners of the parent and €5 mil- lion was to non-controlling interests); (iv) €73 million of repayments of borrowings from banks and other financial institutions, and (v) €18 million for repayments of lease liabilities; partially offset by: (i) €250 million of proceeds from borrowings from banks and other financial institutions; and (ii) €102 million of proceeds net of repayments re- lated to our revolving securitization programs in the United States (proceeds of €151 million and repayments of €49 million). FINANCING ACTIVITIES YEAR ENDED DECEMBER 31, 2022 For the year ended December 31, 2022, our net cash used in financing activities was €554 million, primar- ily attributable to: (i) €397 million to repurchase common shares un- der the Company’s share repurchase program (including the “Sell-to- Cover” practice under the equity incentive plans); (ii) €252 million of dividends paid (of which €250 million was to owners of the parent and €2 mil- lion was to non-controlling interests); (iii) €46 million related to the net change in borrow- ings to banks and other financial institutions; and (iv) €17 million in repayments of lease liabilities; partially offset by: (i) €146 million of proceeds net of repayments re- lated to our revolving securitization programs in the United States; and (ii) €12 million related to the net change in other debt. FINANCING ACTIVITIES YEAR ENDED DECEMBER 31, 2021 For the year ended December 31, 2021, our net cash used in financing activities was €580 million, primar- ily attributable to: (i) €500 million for the full repayment of a bond upon maturity in January 2021; (ii) €231 million to repurchase common shares un- der the Company’s share repurchase program (including the “Sell-to-Cover” practice under the equity incentive plans); (iii) €161 million of dividends paid (of which €160 million was to owners of the parent and €1 mil- lion was to non-controlling interests); (iv) €22 million in repayments of lease liabilities; and (v) €7 million related to the net change in other debt; 111 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTpartially offset by: (i) €149 million of net proceeds from the issuance of the 2032 Notes in July 2021; (ii) €121 million related to the net change in bank borrowings and other financial institutions; and (iii) €71 million of proceeds net of repayments relat- ed to our revolving securitization programs in the United States. CAPITAL EXPENDITURES Capital expenditures are defined as additions to property, plant and equipment (including right-of- use assets recognized in accordance with IFRS 16 — Leases) and intangible assets. Our capital invest- ments generally focus on efforts to support continu- ous product portfolio renewal and expansion, as well as development activities aimed at continually inno- vating and improving our cars, including the transi- tion of our product portfolio to hybrid and electric technology. We expect that our capital expenditures in the next few years will continue to be primarily focused on broadening and innovating our product range, consistent with our plans to launch 15 mod- els over the period from 2023 to 2026, as well as on infrastructure investments to further enhance our technological edge with innovation and the develop- ment of core components in house. Capital expenditures for the years ended De- cember 31, 2023, 2022 and 2021 were €911 million, €824 million and €750 million, respectively. The following table sets forth a breakdown of capital expenditures by category for each of the years ended December 31, 2023, 2022 and 2021: Intangible assets Externally acquired and internally generated development costs Patents, concessions and licenses Other intangible assets Total intangible assets Property, plant and equipment Land and industrial buildings Plant, machinery and equipment Other assets Advances and assets under construction Total property, plant and equipment Total capital expenditures For the years ended December 31, 2023 2022 2021 (€ million) 448 24 15 487 32 113 36 243 424 911 416 31 10 457 18 154 27 168 367 824 363 17 5 385 35 123 20 187 365 750 INTANGIBLE ASSETS Our total capital expenditures for intangible assets for the year ended December 31, 2023 were €487 million (€457 million and €385 million for the years ended December 31, 2022 and 2021, respectively). The most significant investments in intangible assets relate to externally acquired and internal- ly generated development costs. In particular, we make such investments to support the development of our current and future product offering. The cap- italized development costs primarily include materi- als and personnel costs relating to the engineering, design and development activities focused on con- tent enhancement of existing cars and new mod- els, including to broaden and innovate our product portfolio and our ongoing investments in advanced technologies (including hybrid and electric), as well as the development of key components used in our cars, which are necessary to provide continuing performance upgrades to our customers and which we expect to continue to develop primarily in-house. In recent periods, our capitalized developments costs have significantly increased for the afore- mentioned initiatives from €363 million in 2021 to €416 million in 2022 and €448 million in 2023. This has contributed to an increase in the proportion of capitalized development costs compared to total re- search and development incurred due to the effects of the advancement through the stages of develop- ment for many of the technologies we are creating. In particular, capitalized development costs as a pro- portion of total research and development incurred (both capitalized and expensed) increased to 45.4 112 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fpercent in 2023 compared to 44.5 percent in 2022 and 38.7 percent in 2021. For the year ended December 31, 2023, we in- vested €448 million in externally acquired and inter- nally generated development costs, of which €286 million primarily related to the development of mod- els to be launched in future years and €162 million primarily related to the development of our current product portfolio and components. For the year ended December 31, 2022, we in- vested €416 million in externally acquired and inter- nally generated development costs, of which €301 million primarily related to the development of mod- els to be launched in future years and €115 million primarily related to the development of our current product portfolio and components. For the year ended December 31, 2021, we in- vested €363 million in externally acquired and inter- nally generated development costs, of which €229 million primarily related to the development of mod- els to be launched in future years and €134 million primarily related to the development of our current product portfolio and components PROPERTY, PLANT AND EQUIPMENT Our total capital expenditures in property, plant and equipment for the year ended December 31, 2023 were €424 million (€367 million and €365 million for the years ended December 31, 2022 and 2021, re- spectively), of which €42 million related to right-of- use assets (€19 million and 13  million for the years ended December 31, 2022 and 2021, respectively). For the years ended December 31, 2023, 2022 and 2021, we made significant investments in infrastruc- tures in line with our growth plans and our focus on the renewal and broadening of our product portfo- lio and supporting future model launches. In partic- ular, we invested: • in the ongoing construction of our e-building (the main driver of the increase in advances and as- sets under construction in 2023 compared to 2022), which will be used primarily for the pro- duction of battery electric vehicles (BEVs) and related components. The e-building is expected to be inaugurated in June 2024; • in car and engine production lines (including for models to be launched in future years), as well as in our personalization programs; • the new paint shop (in 2023); and • in the purchase of tracts of land adjacent to our facilities in Maranello as part of our expansion plans (primarily in 2021). At December 31, 2023, the Group had contractual commitments for the purchase of property, plant and equipment amounting to €115 million (€201 mil- lion at December 31, 2022). CONTRACTUAL OBLIGATIONS The following table summarizes payments due under our significant contractual commitments at December 31, 2023: Payments due by period Less than 1 year 1 to 3 years 3 to 5 years After 5 years Total (€ million) Long-term debt (1) Interest on long-term debt (2) Lease obligations (principal) (3) Lease obligations (interest) Unconditional minimum purchase obligations (4) Purchase obligations (5) Total contractual obligations 590 1,138 50 16 2 95 115 868 25 21 2 40 — 89 18 16 2 3 — 450 2,267 10 20 2 — — 103 73 8 138 115 1,226 128 482 2,704 (1) Amounts presented relate to the principal amounts of terms and current interest rates on our long-term debt. long-term debt, excluding lease liabilities and the related Where interest rates are variable, they were determined interest expense that will be paid when due. For additional using the rates in effect at December 31, 2023. information see Note 24 “Debt” to our Consolidated Financial (3) Lease obligations mainly relate to leases for Ferrari stores, Statements included elsewhere in this document. The industrial buildings and certain other leased assets used in table above does not include short-term debt obligations. our business. See the table below for a reconciliation of the contractual (4) Unconditional minimum purchase obligations relate to our commitments of our long-term debt to the debt recognized unconditional purchase obligations to purchase a fixed or in the consolidated statement of financial position included minimum quantity of goods and/or services from suppliers within our Consolidated Financial Statements. with fixed and determinable price provisions. From time (2) Amounts include interest payments based on the contractual to time, in the ordinary course of our business, we enter 113 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTinto various arrangements with key suppliers in order purchase obligations to purchase a minimum quantity of to establish strategic and technological advantages. In goods and/or services in connection with certain of our particular, such agreements primarily relate to research sponsorship contracts. and development activities and, to a lesser extent, tooling (5) Purchase obligations represent obligations to purchase obligations. This amount also includes unconditional property, plant and equipment. The long-term debt obligations reflected in the table above can be recon- ciled to the amount recognized in the consolidated statement of financial position at December 31, 2023 (in our Consolidated Financial Statements included elsewhere in this document) as follows: Debt Short-term debt obligations Lease liabilities Accrued interest and amortized cost effects Long-term debt (€ million) 2,477 (133) (73) (4) 2,267 PENSION, POST-EMPLOYMENT BENEFITS AND OTHER PROVISIONS FOR EMPLOYEES We provide post-employment benefits for certain active employees and retirees of the Group. We classify these benefits on the basis of the type of benefit provided and in particular as defined con- tribution plans, defined benefit obligations or other provisions for employees. At December 31, 2023, the liability for such obligations amounted to €123 million (€111 million at December 31, 2022). See Note 22 “Employee benefits” to the Consolidated Financial Statements included elsewhere in this document. OFF BALANCE SHEET ARRANGEMENTS We have entered into various off-balance sheet ar- rangements with unconsolidated third parties in the ordinary course of business. For additional in- formation see Note 29 “Commitments” to the Con- solidated Financial Statements included elsewhere in this document. erational trends, as well as make decisions regard- ing future spending, resource allocations and other operational decisions. Management also uses these measures for budgeting and business plans, perfor- mance monitoring, management remuneration and external reporting purposes. In particular, we present the following non-GAAP financial measures, which are further described be- low: EBITDA, Adjusted EBITDA, Adjusted Operating Profit (Adjusted EBIT), Adjusted Net Profit, Adjusted Basic Earnings per Common Share, Adjusted Diluted Earnings per Common Share, Net Debt, Net Indus- trial Debt, Free Cash Flow and Free Cash Flow from Industrial Activities, as well as a number of financial metrics measured on a constant currency basis. While similar measures are widely used in the in- dustry in which we operate, the non-GAAP financial measures we use may not be comparable to other similarly titled measures used by other companies nor are they intended to be substitutes for mea- sures of financial performance or financial position as prepared in accordance with IFRS. NON-GAAP FINANCIAL MEASURES EBITDA AND ADJUSTED EBITDA We monitor and evaluate our operating and finan- cial performance and financial position using sever- al non-GAAP financial measures, including several adjusted measures which present how the underly- ing business has performed prior to the impact of adjusting items, which may obscure the underlying performance and impair comparability of results between periods. We believe that these non-GAAP financial measures provide useful and relevant in- formation to management and investors regarding our performance and improve the ability to assess our financial performance and financial position. They also provide us with comparable measures that facilitate management’s ability to identify op- EBITDA is defined as net profit before income tax ex- pense, financial expenses, net and amortization and depreciation. Adjusted EBITDA is defined as EBITDA as adjusted for certain income and costs, which are significant in nature, expected to occur infrequent- ly, and that management considers not reflective of ongoing operational activities. The following table sets forth the calculation of EBITDA and Adjusted EBITDA for the years ended December 31, 2023, 2022 and 2021, and provides a reconciliation of these non-GAAP measures to net profit. There were no adjustments impacting Adjust- ed EBITDA, therefore Adjusted EBITDA was equal to EBITDA for the periods presented. 114 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FNet profit Income tax expense Financial expenses, net Operating profit (EBIT) Amortization and depreciation EBITDA Adjustments Adjusted EBITDA For the years ended December 31, 2023 2022 2021 (€ million) 1,257 345 15 1,617 662 2,279 — 2,279 939 239 49 1,227 546 1,773 — 1,773 833 209 33 1,075 456 1,531 — 1,531 ADJUSTED OPERATING PROFIT (ADJUSTED EBIT) Adjusted Operating Profit (Adjusted EBIT) represents operating profit (EBIT) as adjusted for certain income and costs which are significant in nature, expected to occur infrequently, and that management considers not reflective of ongoing operational activities. The following table presents operating profit (EBIT) and Adjusted Op- erating Profit (Adjusted EBIT) for the years ended December 31, 2023, 2022 and 2021. There were no adjustments impacting Operating Profit (EBIT), therefore Adjusted Operating Profit (Adjusted EBIT) was equal to operating profit (EBIT) for the periods presented. Operating profit (EBIT) Adjustments Adjusted Operating Profit (Adjusted EBIT) For the years ended December 31, 2023 2022 2021 (€ million) 1,227 — 1,227 1,617 — 1,617 1,075 — 1,075 ADJUSTED NET PROFIT Adjusted Net Profit represents net profit as adjusted for certain income and costs (net of tax effects) which are significant in nature, expected to occur infrequently, and that management considers not reflective of ongoing operational activities. The following table presents net profit and Adjusted Net Profit for the years ended December 31, 2023, 2022 and 2021. There were no adjust- ments impacting net profit, therefore Adjusted Net Profit was equal to net profit for the periods presented. Net profit Adjustments Adjusted Net Profit For the years ended December 31, 2023 2022 2021 (€ million) 939 — 939 1,257 — 1,257 833 — 833 115 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTADJUSTED BASIC EARNINGS PER COMMON SHARE AND ADJUSTED DILUTED EARNINGS PER COMMON SHARE Adjusted Basic Earnings per Common Share and Adjusted Diluted Earnings per Common Share rep- resent earnings per share, as adjusted for certain in- come and costs (net of tax effects) which are signif- icant in nature, expected to occur infrequently, and that management considers not reflective of ongo- ing operational activities. The following table presents Adjusted Basic Earnings per Common Share and Adjusted Diluted Earnings per Common Share for the years ended December 31, 2023, 2022 and 2021. There were no adjustments impacting basic Earnings per common share and di- luted earnings per common share, therefore Adjust- ed Basic Earnings per Common Share and Adjusted Diluted Earnings per Common Share were equal to basic earnings per common share and diluted earn- ings per common share for the periods presented. Net profit attributable to owners of the Company € million For the years ended December 31, 2023 1,252 2022 933 2021 831 Weighted average number of common shares for basic earnings thousand 181,220 182,836 184,446 per share Basic earnings per common share Adjustments Adjusted Basic Earnings per Common Share € € € 6.91 — 6.91 5.11 — 5.11 4.50 — 4.50 Weighted average number of common shares(1) for diluted earnings per share thousand 181,511 183,121 184,771 Diluted earnings per common share Adjustments Adjusted Diluted Earnings per Common Share € € € 6.90 — 6.90 5.09 — 5.09 4.50 — 4.50 (1) For the years ended December 31, 2023, 2022 and 2021 common shares that would be issued for outstanding the weighted average number of common shares for share-based awards granted by the Group (assuming 100 diluted earnings per common share was increased to take percent of the target awards vested). into consideration the theoretical effect of the potential See Note 12 “Earnings per Share” to the Consolidat- ed Financial Statements, included elsewhere in this document, for the calculation of the basic earnings per common share and diluted earnings per com- mon share. NET DEBT AND NET INDUSTRIAL DEBT Due to different sources of cash flows used for the repayment of debt between industrial activities and financial services activities, and the different busi- ness structure and leverage implications, Net Indus- trial Debt, together with Net Debt, are the primary measures used by us to analyze our capital struc- ture and financial leverage. NET DEBT Is defined as debt less cash and cash equivalents and is composed of Net Industrial Debt and Net Debt of Financial Services Activities, which are both de- fined below. NET INDUSTRIAL DEBT Is defined as debt of our industrial activities less cash and cash equivalents of our industrial activities. Net Industrial Debt represents our Net Debt less our Net Debt of Financial Services Activities (as defined below). Industrial activities include all of the Group’s activities except for those relating to financial ser- vices activities, which are further described below. NET DEBT OF FINANCIAL SERVICES ACTIVITIES Is defined as debt of our financial services activities less cash and cash equivalents of our financial ser- vices activities. The Group’s financial services activi- ties relate to its fully owned subsidiary Ferrari Finan- cial Services Inc., whose primary business is to offer retail client financing for the sale of Ferrari cars in the United States and to manage the related financial re- ceivables portfolio. The Net Debt of Financial Services Activities primarily relates to our asset-backed fi- nancing (securitizations) of the receivables generated by our financial services activities in the United States. The following table sets presents our Net Debt, Net Debt of Financial Services Activities and Net In- dustrial Debt at December 31, 2023 and 2022. 116 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FGroup 2023 Financial Services Activities At December 31, Industrial Activities Group (€ million) 2022 Financial Services Activities Industrial Activities Asset-backed financing (Securitizations) (1,166) (1,166) — (1,105) (1,105) — Bonds and notes Borrowings from banks and other financial institutions Lease liabilities Other debt (904) (291) (73) (43) — (73) — (42) (904) (1,490) (218) (114) (73) (1) (57) (46) — (76) — (41) (1,490) (38) (57) (5) Total debt with third parties (2,477) (1,281) (1,196) (2,812) (1,222) (1,590) Intercompany (1) — (9) 9 — (42) 42 Total debt, net of intercompany (2,477) (1,290) (1,187) (2,812) (1,264) (1,548) Cash and cash equivalents 1,122 34 1,088 1,389 48 1,341 Net Debt (1,355) (1,256) (99) (1,423) (1,216) (207) to €81 million at December 31, 2023 (€97 million at December 31, 2022), is subject to certain repatriation restrictions and may only be repatriated as a repay- ment of payables or debt, or as dividends or capital distributions. We do not currently believe that such transfer restrictions have an adverse impact on our ability to meet our liquidity requirements. The following table sets forth an analysis of the currencies in which our cash and cash equivalents were denominated at the dates presented. (1) Represents intercompany (debt)/receivables between industrial activities and financial services activities. For additional information relating to our total debt, see Note 24 “Debt” to the Consolidated Financial Statements included elsewhere in this document. The Net Debt of Financial Services Activities pri- marily relates to our asset-backed financing (secu- ritizations) of the receivables generated by our fi- nancial services activities in the United States. The latter amounted to €1,451 million and €1,400 mil- lion at December 31, 2023 and 2022, respectively. For further details relating to our receivables from financing activities and our asset-backed financing (securitizations), see Note 18 “Current Receivables and Other Current Assets” and Note 24 “Debt” to the Consolidated Financial Statements included else- where in this document. CASH AND CASH EQUIVALENTS Cash and cash equivalents amounted to €1,122 mil- lion at December 31, 2023 compared to €1,389 mil- lion at December 31, 2022. See “—Cash Flows” above for further details. At December 31, 2023, 80 percent of our cash and cash equivalents were denominated in Euro (at De- cember 31, 2022, 85 percent). Our cash and cash equivalents denominated in currencies other than the Euro are available mostly to Ferrari S.p.A. and certain subsidiaries which operate in areas other than the Eurozone. Cash held in such countries may be subject to transfer restrictions depending on the jurisdictions in which these subsidiaries operate. In particular, cash held in China (including in curren- cies other than the Chinese Yuan), which amounted 117 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTEuro U.S. Dollar Chinese Yuan Pound Sterling Other currencies Total At December 31, 2023 (€ million) 895 97 81 20 29 2022 1,181 70 96 9 33 1,122 1,389 Cash collected from the settlement of receivables under securitization programs is subject to certain restrictions regarding its use and is pri- marily applied to repay principal and interest of the related funding. Such cash amounted to €32 million at December 31, 2023 (€44 million at De- cember 31, 2022). Total available liquidity Total available liquidity (defined as cash and cash equivalents plus un- drawn committed credit lines) at December 31, 2023 was €1,722 million (€2,058 million at December 31, 2022). The following table summarizes our total available liquidity: Cash and cash equivalents Undrawn committed credit lines Total available liquidity At December 31, 2023 (€ million) 1,122 600 1,722 2022 1,389 669 2,058 The undrawn committed credit lines at December 31, 2023 and 2022 relate to revolving credit facilities. For further details, see Note 24 “Debt” to the Consol- idated Financial Statements included elsewhere in this document. — Leases), intangible assets and joint ventures. Free Cash Flow is composed of Free Cash Flow from In- dustrial Activities and Free Cash Flow from Financial Services Activities, which are both defined below. FREE CASH FLOW AND FREE CASH FLOW FROM INDUSTRIAL ACTIVITIES Free Cash Flow and Free Cash Flow from Industrial Activities are two of our primary key performance indicators to measure the Group’s performance and cash flow generation. These measures are not representative of residual cash flows available for discretionary purposes. FREE CASH FLOW Is defined as consolidated cash flows from operat- ing activities less investments in property, plant and equipment (excluding right-of-use assets recog- nized during the period in accordance with IFRS 16 FREE CASH FLOW FROM INDUSTRIAL ACTIVITIES Is defined as cash flows from operating activities of our industrial activities less investments in proper- ty, plant and equipment (excluding right-of-use as- sets recognized during the period in accordance with IFRS 16 — Leases), intangible assets and joint ventures of our industrial activities. Free Cash Flow from Industrial Activities represents our Free Cash Flow less our Free Cash Flow from Financial Ser- vices Activities (as defined below). Industrial activ- ities include all of the Group’s activities except for those relating to financial services activities, which are further described below. 118 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFREE CASH FLOW FROM FINANCIAL SERVICES ACTIVITIES Is defined as cash flows from operating activities of our financial services activities less investments in property, plant and equipment (excluding right- of-use assets recognized during the period in ac- cordance with IFRS 16 — Leases), intangible assets and joint ventures of our financial services activi- ties. The Group’s financial services activities relate only to its fully owned subsidiary Ferrari Financial Services Inc., whose primary business is to offer retail client financing for the sale of Ferrari cars in the United States and to manage the related finan- cial receivables portfolio. Its cash flows from oper- ating activities are mainly driven by the change in its financial receivables portfolio (receivables from financing activities), as well as its operating result during the period. The following table presents our Free Cash Flow, Free Cash Flow from Financial Services Activities and Free Cash Flow from Industrial Activities for the years ended December 31, 2023, 2022 and 2021. For the years ended December 31, 2023 2022 2021 Group Financial Industrial Group Financial Industrial Group Financial Industrial Services Activities Services Activities Services Activities Activities Activities (€ million) Activities 1,717 (84) 1,801 1,403 (161) 1,564 1,283 (96) 1,379 (869) — (869) (806) — (806) (737) — (737) Cash flows from/ (used in)(1) operating activities Investments in property, plant and equipment, intangible assets and joint ventures Free Cash Flow 848 (84) 932 597 (161) 758 546 (96) 642 (1) For the years ended December 31, 2023, 2022 and 2021, from financing activities in the consolidated statement of cash flows used in operating activities of financial services financial position) of €107.2 million, €187.9 million and €122.7 activities mainly reflects the outflows derived from the million, respectively. increase in the financial receivables portfolio (receivables Free Cash Flow for the year ended December 31, 2023 was €848 million compared to €597 million for the year ended December 31, 2022 and €546 million for the year ended December 31, 2021. For an expla- nation of the drivers in Free Cash Flow see “—Cash Flows” above. Free Cash Flow from Industrial Activities for the year ended December 31, 2023 was €932 million, an increase of €174 million compared to €758 million for the year ended December 31, 2022. The increase in Free Cash Flow from Industrial Activities was pri- marily attributable to an increase in net profit before income tax expense, financial expenses, net, amorti- zation and depreciation and other non-cash income and expenses, partially offset by (i) higher absorp- tion of cash for working capital, mainly due to an in- crease in inventories driven by production planning and an enriched product mix, (ii) lower collection of advances for cars in 2023 compared to 2022 (which benefited from the collection of advances for the Daytona SP3), and (iii) higher investments in intan- gible assets and property, plant and equipment re- flecting our initiatives for product and infrastruc- ture development. Free Cash Flow from Industrial Activities for the year ended December 31, 2022 was €758 million, an increase of €116 million compared to €642 million for the year ended December 31, 2021. The increase in Free Cash Flow from Industrial Activities in 2022 compared to 2021 was primarily attributable to (i) an increase in net profit in net profit before income tax expense, financial expenses, net, amortization and depreciation and other non-cash income and ex- penses, (ii) a positive change in cash flows from oth- er operating assets and liabilities driven by the col- lection of advances for the Daytona SP3 and the 812 Competizione A, partially offset by (iii) an increase in cash used for inventories, trade receivables and trade payables driven by higher overall volumes, (ii) higher income taxes paid and (v) higher investments in intangible assets to support the development of our current and future product offering. CONSTANT CURRENCY INFORMATION The “Results of Operations” discussion above in- cludes information about our net revenues on a con- stant currency basis, which excludes the effects of foreign currency translation from our subsidiaries with functional currencies other than Euro, as well as the effects of foreign currency transaction im- pact and foreign currency hedging. 119 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTWe use this information to assess how the underly- ing revenues changed independent of fluctuations in foreign currency exchange rates and hedging. We calculate constant currency by (i) applying the prior-period average foreign currency exchange rates to translate current period revenues of for- eign subsidiaries expressed in local functional cur- rency other than Euro, (ii) applying the prior-period average foreign currency exchange rates to current period revenues originated in a currency other than the functional currency of the applicable entity, and (iii) eliminating the variances of any foreign curren- cy hedging (see Note 2 “Material Accounting Policies” to the Consolidated Financial Statements, included elsewhere in this document, for information on the foreign currency exchange rates applied). Although we do not believe that these measures are a substitute for GAAP measures, we do believe that revenues excluding the impact of currency fluc- tuations and the impacts of hedging provide addi- tional useful information to investors regarding the operating performance on a local currency basis. (€B, unless otherwise stated) NET REVENUES ADJ. OPERATING PROFIT (EBIT) (margin %) ADJ. DILUTED EPS (€) ADJ. EBITDA (margin %) INDUSTRIAL FCF (1) Calculated using the weighted average diluted number of common shares at December 31, 2023 (181,511 thousand). 2024 OUTLOOK 2024 guidance, based on the following assumptions for the year: • Positive product and country mix, along with • Racing activities impacted by lower Formula 1 strong personalizations ranking in 2023 despite higher number of races in the 2024 calendar • Lifestyle activities expected to increase top line contribution while investing to accelerate devel- opment • Cost inflation to persist • Continuous brand investments • Robust Industrial free cash flow generation, par- tially offset by increased capital expenditures and higher tax payments 2023A 2024 GUIDANCE 6.0 1.62 27.1% 6.90(1) 2.28 38.2% 0.93 >6.4 ≥1.77 ≥27% ≥7.50(1) ≥2.45 ≥38% >0.9 MAJOR SHAREHOLDERS Exor is our largest shareholder through its approx- imately 24.65 percent shareholding interest in our outstanding common shares (as of February 9, 2024). See “Overview—History of the Company”. As a result of the loyalty voting mechanism, Exor’s voting power is approximately 36.48 percent (as of Febru- ary 9, 2024). In addition, as of February 9, 2024, Trust Piero Ferrari, a Jersey trust established by Mr. Piero Ferrari, holds approximately 10.48 percent of our outstanding common shares. Piero Ferrari holds the usufruct over such shares including the right to ex- ercise the voting rights of such shares, correspond- ing to, as a result of the loyalty voting mechanism, a voting power of approximately 15.51 percent. The percentages of ownership and voting power above are calculated based on the number of outstanding shares net of treasury shares. Exor and Mr. Piero Ferrari informed us that they have entered into a shareholder agreement, subse- quently amended to reflect adherence by Trust Pie- ro Ferrari, summarized below under “—Sharehold- ers’ Agreement”. Exor is controlled by Giovanni Agnelli B.V. (“G.A.”), which holds 84.37 percent of Exor’s share capital and voting rights, based on regulatory filings with the Netherlands Authority for the Financial Markets (stichting Autoriteit Financiële Markten, the “AFM”). G.A. is a Dutch private company with limited liability (besloten vennootschap met beperkte aansprakeli- jkheid) with interests represented by shares, found- ed by Giovanni Agnelli and currently held by mem- bers of the Agnelli and Nasi families, descendants of Giovanni Agnelli, founder of Fiat. Its present principal business activity is to purchase, administer and dis- pose of equity interests in public and private entities and, in particular, to ensure the cohesion and conti- nuity of the administration of its controlling equity interests. The managing directors of G.A., as of Feb- ruary 16, 2024, were Jeroen Preller, Andrea Agnelli, Luca Ferrero de’ Gubernatis Ventimiglia, Benedet- to Della Chiesa, Johannes Casper Brouwer, Filippo 120 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FScognamiglio Pasini, Alexandre von Furstenberg and Niccolò Camerana. Based on the information in Ferrari’s sharehold- er register, regulatory filings with the AFM and the SEC and other sources available to us, the following shareholders owned, directly or indirectly, in excess of three percent of the common shares holding vot- ing rights of Ferrari, as of February 9, 2024: Shareholder Exor N.V. (2) Trust Piero Ferrari (2) BlackRock, Inc. (3) Other public shareholders Number of common shares Percentage owned (1) 44,435,280 18,894,295 10,946,790 105,974,971 24.65% 10.48% 6.07% 58.80% (1) The percentages of share capital set out in this table (2) Each of Exor and Trust Piero Ferrari participate in the are calculated as the ratio of (i) the aggregate number loyalty voting program of Ferrari. As of February 9, 2024, of outstanding common shares beneficially owned by Exor owned 44,435,280 special voting shares and Trust the shareholder to (ii) the total number of outstanding Piero Ferrari owned 18,892,160 special voting shares. common shares (net of treasury shares) of Ferrari. These Therefore, as discussed above in this section, the voting percentages may slightly differ from the percentages of power of Exor and Trust Piero Ferrari in Ferrari is higher share capital included in the public register held by the than the percentage of common shares beneficially held as AFM of all notifications made pursuant to the disclosure presented in this table. obligations under chapter 5.3 of the Dutch Act on financial (3) Based on filings with the SEC (Amendment No. 1 to Schedule supervision (Wet op het financieel toezicht; the “AFS”), inter 13G filed on February 13, 2024, File No. 005-89223), alia, because any shares held in treasury by Ferrari are BlackRock, Inc. is a parent holding company or control person included in the relevant denominators for purposes of the in accordance with Rule 13d-1(b)(1)(ii)(G) and, out of the AFS disclosure obligations. common shares beneficially owned as set forth in the table, it has sole voting power over 10,278,339 common shares. Based on the information in Ferrari’s sharehold- er register and other sources available to us, as of February 9, 2024, approximately 58.2 million Ferrari common shares, or 30 percent of the outstanding Ferrari common shares, were held in the United States. As of the same date, approximately 1,829 re- cord holders had registered addresses in the Unit- ed States. SHAREHOLDERS’ AGREEMENT On December 23, 2015, Exor and Piero Ferrari en- tered into a Shareholders’ Agreement, which be- came effective at the completion of the Separation on January 3, 2016 (as amended, the “Shareholders’ Agreement”) and prior to the admission to listing and trading of the common shares of Ferrari on Eu- ronext Milan. On December 16, 2022, Exor, Piero Ferrari and the newly established Trust Piero Ferrari entered into an adherence and amendment agreement (the “Adherence and Amendment Agreement”) to the Shareholders’ Agreement, whereby Trust Piero Fer- rari was added as a new party to the Shareholders’ Agreement and certain provisions of the Sharehold- ers Agreement were amended. This followed the es- tablishment of Trust Piero Ferrari and the grant to Trust Piero Ferrari of the bare ownership of Ferrari shares as described under “—Major Shareholders” above. Ferrari is not a party to the Shareholders’ Agreement nor to the Adherence and Amendment Agreement, and does not have any rights or obliga- tions thereunder. Below is a summary of the prin- cipal provisions of the Shareholders’ Agreement based on regulatory filings made by Exor, Trust Pie- ro Ferrari and Piero Ferrari. CONSULTATION For the purposes of forming and exercising, to the extent possible, a common view on the items on the agenda of any General Meeting of shareholders of Ferrari, Exor and Piero Ferrari will consult with each other prior to each General Meeting. For the purposes of this consultation right and duties, rep- resentatives of each of Exor and Piero Ferrari shall meet in order to discuss in good faith whether they have or can find a common view as to the matters on the agenda of the immediately following Gener- al Meeting. This consultation right does not include an obligation to vote in any certain way nor does it constitute a veto right in favor of Piero Ferrari. The consultation rights and obligations set forth in the Shareholders’ Agreement apply solely between Exor and Piero Ferrari, and do not apply to Trust Piero Ferrari. In the event of (i) consolidation upon Trust Piero Ferrari of the usufruct on the common shares of Ferrari, as held by Piero Ferrari, and the bare own- ership on the common shares of Ferrari, as held by Trust Piero Ferrari, or (ii) any other transfer of the usufruct on the common shares of Ferrari, as held by Piero Ferrari, to a Permitted Transferee (as defined in the Shareholders’ Agreement), the consultation rights and obligations set forth in the Shareholders’ Agreement will automatically terminate and cease to have any validity and effect and a new consulta- tion procedure will automatically come into force 121 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTand effect between Exor and the relevant Permitted Transferee (including Trust Piero Ferrari, if applica- ble). Such new consultation procedure will entail no obligation on the parties to reach a common view and each of Exor and the relevant Permitted Trans- feree (including the trustee acting on behalf of Trust Piero Ferrari, if applicable), will at all times remain free to exercise its voting rights independently. PRE-EMPTION RIGHT IN FAVOR OF EXOR AND RIGHT OF FIRST OFFER OF PIERO FERRARI on the common shares of Ferrari, as held by Piero Ferrari, to a Permitted Transferee, all rights and obli- gations pertaining to Piero Ferrari under the Share- holders’ Agreement other than the consultation rights and obligations described above (and, there- fore, including the right of first offer) shall automati- cally be transferred to the relevant Permitted Trans- feree (including Trust Piero Ferrari, if applicable) to the extent that such provisions cannot be classified as acting in concert provisions within the meaning of the Dutch applicable laws and regulations. Except for Permitted Transfers (as defined in the Shareholders’ Agreement), the bare ownership on the common shares of Ferrari, as held by Trust Pie- ro Ferrari, and the usufruct on the common shares of Ferrari, as held by Piero Ferrari, will not be trans- ferred separately. In the event of the joint transfer of bare ownership and usufruct of all or part of the Ferrari common shares held by Trust Piero Ferrari, Exor will have the right to purchase all (but not less than all) of the common shares being transferred on the terms of the original proposed transferor, in case the original proposed transfer was for no con- sideration, at market prices determined pursuant to the Shareholders’ Agreement. In the event Exor intends to transfer (in whole or in part) its common shares to a third party, either solicited or unsolicited, Piero Ferrari will have the right to make a binding, unconditional and irrevoca- ble all cash offer for the purchase of such common shares. Trust Piero Ferrari will not have any rights in connection with such right of first offer. The foregoing will not apply in the case of trans- fers of Ferrari common shares: (i) by any party to the Shareholders’ Agreement, to a party that qual- ifies as a “Loyalty Transferee” (as defined in the Ferrari Articles of Association) of such party, (ii) by Exor, to any affiliate of G.A., to a successor in busi- ness of G.A. and to any affiliate of a successor in business of G.A., and (iii) by any party to the Share- holders’ Agreement that is an individual, to an entity wholly owned and controlled by that same party. In addition, the provisions regarding the pre-emption right in favor of Exor and right of first offer of Piero Ferrari will not apply in relation to, and Trust Piero Ferrari will be free and allowed to carry out, market sales to third parties of its Ferrari common shares (provided always that bare ownership and usufruct are transferred together) which in the aggregate do not exceed, during the whole period of validity of the Shareholders’ Agreement, 0.5 percent of the number of common shares owned by Piero Ferrari upon completion of the Separation. SUCCESSION In the event of (i) consolidation upon Trust Piero Fer- rari of the usufruct on the common shares of Ferra- ri, as held by Piero Ferrari, and the bare ownership on the common shares of Ferrari, as held by Trust Piero Ferrari, or (ii) any other transfer of the usufruct TERM The Shareholders’ Agreement entered into force upon completion of the Separation on January 3, 2016 and provides that it shall remain in force un- til the fifth anniversary of the effective date of the Separation, provided that if neither of the parties to the Shareholders’ Agreement terminates the Share- holders’ Agreement within six months before the end of the initial term, then the Shareholders’ Agree- ment shall be renewed automatically for another five year term. Since neither of the parties to the Shareholders’ Agreement terminated it within six months before January 3, 2021, the Shareholders’ Agreement was automatically renewed for another five year term and, therefore, until January 3, 2026. The Shareholders’ Agreement shall terminate and cease to have any effect as a result of the trans- fer of all the common shares owned by either Exor or Trust Piero Ferrari to a third party. GOVERNING LAW AND JURISDICTION The Shareholders’ Agreement is governed by and must be interpreted according to the laws of the Netherlands. Any disputes arising out of or in con- nection with the Shareholders’ Agreement are sub- ject to the exclusive jurisdiction of the competent court in Amsterdam, the Netherlands, without prej- udice to the right of appeal and appeal to the Su- preme Court. CORPORATE GOVERNANCE INTRODUCTION Ferrari N.V. is a public limited liability company, incor- porated under the laws of the Netherlands. The Com- pany is the holding company of the Ferrari group fol- lowing the separation of the Ferrari business from FCA, now Stellantis N.V. In this section, the “Compa- ny” refers to Ferrari N.V. The Company qualifies as a foreign private issuer under the New York Stock Exchange (“NYSE”) listing standards and its common shares are listed on the NYSE and on Euronext Milan (formerly Mercato Telematico Azionario). In accordance with the NYSE rules, the Company is permitted to follow its home country practice with 122 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fregard to certain corporate governance standards. Therefore, the Company has adopted, except as dis- cussed below under “Compliance with Dutch Corpo- rate Governance Code”, the best practice provisions of the updated Dutch corporate governance code issued by the Corporate Governance Code Monitor- ing Committee, which entered into force on January 1, 2018 (the “Dutch Corporate Governance Code”) and is applicable retroactively as from financial year 2017. The Dutch Corporate Governance Code con- tains principles and best practice provisions that regulate relations inter alia between the board of di- rectors of a company and its committees and the re- lationship with the general meeting of shareholders. On December 20, 2022, the Corporate Governance Code Monitoring Committee published an update to the 2016 Dutch Corporate Governance Code. The updated Dutch Corporate Governance Code has en- tered into force on January 1, 2024 and is applicable retroactively as from financial year 2023. In this Annual Report the Company addresses its overall corporate governance structure. The Com- pany discloses, and intends to disclose any material departure from the best practice provisions of the Dutch Corporate Governance Code in this and in its future annual reports. For further information about culture see “—Cre- ating Value for Our Shareholders” BOARD OF DIRECTORS Pursuant to the Company’s articles of association (the “Articles of Association”), its board of directors (the “Board of Directors” or the “Board”) consists of three or more directors (the “Directors”). The cur- rent Board of Directors was appointed at the annu- al general meeting of shareholders held on April 14, 2023. Its term of office will expire on the day of the next Annual General Meeting of Shareholders, which is currently expected to be on April 17, 2024. Each Di- rector may be reappointed at any subsequent annu- al general meeting of shareholders. The Board of Directors as a whole is responsible for the strategy of the Company. The Board of Direc- tors is composed of two executive Directors (i.e., Mr. John Elkann, Executive Chairman, and Mr. Benedetto Vigna, Chief Executive Officer) and nine non-execu- tive Directors. Pursuant to Article 17 of the Articles of Association, the general authority to represent the Company shall be vested in the Board of Direc- tors and the Chief Executive Officer. The Chief Ex- ecutive Officer has day-to-day responsibility for the management of the Company and the Group. The Board of Directors appointed the following internal committees: (i) an Audit Committee, (ii) an ESG Committee, and (iii) a Compensation Committee. On certain key operational matters, the executive Directors are supported by the Ferrari Leadership Team (hereinafter also the “FLT”, formerly Senior Management Team, and so renamed as a result of the organizational changes implemented in January 2022), which is responsible for reviewing the oper- ating performance of the businesses, collaborat- ing on certain operational matters, supporting the executive Directors with their tasks and executing decisions of the Board of Directors and the day-to- day management of the Company, primarily to the extent it relates to the operational management. Set forth below is the name, year of birth and position of each of the persons currently serving as Directors of Ferrari N.V. Unless otherwise indicated, the business address of each person listed below will be c/o Ferrari, Via Abetone Inferiore n. 4, I-41053 Maranello (MO), Italy. Name John Elkann Benedetto Vigna Piero Ferrari Sergio Duca (1) Delphine Arnault Francesca Bellettini Eddy Cue John Galantic Maria Patrizia Grieco Adam Keswick Mike Volpi Year of Birth Position 1976 1969 1945 1947 1975 1970 1964 1961 1952 1973 1966 Executive Chairman and Executive Director Chief Executive Officer Vice Chairman and Non-Executive Director Senior Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director (1) The Board of Directors has resolved to appoint Sergio Duca as chairman of the Board, as referred to in the Dutch Civil Code, who will in such capacity have the title Chair (Voorzitter). 123 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTNine Directors currently qualify as independent (representing a majority) for purposes of NYSE rules and Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and eight Directors qualify as independent (representing a majority) for purposes of the Dutch Corporate Gov- ernance Code. The Board of Directors has resolved to grant the following titles: • John Elkann: Chairman of the Company; • Benedetto Vigna: Chief Executive Officer; • Piero Ferrari: Vice-Chairman; and • Sergio Duca: Chair of the Board (Voorzitter) and Senior Non-Executive Director. The following members are independent within the meaning of the Dutch Corporate Governance Code and NYSE rules: • Delphine Arnault; • Francesca Bellettini; • Eddy Cue; • Sergio Duca; • John Galantic; • Maria Patrizia Grieco; • Adam Keswick; and • Mike Volpi. In addition, Piero Ferrari is considered independent within the meaning of the NYSE rules. Directors are expected to prepare themselves for and to attend all Board of Directors meetings, the annual general meeting of shareholders and the meetings of the committees on which they serve, with the understanding that, on occasion, a Director may be unable to attend a meeting. During 2023, there were four meetings of the Board of Directors. The attendance rate at these meetings was 97.73 percent. The non-executive Directors of the Company met to discuss the functioning of the Board and its committees, the functioning of the executive Direc- tors as a corporate body of the company, or the cor- porate strategy and the main risks of the business, pursuant to best practice provisions 2.2.6, 2.2.7, 2.2.8 and 1.1.2 of the Dutch Corporate Governance Code. Summary biographies for the current Directors of Ferrari are included below: JOHN ELKANN (CHAIRMAN OF THE COMPANY AND EXECUTIVE DIRECTOR) Mr. John Elkann is Chief Executive Officer of Exor and Chairman of Stellantis N.V. Elkann obtained a scien- tific baccalaureate from the Lycée Victor Duruy in Paris and graduated in Engineering from Politecnico, the Engineering University of Turin. While at universi- ty, he gained work experience in various companies of the Fiat Group in the UK and Poland (manufactur- ing) as well as in France (sales and marketing). He started his professional career in 2001 at General Electric as a member of the Corporate Audit Staff, with assignments in Asia, the USA and Europe. John Elkann is Chairman of Ferrari N.V. and Chairman of GEDI Gruppo Editoriale S.p.A. Mr. Elkann is a trustee of MoMA. He also serves as Chairman of the Giovanni Agnelli Foundation. Born in 1976, Italian citizenship. BENEDETTO VIGNA (CHIEF EXECUTIVE OFFICER AND EXECUTIVE DIRECTOR) Mr. Benedetto Vigna is Chief Executive Officer since September 2021. Before joining Ferrari, he was President of STMicroelectronics’, Analog, MEMS and Sensors Group, since January 2016 and also a mem- ber of ST’s Executive Committee from May 31, 2018. Vigna joined ST in 1995 and founded ST’s MEMS ac- tivities (Micro-Electro-Mechanical Systems). Under his guidance, ST’s MEMS sensors established ST’s leadership with large OEMs in motion-activated user interfaces. His responsibilities were expanded to include connectivity, imaging and power solutions and he piloted a series of successful moves into new business areas, with a particular focus on the industrial and automotive market segments. During his career Vigna has filed more than 200 patents on micromachining, authored numerous publications and has sat on the boards of several EU-funded programs including start ups as well as worldwide recognized boards of Asian and American research centers. Benedetto Vigna graduated in Subnuclear Physics from the University of Pisa. Born in 1969, Italian citizenship. PIERO FERRARI (VICE CHAIRMAN AND NON-EXECUTIVE DIRECTOR) Mr. Piero Ferrari has been Vice Chairman of Ferra- ri S.p.A. since 1988. He also serves as Chairman of HPE-COXA, is board member and Vice President of Ferretti Group. He was President of Piaggio Aero Industries S.p.A. from 1998 to 2014 and served as Chairman of the Italian Motor Sport Commission (CSAI) from 1998 to 2001 and BA SERVICE from 2000 to 2015. He was also a board member and Vice President of Banca Popolare dell’Emilia Romagna in Modena from 2002 to 2011 and from 2011 to 2014 respectively. The son of Ferrari’s founder Enzo Fer- rari, Mr. Piero Ferrari covered a variety of manage- ment positions in the motor sport division of Ferrari from 1970 to 1988 with increasing responsibilities. His first position with Ferrari dates back to 1965 working on the production of the Dino 206 Com- petizione racing car. Mr. Piero Ferrari received an honorary degree in Aerospace Engineering from the University of Naples Federico II in 2004 and an Honorary Degree in Mechanical Engineering from the University of Modena and Reggio Emilia in 2005. In 2004, Mr. Piero Ferrari was awarded the title of Cavaliere del Lavoro. Born in 1945, Italian citizenship. 124 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FSERGIO DUCA (CHAIRMAN OF THE BOARD OF DIRECTORS AND SENIOR NON-EXECUTIVE DIRECTOR) Mr. Sergio Duca is a member of the Statutory Audi- tors of Ferrovie dello Stato Italiane S.p.A. since 2022, independent director of OSAI Automation System S.p.A. since November 2020 and a director of To- faş Türk Otomobil Fabrikasi Anonim Şirketi, as well as Chairperson of the corporate governance com- mittee, member of the risk management committee and member of the audit committee of the board of directors of Tofaş Türk Otomobil Fabrikasi Anonim Şirketi. He also serves as Chairman of the board of auditors of ISPI (Institute for the Study of Internation- al Politics), as well as a member of the board of au- ditors of the Intesa San Paolo Foundation Onlus. Mr. Duca has previously served as member of the board of Nedcommunity association from May 2019 until May 2022, member of the Statutory Auditors of Ba- sicNet S.p.A. from 2017 until March 2022, Chairman of the Board of Statutory Auditors of Enel S.p.A. from April 2010 until May 2019, Chairman of the Board of Directors of Orizzonte SGR S.p.A. from 2008 until 2016, Chairman of the Board of Statutory Auditors of Exor S.p.A. until May 2015, Chairman of the Board of Statutory Auditors and effective auditor of GTech until April 2015, member of the Board of ASTM S.p.A. and Chairman of the Audit Committee of ASTM S.p.A. from 2010 until 2013, Chairman of the Board of Stat- utory Auditors of Tosetti Value SIM and an indepen- dent director of Sella Gestione SGR until April 2010. From 1997 until July 2007, Mr. Duca was the Chair- man of PricewaterhouseCoopers S.p.A. In addition, he has previously served as Chairman of the board of auditors of the Fondazione per la Scuola of Compagnia di San Paolo until February 2022, Chairman of the board of auditors of the Sil- vio Tronchetti Provera Foundation, Chairman of the board of auditors of Compagnia di San Paolo until May 2016, member of the Edison Foundation’s ad- visory board and the University Bocconi in Milan’s development committee, as well as Chairman of the Bocconi’s Alumni Association’s board of auditors and a member of the board of auditors of the AN- DAF (Italian Association of Chief Financial Officers). As a certified chartered accountant and auditor, he acquired broad experience through the Pricewater- houseCoopers network as the external auditor of a number of significant Italian listed companies. Mr. Duca graduated with honors in Economics and Busi- ness from University Bocconi in Milan. Born in 1947, Italian citizenship. DELPHINE ARNAULT (NON-EXECUTIVE DIRECTOR) Mrs. Delphine Arnault graduated from the EDHEC Business School and the London School of Eco- nomics. She began her career at McKinsey & Com- pany, the global management consultancy firm, where she was a Consultant for two years. In 2001, she joined the Executive Committee of Christian Dior Couture where she directed several product lines. She was appointed Deputy General Manager of Christian Dior Couture in 2008 and in September 2013 Deputy General Manager of Louis Vuitton Mal- letier. She has been a board director of LVMH Moët Hennessy Louis Vuitton SE since 2003. Delphine was appointed to the board of Château Cheval Blanc, the Saint-Emilion premier grand cru classé in 2008. In 2002 she joined the board of Loewe, the celebrated Spanish leather goods company, and was appoint- ed to Pucci’s board of directors in 2007. She was appointed to the boards of Céline in December 2011 and Christian Dior SE in April 2012. Delphine Arnault previously served as a director of both Havas and 21st Century Fox from 2013 to 2019. In 2021, she has been appointed to the Board of Gagosian and Phoebe Philo Limited. Since February 2023, Mrs. Delphine Arnault is the President and CEO of Chris- tian Dior Couture. Born in 1975, French citizenship. FRANCESCA BELLETTINI (NON-EXECUTIVE DIRECTOR) Since July 2023, Francesca Bellettini is Kering Dep- uty Chief Executive Officer and since September 2013 she is President and Chief Executive Officer of Yves Saint Laurent (part of the Kering Group), based in France. Ms. Bellettini is a member of the Kering Group Executive Committee since 2013. Ms. Bellet- tini joined the Kering Group in 2003, occupying dif- ferent executive roles. From 2003 until 2008 she worked in Gucci, Italy, first as Assistant to the Presi- dent and Managing Director and, from 2005, as Stra- tegic Planning Director and Associate Worldwide Merchandising Director. In 2008, she joined Bottega Veneta, Italy, as Worldwide Merchandising Director and from 2010 she became Worldwide Merchandis- ing-Communication Director based in Switzerland. From 1999 until 2002, Ms. Bellettini worked in the Prada Group, Italy, first in the Planning and New Busi- ness Development Division of Prada and, in 2002, as Operations Manager of Helmut Lang. Previously, she worked in Compass Partners International, UK from 1998 to 1999, in Deutsche Morgan Grenfell, UK from 1996 to 1998 and in Goldman Sachs International, UK from 1994 to 1996. While graduating, she had an internship in Citibank, Italy in 1994. Ms. Bellettini graduated in Business Administration with a focus on Finance from Bocconi University, Italy. Born in 1970, Italian citizenship. EDDY CUE (NON-EXECUTIVE DIRECTOR) Mr. Eddy Cue is Apple’s senior vice president of Ser- vices, reporting to CEO Tim Cook. Mr. Cue oversees the full range of Apple’s services, including Apple Mu- sic, Apple News, Apple Podcasts, the Apple TV app, and Apple TV+, as well as Apple Pay, Apple Card, Maps, Search Ads, Apple’s iCloud services, and Apple’s pro- ductivity and creativity apps. Mr. Cue’s team has an 125 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTexcellent track record of building and strengthening world-class services that meet and exceed the high expectations of Apple’s customers, and offer cre- ators and storytellers the opportunity to bring their creative visions to people around the world. Mr. Cue joined Apple in 1989 and leads a large organization of amazing people. Mr. Cue was instrumental in creat- ing the Apple online store in 1998, the iTunes Store in 2003, and the App Store in 2008. He also played a key role in developing Apple’s award-winning iLife suite of applications. In his early years at Apple, he was a successful manager of software engineering and customer support teams. Mr. Cue earned a bache- lor’s degree in Computer Science and Economics from Duke University. He serves on the Board of Trustees of both the Paley Center for Media and Duke University. Born in 1964, American citizenship. JOHN GALANTIC (NON-EXECUTIVE DIRECTOR) John Galantic is Operating Partner with Advent Inter- national. Galantic obtained a Bachelor’s degree from Tufts University and Master’s degree in Business Ad- ministration from Harvard Business School. He be- gan his career at Procter and Gamble and worked in various Marketing and Sales roles in Italy, the UK and US. After stints at Glaxo SmithKline in global Marketing and at Coty Beauty, as President of Coty Americas, he joined Chanel in 2006. He was President and Chief Op- erating Officer of Chanel Inc until 2023 and he joined the board of Chanel in 2018. Galantic has also been on the board of Bacardi Limited since 2011. In 2023, he became an Operating Partner with Advent Interna- tional. Born in 1961, American and Swiss citizenship. MARIA PATRIZIA GRIECO (NON-EXECUTIVE DIRECTOR) Maria Patrizia Grieco has been the Chairperson of the Board of Directors of Anima Holding since March 2023. She has been also Chairperson of Assonime (the association of the Italian joint stock companies) since June 2021. From May 2020 to March 2023, she was the Chairperson of from the board of direc- tors of Banca Monte dei Paschi di Siena and from May 2014 to May 2020 she was the Chairperson of the board of directors of Enel, the Italian company world leader in the utilities sector. After graduating in law from the University of Milan, she started her career in 1977 at Italtel, where in 1994 she became chief of the Legal and General Affairs directorate. In 1999, she was appointed General Manager with the task of reorganizing and repositioning the compa- ny, and in 2002 she became Chief Executive Officer. Subsequently, she held the positions of Chief Execu- tive Officer of Siemens Informatica, Partner of Value Partners and Chief Executive Officer of the Group Value Team (today NTT Data). From 2008 to 2013 she was Chief Executive Officer of Olivetti, where she also held the role of Chairperson from 2011. She has been a member of the Board of Directors of Fiat In- dustrial, CIR and Endesa S.A. and currently serves on the Board of Ferrari and Amplifon. Mrs. Grieco is also a member of the Board of Directors of Bocconi University. Maria Patrizia Grieco was Chairperson of the Italian Corporate Governance Committee from 2017 to 2021. During her mandate, the new Corpo- rate Governance Code for Italian listed companies was issued. In the framework of the G20 Italy, she was Chair of the "Integrity & Compliance" Task Force of the B20 Italy, which provided pragmatic solutions that embraced the renewed concepts of integrity and compliance, to create a better future through inclusion and positive impact. She was also a mem- ber of the G20 Business Advisory Board for the Ital- ian Presidency, led by The European House - Ambro- setti. The Board supported the Italian Prime Minister in providing contributions to the G20 agenda. Born in 1952, Italian citizenship. ADAM KESWICK (NON-EXECUTIVE DIRECTOR) Mr. Adam Keswick joined the Jardine Matheson Board in 2007 and was Deputy Managing Director of Jardine Matheson from 2012 to 2016. He was ap- pointed chairman of Matheson & Co. in August 2016. He has held a number of executive positions since joining the Jardine Matheson Group from N M Roth- schild & Sons in 2001, including group strategy di- rector and, thereafter, group managing director of Jardine Cycle & Carriage between 2003 and 2007. Mr Keswick is a director of DFI Retail Group, Hong- kong Land and Mandarin Oriental. He is also a direc- tor of Ferrari N.V. and Schindler, vice chairman of the supervisory board of Rothschild & Co, and is a director of Yabuli China Entrepreneurs Forum. Mr. Keswick attended Eton College and Edinburgh Uni- versity where he received his Master of Arts degree in 1995. Born in 1973, British citizenship. MIKE VOLPI (NON-EXECUTIVE DIRECTOR) Mr. Mike Volpi is a General Partner at Index Ventures. Mike joined Index in 2009 to establish the firm’s North American activities. Mike invests primarily in enterprise software and artificial intelligence. He is currently serving on the boards of Aurora, Con- fluent, Clickhouse, Scale, Sonos, and Wealthfront, among others. Mike was previously a director of Er- icsson and Fiat Chrysler Automotive. Prior to Index, Mike was Chief Strategy Officer and SVP/GM of Cis- co’s routing business, where he managed a P&L in excess of $10 billion in revenues. His team was re- sponsible for the acquisition of over 70 companies, some of which were multi-billion deals. Mike has a B.S. in Mechanical Engineering and an M.S. in Man- ufacturing Systems Engineering from Stanford, and an M.B.A. from the Stanford Graduate School of Business. He currently serves on the Global Advi- sory Board of Stanford’s Knight Hennessy Scholars program. Born in 1966, American citizenship. 126 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FAs of December 31, 2023, the members of the Board of Directors had, among other skills, the skills shown in the table below: Skill Area Corporate Financial Corporate Digital and Innovation ESG Automotive Luxury Governance and management cybersecurity and Risk accounting management and goods motorsport industry industry knowledge knowledge John Elkann (Executive Chairman and Executive Director) Benedetto Vigna (Chief Executive Officer) Piero Ferrari (Vice Chairman and non- Executive Director) Sergio Duca (Senior Non- Executive Director) Delphine Arnault (Non-Executive Director) Francesca Bellettini (Non-Executive Director) Eddy Cue (Non-Executive Director) John Galantic (Non-Executive Director) Maria Patrizia Grieco (Non-Executive Director) Adam Keswick (Non-Executive Director) Mike Volpi (Non-Executive Director) x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x 127 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTAs of December 31, 2023, the Board of Directors and its committee were composed of eleven Directors as shown in the table below: Directors Nationality Executive Non Independent Committees Executive NYSE Dutch Audit Compensation ESG Rules Code Directors from (1) Roles in other companies (4) x x IT John Elkann (Executive Chairman and Executive Director) Benedetto Vigna (Chief Executive IT Officer) IT IT Piero Ferrari (Vice Chairman) Sergio Duca (Chair of the Board and Senior Non-Executive) Delphine Arnault FR Francesca IT Bellettini Eddy Cue US John Galantic US, CH Maria Patrizia IT Grieco Adam Keswick UK Mike Volpi US x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x April 15, 2016 (2) September 16, 2021 (3) x January 2, 2016 January 2, 2016 x x x April 15, 2016 April 16, 2020 x January 2, 2016 April 16, 2020 April 15, 2016 April 15, 2016 April 14, 2023 2 0 0 2 2 1 0 0 2 2 3 (1) References in this table to Directors refer to Ferrari N.V. (3) Mr. Benedetto Vigna was confirmed as Chief Executive The Board of Directors is appointed annually on each annual Officer by the Board of Directors as of April 14, 2023. general meeting of shareholders (4) Directorships in listed companies other than in the (2) Mr. John Elkann is Executive Director from April 12, 2019. Company. BOARD REGULATIONS The current regulations of the Board of Directors deal with matters that concern the Board of Direc- tors and its committees internally. The regulations contain provisions concerning the manner in which meetings of the Board of Direc- tors are called and held, including the decision-mak- ing process. The regulations provide that meetings may be held by telephone conference or video-con- ference, provided that all participating Directors can follow the proceedings and participate in real time discussion of the items on the agenda. The Board of Directors can only adopt valid resolu- tions when the majority of the Directors in office shall be present at the meeting or be represented thereat. A Director may only be represented by another Director authorized in writing. A Director may not act as a proxy for more than one other Director. All resolutions shall be adopted by the favorable vote of the majority of the Directors present or rep- resented at the meeting, provided that the regula- tions may contain specific provisions in this respect. Each Director shall have one vote. The Board of Directors shall be authorized to adopt resolutions without convening a meeting if all Directors shall have expressed their opinions in writing, unless one or more Directors shall object in writing against the resolution being adopted in this way prior to the adoption of the resolution. MEMORANDUM AND ARTICLES OF ASSOCIATION A copy of the articles of association of our predeces- sor company has been filed as Exhibit 3.1 to Ferra- 128 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fri N.V.’s Registration Statement on Form F-1 filed on July 23, 2015. Our articles of association are identical in all material respects to those of our predecessor company. A copy of our articles of association may be obtained from the Dutch Trade Register of the Chamber of Commerce. The following is a summary of material informa- tion relating to the Ferrari common shares, includ- ing summaries of certain provisions of the Ferrari’s articles of association (the “Ferrari Articles of Asso- ciation”), the terms and conditions in respect of the Ferrari special voting shares (the “Terms and Con- ditions”) and the applicable Dutch law provisions in effect at the date of this annual report. The summa- ries of the Ferrari Articles of Association and the Terms and Conditions as set forth in this annual re- port are qualified in their entirety by reference to the full text of the Ferrari Articles of Association, and Terms and Conditions. THE FERRARI SHARES, ARTICLES OF ASSOCIATION AND TERMS AND CONDITIONS OF THE SPECIAL VOTING SHARES Ferrari was incorporated as a public limited liability company (naamloze vennootschap) under the laws of the Netherlands on September 4, 2015 under the name FE New N.V., in contemplation of the Merger, and was renamed Ferrari N.V. effective as of Jan- uary 3, 2016, upon effectiveness of the Merger. Its official seat (statutaire zetel) is in Amsterdam, the Netherlands, and its corporate address and prin- cipal place of business is located at Via Abetone In- feriore n. 4, I-41053 Maranello (MO), Italy. Ferrari is registered with the Dutch Trade Register of the Chamber of Commerce under number 64060977. Its telephone number is +39-0536-949111. The Com- pany’s object, set forth in Article 3.1 of the Articles of Association, is to carry on, either directly or through wholly or partially-owned companies and entities, activities relating in whole or in any part to passen- ger and commercial vehicles, transport, mechani- cal engineering, energy, engines, capital machinery and equipment and related goods and propulsion, as well as any other manufacturing, commercial, finan- cial or service activity. Since incorporation Ferrari has had, and it in- tends to continue to have, its place of effective man- agement in Italy. It will therefore be a tax resident of Italy under both Italian tax law and Article 4 of the Convention between the Kingdom of the Nether- lands and the Republic of Italy for the avoidance of a double taxation with respect to taxes on income and on capital of 1980. SHARE CAPITAL The authorized share capital of Ferrari is seven million five hundred thousand Euro (€7,500,000), divided into three hundred seventy five million (375,000,000) Ferrari common shares, nominal val- ue of one Euro cent (€0.01) per share and an equal number of special voting shares, nominal value of one Euro cent (€0.01) per share. On February 26, 2019 the Board of Directors approved the issuance of 6,855,396 special voting shares with a nominal value of one Euro cent (€0.01) per share to be assigned to existing shareholders entitled to receive such special voting shares under the terms of the loyalty voting program. On March 11, 2021, Ferrari launched a fourth tranche of a multi-year Euro 1.5 billion total share re- purchase program launched on February 9, 2018, for the repurchase of up to Euro 150 million. Such fourth tranche of repurchases was completed on Septem- ber 30, 2021. On October 4, 2021, Ferrari launched a fifth tranche of the repurchase program of up to Euro 150 million, which was completed on March 2, 2022. On March 3, 2022 Ferrari announced a sixth tranche of the repurchase program of up to Euro 120 million, which was completed on May 27, 2022. On July 1, 2022, Ferrari announced a new multi- year share buyback program of approximately Euro 2 billion to be executed by 2026 and replacing the previous share buyback program. The first tranche of the new repurchase program, of up to Euro 150 million, was launched on July 1, 2022 and completed on November 30, 2022. The second tranche of the new repurchase program, of up to Euro 200 million, was launched on December 2, 2022 and completed on June 26, 2023. The third tranche of the new re- purchase program, of up to Euro 200 million, was launched on July 3, 2023 and completed on October 19, 2023. The fourth tranche of the new repurchase program, of up to Euro 350 million, was launched on November 8, 2023 and is expected to be completed no later than June 26, 2024. As of December 31, 2023, Ferrari’s common shares held in treasury amounted to 13,505,409. As of the same date, the Company held in treasury 5.26 percent of its total issued share capital including the common shares and the special voting shares. For additional information on the abovementioned share repurchase program, refer to “Other Infor- mation—Additional Information—Purchases of Equi- ty Securities by the Issuer and Affiliated Purchasers”. A delegation of authority to the Board of Direc- tors to authorize the issuance of common shares without pre-emptive rights enabled Ferrari to offer and sell newly issued common shares to investors free of pre-emptive rights for a period of five years from January 2, 2016 up to and including January 1, 2021. Under Dutch law, such authorization may not exceed a period of five years, but may be renewed by a resolution of the general meeting of sharehold- ers for subsequent five-year periods at any time. Pursuant to the resolution of the Annual Gener- al Meeting held on April 16, 2020, the authorization was renewed for the period starting from January 2, 2021 up to and including October 15, 2021. Pursuant to the resolution of the Annual General Meeting held on April 15, 2021, the authorization has been further renewed for the period starting from April 15, 2021 129 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTfurthermore provided that the task to supervise the performance by the Directors of their duties can only be performed by the non-executive Direc- tors. In addition, an executive Director may not be appointed chairman of the board or delegated the task of establishing the remuneration of executive Directors or nominating Directors for appointment. Tasks that are not allocated fall within the power of the Board of Directors as a whole. Regardless of an allocation of tasks, all Directors remain collectively responsible for the proper management and strat- egy of Ferrari (including supervision thereof in case of non-executive Directors). The Board of Directors may determine that one or more Directors can law- fully adopt board resolutions concerning matters belonging to his or their duties. Ferrari has a policy in respect of the remunera- tion of the members of the Board of Directors. With due observation of the remuneration policy, the Board of Directors may determine the remunera- tion for the Directors in respect of the performance of their duties. The Board of Directors must submit to the Annual General Meeting of Shareholders for its approval plans to award shares or the right to subscribe for shares. The policy was amended as approved by the Annual General Meeting of Share- holders held on April 16, 2020 to implement chang- es necessary pursuant to the implementation of the EU Directive 2017/828 into Dutch law. The amended remuneration policy, as adopted by the 2020 Annu- al General Meeting of Shareholders, builds upon the previous remuneration policy (as partially amended and as approved by the Annual General Meeting of Shareholders held on April 14, 2017) and no mate- rial changes were made compared to the previous remuneration policy. In addition the amended pol- icy will provide for the Board of Directors to issue stock ownership guidelines applicable to Directors and employees. Ferrari shall not grant the Directors any person- al loans or guarantees. up to and including October 14, 2022. Pursuant to the resolution of the Annual General Meeting held on April 13, 2022, the authorization has been further renewed for the period starting from April 13, 2022 up to and including October 12, 2023. Pursuant to the resolution of the Annual General Meeting held on April 14, 2023, the authorization has been further re- newed for the period starting from April 14, 2023 up to and including October 13, 2024. Ferrari common shares are registered shares represented by an entry in the share register of Fer- rari. The Board of Directors may determine that, for the purpose of trading and transfer of shares on a foreign stock exchange, such share certificates shall be issued in such form as shall comply with the requirements of such foreign stock exchange. A register of shareholders is maintained by Ferrari in the Netherlands and a branch register is maintained in the United States on Ferrari’s behalf by the Trans- fer Agent, which serves as branch registrar and transfer agent. Beneficial interests in Ferrari common shares that are traded on the NYSE are held through the book-entry system provided by The Depository Trust Company (“DTC”) and are registered in Ferra- ri’s register of shareholders in the name of Cede  & Co., as DTC’s nominee. Beneficial interests in the Fer- rari common shares traded on the Euronext Milan are held through Monte Titoli S.p.A., the Italian cen- tral clearing and settlement system, as a participant in DTC. DIRECTORS Set forth below is a summary description of the ma- terial provisions of the Ferrari Articles of Associa- tion, relating to our Directors. The summary does not restate the Ferrari Articles of Association in their entirety. Ferrari’s Directors serve on the Board of Di- rectors for a term of approximately one year, such term ending on the day that the first annual general meeting of the shareholders is held in the follow- ing calendar year. Ferrari’s shareholders appoint the Directors of the Board of Directors at a gener- al meeting. Each Director may be reappointed at any subsequent general meeting of shareholders. The general meeting of shareholders determines whether a Director is an executive Director or a non-executive Director. The Board of Directors is a one tier board and consists of three or more members, comprising both members having responsibility for the day-to- day management of Ferrari (executive Directors) and members not having such day-to-day respon- sibility (non-executive Directors). The tasks of the executive and non-executive Directors in a one-tier board such as Ferrari’s Board of Directors may be allocated under or pursuant to the Ferrari Articles of Association, provided that the general meeting has stipulated whether each such Director is appoint- ed as executive or as non-executive Director and 130 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FSHARE OWNERSHIP The number of shares directly and indirectly owned by members of the Board of Directors on February 9, 2024 is set forth in the table below. Name Common Shares % of Common Shares Special Voting Shares % of Special Voting Outstanding Shares Outstanding Piero Ferrari John Elkann Benedetto Vigna Delphine Arnault Eddy Cue John Galantic Adam Keswick 18,894,295 10.48% 18,892,160 29.83% 28,329 11,260 2,803 2,692 100 2,643 (*) (*) (*) (*) (*) (*) — — — — — — — — — — — — (*) Common shares held represent less than 1 percent of our common shares outstanding as of February 9, 2024. No members of the Ferrari Leadership Team benefi- cially own 1 percent or more of the Company’s com- mon shares or special voting shares. THE AUDIT COMMITTEE The Audit Committee is responsible, inter alia, for assisting and advising the Board of Directors, and acting under authority delegated by the Board of Di- rectors, with respect to: (i) the integrity of the Com- pany’s financial statements, (ii) the Company’s policy on tax planning, (iii) the Company’s financing, (iv) the Company’s application of information and commu- nication technology, (v) the systems of internal con- trols that management and the Board of Directors have established, (vi) the Company’s compliance with legal and regulatory requirements, (vii) the Company’s compliance with recommendations and observations of internal auditors and independent registered public accounting firm, (viii) the Compa- ny’s policies and procedures for addressing certain actual or perceived conflicts of interest, (ix) the re- view and approval of related party transactions, (x) the independent registered public accounting firm’s qualifications, independence, remuneration and any non-audit services for the Company, (xi) the func- tioning of the Company’s internal auditors and of the independent registered public accounting firm, (xii) risk management guidelines and policies, and (xiii) the implementation and effectiveness of the Com- pany’s ethics and compliance program. The Audit Committee currently consists of Mr. Duca (Chairperson), Ms. Bellettini and Mrs. Grieco, each of whom is independent within the meaning of the Dutch Corporate Governance Code. Our Board of Directors has determined that Mr. Sergio Duca is the “audit committee financial expert”. The Audit Committee is elected by the Board of Directors and is comprised of at least three non-executive Direc- tors. Audit Committee members are also required (i) not to have any material relationship with the Com- pany or to serve as auditors or accountants for the Company, (ii) to be “independent”, for purposes of NYSE rules, Rule 10A-3 of the Exchange Act and the Dutch Corporate Governance Code, and (iii) to be “fi- nancially literate” and have “accounting or selected financial management expertise” (as determined by the Board of Directors). At least one member of the Audit Committee shall be a “financial expert” as de- fined by the Sarbanes-Oxley Act and the rules of the U.S. Securities and Exchange Commission and sec- tion 2(3) of the Dutch Decree on the Establishment of an audit committee. No Audit Committee member may serve on more than four audit committees for other public companies, absent a waiver from the Board of Directors, which must be disclosed in the Company’s annual report. Unless decided other- wise by the Audit Committee, the independent reg- istered public accounting firm of the Company, the Chief Financial Officer, the Chief Internal Audit, Risk and Compliance Officer, and the Head of Internal Audit are required to attend its meetings, while the Chief Executive Officer is free, but not required, to attend the meetings of the Audit Committee, unless the Audit Committee determines otherwise, and shall attend the meetings of the Audit Committee if the Audit Committee so requires. The Audit Commit- tee shall meet with the independent auditor at least once per year outside the presence of the executive Directors and management. Furthermore, an inde- pendent third party shall make an assessment of the performance of the Audit Committee at least every five years. In 2023, the Audit Committee met seven times and the average attendance rate was 85.71 per- cent. At these meetings several matters were dis- 131 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTcussed, including the audit committee role and re- sponsibilities, the Company’s financial control and risk framework, risk assessment, internal control over financial reporting pursuant to the applicable rules, and a financial overview of operating results. In particular, the Audit Committee reviewed the Ferrari’s periodic and yearly financial results and, with the assistance of the Chief Financial Officer and other Company officers, focused on key ac- counting and reporting matters as well as the main business drivers. THE COMPENSATION COMMITTEE The Compensation Committee is responsible for, among other things, assisting and advising the Board of Directors, and acting under authority del- egated by the Board of Directors, with respect to: (i) determining executive compensation consistent with the Company’s remuneration policy, (ii) review- ing and approving the remuneration structure for the executive Directors, (iii) administering equity in- centive plans and deferred compensation benefit plans, (iv) discussing with management the Compa- ny’s policies and practices related to compensation and issuing recommendations thereon, and (v) pre- paring the compensation report. The Compensation Committee currently con- sists of Mr. Galantic (Chairperson), Mr. Cue and Mr. Ferrari. The Compensation Committee is elected by the Board of Directors and is comprised of at least three non-executive Directors, at most one of whom may not be independent under Dutch Corporate Governance Code. Unless decided otherwise by the Compensation Committee, the Head of Human Re- sources of the Company attends its meetings. In 2023, the Compensation Committee met once with 100 percent attendance of its members at such meeting. The Compensation Committee reviewed the compensation report. Further information on the activities of the Compensation Committee are included in the compensation report. THE ESG COMMITTEE The ESG Committee is responsible for, among other things, assisting and advising the Board of Directors, and acting under authority delegated by the Board of Directors, with respect to: (i) drawing up the se- lection criteria and appointment procedures for members of the Board of Directors; (ii) periodic as- sessment of the size and composition of the Board of Directors and as appropriate making proposals for a composition profile of the Board of Directors; (iii) periodic assessment of the performance of indi- vidual directors and reporting this to the Board of Directors; (iv) proposals to the non-executive mem- bers of the Board of Directors for the nomination and re-nomination of directors to be elected by the shareholders; (v) supervision of the policy on the selection and appointment criteria for senior man- agement and on succession planning; and (vi) mon- itoring, evaluation and reporting on the strategy, targets, achievements, disclosures and reports re- lating to ESG matters globally of the Company and its subsidiaries. The ESG Committee consists of Mr. Elkann (Chairperson), Mrs. Arnault and Mr. Cue. The ESG Committee is elected by the Board of Directors and is comprised of at least three Directors. At least more than half of the members shall be indepen- dent under the Dutch Corporate Governance Code, and at most one of the members may be an execu- tive Director. In 2023, the ESG Committee met once with 66.67 percent attendance of its members at such meeting. The Committee reviewed the Board of Directors’ and Committee’s assessments, the Sustainability achievement and objectives, and the recommenda- tions for Directors’ election. As described above, the charters of the Audit Committee, Compensation Committee and ESG Committee set forth independence requirements for their members for purposes of the Dutch Corporate Governance Code. Audit Committee members are also required to qualify as independent for purposes of NYSE rules and Rule 10A-3 of the Exchange Act. INDEMNIFICATION OF DIRECTORS Under Dutch law, indemnification provisions may be included in a company’s articles of association. Under the Articles of Association, the Company is required to indemnify any and all of its Directors, officers, former Directors, former officers and any person who may have served at its request as a director or officer of another company in which it owns shares or of which it is a creditor, who were or are made a party or are threatened to be made a party to or are involved in, any threatened, pend- ing or completed action, suit or proceeding, wheth- er civil, criminal, administrative, arbitrative or in- vestigative (each a “Proceeding”), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, against any and all liabilities, damages, reasonable and docu- mented expenses (including reasonably incurred and substantiated attorneys’ fees), financial effects of judgments, fines, penalties (including excise and similar taxes and punitive damages) and amounts paid in settlement in connection with such Proceed- ing by any of them. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled otherwise. Not- withstanding the above, no indemnification shall be made in respect of any claim, issue or matter as to which any of the abovementioned indemnified per- sons shall be adjudged to be liable for gross neg- ligence or willful misconduct in the performance of such person’s duty to Ferrari. Ferrari has pur- chased directors’ and officers’ liability insurance for the members of the Board of Directors and cer- tain other officers, substantially in line with that pur- chased by similarly situated companies. 132 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F133 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTCONFLICT OF INTEREST A Director shall not participate in discussions and decision making of the Board of Directors with re- spect to a matter in relation to which he or she has a direct or indirect personal interest that is in conflict with the interests of the Company and the business associated with the Company (“Conflict of Interest”), which shall be determined outside the presence of the Director concerned. All transactions, where there is a Conflict of Interest, must be concluded on terms that are customary in the branch concerned and approved by the Board of Directors. In addition, the Board of Directors as a whole may, on an ad hoc basis, resolve that there is such a strong appear- ance of a Conflict of Interest of an individual Director in relation to a specific matter, that it is deemed in the best interest of a proper decision making pro- cess that such individual Director be excused from participation in the decision making process with respect to such matter even though such Director may not have an actual Conflict of Interest. At least annually, each Director shall assess in good faith whether (i) he or she is independent under (A) best practice provision 2.1.8 of the Dutch Corpo- rate Governance Code, (B) the requirements of Rule 10A-3 under the Exchange Act, and (C) Section 303A of the NYSE Listed Company Manual; and (ii) he or she would have a Conflict of Interest in connection with any transactions between the Company and a significant shareholder or related party of the Com- pany, including affiliates of a significant shareholder (such conflict, a “Related-Party Conflict”), it being un- derstood that currently Exor N.V. (“Exor”) would be considered a significant shareholder. The Directors shall inform the Board of Directors through the Senior Non-executive Director or the Secretary of the Board of Directors as to all material information regarding any circumstances or relation- ships that may impact their characterization as “inde- pendent,” or impact the assessment of their interests, including by responding promptly to the annual D&O questionnaires circulated by or on behalf of the Sec- retary that are designed to elicit relevant information regarding business and other relationships. Based on each Director’s assessment described above, the Board of Directors shall make a determi- nation at least annually regarding such Director’s independence and such Director’s Related-Party Conflict. These annual determinations shall be con- clusive, absent a change in circumstances from those disclosed to the Board of Directors, that ne- cessitates a change in such determination. Mr. Elkann is Chief Executive Officer of Exor, our and Stellantis’s largest shareholder, and an execu- tive director of Stellantis. Stellantis, Exor and a num- ber of companies in the Stellantis and Exor groups are related parties to Ferrari. See “Risk Factors—We may have potential conflicts of interest with Stellantis and Exor and its related companies” and Note 28 “Re- lated Party Transactions” to our Consolidated Finan- cial Statements. Finally, Mr. Ferrari controls COXA S.p.A, from which Ferrari purchases components for Formula 1 racing cars, and HPE S.r.l., which pro- vides consultancy engineering services to Ferrari, see Note 28 “Related Party Transactions” to our Con- solidated Financial Statements. LOYALTY VOTING PROGRAM In connection with the separation from Fiat Chrysler Automobiles N.V. (the “Separation”), Ferrari issued special voting shares with a nominal value of one Euro cent (€0.01) per share, to FCA, Piero Ferrari and FCA shareholders holding FCA special voting shares prior to the Separation including Exor, in ad- dition to Ferrari common shares. As of February 9, 2024, Exor held approximate- ly 36.48 percent of the voting power in the Compa- ny, Trust Piero Ferrari, a Jersey trust established by Piero Ferrari, held approximately 15.51 percent of the voting power in Ferrari and public shareholders held approximately 48.01 percent of the voting pow- er in the Company. The percentages of voting power above are calculated based on the number of out- standing shares net of treasury shares. For more in- formation on the Separation, see “Overview—History of the Company”. Subject to meeting certain conditions, our com- mon shares can be registered in our loyalty register (the “Loyalty Register”) and all such common shares may qualify as qualifying common shares (“Qualify- ing Common Shares”). The holder of Qualifying Com- mon Shares is entitled to receive without consid- eration one special voting share in respect of each such Qualifying Common Share. Pursuant to the Terms and Conditions, and for so long as the Ferrari common shares remain in the Loyalty Register, such Ferrari common shares shall not be sold, disposed of, transferred, except in very limited circumstanc- es (i.e., transfers to affiliates or to relatives through succession, donation or other transfers (defined in the Terms and Conditions as “Loyalty Transferee”), but a shareholder may create or permit to exist any pledge, lien, fixed or floating charge or other encum- brance over such Ferrari common shares, provid- ed that the voting rights in respect of such Ferrari common shares and any corresponding special voting shares remain with such shareholder at all times. Ferrari’s shareholders who want to directly or indirectly sell, dispose of, trade or transfer such Ferrari common shares or otherwise grant any right or interest therein, or create or permit to exist any pledge, lien, fixed or floating charge or other en- cumbrance over such Ferrari common shares with a potential transfer of voting rights relating to such encumbrances will need to submit a de-registration request as referred to in the Terms and Conditions, in order to transfer the relevant Ferrari common shares to the regular trading system (the “Regular Trading System”) except that a Ferrari shareholder may transfer Ferrari common shares included in the Loyalty Register to a Loyalty Transferee (as de- fined in the Terms and Conditions) of such Ferrari 134 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fshareholder without transferring such shares from the Loyalty Register to the Regular Trading System. Ferrari’s shareholders who seek to qualify to receive special voting shares can also request to have their Ferrari common shares registered in the Loyalty Register. Upon registration in the Loyalty Register such shares will be eligible to be treated as Qualifying Common Shares, provided they meet the conditions more fully described under “—Terms and Conditions of the Special Voting Shares” below. Notwithstanding the fact that Article 13 of the Ferrari Articles of Association permits the Board of Directors of Ferrari to approve transfers of special voting shares, the special voting shares cannot be traded and are transferable only in very limited cir- cumstances (i.e., to a Loyalty Transferee described above, or to Ferrari for no consideration (om niet)). Pursuant to Article 23 of the Ferrari Articles of As- sociation, Ferrari shall maintain a special capital re- serve to be credited against the share premium ex- clusively for the purpose of facilitating any issuance or cancellation of special voting shares. The special voting shares shall be issued and paid up against this special capital reserve. The special voting shares have immaterial eco- nomic entitlements. Such economic entitlements are designed to comply with Dutch law but are im- material for investors. The special voting shares car- ry the same voting rights as Ferrari common shares. Section 10 of the Terms and Conditions include liquidated damages provisions intended to deter any attempt by holders to circumvent the terms of the special voting shares. Such liquidated damages provisions may be enforced by Ferrari by means of a legal action brought by Ferrari before competent courts of Amsterdam, the Netherlands. In particular, a violation of the provisions of the Terms and Con- ditions concerning the transfer of special voting shares, Electing Common Shares (common shares registered in the Loyalty Register for the purpose of becoming Qualifying Common Shares in accor- dance with the Ferrari Articles of Association) and Qualifying Common Shares may lead to the impo- sition of liquidated damages. Because we expect the restrictions on transfers of the special voting shares to be effective in practice we do not expect the liquidated damages provisions to be used. Pursuant to Section 12 of the Terms and Condi- tions, any amendment to the Terms and Conditions (other than merely technical, non-material amend- ments and unless such amendment is required to ensure compliance with applicable law or regula- tions or the listing rules of any securities exchange on which the Ferrari common shares are listed) may only be made with the approval of the general meet- ing of shareholders of Ferrari. At any time, a holder of Qualifying Common Shares or Electing Common Shares may request the de-registration of such shares from the Loyalty Register to enable free trading thereof in the Regular Trading System. Upon the de-registration from the Loyalty Register, such shares will cease to be Elect- ing Common Shares or Qualifying Common Shares as the case may be and will be freely tradable and voting rights attached to the corresponding special voting shares will be suspended with immediate ef- fect and such special voting shares shall be trans- ferred to Ferrari for no consideration (om niet). TERMS AND CONDITIONS OF THE SPECIAL VOTING SHARES The Terms and Conditions apply to the issuance, allo- cation, acquisition, holding, repurchase and transfer of special voting shares in our share capital and to certain aspects of Electing Common Shares, Quali- fying Common Shares and Ferrari common shares, which are or will be registered in the Loyalty Register. Application for Special Voting Shares A Ferrari shareholder may at any time elect to partic- ipate in the loyalty voting program by requesting that Ferrari register all or some of the number of Ferrari common shares held by such Ferrari shareholder in the Loyalty Register. Such election shall be effective and registration in the Loyalty Register shall occur as of the end of the calendar month during which the election is made. If such Ferrari common shares (i.e. Electing Common Shares) have been registered in the Loyalty Register (and are thus blocked from trading in the Regular Trading System) for an unin- terrupted period of three years in the name of the same shareholder, the holder of such Ferrari com- mon shares will be entitled to receive one Ferrari special voting share for each such Ferrari common share that has been registered. If at any moment in time such Ferrari common shares are de-regis- tered from the Loyalty Register for whatever rea- son, the relevant shareholder loses its entitlement to hold a corresponding number of Ferrari special voting shares. Withdrawal of Special Voting Shares As described above, a holder of Qualifying Com- mon Shares or Electing Common Shares may re- quest that some or all of its Qualifying Common Shares or Electing Common Shares be de-regis- tered from the Loyalty Register and if held outside the Regular Trading System, transfer such shares back to the Regular Trading System, which will allow such shareholder to freely trade its Ferrari com- mon shares, as described below. From the moment of such request, the holder of Qualifying Common Shares shall be considered to have waived his rights to cast any votes associated with the Ferrari special voting shares which were issued and allocated in re- spect of such Qualifying Common Shares. Any such request would automatically trigger a mandatory transfer requirement pursuant to which the Ferra- ri special voting shares will be offered and trans- ferred to Ferrari for no consideration in accordance with the Ferrari Articles of Association and the 135 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTTerms and Conditions. Ferrari may continue to hold the special voting shares as treasury stock, but will not be entitled to vote any such treasury stock. Alter- natively, Ferrari may withdraw and cancel the spe- cial voting shares, as a result of which the nominal value of such shares will be allocated to the special capital reserves of Ferrari. Consequently, the loyalty voting feature will terminate as to the relevant Quali- fying Common Shares being deregistered from the Loyalty Register. No shareholder required to trans- fer special voting shares pursuant to the Terms and Conditions shall be entitled to any consideration for such special voting shares and each shareholder expressly waives any rights in that respect as a con- dition to participation in the loyalty voting program. Change of Control A shareholder who is a holder of Qualifying Common Shares or Electing Common Shares must promptly notify the Agent and Ferrari upon the occurrence of a “change of control” as defined in the Ferrari Arti- cles of Association, as described below. The change of control will trigger the de-registration of the rel- evant Electing Common Shares or Qualifying Com- mon Shares or the relevant Ferrari common shares in the Loyalty Register. The voting rights attached to the special voting shares issued and allocated in respect of the relevant Qualified Common Shares will be suspended upon a direct or indirect change of control in respect of the relevant holder of such Qualifying Common Shares that are registered in the Loyalty Register. For the purposes of this section a “change of control” shall mean, in respect of any Ferrari share- holder that is not an individual (natuurlijk persoon), any direct or indirect transfer in one or a series of related transactions as a result of which (i) a major- ity of the voting rights of such shareholder, (ii)  the de facto ability to direct the casting of a majority of the votes exercisable at general meetings of share- holders of such shareholder and/or (iii)  the ability to appoint or remove a majority of the Directors, executive Directors or board members or execu- tive officers of such shareholder or to direct the casting of a majority or more of the voting rights at meetings of the board of Directors, governing body or executive committee of such shareholder has been transferred to a new owner, provided that no change of control shall be deemed to have occurred if (a) the transfer of ownership and/or control is an intra-group transfer under the same parent compa- ny, (b)  the transfer of ownership and /or control is the result of the succession or the liquidation of as- sets between spouses or the inheritance, inter vivos donation or other transfer to a spouse or a relative up to and including the fourth degree or (c) the fair market value of the Qualifying Common Shares held by such shareholder represents less than twen- ty percent (20 percent) of the total assets of the Transferred Group at the time of the transfer and the Qualifying Common Shares held by such share- holder, in the sole judgment of the Company, are not otherwise material to the Transferred Group or the change of control transaction. “Transferred Group” shall mean the relevant shareholder together with its affiliates, if any, over which control was trans- ferred as part of the same change of control trans- action within the meaning of the definition of change of control. LIABILITY TO FURTHER CAPITAL CALLS All of the outstanding Ferrari common shares and spe- cial voting shares are fully paid and non-assessable. ADDITIONAL ISSUANCES AND RIGHTS OF PREFERENCE ISSUANCE OF SHARES The general meeting of shareholders of Ferrari (the “General Meeting”) has the authority to resolve on any issuance of shares, unless such authority has been delegated to the Board of Directors of Ferrari. In such a resolution, the General Meeting must de- termine the price and other terms of issuance. The Board of Directors of Ferrari may have the power to issue shares if it has been authorized to do so by the General Meeting, or pursuant to the Ferrari Articles of Association. Under Dutch law, such authorization may not exceed a period of five years, but may be renewed by a resolution of the General Meeting for subsequent five-year periods at any time. The Board of Directors has been designated by the Ferrari Ar- ticles of Association as the competent body to issue Ferrari common shares and special voting shares up to the maximum aggregate amount of the Fer- rari authorized share capital for an initial period of five years from January 2, 2016, which may be ex- tended by the General Meeting with additional con- secutive periods of up to a maximum of five years each. Pursuant to the resolution of the Annual Gen- eral Meeting held on April 16, 2020, the authorization was renewed for the period starting from January 2, 2021 up to and including October 15, 2021. Pursuant to the resolution of the Annual General Meeting held on April 15, 2021, the authorization has been further renewed for the period starting from April 15, 2021 up to and including October 14, 2022. Pursuant to the resolution of the Annual General Meeting held on April 13, 2022, the authorization has been further renewed for the period starting from April 13, 2022 up to and including October 12, 2023. Pursuant to the resolution of the Annual General Meeting held on April 14, 2023, the authorization has been further re- newed for the period starting from April 14, 2023 up to and including October 13, 2024. Ferrari will not be required to obtain approval from a General Meeting to issue shares pursuant to the exercise of a right to subscribe for shares that was previously granted pursuant to authority grant- ed by the shareholders or pursuant to delegated au- thority by the Board of Directors. The General Meet- 136 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fing shall, for as long as any such designation of the Board of Directors of Ferrari for this purpose is in force, no longer has authority to decide on the issu- ance of shares. RIGHTS OF PRE-EMPTION Under Dutch law and the Ferrari Articles of As- sociation, each Ferrari shareholder has a right of pre-emption in proportion to the aggregate nominal value of its shareholding upon the issuance of new Ferrari common shares (or the granting of rights to subscribe for Ferrari common shares). Exceptions to this right of pre-emption include the issuance of new Ferrari common shares (or the granting of rights to subscribe for common shares): (i)  to em- ployees of Ferrari or another member of its group pursuant to a stock compensation plan of Ferrari, (ii)  against payment in kind (contribution other than in cash) and (iii)  to persons exercising a previous- ly granted right to subscribe for Ferrari common shares. In the event of an issuance of special vot- ing shares, shareholders shall not have any right of pre-emption. The General Meeting may resolve to limit or ex- clude the rights of pre-emption upon an issuance of Ferrari common shares, which resolution requires approval of at least two-thirds of the votes cast, if less than half of the issued share capital is repre- sented at the General Meeting. The Ferrari Articles of Association or the General Meeting may also des- ignate the Board of Directors to resolve to limit or exclude the rights of pre-emption in relation to the issuance of Ferrari common shares. Pursuant to Dutch law, the designation by the General Meeting may be granted to the Board of Directors for a spec- ified period of time of not more than five years and only if the Board of Directors has also been designat- ed or is simultaneously designated the authority to resolve to issue Ferrari common shares. The Board of Directors is designated in the Ferrari Articles of Association as the competent body to exclude or limit rights of pre-emption for an initial period of five years from January 2, 2016, which may be extend- ed by the General Meeting with additional periods up to a maximum of five years per period. Pursuant to the resolutions of the Annual General Meeting held on April 16, 2020, the Board of Directors was autho- rized to issue Ferrari common shares and to limit or exclude the rights of pre-emption in relation to the issuance of Ferrari common shares for the period starting from January 2, 2021 up to and including October 15, 2021. Pursuant to the resolutions of the Annual General Meeting held on April 15, 2021, the Board of Directors has been further authorized to issue Ferrari common shares and to limit or exclude the rights of pre-emption in relation to the issuance of Ferrari common shares for the period starting from April 15, 2021 up to and including October 14, 2022. Pursuant to the resolutions of the Annual General Meeting held on April 13, 2022, the Board of Directors has been authorized to issue Ferrari common shares and to limit or exclude the rights of pre-emption in relation to the issuance of Ferrari common shares for the period starting from April 13, 2022 up to and including October 12, 2023. Pur- 137 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTsuant to the resolutions of the Annual General Meet- ing held on April 14, 2023, the Board of Directors has been authorized to issue Ferrari common shares and to limit or exclude the rights of pre-emption in relation to the issuance of Ferrari common shares for the period starting from April 14, 2023 up to and including October 13, 2024. REPURCHASE OF SHARES Upon agreement with the relevant Ferrari share- holder, Ferrari may acquire its own shares at any time for no consideration (om niet), or subject to certain provisions of Dutch law and the Ferrari Ar- ticles of Association for consideration, if: (i)  Ferra- ri’s shareholders’ equity less the payment required to make the acquisition does not fall below the sum of called-up and paid-in share capital and any statu- tory reserves, (ii)  Ferrari would thereafter not hold a pledge over Ferrari common shares or together with subsidiaries hold Ferrari common shares with an aggregate nominal value exceeding 50 percent of the Ferrari’s issued share capital and (iii) the Board of Directors has been authorized to do so by the General Meeting. The acquisition of fully paid-up shares by Ferra- ri other than for no consideration (om niet) requires authorization by the General Meeting. Such autho- rization may be granted for a period not exceeding 18 months and shall specify the number of shares, the manner in which the shares may be acquired and the price range within which shares may be acquired. The authorization is not required for the acquisition of shares from employees of Ferrari or another member of its Group, under a scheme appli- cable to such employees and no authorization is re- quired for repurchase of shares acquired in certain other limited circumstances in which the acquisition takes place by operation of law, such as pursuant to mergers or demergers. Such shares must be offi- cially listed on a price list of an exchange. At a General Meeting the shareholders may re- solve to designate the Board of Directors of Ferra- ri as the competent body to resolve on Ferrari ac- quiring any Ferrari’s fully paid up Ferrari common shares other than for no consideration (om niet) for a period of up to 18 months. Ferrari may, jointly with its subsidiaries, hold Fer- rari shares in its own capital exceeding one-tenth of its issued capital for no more than three years after acquisition of such Ferrari shares for no con- sideration (om niet) or in certain other limited cir- cumstances in which the acquisition takes place by operation of law, such as pursuant to mergers or demergers. Any Ferrari shares held by Ferrari in excess of the amount permitted shall transfer to all members of the Board of Directors jointly at the end of the last day of such three year period. Each mem- ber of the Board of Directors shall be jointly and sev- erally liable to compensate Ferrari for the value of the Ferrari shares at such time, with interest at the statutory rate thereon from such time. The term Ferrari shares in this paragraph shall include depos- itary receipts for shares and shares in respect of which Ferrari holds a right of pledge. No votes may be cast at a General Meeting on the Ferrari shares 138 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Ftered certificates to be properly endorsed for trans- fer as provided for in the certificates and accompa- nied by proper instruments of transfer and stock transfer tax stamps for, or funds to pay, any applica- ble stock transfer taxes. Ferrari common shares are freely transferable. As described below, special voting shares are gen- erally not transferable. At any time, a holder of Ferrari common shares that are registered in the Loyalty Register (i.e. Elect- ing Common Shares or Qualifying Common Shares) wishing to transfer such Ferrari common shares other than in limited specified circumstances (i.e., transfers to affiliates or to relatives through succes- sion, donation or other transfers) must first request a de-registration of such shares from the Loyalty Register and if held outside the Regular Trading Sys- tem, transfer such common shares back into the Regular Trading System. After de-registration from the Loyalty Register, such Ferrari common shares no longer qualify as Electing Common Shares or Qualifying Common Shares, as a result, the holder of such Ferrari common shares is required to offer and transfer the special voting shares associated with such Ferrari common shares that were previ- ously Qualifying Common Shares to Ferrari for no consideration (om niet) as described in detail in “— Loyalty Voting Program—Terms and Conditions of the Special Voting Shares—Withdrawal of Special Voting Shares”. ANNUAL ACCOUNTS AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ferrari’s financial year is the calendar year. Within four months after the end of each financial year, the Board of Directors will prepare the annual accounts, which must be accompanied by an annual report and an auditors’ report and will publish the accounts and annual report and will make those available for inspection at Ferrari’s corporate address. All mem- bers of the Board of Directors are required to sign the annual accounts and in case the signature of any member is missing, the reason for this must be stated. The annual accounts are to be adopted by the General Meeting at the annual general meeting of shareholders, at which meeting the members of the Board of Directors will be discharged from lia- bility for performance of their duties with respect to any matter disclosed in the annual accounts for the relevant financial year insofar this appears from the annual accounts. The annual accounts, the annual report and independent registered public account- ing firm’s reports are made available through Ferra- ri’s website to the shareholders for review as from the day of the notice convening the annual general meeting of shareholders. held by Ferrari or its subsidiaries. Also no voting rights may be cast at a General Meeting in respect of Ferrari shares for which depositary receipts have been issued that are owned by Ferrari. Nonetheless, the holders of a right of usufruct or pledge in re- spect of shares held by Ferrari and its subsidiaries in Ferrari’s share capital are not excluded from the right to vote on such shares, if the right of usufruct or pledge was granted prior to the time such shares were acquired by Ferrari or its subsidiaries. Neither Ferrari nor any of its subsidiaries may cast votes in respect of a share on which it or its subsidiaries holds a right of usufruct or pledge. REDUCTION OF SHARE CAPITAL Shareholders at a General Meeting have the power to cancel shares acquired by Ferrari or to reduce the nominal value of the shares. A resolution to re- duce the share capital requires a majority of at least two-thirds of the votes cast at the General Meeting, if less than one-half of the issued capital is present or represented at the meeting. If more than one-half of the issued share capital is present or represent- ed at the meeting, a simple majority of the votes cast at the General Meeting is required. Any proposal for cancellation or reduction of nominal value is subject to general requirements of Dutch law with respect to reduction of share capital. TRANSFER OF SHARES In accordance with the provisions of Dutch law, pur- suant to Article 12 of the Ferrari Articles of Associ- ation, the transfer or creation of Ferrari shares or a right in rem thereon requires a deed intended for that purpose and save when Ferrari is a party to the transaction, written acknowledgment by Ferrari of the transfer. The transfer of Ferrari common shares that have not been entered into a book-entry system will be effected in accordance with Article 12 of the Fer- rari Articles of Association. Common shares that have been entered into the DTC book-entry system will be registered in the name of Cede & Co., as nominee for DTC and trans- fers of beneficial ownership of shares held through DTC will be effected by electronic transfer made by DTC participants. Article 12 of the Ferrari Articles of Association does not apply to the trading of such Ferrari common shares on a regulated market or the equivalent thereof. Transfers of shares held outside of DTC (in- cluding Monte Titoli S.p.A., as a participant in DTC) or another direct registration system maintained by Computershare, Ferrari’s transfer agent in New York (“Transfer Agent”) and not represented by cer- tificates are effected by a stock transfer instrument and require the written acknowledgment by Ferra- ri. Transfer of registered certificates is effected by presenting and surrendering the certificates to the Transfer Agent. A valid transfer requires the regis- 139 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTPAYMENT OF DIVIDENDS Ferrari may make distributions to the shareholders and other persons entitled to the distributable prof- its only to the extent that its shareholders’ equity ex- ceeds the sum of the paid-up and called up portion of the share capital and the reserves that must be maintained in accordance with Dutch law. No distri- bution of profits may be made to Ferrari itself for shares that Ferrari holds in its own share capital. Ferrari may only make a distribution of dividends to the shareholders after the adoption of its statuto- ry annual accounts demonstrating that such distri- bution is legally permitted. The Board of Directors may determine that other freely distributable distri- butions shall be made, in whole or in part, from Fer- rari’s share premium reserve or from any other re- serve, provided that payments from reserves may only be made to the shareholders that are entitled to the relevant reserve upon the dissolution of Ferrari and provided further that the policy of Ferrari on ad- ditions to reserves and dividends is duly observed. Holders of special voting shares will not receive any dividend in respect of the special voting shares. However Ferrari maintains a separate dividend re- serve for the special voting shares for the sole pur- pose of the allocation of the mandatory minimal profits that accrue to the special voting shares. This allocation establishes a reserve for the amount that would otherwise be paid. The special voting shares do not carry any entitlement to any other reserve. Any distribution out of the special dividend reserve or the partial or full release of such reserve requires a prior proposal from the Board of Directors and a subsequent resolution of the meeting of holders of special voting shares. Insofar as the profits have not been distributed or allocated to the reserves, they may, by resolution of the General Meeting, be distributed as dividends on the Ferrari common shares only. The General Meeting may resolve, on the proposal of the Board of Directors, to declare and distribute dividends in U.S. Dollars. The Board of Directors may decide, subject to the approval of the General Meeting and the Board of Directors having been designated as the body competent to pass a resolution for the issuance of shares, that a distribu- tion shall, wholly or partially, be made in the form of shares, or that shareholders shall be given the op- tion to receive a distribution either in cash or in the form of shares. The right to dividends and distribu- tions will lapse if the dividends or distributions are not claimed within five years following the day after the date on which they first became payable. Any dividends or other distributions made in violation of the Ferrari Articles of Association or Dutch law will have to be repaid by the shareholders who knew or should have known, of such violation. GENERAL MEETINGS AND VOTING RIGHTS ANNUAL MEETING An annual General Meeting must be held within six months from the end of Ferrari’s preceding finan- cial year. The purpose of the annual General Meet- ing is to discuss, among other things, the annual 140 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Freport, the adoption of the annual accounts, alloca- tion of profits (including the proposal to distribute dividends), release of members of the Board of Di- rectors from liability for their management and su- pervision, and other proposals brought up for dis- cussion by the Board of Directors. GENERAL MEETING AND PLACE OF MEETINGS Other General Meetings will be held if requested by the Board of Directors, the chairman of the Board of Directors, the chairperson or the chief executive officer, or by the written request (stating the exact subjects to be discussed) of one or more sharehold- ers representing in aggregate at least 10 percent of the issued share capital of the company (taking into account the relevant provisions of Dutch law, and the Ferrari Articles of Association and the ap- plicable stock exchange regulations). General Meet- ings will be held in Amsterdam or Haarlemmermeer (Schiphol Airport), the Netherlands. CONVOCATION NOTICE AND AGENDA General Meetings can be convened by a notice, spec- ifying the subjects to be discussed, the place and the time of the meeting and admission and participation procedure, issued at least 15 days before the meet- ing or 42 days if shares of Ferrari or depositary re- ceipts issued with cooperation of Ferrari have been admitted to trading on the Euronext Milan or another regulated market as referred to in Article 1:1 of the Dutch Financial Supervision Act. All convocations, announcements, notifications and communications to shareholders and other persons entitled to attend the General Meeting must be made on the compa- ny’s corporate website in accordance with the rele- vant provisions of Dutch law. The agenda for a Gen- eral Meeting may contain the items requested by one or more shareholders representing at least three percent of the issued share capital of the company. Requests must be made in writing, including the rea- sons for adding the relevant item on the agenda, and received by the Board of Directors at least 60 days before the day of the meeting. The agenda of the an- nual general meeting of shareholders shall contain, inter alia, the following items: • adoption of the annual report; • the remuneration report; • at least every four years after adoption of the re- • the policy of the Company on additions to re- • granting of discharge to the Directors in respect muneration policy, the remuneration policy; serves and on dividends, if any; of the performance of their duties in the relevant financial year; • the appointment of Directors; • if applicable, the proposal to pay a dividend; • if applicable, discussion of any substantial change in the corporate governance structure of the Company; and 141 • any matters decided upon by the person(s) con- vening the meeting and any matters placed on the agenda with due observance of applicable Dutch law. The Board of Directors shall provide the general meeting of shareholders with all requested informa- tion, unless this would be contrary to an overriding interest of the Company. If the Board of Directors invokes an overriding interest, it must give reasons. ADMISSION AND REGISTRATION Each shareholder entitled to vote, and each person holding a usufruct or pledge to whom the right to vote on the Ferrari common shares accrues, shall be authorized to attend the General Meeting, to ad- dress the General Meeting and to exercise its voting rights. The registration date of each General Meeting is the twenty-eighth day prior to the date of the Gen- eral Meeting so as to establish which shareholders are entitled to attend and vote at the General Meeting. Only holders of shares and other persons entitled to vote or attend the General Meeting, at such registra- tion date are entitled to attend and vote at the General Meeting. The convocation notice for the meeting shall state the registration date and the manner in which the persons entitled to attend the General Meeting may register and exercise their rights. Those entitled to attend a General Meeting may be represented at a General Meeting by a proxy au- thorized in writing. The requirement that a proxy must be in written form is also fulfilled when it is re- corded electronically. Members of the Board of Directors have the right to attend a General Meeting. In these General Meetings they have an advisory role. VOTING RIGHTS Ferrari applies the one-share-one-vote principle, meaning that each Ferrari common share and each special voting share confers the right on the holder to cast one vote at a General Meeting. Resolutions are passed by a simple majority of the votes cast, un- less Dutch law or the Ferrari Articles of Association prescribes a larger majority. Blank votes shall not be counted as votes cast. Shares in respect of which Dutch law deter- mines that no votes may be cast shall be disregard- ed for the purposes of determining the proportion of shareholders voting, present or represented or the proportion of the share capital present or rep- resented. Under Dutch law and/or the Ferrari Arti- cles of Association, the following matters require at least two-thirds of the votes cast at a meeting if less than half of the issued share capital is present or represented: • a resolution to reduce the issued share capital; • a resolution to amend the Ferrari Articles of As- sociation; FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT• a resolution to restrict or exclude rights of • a resolution to authorize the Board of Direc- pre-emption; tors to restrict or exclude shareholder rights of pre-emption; • a resolution to enter into a legal merger or a legal • a resolution to dissolve Ferrari. demerger; or Under Dutch law, a resolution to adopt the remuner- ation policy requires three-fourths of the votes val- idly cast, unless the Ferrari Articles of Association include a lower threshold which could be inserted in the Ferrari Articles of Association through a resolu- tion of the General Meeting pursuant to a prior pro- posal of the Board of Directors. Such a resolution to amend the Ferrari Articles of Association must be approved by a vote of a majority of at least two- thirds of the votes cast if less than one-half of the is- sued share capital is present or represented at such General Meeting and a simple majority vote if one- half or more than one-half of the issued share capital is present or represented at such General Meeting. All votes shall be cast in writing or electronically. The chairman of the meeting may, however, deter- mine that voting by raising hands or in another man- ner shall be permitted. Voting by acclamation shall be permitted if none of the shareholders present or represented objects. No voting rights shall be exercised in the gener- al meeting of shareholders for shares owned by the Company or by a subsidiary of the Company. Pledg- ees and usufructuaries of shares owned by the Company and its subsidiaries shall however not be excluded from exercising their voting rights, if the right of pledge or usufruct was created before the shares were owned by the Company or a subsidiary. Neither the Company nor any of its subsidiaries may exercise voting rights for shares in respect of which it holds a right of pledge or usufruct. Without preju- dice to the Articles of Association, the Company shall determine for each resolution passed: • the number of shares on which valid votes have • the percentage that the number of shares as re- been cast; ferred to under a. represents in the issued share capital; • the aggregate number of votes validly cast; and • the aggregate number of votes cast in favor of and against a resolution, as well as the number of abstentions. LIMITATIONS ON RIGHTS OF NON-RESIDENT OR FOREIGN SHAREHOLDERS There are no limitations imposed by Dutch law or by the Ferrari Articles of Association on the rights of non-resident or foreign shareholders to hold or vote Ferrari common shares. 142 SHAREHOLDERS’ VOTES ON CERTAIN TRANSACTIONS Any important change in the identity or character of Ferrari must be approved by the General Meeting, including (i)  the termination transfer to a third par- ty of the business of Ferrari or practically the entire business of Ferrari; (ii) the entry into or breaking off of any long-term cooperation of Ferrari or a subsid- iary with another legal entity or company or as a ful- ly liable partner of a general partnership or limited partnership, where such entry into or breaking off is of far-reaching importance to Ferrari; and (iii) the acquisition or disposal by Ferrari or a subsidiary of an interest in the capital of a company with a value of at least one-third of Ferrari’s assets according to the consolidated statement of financial position with ex- planatory notes included in the last adopted annual accounts of Ferrari. AMENDMENTS TO THE FERRARI ARTICLES OF ASSOCIATION, INCLUDING VARIATION OF RIGHTS A resolution of the General Meeting to amend the Ferrari Articles of Association or to wind up Ferrari may be approved only if proposed by the Board of Directors and must be approved by a vote of a ma- jority of at least two-thirds of the votes cast if less than one-half of the issued share capital is present or represented at such General Meeting. The rights of shareholders may be changed only by amending the Ferrari Articles of Association in compliance with Dutch law. DISSOLUTION AND LIQUIDATION The General Meeting may resolve to dissolve Ferrari, upon a proposal of the Board of Directors thereto. A majority of at least two-thirds of the votes cast shall be required if less than one-half of the issued capi- tal is present or represented at the meeting. In the event of dissolution, Ferrari will be liquidated in ac- cordance with Dutch law and the Ferrari Articles of Association and the liquidation shall be arranged by the members of the Board of Directors, unless the General Meeting appoints other liquidators. During liquidation, the provisions of the Ferrari Articles of Association will remain in force as long as possible. If Ferrari is dissolved and liquidated, whatever remains of Ferrari’s equity after all its debts have been discharged shall first be applied to distribute the aggregate balance of share premium reserves and other reserves (other than the special dividend reserve), to holders of Ferrari common shares in proportion to the aggregate nominal value of the Fer- rari common shares held by each holder; secondly, from any balance remaining, an amount equal to the aggregate amount of the nominal value of the Fer- rari common shares will be distributed to the hold- ers of Ferrari common shares in proportion to the aggregate nominal value of Ferrari common shares held by each of them; thirdly, from any balance re- BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F maining, an amount equal to the aggregate amount of the special voting shares dividend reserve will be distributed to the holders of special voting shares in proportion to the aggregate nominal value of the special voting shares held by each of them; fourthly, from any balance remaining, the aggregate amount of the nominal value of the special voting shares will be distributed to the holders of special voting shares in proportion to the aggregate nominal value of the special voting shares held by each of them; and, last- ly, any balance remaining will be distributed to the holders of Ferrari common shares in proportion to the aggregate nominal value of Ferrari common shares held by each of them. LIABILITY OF DIRECTORS Under Dutch law, the management of a company is a joint undertaking and each member of the Board of Directors can be held jointly and severally liable to Ferrari for damages in the event of improper or negligent performance of their duties. Further, members of the Board of Directors can be held lia- ble to third parties based on tort, pursuant to certain provisions of the Dutch Civil Code. All Directors are jointly and severally liable for failure of one or more co-Directors. An individual Director is only exempt- ed from liability if he proves that he cannot be held seriously culpable for the mismanagement and that he has not been negligent in seeking to prevent the consequences of the mismanagement. In this re- gard a Director may, however, refer to the allocation of tasks between the Directors. In certain circum- stances, Directors may incur additional specific civil and criminal liabilities. INDEMNIFICATION OF DIRECTORS AND OFFICERS Under Dutch law, indemnification provisions may be included in a company’s articles of association. Under the Ferrari Articles of Association, Ferrari is required to indemnify its Directors, officers, former Directors, former officers and any person who may have served at Ferrari’s request as a Director or officer of another company in which Ferrari owns shares or of which Ferrari is a creditor who were or are made a party or are threatened to be made a party or are involved in, any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative or investi- gative (each a “Proceeding”), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, against any and all liabili- ties, damages, reasonable and documented expens- es (including reasonably incurred and substantiated attorney’s fees), financial effects of judgments, fines, penalties (including excise and similar taxes and pu- nitive damages) and amounts paid in settlement in connection with such Proceeding by any of them. Notwithstanding the above, no indemnification shall be made in respect of any claim, issue or matter as to which any of the abovementioned indemnified persons shall be adjudged to be liable for gross neg- ligence or willful misconduct in the performance of such person’s duty to Ferrari. This indemnifica- tion by Ferrari is not exclusive of any other rights to which those indemnified may be entitled otherwise. Ferrari has purchased directors’ and officers’ liabili- ty insurance for the members of the Board of Direc- tors and certain other officers, substantially in line with that purchased by similarly situated companies. DUTCH CORPORATE GOVERNANCE CODE The Dutch Corporate Governance Code contains principles and best practice provisions that regulate relations between the board and the shareholders (including the General Meeting). The Dutch Corpo- rate Governance Code is divided into five chapters which address the following topics: (i) sustain- able long-term value creation; (ii) effective manage- ment and supervision; (iii) remuneration; (iv) the gen- eral meeting; and (v) one-tier governance structure. Dutch companies whose shares are listed on a government-recognized stock exchange, such as the NYSE, are required under Dutch law to disclose in their annual reports whether or not they apply the provisions of the Dutch Corporate Governance Code and, in the event that they do not apply a cer- tain provision, to explain the reasons why they have chosen to deviate. Ferrari acknowledges the importance of good corporate governance and supports the best prac- tice provisions of the Dutch Corporate Governance Code. Therefore, Ferrari intends to comply with the relevant best practice provisions of the Dutch Cor- porate Governance Code except as may be noted from time to time in Ferrari’s annual reports. The Dutch Corporate Governance Code has been revised in December 2016 and the revised Dutch Corporate Governance Code entered into force on January 1, 2018, being applicable retroac- tively as from the financial year 2017. Consequently, Ferrari has reported in 2018 regarding its applica- tion of the revised Dutch Corporate Governance Code with respect to the financial year 2017. On De- cember 20, 2022, the Corporate Governance Code Monitoring Committee published an update to the 2016 Dutch Corporate Governance Code. The up- dated Dutch Corporate Governance Code has en- tered into force on January 1, 2024 and is applicable retroactively as from financial year 2023. DISCLOSURE OF HOLDINGS UNDER DUTCH LAW Home member state for purposes of the EU Transparency Directive The Netherlands is Ferrari’s home member state for the purposes of the EU Transparency Directive (Directive 2004/109/EC, as amended). As of the list- ing of the Ferrari common shares on Euronext Mi- lan, we are subject to financial and other reporting 143 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTobligations under the Dutch act on Financial Super- vision (“AFS”) and the Dutch Financial Reporting Su- pervision Act (Wet toezicht financiële verslaggeving), which both implement the EU Transparency Direc- tive in the Netherlands. Disclosure of information Ferrari is required to publish its annual report (con- sisting of the audited annual accounts, the annual report and the responsibility statement) within four months after the end of each financial year and its half-yearly figures within three months after the end of the first six months of each financial year. Shareholder disclosure and reporting obligations As a result of the listing of the Ferrari common shares on the Euronext Milan, chapter 5.3 of the AFS applies, pursuant to which any person who, direct- ly or indirectly, acquires or disposes of an actual or potential capital interest and/or actual or potential voting rights in Ferrari must promptly give written notice to the Netherlands Authority for the Financial Markets (stichting Autoriteit Financiële Markten, the “AFM”) of such acquisition or disposal by means of a standard form if, as a result of such acquisition or disposal, the percentage of capital interest and/or voting rights held by such person reaches, exceeds or falls below the following thresholds: 3 percent, 5 percent, 10 percent, 15 percent, 20 percent, 25 per- cent, 30 percent, 40 percent, 50 percent, 60 percent, 75 percent and 95 percent. For the purpose of calculating the percentage of capital interest or voting rights, the following interests must, inter alia, be taken into account: (i) shares and/or voting rights directly held (or ac- quired or disposed of) by any person, (ii) shares and/or voting rights held (or, acquired or disposed of) by such person’s controlled entities or by a third party for such person’s account, (iii) voting rights held (or acquired or disposed of) by a third party with whom such person has concluded an oral or written voting agreement, (iv) voting rights acquired pursuant to an agreement providing for a temporary transfer of voting rights in consider- ation for a payment, and (v) shares which such per- son, or any controlled entity or third party referred to above, may acquire pursuant to any option or other right to acquire shares. As a consequence of the above, special voting shares must be added to Ferrari common shares for the purposes of the above thresholds. Controlled entities (within the meaning of the AFS) do not themselves have notification obligations under the AFS as their direct and indirect interests are attributed to their (ultimate) parent. If a person who has a three percent or larger interest in Ferra- ri’s share capital or voting rights ceases to be a con- trolled entity it must immediately notify the AFM and all notification obligations under the AFS will become applicable to such former controlled entity. Special rules apply to the attribution of shares and/ or voting rights which are part of the property of a partnership or other form of joint ownership. A holder of a pledge or right of usufruct in respect of shares can also be subject to notification obliga- tions, if such person has, or can acquire, the right to vote on the shares. The acquisition of (conditional) voting rights by a pledgee or beneficial owner may also trigger notification obligations as if the pledg- ee or beneficial owner were the legal holder of the shares and/or voting rights. Furthermore, when calculating the percentage of capital interest, a person is also considered to be in possession of shares if (i) such person holds a financial instrument the value of which is (in part) determined by the value of the shares or any dis- tributions associated therewith and which does not entitle such person to acquire any shares, (ii) such person may be obliged to purchase shares on the basis of an option, or (iii) such person has con- cluded another contract whereby such person ac- quires an economic interest comparable to that of holding a share. If a person’s capital interest and/or voting rights reaches, exceeds or falls below the abovementioned thresholds as a result of a change in Ferrari’s issued and outstanding share capital or voting rights, such person is required to make a notification not later than on the fourth trading day after the AFM has published Ferrari’s notification as described below. the Following implementation of Directive 2013/50/EU into the AFS, every holder of three percent more of the issued and outstanding share capital or voting rights whose interest has changed compared to his most recent notification, and which holder knows or should know that pursuant to this change his interest reaches or crosses a threshold as a result of certain acts (as described above and including the exchange of a financial instrument or a contract (pursuant to which the holder is deemed to have issued and outstanding shares or voting rights at his disposal)), must notify the AFM of this change. Ferrari is required to notify the AFM promptly of any change of one percent or more in its issued and outstanding share capital or voting rights since a previous notification. Other changes in Ferrari’s is- sued and outstanding share capital or voting rights must be notified to the AFM within eight days after the end of the quarter in which the change occurred. In addition to the above described notification obligations pertaining to capital interest or voting rights, pursuant to Regulation (EU) No 236/2012, as amended, notification must be made of any net short position of 0.2% in the issued share capital of Ferrari, and of every subsequent 0.1% above this threshold. Notifications starting at 0.5% and every subsequent 0.1% above this threshold will be made public via the short selling register of the AFM. Furthermore, gross short positions shall be notified in the event that a threshold is reached, exceeded or fallen below. With regard to gross short positions, the same disclosure thresholds as for holders of capital interests and/or 144 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fvoting rights apply. Furthermore, each member of the Board of Directors must notify the AFM: • within two weeks after his/her appointment of the number of shares he/she holds and the num- ber of votes he/she is entitled to cast in respect of Ferrari’s issued and outstanding share capital, and • subsequently of each change in the number of shares he/she holds and of each change in the number of votes he/she is entitled to cast in re- spect of Ferrari’s issued and outstanding share capital, immediately after the relevant change. The AFM keeps a public register of all notifications made pursuant to these disclosure obligations and publishes any notification received which can be ac- cessed via www.afm.nl. The notifications referred to in this paragraph should be made in writing by means of a standard form or electronically through the notification system of the AFM. Non-compliance with these disclosure obliga- tions is an economic offense and may lead to crimi- nal prosecution. The AFM may impose administrative penalties for non-compliance, and the publication thereof. In addition, a civil court can impose mea- sures against any person who fails to notify or in- correctly notifies the AFM of matters required to be notified. A claim requiring that such measures be im- posed may be instituted by Ferrari and/or by one or more shareholders who alone or together with oth- ers represent at least three percent of the issued and outstanding share capital of Ferrari or are able to ex- ercise at least three percent of the voting rights. The measures that the civil court may impose include: • an order requiring appropriate disclosure; • suspension of the right to exercise the voting rights for a period of up to three years as deter- mined by the court; • voiding a resolution adopted by the General Meeting, if the court determines that the reso- lution would not have been adopted but for the exercise of the voting rights of the person with a duty to disclose, or suspension of a resolution adopted by the general meeting of shareholders until the court makes a decision about such void- ing; and • an order to refrain, during a period of up to five years as determined by the court, from acquir- ing shares and/or voting rights in Ferrari. Share- holders are advised to consult with their own legal advisers to determine whether the disclo- sure obligations apply to them. Shareholders are advised to consult with their own legal advisers to determine whether the disclosure obligations apply to them. MANDATORY BID REQUIREMENT Under Dutch law any person, acting alone or in con- cert with others, who, directly or indirectly, acquires 30 percent or more of Ferrari’s voting rights will be obliged to launch a public offer for all outstand- ing shares in Ferrari’s share capital. An exception is made for shareholders who, whether alone or acting in concert with others, had an interest of at least 30 percent of Ferrari’s voting rights before the shares were first listed on the Euronext Milan (formerly Mercato Telematico Azionario or “MTA”), and who still maintained such an interest after such first listing. Immediately after the first listing of Ferrari common shares on MTA, now Euronext Milan, Exor held more than 30 percent of Ferrari’s voting rights. Therefore Exor’s interest in Ferrari was grandfathered and the exception that applies to it will continue to apply to it for as long as its holding of shares represents over 30 percent of Ferrari’s voting rights. DUTCH FINANCIAL REPORTING SUPERVISION ACT On the basis of the Dutch Financial Reporting Su- pervision Act (Wet toezicht financiële verslaggeving), or the FRSA, the AFM supervises the application of financial reporting standards by, amongst others, companies whose official seat is in the Netherlands and whose securities are listed on a regulated mar- ket within the EU or in a non-EU country on a system similar to a regulated market. Pursuant to the FRSA, the AFM has an indepen- dent right to (i) request an explanation from Ferrari regarding its application of the applicable financial reporting standards and (ii)  recommend to us the making available of further explanations. If we do not comply with such a request or recommendation, the AFM may request that the Enterprise Chamber order us to (i) make available further explanations as recommended by the AFM, (ii)  provide an explana- tion of the way we have applied the applicable finan- cial reporting standards to our financial reports or (iii) prepare our financial reports in accordance with the Enterprise Chamber’s instructions. Compulsory Acquisition Pursuant to article 2:92a of the Dutch Civil Code (“DCC”), a shareholder who, for its own account, holds at least 95 percent of the issued share capi- tal of Ferrari may institute proceedings against the other shareholders jointly for the transfer of their shares to it. The proceedings are held before the Dutch Enterprise Chamber and can be instituted by means of a writ of summons served upon each of the minority shareholders in accordance with the provisions of the Dutch Code of Civil Procedure. The Enterprise Chamber may grant the claim for the squeeze-out in relation to all minority share- holders and will determine the price to be paid for the shares, if necessary after appointment of one 145 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTor three expert(s) who will offer an opinion to the Enterprise Chamber on the value to be paid for the shares of the minority shareholders. Once the or- der to transfer becomes final before the Enterprise Chamber, the person acquiring the shares must give written notice of the date and place of payment and the price to the holders of the shares to be ac- quired whose addresses are known to it. Unless the addresses of all of them are known to it, it must also publish the same in a Dutch daily newspaper with a national circulation. A shareholder can only appeal against the judgment of the Enterprise Chamber be- fore the Dutch Supreme Court. In addition, pursuant to article 2:359c of the DCC, an offeror under a public offer is also entitled to start a squeeze out procedure, within three months after the public offer, if following the public offer it holds at least 95% of the issued share capital of Ferrari representing at least 95% of the total voting rights. In the event of a mandatory offer, the mandatory offer price is in principle deemed to be a reasonable price, which has to be accepted by minority sharehold- ers. In the event of a voluntary public offer, the offer price is considered reasonable if at least 90% of the shares have been acquired under the public offer. Pursuant to article 2:359d of the DCC, if the of- feror has acquired at least 95% of the issued share capital of Ferrari representing at least 95% of the to- tal voting rights, each remaining minority sharehold- er is entitled to demand a squeeze out. This proce- dure must be initiated with the Enterprise Chamber within three months after the end of the period for tendering Shares in the public offer. With regard to the price per share to be paid by the majority Share- holder, the same procedure as for squeeze out pro- ceedings initiated by the offeror, as set out in the previous paragraph, applies. DISCLOSURE OF TRADES IN LISTED SECURITIES DISCLOSURE UNDER DUTCH LAW Pursuant to the AFS and the Market Abuse Regula- tion (EU) No 596/2014 (the “Market Abuse Regula- tion”), each of the members of the Board of Direc- tors and any other person discharging managerial responsibilities within Ferrari and who in that ca- pacity is authorized to make decisions affecting the future developments and business prospects of Ferrari and who has regular access to inside in- formation relating, directly or indirectly, to Ferrari (each, an “Insider”) must notify the AFM of all trans- actions, conducted or carried out for his/her own account, relating to Ferrari common shares, special voting shares or financial instruments, the value of which is (in part) determined by the value of Ferrari common shares or special voting shares. In addition, persons who are closely associated with members of the Board of Directors or any of the other Insiders must notify the AFM of all trans- actions conducted for their own account relating to Ferrari’s shares or financial instruments, the value of which is (in part) determined by the value of Ferra- ri’s shares. The Market Abuse Regulation designates the following categories of persons: (i) the spouse or any partner considered by applicable law as equiva- lent to the spouse, (ii)  dependent children, (iii)  other relatives who have shared the same household for at least one year at the relevant transaction date, and (iv)  any legal person, trust or partnership, among other things, whose managerial responsibilities are discharged by a member of the Board of Directors or any other Insider or by a person referred to under (i), (ii) or (iii) above. The AFM must be forthwith notified of transac- tions effected in either Ferrari’s shares or financial instruments, the value of which is (in part) deter- mined by the value of Ferrari’s shares, following the transaction date by means of a standard form. No- tifications under the Market Abuse Regulation may however be postponed until the date that the value of the transactions carried out on a person’s own account, together with the transactions carried out by the persons associated with that person, reach- es or exceeds the amount of €5,000 in the calendar year in question. The AFM keeps a public register of all notifications made pursuant to the AFS and the Market Abuse Regulation. Ferrari is required to make inside information public. Inside information is precise information di- rectly or indirectly relating to the issuer or the trade in its securities which has not yet been made public and publication of which could significantly affect the trading price of the securities. Ferrari must also provide the CONSOB with this inside information at the time of publication. Furthermore, Ferrari must without delay publish the inside information on its website and keep it available on Ferrari’s website for at least five years. It is prohibited for any person to make use of inside information by conducting, effecting or at- tempting to conduct or effect a transaction in rele- vant financial instruments. In addition, it is prohibited for any person to pass on inside information relating to Ferrari or the trade in its securities to a third par- ty or to recommend or induce, on the basis of inside information, any person to conduct a transaction in securities of Ferrari. Furthermore, it is prohibited for any person to manipulate or attempt to manipu- late the market, for instance by conducting transac- tions which could lead to an incorrect or misleading signal of the supply of, the demand for or the price of the securities. The provisions of the Market Abuse Regulation concerning insider trading and manip- ulation of the market are self-executing and imme- diately applicable Italian law. Moreover, on October 2016 CONSOB started a process for the review (in light of the Market Abuse Regulation) of certain reg- ulatory provisions contained in the Issuers’ Regula- tion no. 11971/1999. Non-compliance with these reporting obliga- tions could lead to criminal penalties, administrative fines and cease-and-desist orders (and the publica- tion thereof), imprisonment or other sanctions. 146 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FSHAREHOLDER DISCLOSURE AND REPORTING OBLIGATIONS UNDER U.S. LAW  shares or on the price of related derivative financial instruments (the “Inside Information”). Holders of Ferrari shares are subject to certain U.S. reporting requirements under the Securities Ex- change Act of 1934 (the “Exchange Act”) for share- holders owning more than 5 percent of any class of equity securities registered pursuant to Section  12 of the Exchange Act. Among the reporting require- ments are disclosure obligations intended to inform the market of significant accumulations of shares that may lead to a change of control of an issuer. If Ferrari were to fail to qualify as a foreign pri- vate issuer in the future, Section  16(a) of the Ex- change Act would require Ferrari’s Directors and executive officers, and persons who own more than ten percent of a registered class of Ferrari’s equity securities, to file reports of ownership of, and trans- actions in, Ferrari’s equity securities with the SEC. Such Directors, executive officers and ten percent stockholders would also be required to furnish Fer- rari with copies of all Section 16 reports they file. DISCLOSURE REQUIREMENTS UNDER ITALIAN LAW Summarized below are the most significant require- ments to be complied with by Ferrari in connection with the admission to listing of Ferrari common shares on the Euronext Milan. The breach of the obligations described below may result in the ap- plication of fines and criminal penalties (including, for instance, those provided for insider trading and market manipulation). Further requirements may be imposed by CONSOB and/or Borsa Italiana as a re- sult of the listing of Ferrari common shares on the Euronext Milan. In particular, the following main disclosure ob- ligations provided for by the Legislative Decree no. 58/1998, or the Italian Financial Act, effective as of the date of this document shall apply to Ferrari, arti- cle 92 (equal treatment principle), article 114 (infor- mation to be provided to the public), article 114-bis (information to be provided to the market concern- ing the allocation of financial instruments to corpo- rate officers, employees and collaborators), article 115 (information to be disclosed to CONSOB) and ar- ticle 180 and the following (relating to insider trading and market manipulation). In addition to the above, the applicable provisions set forth under the market rules (including those relating to the timing for the payment of dividends) shall apply to Ferrari. DISCLOSURE OF INSIDE INFORMATION Pursuant to the Market Abuse Regulation, Ferrari shall disclose to the public, without delay, any inside information which: (i) is of a precise nature, (ii) has not been made public, (iii) relates, directly or indi- rectly, to Ferrari or Ferrari’s common shares, and (iv) if it were made public, would be likely to have a significant effect on the prices of Ferrari’s common In this regard, Inside Information shall be deemed to be of a precise nature if: (a) it indicates a set of cir- cumstances which exists or which may reasonably be expected to come into existence, or an event which has occurred or which may reasonably be expected to occur and (b) it is specific enough to enable a con- clusion to be drawn as to the possible effect of that set of circumstances or events on the prices of the financial instruments (i.e., Ferrari’s common shares) or the related derivative financial instruments. The above disclosure requirement shall be com- plied with through the publication of a press release by Ferrari, in accordance with the modalities set forth under the Market Abuse Regulation, Dutch and Italian law, disclosing to the public the relevant Inside Information. The provisions of the MAR concerning the disclosure of inside information are self-execut- ing and immediately applicable under Italian law. Under specific circumstances, CONSOB may at any time request: (a) Ferrari to disclose to the pub- lic specific information or documentation where deemed appropriate or necessary or alternatively (b) to be provided with specific information or docu- mentation. For this purpose, CONSOB has wide pow- ers to, among other things, carry out inspections or request information to the members of the manag- ing board, the members of the supervisory board or to the external auditor. Ferrari shall publish and transmit to CONSOB any information disseminated in any non-EU-coun- tries where Ferrari’s common shares are listed (i.e., the United States), if this information is significant for the purposes of the evaluation of Ferrari’s com- mon shares listed on the Euronext Milan. INSIDERS’ REGISTER Pursuant to the Market Abuse Regulation, Ferrari and its subsidiaries, as well as persons acting on their behalf or for their account, shall draw up, and keep promptly updated, a list of persons who, in the exer- cise of their employment, profession or duties, have access to Inside Information. Ferrari shall provide such list to the competent authority at its request. PUBLIC TENDER OFFERS Certain rules provided for under Italian law with re- spect to both voluntary and mandatory public ten- der offers shall apply to any offer launched for Fer- rari’s common shares. In particular, among other things, the provisions concerning the tender offer price, the content of the offer document and the dis- closure of the tender offer will be subject to the su- pervision by CONSOB and Italian law. ELECTION AND REMOVAL OF DIRECTORS The Ferrari Articles of Association provide that the Board of Directors shall be composed of three or 147 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTmore members. Directors are appointed by a simple majority of the votes validly cast at a General Meet- ing. The General Meeting may at any time suspend or dismiss any Director. DISCLOSURES PURSUANT TO DECREE ARTICLE 10 EU-DIRECTIVE ON TAKEOVERS In accordance with the Dutch Besluit artikel 10 over- namerichtlijn (the “Decree”), the Company makes the following disclosures: • For information on the capital structure of the Company, the composition of the issued share capital and the existence of the two classes of shares, please refer to Note 13 to the Company Financial Statements in this Annual Report. For information on the rights attached to the com- mon shares, please refer to the Company’s Ar- ticles of Association. To summarize, the rights attached to common shares comprise pre-emp- tive rights upon issuance of common shares, the entitlement to attend to the general meeting of Shareholders and to speak and vote at that meeting and the entitlement to distributions of such amount of the Company’s profit as remains after allocation to reserves. For information on the rights attached to the special voting shares, please refer to the Articles of Association and the Terms and Conditions for the Special Voting Shares which can both be found on the Compa- ny’s website and more in particular to the para- graph “Loyalty Voting Program” of this Annual Report. At December 31, 2023, the issued share capital of the Company consisted of 193,923,499 common shares, representing approximate- ly 75.38 percent of the aggregate issued share capital, and 63,349,112 special voting shares, representing approximately 24.62 percent of the aggregate issued share capital. • The Company has imposed no limitations on the transfer of common shares. The Articles of As- sociation provide in Article 13 for transfer re- strictions for special voting shares. • For information on participations in the Compa- ny’s capital in respect of which pursuant to Sec- tions 5:34, 5:35 and 5:43 of the Dutch Financial Supervision Act (Wet op het financieel toezicht) notification requirements apply, please refer to the chapter “Major Shareholders” of this Annual Report. There you will find a list of Shareholders who are known to the Company to have holdings of 3 percent or more at the stated date. • No special control rights or other rights accrue • A mechanism for verifying compliance with a to shares in the capital of the Company. scheme allowing employees to subscribe for or to acquire shares in the capital of the company or a subsidiary if the employees do not arrange for such verification directly is not applicable to the Company. • No restrictions apply to voting rights attached 148 to shares in the capital of the Company, nor are there any deadlines for exercising voting rights. The Articles of Association allow the Company to cooperate in the issuance of registered deposi- tary receipts for common shares, but only pur- suant to a resolution to that effect of the Board of Directors. The Company is not aware of any de- pository receipts having been issued for shares in its capital. • The Company is not aware of the existence of any agreements with Shareholders which may result in restrictions on the transfer of shares or limita- tion of voting rights except for the shareholders’ agreement, dated December 23, 2015 between Exor (formerly Exor S.p.A.) and Piero Ferrari, re- cently amended to reflect adherence by Trust Piero Ferrari, which became effective upon the completion of the Separation on January 3, 2016 (the “Shareholders’ Agreement”). The Sharehold- includes certain preemption ers’ Agreement rights of Exor in the event of a proposed transfer of common shares by Piero Ferrari, and certain rights of first offer of Piero Ferrari in the event of a proposed transfer of common shares by Exor, in each case subject to the exceptions set forth in the Shareholders’ Agreement. The Shareholders’ Agreement will remain in force until the fifth anni- versary of the Separation provided that if neither of the parties to the Shareholders’ Agreement terminates the Shareholders’ Agreement within six months before the end of the initial term, then the Shareholders’ Agreement shall be renewed automatically for another five year term. Since neither of the parties to the Shareholders’ Agree- ment terminated it within six months before Jan- uary 3, 2021, the Shareholders’ Agreement was automatically renewed for another five year term and, therefore, until January 3, 2026. On Decem- ber 16, 2022, Exor N.V., Mr. Piero Ferrari and Trust Piero Ferrari entered into an adherence and amendment agreement whereby Trust Piero Fer- rari became a party to the Shareholders’ Agree- ment and certain terms of the Shareholders’ Agreement were amended. The Shareholders’ Agreement, as so amended, is governed by the laws of the Netherlands and it mainly concerns the “acting in concert” and certain pre-emption rights and rights of first offer with respect to the shares of the Company. • The rules governing the appointment and dis- missal of members of the Board of Directors are stated in the Articles of Association of the Company. All members of the Board of Directors are appointed by the general meeting of Share- holders. The term of office of all members of the Board of Directors is for a period of approximate- ly one year after appointment, such period expir- ing on the day the first Annual General Meeting of Shareholders is held in the following calendar year. The general meeting of Shareholders has the power to suspend or dismiss any member of the Board of Directors at any time. The rules gov- BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Ferning an amendment of the Articles of Associa- tion are stated in the Articles of Association and require a resolution of the general meeting of Shareholders which can only be passed pursu- ant to a prior proposal of the Board of Directors. • The general powers of the Board of Directors are stated in the Articles of Association of the Company. Pursuant to the resolution of the An- nual General Meeting held on April 14, 2023, the Board of Directors has been authorized to issue common shares in the capital of the Company and to grant rights to subscribe for common shares in the capital of the Company. This autho- rization is limited in respect of common shares to 10 percent of the issued common shares for general corporate purposes as of the date of the 2023 Annual General Meeting (i.e. April 14, 2023), which can be used for any and all purposes nec- essary in the opinion of the Board of Directors. The authorization has been granted for a peri- od of 18 months starting from the date of the 2023 Annual General Meeting of Shareholders on April 14, 2023 up to and including October 13, 2024. The Board of Directors has also been des- ignated for the same period as the authorized body to limit or exclude the rights of pre-emp- tion of shareholders in connection with the au- thority of the Board of Directors to issue com- mon shares and grant rights to subscribe for common shares as referred to above. Pursuant to the resolution of the Annual General Meeting held on April 13, 2022, the Board of Directors has been further authorized to issue special voting shares in the capital of the Company and to grant rights to subscribe for special voting shares in the capital of the Company. This authorization is limited in respect of special voting shares to 10 percent of the maximum aggregate amount of special voting shares as provided for in the Company’s authorized share capital. The autho- rization has been granted for a period of 5 years starting from the date of the 2022 Annual Gener- al Meeting of Shareholders on April 13, 2022 up to and including April 12, 2027. In the event of an issuance of special voting shares, shareholders have no right of pre-emption. The Company has the authority to acquire fully paid-up shares in its own share capital, provided that such acquisi- tion is made for no consideration. Further rules governing the acquisition of shares by the Com- pany in its own share capital are set out in article 8 of the Articles of Association. • The Company is not a party to any significant agreements which will take effect, will be altered or will be terminated upon a change of control of the Company as a result of a public offer within the meaning of Section 5:70 of the Dutch Financial Supervision Act (Wet op het financieel toezicht), provided that certain of the loan agreements entered into by the Company contain clauses that, as is customary for financing agreements of similar type, may require early repayment or termination in the event of a change of control of the Company. • The Company did not enter into any agreement with a Director or employee of the Company pro- 149 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTviding for a payment / distribution upon termina- tion of employment as a result of a public offer within the meaning of article 5:70 of the Dutch Financial Supervision Act. GENERAL MEETING OF SHAREHOLDERS At least one general meeting of shareholders shall be held every year, which meeting shall be held with- in six months after the close of the financial year. Furthermore, general meetings of shareholders shall be held in the case referred to in Section 2:108a of the Dutch Civil Code as often as the Board of Di- rectors, the Chairman or the Chief Executive Officer deems it necessary to hold them or as otherwise re- quired by Dutch law, without prejudice to what has been provided in the next paragraph hereof. Shareholders solely or jointly representing at least ten percent (10 percent) of the issued share capital may request the Board of Directors, in writ- ing, to call a general meeting of shareholders, stat- ing the matters to be dealt with. If the Board of Directors fails to call a meeting, then such shareholders may, on their application, be au- thorized by the interim provisions judge of the court (voorzieningenrechter van de rechtbank) to convene a general meeting of shareholders. The interim provi- sions judge (voorzieningenrechter van de rechtbank) shall reject the application if he is not satisfied that the applicants have previously requested the Board of Di- rectors in writing, stating the exact subjects to be dis- cussed, to convene a general meeting of shareholders. General meetings of shareholders shall be held in Amsterdam or Haarlemmermeer (Schiphol Air- port), the Netherlands, and shall be called by the Board of Directors, the Chairman or the Chief Exec- utive Officer, in such manner as is required to com- ply with the law and the applicable stock exchange regulations, not later than on the forty-second day prior to the day of the meeting. All convocations of general meetings of share- holders and all announcements, notifications and communications to shareholders shall be made by means of an announcement on the Company’s cor- porate website and such announcement shall re- main accessible until the relevant general meeting of shareholders. Any communication to be addressed to the general meeting of shareholders by virtue of Dutch law or the Articles of Association, may be ei- ther included in the notice, referred to in the preced- ing sentence or, to the extent provided for in such notice, on the Company’s corporate website and/or in a document made available for inspection at the office of the Company and such other place(s) as the Board of Directors shall determine. Convocations of general meetings of sharehold- ers may be sent to Shareholders through the use of an electronic means of communication to the ad- dress provided by such Shareholders to the Compa- ny for this purpose. The notice shall state the place, date and hour of the meeting and the agenda of the meeting as well as the other data required by law. An item proposed in writing by such number of Shareholders who, by Dutch law, are entitled to make such proposal, shall be included in the notice or shall be announced in a manner similar to the announce- ment of the notice, provided that the Company has received the relevant request, including the reasons for putting the relevant item on the agenda, no later than the sixtieth day before the day of the meeting. Pursuant to Dutch law, the board of a listed company has the power to invoke a cooling-off pe- riod of up to 250 days in the event of (i) a request by one or more shareholders for consideration of a proposal to appoint, suspend or dismiss one or more members of the board, or (ii) when an unso- licited public bid has been announced or made for the shares of the listed company. The decision by the board to invoke the cooling-off period is subject to supervisory board approval. To invoke the cool- ing-off period, the request under i) or the public bid under ii) must in the view of the board be substan- tially contrary to the interest of the listed company and its affiliated enterprises. The agenda of the annual general meeting of share- holders shall contain, inter alia, the following items: • adoption of the annual report; • the remuneration report; • at least every four years after adoption of the re- • the policy of the Company on additions to re- • granting of discharge to the Directors in respect muneration policy, the remuneration policy; serves and on dividends, if any; of the performance of their duties in the relevant financial year; • the appointment of Directors; • if applicable, the proposal to pay a dividend; • if applicable, discussion of any substantial change in the corporate governance structure of the Company; and • any matters decided upon by the person(s) con- vening the meeting and any matters placed on the agenda with due observance of applicable Dutch law. The Board of Directors shall provide the general meeting of shareholders with all requested informa- tion, unless this would be contrary to an overriding interest of the Company. If the Board of Directors invokes an overriding interest, it must give reasons. When convening a general meeting of share- holders, the Board of Directors shall determine that, for the purpose of Article 19 and Article 20 of the Ar- ticles of Association, persons with the right to vote or attend meetings shall be considered those per- sons who have these rights at the twenty-eighth day prior to the day of the meeting (the “Record Date”) and are registered as such in a register to be desig- nated by the Board of Directors for such purpose, ir- respective whether they will have these rights at the date of the meeting. In addition to the Record Date, the notice of the meeting shall further state the man- ner in which shareholders and other parties with 150 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fmeeting rights may have themselves registered and the manner in which those rights can be exercised. The general meeting of shareholders shall be presided over by the Chairman or, in his absence, by the person chosen by the Board of Directors to act as chairman for such meeting. One of the persons present designated for that purpose by the chairman of the meeting shall act as secretary and take minutes of the business trans- acted. The minutes shall be confirmed by the chair- man of the meeting and the secretary and signed by them in witness thereof. The minutes of the general meeting of share- holders shall be made available, on request, to the shareholders no later than three months after the end of the meeting, after which the shareholders shall have the opportunity to react to the minutes in the following three months. The minutes shall then be adopted in the manner as described in the pre- ceding paragraph. If an official notarial record is made of the busi- ness transacted at the meeting then minutes need not be drawn up and it shall suffice that the official notarial record be signed by the notary. As a prerequisite to attending the meeting and, to the extent applicable, exercising voting rights, the shareholders entitled to attend the meeting shall be obliged to inform the Board of Directors in writing within the time frame mentioned in the convening notice. At the latest this notice must be received by the Board of Directors on the day mentioned in the convening notice. Shareholders and those permitted by Dutch law to attend the general meetings of shareholders may cause themselves to be represented at any meeting by a proxy duly authorized in writing, provided they shall notify the Company in writing of their wish to be represented at such time and place as shall be stat- ed in the notice of the meetings. For the avoidance of doubt, such attorney is also authorized in writing if the proxy is documented electronically. The Board of Directors may determine further rules concern- ing the deposit of the powers of attorney; these shall be mentioned in the notice of the meeting. The Company is exempt from the proxy rules un- der the Exchange Act. The chairman of the meeting shall decide on the admittance to the meeting of persons other than those who are entitled to attend. For each general meeting of shareholders, the Board of Directors may decide that shareholders shall be entitled to attend, address and exercise voting rights at such meeting through the use of electronic means of communication, provided that shareholders who participate in the meeting are capable of being identified through the electronic means of communication and have direct cogni- zance of the discussions at the meeting and the ex- ercising of voting rights (if applicable). The Board of Directors may set requirements for the use of elec- tronic means of communication and state these in the convening notice. Furthermore, the Board of Di- rectors may for each general meeting of sharehold- ers decide that votes cast by the use of electronic means of communication prior to the meeting and received by the Board of Directors shall be consid- ered to be votes cast at the meeting. Such votes may not be cast prior to the Record Date. Whether the provision of the foregoing sentence applies and the procedure for exercising the rights referred to in that sentence shall be stated in the notice. Prior to being allowed admittance to a meeting, a shareholder and each person entitled to attend the meeting, or its attorney, shall sign an attendance list, while stating his name and, to the extent applica- ble, the number of votes to which he is entitled. Each shareholder and other person attending a meeting by the use of electronic means of communication and identified in accordance with the above shall be registered on the attendance list by the Board of Di- rectors. In the event that it concerns an attorney of a shareholder or another person entitled to attend the meeting, the name(s) of the person(s) on whose behalf the attorney is acting, shall also be stated. The chairman of the meeting may decide that the at- tendance list must also be signed by other persons present at the meeting. The chairman of the meeting may determine the time for which shareholders and others entitled to attend the general meeting of shareholders may speak if he considers this desirable with a view to the orderly conduct of the meeting as well as other procedures that the chairman considers desirable for the efficient and orderly conduct of the business of the meeting. Ferrari applies the one-share-one-vote principle, meaning that every share (whether common or spe- cial voting) shall confer the right to cast one vote. Shares in respect of which Dutch law determines that no votes may be cast shall be disregarded for the purposes of determining the proportion of share- holders voting, present or represented or the pro- portion of the share capital present or represented. All resolutions shall be passed with an absolute majority of the votes validly cast unless otherwise specified in the Articles of Association. Blank votes shall not be counted as votes cast. All votes shall be cast in writing or electronically. The chairman of the meeting may, however, deter- mine that voting by raising hands or in another man- ner shall be permitted. Voting by acclamation shall be permitted if none of the shareholders present or represented objects. No voting rights shall be exercised in the gener- al meeting of shareholders for shares owned by the Company or by a subsidiary of the Company. Pledg- ees and usufructuaries of shares owned by the Company and its subsidiaries shall however not be excluded from exercising their voting rights, if the right of pledge or usufruct was created before the shares were owned by the Company or a subsidiary. Neither the Company nor any of its subsidiaries may exercise voting rights for shares in respect of which it holds a right of pledge or usufruct. Without preju- 151 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTdice to the Articles of Association, the Company shall determine for each resolution passed: • the number of shares on which valid votes have • the percentage that the number of shares as re- been cast; ferred to under a. represents in the issued share capital; • the aggregate number of votes validly cast; and • the aggregate number of votes cast in favor of and against a resolution, as well as the number of abstentions. ISSUANCE OF SHARES The general meeting of shareholders or alternative- ly the Board of Directors, if it has been designated to do so by the general meeting of shareholders, shall have authority to resolve on any issuance of shares and rights to subscribe for shares. The gen- eral meeting of shareholders shall, for as long as any such designation of the Board of Directors for this purpose is in force, no longer have authority to decide on the issuance of shares and rights to sub- scribe for shares. For a period of five years from January 2, 2016 the Board of Directors has been irrevocably autho- rized to issue shares and rights to subscribe for shares up to the maximum aggregate amount of shares as provided for in the company’s authorized share capital as set out in Article 4.1 of the Articles of Association, as amended from time to time. The general meeting of shareholders or the Board of Directors if so designated in accordance with the Articles of Association, shall decide on the price and the further terms and conditions of issu- ance, with due observance of what has been pro- vided in relation thereto in Dutch law and the Arti- cles of Association. If the Board of Directors is designated to have au- thority to decide on the issuance of shares or rights to subscribe for shares, such designation shall spec- ify the class of shares and the maximum number of shares or rights to subscribe for shares that can be issued under such designation. When making such designation the duration thereof, which shall not be for more than five years, shall be resolved upon at the same time. The designation may be extend- ed from time to time for periods not exceeding five years. The designation may not be withdrawn unless otherwise provided in the resolution in which the designation is made. Pursuant to the resolution of the Annual General Meeting held on April 14, 2023, the Board of Direc- tors has been authorized to issue common shares in the capital of the Company and to grant rights to subscribe for common shares in the capital of the Company. This authorization is limited in respect of common shares to 10 percent of the issued com- mon shares for general corporate purposes as of the date of the 2023 Annual General Meeting (i.e. April 152 14, 2023), which can be used for any and all purposes necessary in the opinion of the Board of Directors. The authorization has been granted for a period of 18 months starting from the date of the 2023 Annual General Meeting of Shareholders on April 14, 2023 up to and including October 13, 2024. The Board of Directors has also been designated for the same pe- riod as the authorized body to limit or exclude the rights of pre-emption of shareholders in connection with the authority of the Board of Directors to issue common shares and grant rights to subscribe for common shares as referred to above. Pursuant to the resolution of the Annual General Meeting held on April 13, 2022, the Board of Directors has been fur- ther authorized to issue special voting shares in the capital of the Company and to grant rights to sub- scribe for special voting shares in the capital of the Company. This authorization is limited in respect of special voting shares to 10 percent of the maximum aggregate amount of special voting shares as pro- vided for in the Company’s authorized share capital. The authorization has been granted for a period of 5 years starting from the date of the 2022 Annual Gen- eral Meeting of Shareholders on April 13, 2022 up to and including April 12, 2027. Payment for shares shall be made in cash unless another form of consideration has been agreed. Payment in a currency other than Euro may only be made with the consent of the Company. The Board of Directors has also been designated as the authorized body to limit or exclude the rights of pre-emption of shareholders in connection with the authority of the Board of Directors to issue com- mon shares and grant rights to subscribe for com- mon shares as referred to above. In the event of an issuance of common shares every holder of common shares shall have a right of pre-emption with regard to the common shares or rights to subscribe for common shares to be is- sued in proportion to the aggregate nominal value of his common shares, provided however that no such right of pre-emption shall exist in respect of shares or rights to subscribe for common shares to be issued to employees of the Company or of a group company pursuant to any option plan of the Company. A shareholder shall have no right of pre-emption for shares that are issued against a non-cash con- tribution. In the event of an issuance of special voting shares to qualifying shareholders, shareholders shall not have any right of pre-emption. The general meeting of shareholders or the Board of Directors, as the case may be, shall de- cide when passing the resolution to issue shares or rights to subscribe for shares in which manner the shares shall be issued and, to the extent that rights of pre-emption apply, within what period those rights may be exercised. BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFERRARI LEADERSHIP TEAM On certain key operational matters, the CEO is supported by the FLT, which is responsible for reviewing the operating performance of the business, collaborating on certain operational matters, supporting the Chief Exec- utive Officer with his tasks, and executing decisions of the Board of Direc- tors and the day-to-day management of the Company, primarily as it re- lates to the operational management. Set forth below are the names, year of birth and position of each of the members of the FLT of Ferrari. Unless otherwise indicated, the business address of each person listed below will be c/o Ferrari, Via Abetone Inferiore n. 4, I-41053 Maranello (MO), Italy. Year of Birth Position 1976 1969 1964 1984 1979 1969 1968 1969 1969 1966 1970 1972 1968 1972 1965 1979 1974 1968 Executive Chairman and Executive Director Chief Executive Officer Chief Financial Officer Chief Technologies and Infrastructures Officer Chief Manufacturing Officer Chief Human Resources Officer General Counsel Chief Product Development Officer Chief Digital & Data Officer Chief Marketing and Commercial Officer Chief Racing Revenue Officer Chief Research & Development Officer Chief Brand Officer Chief Internal Audit, Risk and Compliance Officer Chief Design Officer Chief Communications Officer Chief Purchasing & Quality Officer Scuderia Ferrari Team Principal & General Manager Name John Elkann Benedetto Vigna Antonio Picca Piccon Davide Abate Andrea Antichi Michele Antoniazzi Carlo Daneo Gianmaria Fulgenzi Silvia Gabrielli Enrico Galliera Lorenzo Giorgetti Ernesto Lasalandra Maria Carla Liuni Marco Lovati Flavio Manzoni Francesca Montini Angelo Pesci Frédéric Vasseur Summary biographies for the current members of the FLT are included below: JOHN ELKANN See the “—Board of Directors” section above. BENEDETTO VIGNA See the “—Board of Directors” section above. ANTONIO PICCA PICCON FCA, where he covered several senior roles in fi- nance and financial services, including CFO of Ive- co Group, CEO of FGA Capital (now FCA Bank) and Group Treasurer and Head of Financial Services for FCA. He started his career in banking, in various po- sitions within Sanpaolo IMI group. He also served as a member of the Board of Directors of Ferrari, Fiat Group Automobiles, Magneti Marelli, Maserati and Teksid. Mr. Picca Piccon graduated in Economics and Business Administration from the University of Turin and holds an MPhil in Economics from the Uni- versity of Cambridge. Mr. Antonio Picca Piccon is Chief Financial Officer since July 2018. Before joining Ferrari, he held the position of CFO in Ariston Thermo Group, includ- ing responsibilities for Legal and Corporate Affairs and ICT, since November 2014. Prior to such as- signment he spent 15 years within Fiat Group and DAVIDE ABATE Mr. Davide Abate is Chief Technologies and Infra- structures Officer since January 2022. Previously he held the position of Head of Technologies at Ferrari since October 2020, and various managerial roles in 153 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTthe manufacturing area such as Head of Prototype Construction from 2017 to 2020. Prior to joining Fer- rari in 2012, he covered technical managerial roles at Ducati Motor Holding. Mr. Abate holds the Ferrari Corporate Executive MBA from the Bologna Busi- ness School and a master in Process Engineering at Bocconi School of Management, as well as a mas- ters’ degree in Automotive Engineering from the Tu- rin Polytechnic. ANDREA ANTICHI Mr. Andrea Antichi was appointed Chief Manufactur- ing Officer in January 2022. Previously he was Head of Vehicle at Ferrari since June 2018. During his ca- reer he covered various managerial roles at Ferrari in the manufacturing area such as Head of Engine Assembly and Machining from 2014 to 2018 and En- gine Assembly and Machining Process Engineering Manager from 2008 to 2013. Prior to joining Ferra- ri in 2006, he held technical roles in Piaggio and re- searcher in Computational Biomechanics at Istituti Ortopedici Rizzoli. Mr. Antichi holds the Ferrari Cor- porate Executive MBA from the Bologna Business School, as well as a masters’ degree in Mechanical Engineering from the University of Pisa. MICHELE ANTONIAZZI Mr. Michele Antoniazzi is Chief Human Resources Of- ficer since April 2016. Before joining Ferrari, he held several senior roles in Magneti Marelli, becoming the Human Resources Director of the Automotive Light- ing business line in 2012. Prior to that experience he was the Human Resources Director of the Suspen- sion Systems business line from 2009 to 2012 and the Head of Organizational Development for the Sec- tor Magneti Marelli from 2006 to 2012. He graduat- ed from the University of Padova with a degree in Industrial and Organizational Psychology. CARLO DANEO Mr. Carlo Daneo was appointed as our General Counsel in July 2015, as a member of the Board of Directors of Ferrari North America Inc. in February 2017, as a member of the Supervisory Body of Fer- rari S.p.A. in August 2015 and Data Protection Offi- cer of the Ferrari Group in February 2018. Prior to joining Ferrari, he held several senior positions in the FCA legal area, including the role of Senior Vice President and Legal Counsel in Finance and Financial Services of FCA from 2008 until 2015 and the role of General Counsel in Fiat Chrysler Finance S.p.A. (pre- viously Fiat Finance S.p.A.) from 2003 to 2015. He started his career in 1995 with a work experience at the United Nations at the International Trade Cen- ter Unctad / WTO in Geneva and since 1996 in the legal profession in law firms with experience in the Corporate, Finance and Capital Markets areas in pri- mary international law firms in Italy and abroad until 2003. He graduated in Law at the University of Turin, did a master’s degree organized by the University Institute of European Studies in international law at the International Labour Organization of Turin and obtained the title of Lawyer. GIANMARIA FULGENZI Mr. Gianmaria Fulgenzi is Chief Product Develop- ment Officer since January 2022. Previously he was Head of GeS Supply Chain of Ferrari since March 2019. He also worked in the product development and manufacturing area, as Head of Rear Engine Car Platform from 2015 to 2019 and Head of Pow- ertrain Production from 2008 to 2010. Prior to join- ing Ferrari in 2002, he covered technical managerial roles at PiaggioAero Industries. Mr. Fulgenzi holds a master in Management from the London Business School, as well as a masters’ degree in Aerospace Engineering from the Turin Polytechnic. SILVIA GABRIELLI Ms. Silvia Gabrielli was appointed Chief Digital & Data Officer in January 2022. Previously, she held the po- sition of Head of IT Digital & Analytics since July 2019. Prior to joining Ferrari she held the position of Digital Transformation Advisor at Microsoft. From 1996 to 2017 she worked as a business consultant and busi- ness development manager in different companies, such as SAP, A.T. Kearney and Accenture. Ms. Gabri- elli holds a masters’ degree in Business Administra- tion from the Bocconi University. ENRICO GALLIERA Mr. Enrico Galliera was appointed as our Chief Mar- keting and Commercial Officer in April 2010. From 1990 to 2010 he worked for Barilla S.p.A, where he held multiple positions, ultimately becoming Europe and export market unit director. During his time at Barilla S.p.A., Mr. Galliera also served as director of customer business development for Europe, gener- al manager for South West Europe and trade mar- keting director for Italy. Mr. Galliera holds a degree in economics and political science from the University of Parma. LORENZO GIORGETTI Mr. Lorenzo Giorgetti was appointed Chief Racing Revenue Officer in February 2023. His career has seen him gain extensive experience in growing businesses across sports clubs, the media and the world of luxury. Prior to joining Ferrari, he was Chief Commercial Officer at AC Milan; he has also been Head of Licensing for major sporting events, such as the Turin 2006 Winter Olympic Games and Milan Cortina 2026. From 2007 to 2017, he led the com- mercial management of RCS Media Group’s sports division, where he was also CEO of the UAE sport branch and is currently a member of the board of the Global Esports Federation. He graduated in en- 154 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fgineering from the Politecnico di Milano and has an MBA from SDA Bocconi. ERNESTO LASALANDRA Mr. Ernesto Lasalandra is Chief Research & Develop- ment Officer since January 2022. He joined Ferrari from his previous role as Group VP R&D General Manager in STMicroelectronics, where over the past decades he covered roles of increasing responsibil- ities in Product Development and R&D. Mr. Lasalan- dra holds a degree in Electronic Engineering from University of Pavia. MARIA CARLA LIUNI Ms. Maria Carla Liuni joined Ferrari as Chief Brand Officer in September 2022. Previously, she was Chief Marketing Officer at Pandora, where she played a key part in relaunching the company and boosting its desirability. She has also led Bulgari’s marketing division and global communications. In addition, she spent almost 20 years at Procter & Gamble, where she was General Manager of the Prestige division which includes perfume, makeup and skincare for brands such as Dolce & Gabbana, Gucci and Hugo Boss. This encompassed multiple roles including Re- gional Leader for the Asia-Pacific region and leading on marketing, communication and product develop- ment for the entire portfolio, working closely with the fashion houses. She graduated in economics at Rome’s Luiss University and has a master’s degree in marketing from the IPSOA business school in Milan. MARCO LOVATI Mr. Marco Lovati is Chief Internal Audit, Risk and Compliance Officer since December 2023, Chief In- ternal Audit Officer since April 2015 and a member of the Supervisory Body of Ferrari S.p.A. since July 2014. Prior to such assignment he spent 14 years in the Internal Audit and Compliance department of Fiat Group and FCA, where he covered several se- nior positions including the role of “Financial & In- surance Companies, Luxury Cars” and “Automotive Europe & Financial JV Companies” Head of Audit, also serving as member of the Supervisory Body of different Fiat Group and FCA legal entities. Mr. Mar- co Lovati graduated in Economics and Business Ad- ministration from the University of Turin and holds an MBA in Finance jointly organized by the University of Turin and the Italian Association of Finance Direc- tors (ANDAF). FLAVIO MANZONI Mr. Flavio Manzoni was appointed as our Chief De- sign Officer in January 2010. From 2007 to 2010 he was Director of Creative Design at the Volkswagen Group where he was involved in designing most of the Skoda, Bentley, Bugatti and Volkswagen recent cars as well as redefining the aesthetic philosophy of these brands. From 2001 to 2006, he worked at Fiat Group as Head of Design for Lancia, Fiat and LCV. He has also held design positions at Lancia and Seat. Mr. Manzoni holds a degree in architecture with a thesis in industrial design from the University of Florence. On June 28, 2019, at the University of Sassari, he was awarded an honorary master’s degree in “Human- ities, Modern Philology and Cultural Industry”. FRANCESCA MONTINI Ms. Francesca Montini is Chief Communications Of- ficer since April 2023. She joined Ferrari in January 2018 as Head of Brand and Corporate Communica- tions. Over her career, Ms. Montini has built a strong international profile in corporate and brand com- munications working across multiple markets (Eu- rope, the Middle East and the U.S.A.) and a variety of powerful global brands, including Nike, Nokia, Ford, Jeep and Ferrari. Ms. Montini holds a Masters degree in Corporate Communications from University of Rome, La Sapienza and the Ferrari Corporate Exec- utive MBA from the Bologna Business School. ANGELO PESCI Mr. Angelo Pesci is Chief Purchasing & Quality Offi- cer since January 2022. Angelo Pesci joined Ferrari from STMicroelectronics, where over the past de- cades he covered roles of increasing responsibili- ties in Financial Planning, Supply Chain and Product Planning, Services and Operations. Mr. Pesci holds a Master in Business Administration from SDA Bocco- ni, as well as a masters’ degree in Physics from Uni- versity of Trieste. FRÉDÉRIC VASSEUR Mr. Frédéric Vasseur was born in Draveil, France on May 28, 1968. In 1995, he graduated in Aeronautical Engineering at ESTACA (École Supérieure des Tech- niques Aéronautiques et de Construction Automo- bile) in Paris. In 1992, while still studying, he estab- lished RPM, preparing Formula 3 engines for Renault. In 1996, he set up the ASM team, racing in Formula 3. He ran the operation up to 2015, winning various titles including the French one in 1998 with David Saelens at the wheel, going on to win the European title four times between 2004 and 2007, with Jamie Green, Lewis Hamilton, Paul Di Resta and Romain Grosjean. In 2004, he created a second team, ART Grand Prix, winning eighth teams’ championships across GP2 and GP3 and eleven drivers’ titles includ- ing clinching the 2016 GP3 crown with Charles Le- clerc. An enquiring mind and a willingness to explore new avenues led Vasseur to set up AOTech in 2010, a company specialising in driving simulators and CFD design. Two years later, along came Spark Rac- ing Technology, dealing in the design and manufac- ture of hybrid and electrical systems. The company secured the contract to supply Formula E chassis, when the category for fully electric single-seaters 155 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTwas first set up by the FIA (Federation Internationale Automobile) in 2014. Frédéric first appeared in the Formula 1 paddock in 2016 as Renault Team Princi- pal. The following year, he moved on to become Man- aging Director of the Sauber Group, as well as Team Principal of the Alfa Romeo Sauber F1 Team, which morphed into Alfa Romeo Racing in 2019, running Ferrari power units. After the 2022 season, he was asked to take on the role of Scuderia FerrariTeam Principal & General Manager, starting in his new po- sition on January 9, 2023. CORPORATE OFFICES The Company is incorporated under the laws of the Netherlands. It has its official seat in Amsterdam, the Netherlands, and the place of effective management of the Company is Via Abetone Inferiore n. 4 I-41053 Maranello (MO) Italy. The business address of the Board of Directors and the senior managers is Via Abetone Inferiore n. 4 I-41053 Maranello (MO) Italy. The Company is registered at the Dutch trade register under number 64060977. The Netherlands is the Company’s home mem- ber state for the purposes of the EU Transparency Directive (Directive 2004/109/EC, as amended). INTERNAL CONTROL SYSTEM The Company has in place an internal control system (the “System”), based on the model provided by the COSO Framework (Committee of Sponsoring Orga- nizations of the Treadway Commission Report – En- terprise Risk Management model) and the principles of the Dutch Corporate Governance Code, which consists of a set of policies, procedures and orga- nizational structures aimed at identifying, measur- ing, managing and monitoring the principal risks to which the Company is exposed. The System is inte- grated within the organizational and corporate gov- ernance framework adopted by the Company and contributes to the protection of corporate assets, as well as to ensuring the efficiency and effectiveness of business processes, reliability of financial infor- mation and compliance with laws, regulations, the Articles of Association and internal procedures. The System, which has been developed on the basis of international best practices, relies on the so called “Three Levels of Controls Model” as referred to and outlined in the “Risk Management Process and Internal Control Systems” section of this Report. PRINCIPAL CHARACTERISTICS OF THE INTERNAL CONTROL SYSTEM AND INTERNAL CONTROL OVER FINANCIAL REPORTING The Company has in place a system of risk manage- ment and internal control over financial reporting based on the model provided by the COSO Frame- work, according to which the internal control sys- tem is defined as a set of rules, procedures and tools designed to provide reasonable assurance of the achievement of corporate objectives. In relation to the financial reporting process, re- liability, accuracy, completeness and timeliness of the information contribute to the achievement of such corporate objectives. Risk management is an integral part of the internal control system. A period- ic evaluation of the system of internal control over financial reporting is designed to ensure the over- all effectiveness of the components of the COSO Framework (control environment, risk assessment, control activities, information and communication, and monitoring) in achieving those objectives. The Company has a system of administrative and accounting procedures in place that ensure a high degree of reliability in the system of internal control over financial reporting. The approach adopted by the Company for the evaluation, monitoring and continuous updating of the system of internal control over financial report- ing, is based on a ‘top-down, risk-based’ process consistent with the COSO Framework. This enables focus on areas of higher risk and/or materiality, where there is risk of significant errors, including those attributable to fraud, in the elements of the fi- nancial statements and related documents. The key components of the process are: • identification and evaluation of the source and probability of material errors in elements of fi- nancial reporting; • assessment of the adequacy of key controls in enabling ex-ante or ex-post identification of po- tential misstatements in elements of financial re- porting; and • verification of the operating effectiveness of controls based on the assessment of the risk of misstatement in financial reporting, with testing focused on areas of higher risk. Identification and evaluation of the risk of misstate- ments which could have material effects on financial reporting is carried out through a risk assessment process that uses a top-down approach to identify the organizational entities, processes and the relat- ed accounts, in addition to specific activities, which could potentially generate significant errors. Under the methodology adopted by the Company, risks and related controls are associated with the accounting and business processes upon which accounting in- formation is based. Significant risks identified through the assess- ment process require definition and evaluation of key controls that address those risks, thereby mit- igating the possibility that financial reporting will contain any material misstatements. In accordance with international best practices, the Group has two principal types of control in place: • controls that operate at Group or subsidiary lev- el, such as delegation of authorities and respon- sibilities, separation of duties, and assignment 156 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fof access rights to information technology sys- tems; and • controls that operate at process level, such as authorizations, reconciliations, verification of consistencies, etc. This category includes con- trols for operating processes, controls for finan- cial closing processes and cross-sector controls carried out by captive service providers. These controls can be preventive (i.e., designed to pre- vent errors or fraud that could result in mis- statements in financial reporting) or detective (i.e., designed to reveal errors or fraud that have already occurred). They may also be classified as manual or automatic, such as application-based controls relating to the technical characteristics and configuration of information technology systems supporting business activities. An assessment of the design and operating effec- tiveness of key controls is carried out through tests performed by the Internal Audit department, both at group and subsidiary level, using sampling tech- niques recognized as best practices internationally. The assessment of the controls may require the definition of compensating controls and plans for remediation and improvement. The results of moni- toring are subject to periodic review by the manager responsible for the Company’s financial reporting and communicated by him to senior management and to the Audit Committee (which in turn reports to the Board of Directors). Since 6 December 2023, our risk management and internal control system has been enhanced with the creation of a new department tasked with co- ordinating the system as a whole: the Internal Audit, Risk and Compliance Department, which reports di- rectly to the CEO and works to ensure, in an integrat- ed manner, that business operations are conducted with transparency, in the interests of shareholders and all stakeholders. The Internal Audit, Risk and Compliance Depart- ment comprises the following groups: ENTERPRISE RISK MANAGEMENT Which will now report to this new department. The purpose of this group is to create an organized system for identifying, assessing, managing, and monitoring major risks that could compromise the achievement of our strategic, operational and finan- cial objectives. COMPLIANCE The purpose of which is to ensure that the actions taken within the Company are consistent with the applicable rules of ethics, laws and regulations, as well as Ferrari’s internal procedures, in order to in- crease the confidence of stakeholders in the fair- ness of our management. INTERNAL AUDIT The purpose of which is to provide an independent and objective assessment of the adequacy of our in- ternal control system as well as of the efficiency of operations conducted within Ferrari. This is achieved through the execution of, among others, operational, 157 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTcompliance, financial and technology audits as well as consulting activities designed to enhance and pro- tect company assets and relevant information also providing support to internal stakeholders in the im- plementation of projects, as applicable. The Internal Audit function continues to report to the Audit Com- mittee of the Board of Directors of Ferrari N.V. The Internal Control Committee regularly mon- itors all Group risks and is composed of General Counsel, the CFO, the Chief Digital & Data Officer, the Chief Internal Audit, Risk and Compliance Officer, the Chief Human Resources Officer, Enterprise Risk Management, and the Enterprise Cybersecurity de- partment. It reports at least once a year to the Audit Committee and the Privacy Committee. CODE OF CONDUCT AND COMPANY POLICIES CODE OF CONDUCT We have adopted, at a group level, a Code of Conduct which applies to all of our employees, including our principal executive, principal financial and principal accounting officers. It also applies to the Compa- ny’s subsidiaries and other individuals or companies that act in the name and on behalf of the Company. Our Code of Conduct is available on our website at https://cdn.ferrari.com/cms/network/media/pdf/ codice_condotta_ferrari_eng_def.pdf. Ferrari’s Code of Conduct was updated in Feb- ruary 2023, also strengthening the reference to ESG aspects, with the approval by the Board of Directors of Ferrari N.V. Should any further amendments, or should any waiver be granted under, the Code of Conduct, this will be disclosed in accordance with the applicable rules and regulations. The Code of Conduct represents a set of values recognized, adhered to and promoted by the Com- pany which understands that conduct based on the principles of diligence, integrity and fairness is an im- portant driver of social and economic development. The Code of Conduct is a pillar of the gover- nance system, which regulates the decision-making processes and operating approach of the Compa- ny and its employees in the interests of sustainable long-term value creation while taking into account the impact the actions have on people and the en- vironment and to that end weighs the stakeholder interests that are relevant in this context. Explicit reference is made to the UN’s Universal Declara- tion on Human Rights, the principal Conventions of the International Labor Organization (ILO) and the OECD Guidelines for Multinational Enterprises. Fur- thermore, the Code of Conduct provides for the guiding principles relating to: health and safety, busi- ness ethics and anticorruption, antitrust, human re- source management and the central role of the in- dividual and the respect of human rights, personal data privacy, conflicts of interest, the importance of the Community, of the environment and, in general terms, of sustainability. The Company promotes adoption of the Code of Conduct as a best practice standard of business conduct by partners, suppliers, agents, dealers and any other business partner. In fact, the Company’s contracts worldwide include specific clauses relat- ing to recognition and adherence to the principles underlying the Code of Conduct and related guide- lines, as well as compliance with local regulations. The Company closely monitors the effective- ness of and compliance with the Code of Conduct, with the help of the Group Compliance department. Violations of the Code of Conduct are usually deter- mined through, among other things: periodic activi- ties of compliance monitoring carried out by Group Compliance department, periodic and/or specific activities carried out by the Internal Audit depart- ment of the Group; the whistleblowing reports and management procedures and checks forming part of the standard operating procedures. Periodic re- porting is provided to the Chairman and CEO as well as to the Audit Committee. For all Code of Conduct violations, the disciplinary measures taken are com- mensurate with the seriousness of the case and comply with local legislation. The relevant corporate departments are notified of violations, irrespective of whether criminal action is taken by the authorities. The Internal Audit department of the Group should inform the Board of Directors and the chairman of the Audit Committee without delay if, during the per- formance of its duties, it discovers or suspects an in- stance of material misconduct or irregularity. If the actual or suspected material misconduct or irregu- larity pertains to the functioning of one or more Di- rectors, the Internal Audit department should report this to the Chairman. More detailed information about the Code of Conduct, among which compliance therewith in 2023, is included in the Non-Financial Statement sec- tion of our 2023 Annual Report. INSIDER TRADING POLICY As of January 3, 2016 the Company’s Board of Direc- tors adopted an insider trading policy setting forth guidelines and recommendations to all Directors, officers and employees of the Group with respect to transactions in the Company’s securities. This policy, which also applies to immediate family mem- bers and members of the households of persons covered by the policy, is designed to prevent insider trading or allegations of insider trading, and to pro- tect the Company for integrity and ethical conduct. CYBERSECURITY CYBERSECURITY MANAGEMENT Cybersecurity and IP protection are among Ferrari top priorities. Cybersecurity risks are managed at multiple levels within the organization. The internal processes through which our Enterprise Cyberse- curity department (as referred to below) operates 158 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fare built to assess, identify and manage material risks from cybersecurity threats and are integrated in our overall enterprise risk management framework. In addition, a global Enterprise Risk Management department (part of Internal Audit, Risk and Compli- ance) considers and evaluates all risks that could af- fect the Group and cybersecurity has been integrat- ed into this risk management process. For additional information on our Enterprise Risk Management department and processes, please see “Principal Characteristics of the Internal Control System and Internal Control over Financial Reporting” and “Risk Management Process and Internal Control System— Cybersecurity Including Third Parties Vulnerabilities”. We evaluate cyber risks that can directly or indi- rectly affect the Group, including dealers and suppli- ers, and assess, identify, mitigate and manage ma- terial cybersecurity risks. Ferrari is accountable for this process, which involves several external part- ners for both monitoring and analysis/remediation activities, such as a security operation service and cybersecurity operations with a triage service, both of which are 24 hours a day, 7 days a week, as well as a primary and worldwide known cybersecurity inci- dent management company and several cybersecu- rity companies specialized in different areas. Such procedures are regularly verified and, in some cas- es, formally audited, either externally (UNECE R155, NYDFS500) by government agencies or internally by the Internal Audit, Risk & Compliance Department. CYBERSECURITY GOVERNANCE Ferrari considers cybersecurity a strategic matter since 2008, when a dedicated department was es- tablished. It evolved to an articulated structure cur- rently composed of 14 full time people plus several external services. The Enterprise Cybersecurity department is responsible for cybersecurity and provides cyber- security services and training to the whole Ferrari Group. The responsibility of Enterprise Cyberse- curity department includes operational technology and vehicle cybersecurity. It is part of the Digital & Data department, whose Chief Digital & Data Officer directly reports to the CEO. The Chief Digital & Data Officer has substantial relevant expertise in the ar- eas of information security and cybersecurity risk management, and has more than 8 years of experi- ence in information technology. The Enterprise Cybersecurity department manages and coordinates every aspect of cyber- security: policies, controls, incidents, awareness, countermeasures, remediation, relations with pub- lic institutions. Cybersecurity governance primarily involves the following committees: (i) The Cyber Crisis Committee, which overviews and manages material (or significant) cyber inci- dents. It is composed mainly by executives and C-level executives representing: • Enterprise Cybersecurity; • Data & Digital; • Legal; • Finance; • Communications; • Compliance, and • relevant internal business functions (e.g. sales, procurement, design, racing, etc.), as applicable. (ii) The Internal Control Committee, which regularly monitors all Group risks, including cyber risks, and reports at least once a year to the Audit Com- mittee and the Privacy Committee. The Internal Control Committee is composed of executives and C-level executives representing: • Enterprise Cybersecurity; • Data & Digital; • Legal; • Finance; • Internal Audit; • Compliance; • Enterprise Risk Management, and • Human Resources. (iii) The Audit Committee, which periodically reviews the cybersecurity strategy, governance and management, and is regularly updated about cy- bersecurity matters. CYBERSECURITY REPORTING The Enterprise Cybersecurity department period- ically reports to management with different fre- quencies. For example, it provides weekly reporting in relation to cyber incidents to the Chief Digital & Data Officer and the CEO, and every six months it reports to the CFO, the Chief Internal Audit, Risk and Compliance Officer and the Chief Digital & Data Of- ficer. It also prepares and shares specific reports and updates in case of relevant incidents with the relevant stakeholders (which usually include the CEO, General Counsel, the CFO and the Chief Data & Digital Officer. CYBERSECURITY STRATEGY TECHNICAL COUNTERMEASURES Ferrari relies on several cybersecurity technical tools to prevent cyber incidents and detect any devi- ation from standard behaviors and seeks to continu- ously strengthen its security processes and controls by investing in new and improved security technol- ogies, improving incident response plans, provid- ing regular employee training and keeping up to date with several cybersecurity compliance frame- works, such as SOX, NYDFS500, UNECE R155 and the EU GDPR. Cybersecurity is technically provided through the adoption of available tools, protecting the whole perimeter of network, applications, devic- es, services and accounts. Policies and procedures 159 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTdefine the rules for the correct management and ex- ecution of the cybersecurity services. Additionally, the Group has purchased cybersecurity insurance and it engages external consultants with extensive technical expertise in cybersecurity matters to as- sist management in implementing its cybersecuri- ty strategy. The Group also performs penetration tests, data recovery testing, security audits and risk assessments throughout the year. CYBERSECURITY CONTROLS Controls are performed on a shorter-than-daily ba- sis, generally with a delay of minutes or few hours at most. Vulnerabilities are monitored every day, and action plans are defined accordingly. Since 2020 logs are continuously analyzed and correlated 24 hours a day, 7 days a week by a security operation service. Other controls are performed throughout the year. For example, with “friendly phishing” campaigns aimed to identify users more prone to mail scams. TRAINING & AWARENESS Human behavior is central to cybersecurity. Both employees and external workers are specifically trained in cybersecurity in several ways, in person and/or online, including through several security pills via email or intranet, “friendly phishing” cam- paigns and personal support for phishing analysis or general cybersecurity questions. Specific de- partments particularly exposed to cyber risks re- ceive dedicated classroom training, with more than 1,000 people involved in 2023. DEALERS & SUPPLIERS The cybersecurity of third parties, dealers and sup- pliers, is part of the Group’s overall cybersecurity program. Dealers and suppliers are subject to spe- cific and tailored analysis to evaluate their maturity level with a specific focus on technical, procedural or organizational nature. The evaluation is based on questionnaires dealing with all aspects related to cy- bersecurity. In case of weaknesses, we may request a mitigation plan to be implemented and monitored. CYBER INCIDENTS As previously disclosed, in March 2023 Ferrari was hit by a ransomware attack. Data protection author- ities, media and clients were promptly informed and the ransom request was publicly rejected. Rejection of the ransom request led to the leak of a signifi- cant amount of customers’ personal identifiable in- formation, and we were provided evidence of such leak with respect to several hundred customers. In addition, in the last twelve months, cybersecurity threats and other attacks have occurred, especial- ly against some of our suppliers. None of these inci- dents have had material financial impacts or serious consequences for Ferrari. Ferrari reports incidents in compliance with the requirements of different au- thorities. If necessary, specialized incident manage- ment services are hired to provide support to both analysis and remediation activities. Data protection authorities (Italian and of other countries) have been immediately informed whenever necessary. If nec- essary, specialized cybersecurity service providers are hired. Furthermore, a long standing cooperation with police forces in Italy and other countries pro- vides an additional layer of security. As of the date of this report, we have not experienced any further material cybersecurity incidents. See “Risk Factors — A disruption in our information technology, includ- ing as a result of cybercrimes, could compromise confidential, proprietary and sensitive information” for further information about data protection and cybersecurity risks. DIVERSITY POLICY The Board of Directors adopted an updated diver- sity policy for the Board of Directors (the “Diversity Policy”) effective as of September 14, 2023, since the Company believes that diversity in the composition of the Board of Directors in terms of age, sex, gen- der, nationality, expertise, experience, competen- cies, or other personal qualities, and cultural or oth- er background is an important mean of promoting debate, balanced decision making and independent actions of the Board of Directors. The Diversity Policy gives weight to the following diversity factors in Board of Directors composition age, sex, gender, nationality, expertise, experience, competencies, or other personal qualities, and pro- fessional cultural or other background. The Compa- ny considers each of these aspects key drivers to support the abovementioned goals and to achieve sufficient diversity of views and the expertise need- ed for a proper understanding of current affairs and longer-term risks and opportunities related to the Company’s business. The Board of Directors and its ESG Committee consider such factors when evaluating nominees for election to the Board of Di- rectors and during the annual performance assess- ment process. GENDER DIVERSITY TARGETS a) Board of Directors diversity targets  The Company has set the following concrete targets to be achieved by 2027: (a) at least 30 percent of the seats of the Board of Directors to be occupied by women and at least 30 percent by men; (b) at least 33% of the seats of the non-executive members of the Board of Directors to be occupied by women and at least 33% by men; (c) the nationality of the members of the Board of Directors to be reason- ably consistent with the geographic presence of the Company’s business, and no nationality should count for more than 60% of the members of the Board of Directors; and (d) diversity in the age of the 160 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fmembers of the Board of Directors by having one or more members of the Board of Directors aged un- der 50 at the day of their nomination; provided that, in the candidate selection process, rules and gen- erally accepted principles of non-discrimination (on grounds such as ethnic origin, race, disability or sex- ual orientation) will be taken into account. Given the current composition of the Board of the Company in one-tier system, composed only by two (2) executive directors (of the same gender), the Company has de- cided not to set a specific gender diversity target for executive directors in the Policy while targets have been set for the Board of Directors as a whole. sity Policy will be taken into account in the nomina- tion of executive Directors, and in the adoption of a profile for non-executive Directors as well as in nom- inating and recommending non-executive Directors. As of December 31, 2023, the Company has achieved (i) the gender targets of the non-executive members of the Board of Directors, (ii) the target on nationality and (iii) the age target. Due to the ap- pointment of one extra male to the Board of Direc- tors compared to 2022, the percentage of women in the Board as a whole has dropped just below the 30% target. Please find below a chart representing the To ensure its correct implementation, the Diver- Board’s gender and age as of December 31, 2023. DIRECTORS BY AGE GROUP AND GENDER Directors Male Female Total December 31, 2023 30-50 >50 Total Total % 2 1 3 6 2 8 8 3 11 73% 27% 100% b) Manager Diversity Targets (sub-top) & Diversity and Inclusion Practice  Ferrari places people at its core. We believe in the importance of inclusion and the enhancement of di- versity and continuously improve our people strate- gies in order to maintain an engaging, meritocratic and fair environment, in which all Ferrari people can and want to do their best. Equal opportunities are the best way to ensure that merit is the decisive factor to keep on attracting, retaining and developing the tal- ents, accelerating Ferrari’s innovation process. In order to guarantee equal opportunities, our Company operates a merit-based remuneration policy, not discriminating on the basis of gender, age, nationality, social status or cultural background. In addition, Ferrari S.p.A. started an in-depth analy- sis on remuneration, which led, in July 2020, to the award of the Equal Salary Certificate for providing equal pay to men and women with the same quali- fications and positions in the Company. This certifi- cate has been maintained also for 2023, it has been extended at global level in 2023 and testifies to the Company’s commitment to creating an inclusive and diverse working environment while fostering career development for all. Ferrari sees this certifi- cation not as an end point but as a further stage of growth and an opportunity to implement tangible actions to ensure that everyone can pursue his or her own professional development. Reflecting the Company’s ambition for diversity and inclusion in the entire Company, The Board of Directors adopted a diversity and inclusion practice (the “Diversity and Inclusion Practice”) effective as of September 14, 2023. Ferrari Group promotes the valorization of human resources and encourages the diffusion of a corporate culture based on Inclu- sion and mutual respect in the belief that Diversity represents a source of creativity, enrichment and innovation. In carrying out its activities, the Group adopts an approach aimed at guaranteeing equal opportunities at all levels of the organization as well as rejecting any form of discrimination. The Diversi- ty and Inclusion Practice identifies and implements diversity and inclusion principles for the whole em- ployees’ population of Ferrari Group as well as the Board of Directors. Among the actions we have tak- en to implement the Diversity and Inclusion Practice, the monitoring of diversity in panel of hiring can- didates, the analysis of the percentage of men and women involved in remuneration and promotion processes to support with these data the decision making, the definition of clear diversity objectives for all levels in the organization. The progresses in our journey are evident look- ing at some figures: women in managerial positions at December 31, 2017 were 11.8% (while women rep- resented 12.2% of the total employee population), at December 31, 2022 were 15.2% (while women rep- resented 15.4% of the total employee population) and at December 31, 2023 were 16.2% (while women represented 15.7% of the total employee population). Compared to 2022, at the end of December 2023, the percentage of women in managerial positions increased by 1%. Our goal is to proceed in this direction: indeed we aim to maintain a healthy growth rate in women in managerial positions, considering the percent- 161 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTage of women in the total employee population. We define as an appropriate target to have at least 18% women in managerial positions by 2027. Our plan to achieve the target is to continue the implementation of initiatives and actions put in place in 2023, as mentioned above fostering the value of diversity in panel of hiring candidates, monitoring the percentage of men and women involved in ca- reer plans and salary review, defining clear diversity objectives for all levels in organization. For Ferrari it is important to guarantee equal opportunities at all levels, so the consistency between global percent- age and managerial percentage is a key indicator in our diversity strategy. STAKEHOLDER ENGAGEMENT PRACTICE On September 14, 2023, the Board of Directors ad- opted the updated version of the stakeholder en- gagement practice (the “Stakeholder Engagement Practice”), as the Company firmly believes that maintaining a profitable dialogue with its stake- holders, by listening to their expectations and per- spectives, is key in the path to sustainable long-term value creation. This Stakeholder Engagement Prac- tice aims at enhancing Ferrari’s communication with its stakeholders and at giving all members of the Board, managers and employees of the Ferrari Group, and anyone else working for it or on its be- half in Italy or any other country, guidelines on the right methods and forms of interaction with such different stakeholders. For more information our stakeholder engage- ment, see the chapter entitled “Stakeholder Engage- ment” in the Non-Financial Statement section of our 2023 Annual Report. PROFILE OF THE NON-EXECUTIVE DIRECTORS In respect of the composition of the Board of Direc- tors, a profile of the non-executive Directors (the “Profile”) has been adopted by the Company. The purpose of this profile is to provide guidance with respect to the composition and expertise of the non-executive Directors. The Profile provides that the Board of Directors shall be composed in such manner that its composition reflects an adequate mix of technical abilities, professional background and experience, both general and specific, gained in an international environment and pertaining to the dynamics of the macro-economy and globalization of markets, more generally, as well as the industri- al and financial sectors, more specifically. In select- ing and nominating new non-executive Directors, the Company shall ensure that such non-executive Directors complement the knowledge and experi- ence of the other non-executive Directors and that the independency requirements under the Dutch Corporate Governance Code and the NYSE rules are taken into account. In selecting and nominating new non-executive Directors, the Company shall also ensure that the Diversity Policy, including the gender diversity target ratios as described under “— Diversity Policy” above, is taken into account. In rec- ommending prospective candidates for nomination to the Board of Directors, the ESG Committee shall take into account the Profile. The Profile is posted on our website at https://corporate.ferrari.com/sites/ ferrari15ipo/files/e_fnv_profile_non-executive_di- rectors_13_09_2018_clean_final_new_0.pdf. COMPLIANCE WITH DUTCH CORPORATE GOVERNANCE CODE The Company endorses the principles and best practice provisions of the Dutch Corporate Gover- nance Code, except for the following best practice provisions which are explained below: Best practice provision 2.2.4 of the Dutch Corporate Governance Code: The supervisory board should also draw up a retirement schedule in order to avoid, as much as possible, supervisory board members retiring simultaneously. The retirement schedule should be published on the company’s website. The Company does not have a retirement schedule as referred to in best practice provision 2.2.4 of the Dutch Corporate Governance Code, because the Company’s Articles of Association provide for a term of office of member of the Board of Directors for a period of approximately one year after appointment, such period expiring on the day the first annual gen- eral meeting of shareholders is held in the following calendar year. Short terms of office for board mem- bers are customary for companies listed in the U.S. As the Company is listed on the NYSE, the Compa- ny also follows certain common U.S. governance practices, one of which is the reappointment of our Directors at each annual general meeting of share- holders. In light of this term of office, the Company does not have a retirement schedule in place. Best practice provision 4.1.8 of the Dutch Corporate Governance Code: Management board and super- visory board members nominated for appointment should attend the general meeting at which votes will be cast on their nomination. Pursuant to best practice provision 4.1.8 of the Dutch Corporate Governance Code, every executive and non-executive Director nominated for appointment should attend the general meeting at which votes will be cast on its nomination. Since, pursuant to Article 14.3 of the Articles of Association, the term of office of Directors is approximately one year, such period expiring on the day the first annual general meeting of shareholders of the Company is held in the follow- ing calendar year, all members of the Board of Direc- tors are nominated for (re)appointment each year. By publishing the relevant biographical details and curriculum vitae of each nominee for (re)appoint- ment, the Company ensures that the Company’s general meeting of shareholders is well informed in 162 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Frespect of the nominees for (re)appointment and in practice only the Chairman, the Chief Executive Offi- cer and the Vice-Chairman will therefore be present at the general meeting. Best practice provision 5.1.4 of the Dutch Corporate Governance Code: Neither the audit committee nor the remuneration committee can be chaired by the chairman of the management board or by a former executive director of the company. Our Senior Non-Executive Director and Chair of the Board of Directors, Mr. Duca, is also the Chairperson of the Audit Committee, which is not in line with best practice provision 5.1.4 of the Dutch Corporate Gov- ernance Code. The Company believes that Mr. Duca, in light of his extensive experience with audits and his knowledge in this respect, brings a valuable con- tribution to the Audit Committee and therefore be- lieves it is in Ferrari’s best interest and appropriate for Mr. Duca to chair the Audit Committee. Best practice provision 5.1.4 of the Dutch Corporate Governance Code: The committees referred to in best practice 2.3.2 should be comprised exclusively of non-executive directors. Mr. Elkann, our Executive Chairman and Executive Director, has a position on the ESG Committee, to which best practice provision 5.1.4 of the Dutch Cor- porate Governance Code applies. The position of Mr. Elkann as executive Director in this committee fol- lows inter alia from the duties of the ESG Commit- tee, which are more extensive than the duties of a selection and appointment committee and include duties that warrant participation of an executive Di- rector in the view of the Company. ITALIAN CORPORATE GOVERNANCE CODE As regards the Italian framework for corporate governance, the Company is aware that a new ver- sion of the corporate governance code (the “Italian CGC”) has been issued by Borsa Italiana S.p.A., appli- cable (starting from January 2021) to all companies with shares listed on Euronext Milan. As of December 31, 2022, the Company’s cor- porate governance structure is substantially in line with all the principles and recommendations set forth in the Italian CGC, especially due to the fact that the Company has adopted, and complies with, the Dutch Corporate Governance Code, which contains principles and best practice provisions largely sim- ilar to those highlighted in the Italian CGC, exception being made for the following: (a) The independent Chair of the Board of Directors cannot chair the control and risk committee (Ar- ticle 2, Recommendation no. 7 of the Italian CGC). Our Senior Non-Executive Director and Chair of the Board of Directors, Mr. Duca, is also the Chairperson of the Audit Committee, which is not in line with best practice provision under Article 2, Recommendation no. 7 of the Italian CGC. The Company believes that Mr. Duca, in light of his extensive experience with audits and his knowledge in this respect, brings a valuable contribution to the Audit Committee and therefore believes it is in Ferrari’s best interest and appropri- ate for Mr. Duca to chair the Audit Committee. (b) In large companies, the Board of Directors ex- presses its guidelines on the maximum number of offices that can be considered compatible with an effective performance and the time commit- ment required by the role of the directors. The rel- evant offices are those held in corporate bodies of other listed companies or of companies having a significant size (Article 3, Recommendation no. 15 of the Italian CGC) Applicable Dutch corporate law already expressly regulates the maximum number of offices that may be held by directors. Pursuant to Dutch law, persons may not be appointed as non-executive Directors if such persons are non-executive director, member of the supervisory board or other similar bodies for five or more (Dutch) companies of a certain size and such persons cannot be appointed as executive Di- rectors if such persons are non-executive director at more than two other (Dutch) companies of a cer- tain size or if such person is the chairperson of the board of supervisors or the one tier board of anoth- er (Dutch) company of a certain size. Ferrari is com- pliant with the abovementioned Dutch limits. (c) In large companies, the Board of Directors elab- orates, with the support of the nomination com- mittee, a plan for the succession of the Chief Executive Officer and executive directors by iden- tifying, at least, the procedures to be followed in the event of an early termination of office (Article 4, Recommendation no. 24 of the Italian CGC) The Company’s Board of Directors believes that the members of the Board of Directors itself – chosen and appointed on the basis of their respective ex- pertise, level of professionalism and knowledge of the Company’s business – would be capable to carry out (in the absence, due to early termination of the office, of the Chief Executive Officer and/or any oth- er executive officer) the ordinary business of the Company until the appointment, by the competent corporate body, of the new Chief Executive Officer and/or other executive officer(s). Further, the Company’s Board of Directors believes that the decision whether to adopt a succession plan shall be further analysed bearing in mind the sensi- tivity of the topic. Furthermore, the Company believes that the overall system of delegated powers adopted by the Company is sufficient to mitigate the risk of a vacan- cy for an executive Director or a senior manager and 163 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTensure the continuity of the Company’s business. The overall system of delegated powers adopted by the Company already includes a succession plan for the top management which in the Company is repre- sented by the Ferrari Leadership Team. The Compa- ny believes that the above measures help the Com- pany achieving the objective underlying the Code’s principles and in any case contributes to good cor- porate governance. Finally, it should be noted that the Company’s Board of Directors has already de- fined a procedure to be applied for the appointment of, at least, the Chief Executive Officer, which pro- vides for, inter alia, the involvement of, inter alia, a specific committee (i.e., the CEO Search Committee), who will assist the ESG Committee with selecting a new candidate for this office. EXCHANGE CONTROLS Under Dutch law, there are no exchange control restrictions on investments in, or payments on, the Ferrari common shares. There are no special re- strictions in the Ferrari Articles of Association or Dutch law that limit the right of shareholders who are not citizens or residents of the Netherlands to hold or vote the Ferrari common shares. REPORT OF THE NON-EXECUTIVE DIRECTORS INTRODUCTION This is the report of the non-executive Directors of the Company over the financial year 2023, as re- ferred to in best practice provision 5.1.5 of the Dutch Corporate Governance Code, and it provides fur- ther information on the performance of the non-ex- ecutive Directors’ duties throughout 2023. It is the responsibility of the non-executive Di- rectors to supervise the policies carried out by the executive Directors and the general affairs of the Company and its affiliated enterprise, including the implementation of the strategy of the Company re- garding sustainable long-term value creation. Inter alia, non-executive Directors should focus on the effectiveness of the Company’s internal risk man- agement and control systems and the integrity and quality of the financial reporting and the sustainabili- ty reporting. It is also the responsibility of the non-ex- ecutive Directors to determine the remuneration of the executive Directors and to nominate candi- dates for the Director appointments. In so doing, the non-executive Directors act solely in the interest of the Company. With a view of maintaining supervision on the Company, the non-executive Directors regu- larly discuss Ferrari’s long-term business plans, the implementation of such plans and the risks associat- ed with such plans with the executive Directors. According to the Articles of Association, the Board of Directors is a single board and consists of three or more members, comprising both members having responsibility for the day-to-day manage- ment of Ferrari (executive Directors) and members not having such day-to-day responsibility (non-ex- ecutive Directors). The tasks of the executive and non-executive Directors in a one-tier board such as the Company’s Board of Directors may be allocated under or pursuant to the Articles of Association, pro- vided that the general meeting of shareholders has stipulated whether such Director is appointed as executive or as non-executive Director and further- more provided that the task to supervise the perfor- mance by the Directors of their duties can only be performed by the non-executive Directors. Regard- less of an allocation of tasks, all Directors remain collectively responsible for the proper management and strategy of the Company (including supervision thereof in case of non-executive Directors). Details of the current composition of the Board of Directors, including the non-executive Direc- tors, and its committees are set forth in the section “Board of Directors”. SUPERVISION BY THE NON-EXECUTIVE DIRECTORS The non-executive Directors supervise the policies carried out by the executive Directors and the gen- eral affairs of the Company and its affiliated enter- prise. In so doing, the non-executive Directors have also focused on the effectiveness of the Company’s internal risk management and control systems, the integrity and quality of the financial reporting and Ferrari’s long-term business plans, the implementa- tion of such plans and the risks associated. The non-executive Directors also determine the remuneration of the executive Directors and nom- inate candidates for the Director appointments. Furthermore, the Board of Directors may allocate certain specific responsibilities to one or more indi- vidual Directors or to a committee comprised of el- igible Directors of the Company and subsidiaries of the Company. In this respect, the Board of Directors has allocated certain specific responsibilities to the Audit Committee, the Compensation Committee and the ESG Committee. Further details on the manner in which these committees have carried out their duties, are set forth in the sections “The Audit Com- mittee”, “The Compensation Committee” and “The ESG Committee”. The non-executive Directors supervised the adoption and implementation of the strategies and policies by the Group, reviewed this annual report, including the Compensation Report and the Group’s financial results, received updates on legal and compliance matters and they have been regularly involved in the review and approval of transactions entered into with related parties. The non-executive Directors have also reviewed the reports of the Board of Directors and its commit- tees and the recommendations for the appoint- ment of Directors. 164 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FMEETINGS AND ATTENDANCE During 2023, there were four meetings of the Board of Directors. The average attendance at those meet- ings was 97.73 percent. Members of the FLT were invited to give presentations to the Board of Direc- tors. Portions of these meetings took place with the participation of the non-executive Directors only, without the executive Directors or any other attend- ees being present, in order for the non-executive Di- rectors to independently review and discuss certain matters. In addition, the Senior Non-Executive Direc- tor and the Chief Executive Officer held regular one- to-one meetings to discuss progress and key topics. Members of the Board of Directors had contact with various levels of management to ensure that they remained well-informed about the Company’s op- erations. All non-executive Directors set aside ade- quate time to give sufficient attention to the Compa- ny’s matters. An overview of the attendance of the individual Directors per meeting of the Board of Directors and its committees set out against the total number of such meetings is set out below: Name Meeting Board of Directors Audit Committee ESG Committee Compensation Committee John Elkann Benedetto Vigna Piero Ferrari Sergio Duca Delphine Arnault Francesca Bellettini Eddy Cue John Galantic Maria Patrizia Grieco Adam Keswick Mike Volpi 4/4 4/4 4/4 4/4 4/4 4/4 4/4 4/4 4/4 3/4 3/3(1) (1) Mr. Mike Volpi was appointed as non-executive director by the AGM of Ferrari N.V. as of April 14, 2023. 1/1 0/1 1/1 1/1 1/1 1/1 7/7 4/7 7/7 BOARD FOCUS During these meetings, key topics discussed were, amongst others: the Group’s strategy, the Group’s financial results and reporting, sustainability, acqui- sitions and divestments, executive compensation, technological developments, risk management, up- dates on legal and compliance, risk management, human resources with the Head of Human Resourc- es, implementation of the Remuneration Policy and the compensation report. The non-executive Direc- tors were actively involved in the process of review- ing strategic and growth projects for the Company. INDEPENDENCE OF THE NON-EXECUTIVE DIRECTORS The non-executive Directors are required by Dutch law to act solely in the interest of the Company. The Dutch Corporate Governance Code stipulates the corporate governance rules relating to the inde- pendence of non-executive Directors and requires under most circumstances that a majority of the non-executive Directors be “independent”. Currently, nine out of nine non-executive Directors are considered to be independent under the NYSE definition while eight non-executive Directors are considered to be independent under the Dutch Cor- porate Governance Code given the right of usufruct Mr. Pierro Ferrari holds over shares (including the right to exercise the voting rights of such shares) held by Trust Piero Ferrari (as described in this An- nual Report). Mr. Sergio Duca, the Senior Non-Exec- utive Director of the Board of Directors, is indepen- dent under the Dutch Corporate Governance Code in accordance with best practice provision 2.1.9 of the Dutch Corporate Governance Code. Ferrari is of the opinion that the independency requirements as referred to in best practice pro- vision 2.1.10 of the Dutch Corporate Governance Code are met by the Company. EVALUATION BY THE NON-EXECUTIVE DIRECTORS The non-executive Directors are responsible for su- pervising the Board of Directors and its committees, as well as the individual executive and non-executive 165 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTDirectors, and are assisted by the ESG Committee in this respect. Each year, the Board of Directors formally assesses its performance, including with respect to its composition, diversity and how effec- tively its members work together, with the aim of helping to improve the effectiveness of the function- ing of the Board of Directors and its committees. In accordance with the ESG Committee Charter, the ESG Committee assists and advises the Board of Directors with respect to periodic assessment of the performance of individual Directors. In this respect, the ESG Committee has, amongst others, the duties and responsibilities to review annually the Board of Directors’ performance and the per- formance of its committees and to review each Di- rector’s continuation on the Board of Directors at appropriate regular intervals as determined by the ESG Committee. In 2023, the ESG Committee’s periodic assess- ments took place during the meeting held on Feb- ruary 22. During that meeting, the ESG Committee focused on the results of the periodic assessments and the performance of the Board of Directors, its committees and the individual Directors, keeping also into account the self-assessment prepared by each Director. During such meeting and on the basis of such evaluations, the ESG Committee dealt also with the directors’ nomination process, the assess- ment of Directors’ qualifications, the size and com- position of the Board of Directors and its commit- tees, as well as the recommendations for Directors’ election, in which the outcome of the evaluations has been reflected. The non-executive Directors have been regular- ly informed by each committee as referred to in best practice provision 2.3.5 of the Dutch Corporate Gov- ernance Code and the conclusions of those commit- tee were taken into account when drafting this re- port of the non-executive Directors. The non-executive Directors were able to re- view and evaluate the performance of the Audit Committee, the ESG Committee and the Compen- sation Committee based on the assessments made by the ESG Committee. The self-assessment of the Committees were also discussed by the Board of Directors. The outcome of the evaluations is that there is no need to amend the size or composition of the Audit Committee, the ESG Committee and the Compensation Committee, nor is there any reason to amend their charters on this basis. Further de- tails on the manner in which these committees have carried out their duties, are set forth in sections “The Audit Committee”, “The Compensation Com- mittee” and “The ESG Committee”. On the basis of the preparations by the ESG Committee, the non-executive Directors were able to review the Board of Director’s assessments, the individual Directors’ assessments and the recom- mendation for Directors’ election. The Board of Di- rectors concluded that each of the Directors con- tinues to demonstrate commitment to its respective role in the Company. Also, pursuant to the Compensation Committee Charter, the Compensation Committee implements and oversees the remuneration policy as it applies to non-executive Directors, executive Directors and se- nior officers reporting directly to the executive Direc- tors. The Compensation Committee administers all the equity incentive plans and the deferred compen- sation benefits plans. On the basis of the assessments performed, the non-executive Directors determine the remuneration of the executive Directors and nominate candidates for the Director appointments. The non-executive Directors have supervised the performance of the Audit Committee, the Com- pensation Committee and the ESG Committee. RESPONSIBILITIES IN RESPECT TO THE ANNUAL REPORT The Board of Directors is responsible for preparing the Annual Report, inclusive of the Consolidated and Company Financial Statements and Board Report, in accordance with Dutch law and International Finan- cial Reporting Standards as issued by the Interna- tional Accounting Standards Board and as adopted by the European Union (IFRS). In accordance with Section 5:25c, paragraph 2 of the Dutch Financial Supervision Act, the Board of Di- rectors states that, to the best of its knowledge, the Consolidated and Company Financial Statements prepared in accordance with IFRS as adopted by the European Union provide a true and fair view of the assets, liabilities, financial position and profit or loss for the year of the Company and its subsidiaries and that the Board Report provides a true and a fair view of the performance of the business during the finan- cial year and the position at the balance sheet date of the Company and its subsidiaries, together with a description of the principal risks and uncertainties that the Company and the Group face. February 22, 2024 [Board of Directors] John Elkann Benedetto Vigna Piero Ferrari Sergio Duca Delphine Arnault Francesca Bellettini Eddy Cue John Galantic Maria Patrizia Grieco Adam Keswick Mike Volpi 166 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F167 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT168 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F169 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT171 NON FINANCIAL STATEMENTNON FINANCIAL STATEMENT INDEX 174 Ferrari Group 184 Proactively Fostering Best 216 Reducing Our Environmental Practice Governance Footprint 176 Double Materiality Analysis and Stakeholder Engagement 194 Exceeding Expectations 246 Creating and Sharing Value 198 Being the Employer of Choice with the Community 173 FERRARI GROUP OUR DNA At Ferrari, we redefine the limits of what is possible across everything we do. We are a team with a relentless will to progress, and an audacious desire to challenge the status quo through tradition and innovation. Working at Ferrari means being part of a uniquely passionate and fu- ture-focused company in which people are our most valuable asset. To- gether, we compete on circuits and in markets all over the world. OUR VALUES INDIVIDUAL AND TEAM Our talented individuals are our greatest resource. However, they can only pursue the extraordinary by working together as a team. By fostering integrity, excellence and generosity, we give each of our people the possi- bility to express their own full potential - and be part of something greater. TRADITION AND INNOVATION Tradition and innovation drive each other. The ongoing quest for lasting firsts is what fuels the Ferrari legend. Our ability to combine revolutionary technological solutions with exceptional artisanal craftsmanship is what enables us to create icons that stay timeless in a fast-changing world. PASSION AND ACHIEVEMENT Ferrari’s racing spirit lives on in emotions that transcend the road and the track, ultimately becoming an authentic attitude towards life. Nothing excites us more than setting ambitious targets and expectations – and then exceeding them, to push every boundary. It is how the power of pas- sion becomes the beauty of achievement. 174 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FOUR STRATEGY Our strategy focuses on maintaining our leading position in the luxury performance sports car market, while enhancing and protecting the val- ue and exclusivity of the Ferrari brand. We focus on cost-efficiencies and aim to achieve profitable growth by pursuing the following strategies: • Low volumes and controlled growth • Regular new model introductions and enhancements • Pursue excellence in racing • Controlled growth in adjacent luxury and lifestyle categories OUR JOURNEY TO SUSTAINABILITY Sustainability is a pervasive attitude in the way we operate across our company pillars: sports cars, racing and lifestyle. It never ceases to in- spire our decisions, and to push every one of us towards audacious solu- tions that can determine the impact we have both on our local and global community. To successfully act as a catalyst for change, sustainability is intended here at Ferrari in the form of a ripple, that enlarges its impact in wider circles of influence. 1 First and foremost, we take much care of the impact we have within our own home and family: our company. 2 We then widen our gaze to embrace our local community, that still represents the nurturing foundation of all our ventures. 3 But above all, we aspire to drive an impact on our global community, awakening both awareness and actions towards a sustainable future. Environmental issues are just a part – even if a very crucial one – to our approach to sustainability, which is inherently holistic. The building blocks of our ESG approach are in fact three: 1 Education 2 People 3 Environment Within the perimeter of these areas, we let our behavior be guided by a science based approach, constantly developing and deploying tangible actions to have a measurable and positive impact in the changing world we all share. Open Innovation is a powerful accelerating tool to fuel our evolution with groundbreaking technology: we believe that cross contamination between excellent and diversified innovative companies is the best way to stay true to our founder Enzo Ferrari’s continuous will to progress. 175 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FDOUBLE MATERIALITY ANALYSIS AND STAKEHOLDER ENGAGEMENT DOUBLE MATERIALITY ANALYSIS OF FERRARI GROUP The materiality is the process of identifying the top- ics that are relevant for the Group and are based on an assessment of impacts, risks and opportunities. In 2023, we updated the analysis of the most rel- evant sustainability topics (materiality analysis) for the Group and our stakeholders, to better reflect sustainability context developments, changes in our drivers and goals, as well as our 2022-2026 Strategic Plan and our sustainability strategy. For this Fiscal Year 2023, we decided to conduct a double materiality analysis taking into consider- ation the guidelines(3) of the European Sustainability Reporting Standards (ESRS). The Double Materiality analysis has been implemented on the basis of the GRI Standards and inspired by the ESRS require- ments. The Double Materiality assessment entails the evaluation of the impacts following an inside-out perspective, considering the positive or negative, actual or potential impacts of Ferrari on the differ- ent stakeholders and the environment, and the eval- uation of risks and opportunities following an out- side-in perspective, considering all the risks and the opportunities arising for Ferrari from the external context. For both the inside-out and the outside-in perspective, we consider the impacts and the risks from an inherent point of view. For the inside-out perspective, Ferrari data own- ers have been involved, through one-to-one inter- views, to identify and evaluate our most relevant impacts(4) on the economy, environment, and peo- ple, including impacts on human rights, across our activities and business relationships. For the com- plete list and description of the impacts considered, please refer to the table present in the “Methodology and Scope” section. The analysis includes the evaluation of the ma- terial topics identified by a selected panel of Ferrari stakeholders. This Stakeholder engagement activity is better described in “—Stakeholder Engagement”. For the outside-in perspective we have cooper- ated with the Enterprise Risk Management team to identify the sustainability risks that could potentially arise. The activities to identify, assess and quantify potential risks (Risk Assessment & Measurement) are part of Ferrari’s Enterprise Risk Management process. Regarding further aspects see “Risk Man- agement Process and Internal Control System”. The results of the analyses  carried out during the year were organized into material topics, repre- sented in the matrix below. The double materiality matrix highlights our strategic sustainability priorities by showing our most relevant impacts, including the impact areas most relevant to our stakeholders, on the economy, environment and people as well as the risks and op- portunities arising from the external context. Compared to the matrix published in 2022, the 176 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F DOUBLE MATERIALITY MATRIX OF FERRARI GROUP VERY RELEVANT Natural resources management and biodiversity Ethics and human rights Talent attraction, retention and development Supply chain responsible management Health, safety and well-being Product technology, design quality and safety Data responsibility, privacy and cybersecurity Diversity and inclusion Climate change Raw materials and circular economy Responsibility towards the community and future generations I I T N E M S S E S S A Y T L A R E T A M L A C N A N F R O F E C N A V E L E R I I RELEVANT RELEVANCE OF IMPACTS MATERIALITY ASSESSMENT on the economy, environment and people VERY RELEVANT Categories Proactively fostering best practice governance Exceeding expectations Being the employer of choice Reducing environmental footprint Creating and sharing value with the community topics “Clients and enthusiasts’ satisfaction”, “Re- lationship with stakeholders”, “Image and brand reputation” and “Economic value creation and dis- tribution” are no longer reported. This is due to the rationalization of the material topics according to the new methodology applied. From an Impact Ma- teriality point of view the most relevant topics for us in 2023 are “Product, technology, quality, design and safety”, “Raw materials and circular economy” and “Health, safety and well-being”. The first and third maintained similar position compared to the previ- ous year while the most significant shifts (“Raw Ma- terials and circular economy” increasing and “Eth- ics and Human Rights” decreasing) are mainly due to the change in the impact evaluation methodology applied. From a Financial Materiality point of view, the most important risks are related to the “Natural resources management and biodiversity”, “Supply chain responsible management” and “Health, safety and well-being” topics. 177 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F This matrix is directly linked with our sustainability strategy, based on the following five pillars: RELEVANT UNITED NATIONS SDGs EXCEEDING EXPECTATIONS Drive technological innovation while pursuing excel- lence in design and craftsmanship to fuel the passion of our clients and enthusiasts. MATERIAL TOPIC • Product technology, design quality and safety REDUCING OUR ENVIRONMENTAL FOOTPRINT Increase our environmental awareness to continuou- sly set and implement related programs and actions. RELEVANT UNITED NATIONS SDGs MATERIAL TOPIC • • • Climate change Raw materials and circular economy Natural resources management and biodiversity RELEVANT UNITED NATIONS SDGs BEING THE EMPLOYER OF CHOICE Provide an inclusive, educational, and inspiring work environment to unleash everyone’s passion, creati- vity and talent. MATERIAL TOPIC CREATING AND SHARING VALUE WITH THE COMMUNITY • • • Talent attraction, retention and development Health, safety and well-being Diversity and inclusion Encourage strategic partnerships and the creation of positive externalities for all stakeholders. RELEVANT UNITED NATIONS SDGs MATERIAL TOPIC • Responsibility towards the community and future generations RELEVANT UNITED NATIONS SDGs PROACTIVELY FOSTERING BEST PRACTICE GOVERNANCE Maintain Ferrari’s corporate governance and risk management systems aligned with best practices to ensure an ethical business conduct while providing superior and sustainable returns to our shareholders. MATERIAL TOPIC • • • Ethics and human rights Supply chain responsible management Data responsibility, privacy and cybersecurity 178 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FThis matrix is directly linked with our sustainability RELEVANT UNITED NATIONS SDGs strategy, based on the following five pillars: EXCEEDING EXPECTATIONS Drive technological innovation while pursuing excel- lence in design and craftsmanship to fuel the passion of our clients and enthusiasts. MATERIAL TOPIC RELEVANT UNITED NATIONS SDGs MATERIAL TOPIC REDUCING OUR ENVIRONMENTAL FOOTPRINT • • • Climate change Raw materials and circular economy Natural resources management and biodiversity RELEVANT UNITED NATIONS SDGs BEING THE EMPLOYER OF CHOICE Provide an inclusive, educational, and inspiring work environment to unleash everyone’s passion, creati- vity and talent. MATERIAL TOPIC CREATING AND SHARING VALUE WITH THE COMMUNITY Talent attraction, retention and development Health, safety and well-being Diversity and inclusion Encourage strategic partnerships and the creation of positive externalities for all stakeholders. RELEVANT UNITED NATIONS SDGs MATERIAL TOPIC RELEVANT UNITED NATIONS SDGs PROACTIVELY FOSTERING BEST PRACTICE GOVERNANCE Maintain Ferrari’s corporate governance and risk management systems aligned with best practices to ensure an ethical business conduct while providing superior and sustainable returns to our shareholders. MATERIAL TOPIC Ethics and human rights Supply chain responsible management Data responsibility, privacy and cybersecurity • • • • • • • Product technology, design quality and safety sly set and implement related programs and actions. the safety of our customers and other road- • Competition; Increase our environmental awareness to continuou- safety Designing and manufacturing while keeping Tax) and Codes; The above-mentioned material topics have been linked to the Sustainable Development Goals (SDGs) that are impacted by our business. Each material topic is analyzed in the subsequent chapters and in- cludes a qualitative description of the management approach and, where available, selected perfor- mance indicators. The table below shows the pur- sued policies, the related key risks and risk trends, and the relevant chapters within this Report related to the material topics identified. Material topics Pursued policies Key risks and risk trends Most relevant chapters of this annual report Product technology, Developing new technologies and • Non-compliance with Laws, Exceeding design quality and distinctive designs Regulations, Local Standards (Including Expectations users always in mind • Technology, Product and Regulation; • Human Capital Management and Internal Organization; • Climate Change; Climate change Researching technologies that further • Non-compliance with Laws, Reducing Our reduce emissions to prepare for a low- Regulations, Local Standards (Including Environmental emission future Tax) and Codes; Footprint • Technology, Product and Regulation; • Climate Change; • Production disruption and transformation costs; • Supply Chain resilience; Natural resources Managing resources responsibly and • Non-compliance with Laws, Reducing Our management and protecting biodiversity Regulations, Local Standards (Including Environmental biodiversity Tax) and Codes Footprint Raw materials and Promoting circular economy strategies and circular economy initiatives • Technology, Product and Regulation; • Climate Change; • Social and Geopolitical Instability; • Production disruption and Reducing Our Environmental Footprint transformation costs; • Supply Chain resilience; Talent attraction, Creating an inspiring working environment, • Human Capital Management and Being the Employer retention and development enabling the development of everyone’s Internal Organization; of Choice talent • Delays in Lifestyle Strategy Execution; • Scuderia Ferrari Success; Health, safety and Enforcing a safety-first culture • Non-compliance with Laws, Being the Employer Responsibility towards the community and future well- being • generations Regulations, Local Standards (Including of Choice Tax) and Codes; Diversity and Spreading an inclusive culture within • With respect to this topic, no key risks Being the Employer inclusion Ferrari and ensuring equal opportunities at have been identified of Choice all levels of our organization Responsibility Managing our operations responsibly • With respect to this topic, no key risks Creating and towards the towards our community and future have been identified community and generations; future generations Promoting the education of young talents Sharing Value with the Community Ethics and human Fostering a culture dedicated to integrity, • Non-compliance with Laws, Proactively Fostering rights responsibility and ethical behavior Regulations, Local Standards (Including Best Practice Tax) and Codes; • Supply Chain resilience; Governance Supply chain responsible management Implementing a responsible and efficient • Cybersecurity Including Third Parties Overview of supply chain management; Vulnerabilities; Encouraging the adoption of sustainable • Climate Change; Our Business/ Procurement practices and sharing among our business partners and suppliers • Supply Chain resilience; • Social and Geopolitical Instability; Data responsibility, Enforcing a data-secure environment for • Non-compliance with Laws, Proactively Fostering privacy and cybersecurity our stakeholders Regulations, Local Standards (Including Best Practice Tax) and Codes; Governance • Cybersecurity Including Third Parties Vulnerabilities; Further disclosure on key risks is presented within “Risk Management Process and Internal Control Systems”. 179 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FSTAKEHOLDER ENGAGEMENT As an international firm with ambitious corporate objectives and a complex value chain, we need to develop forms of communication and collaboration with both our internal and external stakeholders that allow us to understand their needs, interests, and ex- pectations. Our approach to engaging stakeholders aims for honest, clear, and effective communication and consultation, based on constant dialog. Fully understanding the needs and perspectives of our stakeholders is a fundamental part of the value generation process we continuously strive to pro- mote both inside and outside our organization This Statement is addressed to all stakehold- ers involved in our activities, as shown in the fol- lowing image: STAKEHOLDER D e a l e r s Tifosi n it y r e s m u o l d m cial C o h ar e h d S n a Fin n a s r e i l p p u S M I n fl e d u i e a n a c n e d r s C a o n d m m U u niv e r nity sity F e r r a r i s t i L i c e B n s u s i i n g n e s s a n d P a r t n e r s s d t, n n n tio s a e m u r tit n ulato r s e orts In v o g e R G p S d s n n s a n i o y e e e U E m p l o T r a d Sponsors With regard to stakeholder involvement, we support our brand value by promoting a strong connection with the Ferrari community: our tifosi and Ferraristi(5). We focus on strengthening this connection by rewarding our most loyal clients through a range of initiatives. The high attention and care towards our products are the foundation upon which our success is built, and this is achieved thanks to the efforts of our employees. We rely on a significant number of suppli- ers who play an important part in the success of the Group. For the sourcing of certain key components with high technological specifications, we have de- veloped strong synergistic relationships with some of our suppliers, which are considered “key strategic innovation partners”. We continue to invest heavily to minimize our environmental impact. Our vehicles must comply with extensive regional, national, and lo- cal laws and regulations, as well as industry self-reg- ulations (including those that regulate vehicle safety). We are a dual-listed Company, therefore, the fi- nancial discipline, enhanced through the relation- ship with the financial community and shareholders, further supports the Company in pursuing its busi- ness targets. Furthermore, we collaborate with uni- versities and high schools to provide scholarships to talented students. We believe that building and honing effective communication and collaboration with our internal 180 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F STAKEHOLDER D e a l e r s Tifosi n it y s r e m u o l d m cial C o h ar e h n a d S Fin n a s r e i l p p u S M I n e fl d u i e a n a c n e d r s F e r r a r i s t i L i c e B n u s s i i n n g e s s a n d P a r t n e r s s n d n t, n e s a r m tio u tit s v o G ulato orts In n r e R g e p S C a o n d m m U u niv e r nity sity Sponsors d s n n s a n i o e e y e U E m p l o a T r d and external stakeholders is a key element of sus- tainable and lasting growth, with a view to conciliate interests and expectations. With this in mind, over the years we set an on- going process of stakeholder engagement carrying out initiatives with different levels of interaction and methods of involvement. Our Stakeholder Engagement Practice, inspired by the values and principles of the Code of Conduct, seeks to give all directors, managers and employees of the Ferrari Group, and anyone else working for it or on its behalf, guidelines on the right methods and forms of interaction with different stakeholders. In line with the Stakeholder Engagement Practice, in 2023 we carried out various specific activities to enhance the voice of our stakeholders on sustain- ability topics. We engaged with our employees, both “Scuola dei Mestieri” and “Scuola delle Professioni” participants,  and MUNER students through face-to- face workshops that had a dual purpose: to further communicate the importance of sustainability and explain what it stands for within Ferrari, and to col- lect their priorities and suggestions. Finally, we regularly engage with our investors to better understand what they consider to be the main ESG drivers for Ferrari, as well as participate every year in a variety of ESG questionnaires such as the S&P Global Corporate Sustainability Assessment (CSA), ranking in the top quartile of our industry in the last assessment, the CDP Climate Change and CDP Water questionnaires, obtaining a “A-” and “B” rating respectively in 2023. All these activities allowed us to further strengthen our materiality analysis. These engagement activities are an important part of the sustainability approach that helps us iden- tify potential updates in our sustainability impact ar- eas, risks and opportunities, as well as support man- agement in achieving the Company’s objectives. We firmly believe that keeping a profitable dialog and collaboration with our stakeholders is essential and intends to continue the path of engagement un- dertaken, with a view to continuous improvement. 181 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F STAKEHOLDER DIALOGUE Stakeholders Areas of interest Communication methods TIFOSI • Racing • Sports car • “Ferrari classiche” • Brand Value • Innovation • Lifestyle › Motorsport events › Sports cars unveilings › Advertising › Earned media, website, social media FERRARISTI • Image and brand reputation › Client relations: client and driving events • Clients and enthusiasts’ satisfaction › Client satisfaction survey • Product technology, design quality and safety › Media, website, social media • Privacy and security • “Ferrari classiche” BUSINESS AND • Image and brand reputation LICENSING PARTNERS • Continuity of the service • Contract terms and conditions • Financial soundness › Meetings › Website GOVERNMENT, • Compliance with the law › Dialogs concerning new regulations and available REGULATORS AND SPORTS INSTITUTIONS • Sport fair play technologies › Scuderia Ferrari › Financial statements › Website EMPLOYEES AND • Motivation and development › Induction for new employees and training programs TRADE UNIONS • Work-life balance • Welfare • Health, safety and well-being • Equal opportunities • Industrial relations • Ethical business conduct SPONSORS • Racing • Image and brand reputation COMMUNITY AND UNIVERSITIES • Support local initiatives • Employment support MEDIA AND INFLUENCERS • Transparency • Racing Image and brand reputation • • Product technology, design quality and safety SUPPLIERS • Continuity of the service • Supplier risk assessment • Contract terms and conditions FINANCIAL COMMUNITY AND • Market transparency • Financial soundness SHAREHOLDERS • Economic performance • Corporate governance DEALERS Image and brand reputation • • Transparency • Motivation and development › Internal initiatives › Meetings with Top Management › Collective bargaining agreements › Participation in management-worker health and safety committees › Website, social media › Scuderia Ferrari › Website, social media › Partnerships with universities › Meeting and local events › Website, social media › Sustainability workshops › Scuderia Ferrari › Press releases › Website, social media › Communication with journalists › New model/technology launch events › Website › Meeting › Contractual documents › Financial earnings › Investor conference › Roadshow › Website › Communication with Management › Convention › Training course › Website 182 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F183 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FPROACTIVELY FOSTERING BEST PRACTICE GOVERNANCE OUR GOVERNANCE Ferrari N.V. is a public limited liability Company, incor- porated under the laws of the Netherlands and en- dorses the principles and best practice provisions of the Dutch corporate governance code issued by the Dutch Corporate Governance Code Monitoring Committee, and discloses, and intends to disclose, in this Report and in its future annual reports any material deviation from the best practice provisions contained in the Dutch corporate governance code. Regarding further aspects of our governance see “Corporate Governance”. OUR DECISION-MAKING PROCESS The Ferrari Leadership Team (FLT) is responsible for reviewing the operating performance of the busi- ness, collaborating on certain operational matters, supporting the Chief Executive Officer with his tasks and executing the decisions of the Board of Direc- tors and the day-to-day management of the Com- pany, primarily as it relates to operational manage- ment. The FLT is led by the Chief Executive Officer and is composed of the heads of the operating and central functions. At the strategic level we have defined cross-func- tional committees, responsible for cross-functional projects to sustain excellence in every area, among which the ESG Strategic Committee. The ESG Stra- tegic Committee, composed of all the members of the FLT, is in charge of defining the ESG strategy of the Ferrari Group and of monitoring the achieve- ment of the targets. At the operational level, we have established two committees focused on certain environmental and social issues, responsible for translating strategies into concrete decisions and action plans. The Diversi- ty and Inclusion Committee, headed by the Chief Hu- man Resources Officer, focuses on gender diversity, disability inclusion, generational diversity and educa- tional opportunities. Whereas, the Green Sustainabil- ity Steering Committee, headed by the Head of Green Committee and Carbon Neutrality, has the priority to reach carbon neutrality by 2030, addressing direct and indirect GHG emissions, focusing on energy and materials, in addition to our electrification journey. Our Chief Financial Officer, a member of the FLT and Head of the ESG Strategic Committee, is re- sponsible for the sustainability function, which over- sees the coordination of the sustainability activities within the Group, promoting dialog between differ- 184 Board of Directors (Executive Level) • ESG Committee • Audit Committee • Compensation Committee Chief Executive Officer Chief Financial Officer (responsible for sustainability) Ferrari Leadership Team (Strategic Level) Working Groups (Operational Level) ESG Strategic Committee • Members of Company management • Meet every quarter • Reviews and validates sustainability strategy, committments and targets Green Sustainability Steering Committee • Cross functional representatives • Meet weekly • Coordinate development and deployment of specific cross-functional programs on carbon footprint topics Diversity & Inclusion Committee • Cross functional representatives • Meet periodically • Coordinate development and deployment of specific cross-functional programs on diversity and inclusion topics NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F ent teams and functions, and identifying risks and opportunities. The Chief Financial Officer reports periodically back to the Board of Directors on the management of the organization’s impacts on the economy, environment, and people. Integrating sustainability into our Company relies on a formal structure with clear accountabilities at dif- ferent levels of the organization. Board of Directors (Executive Level) • ESG Committee • Audit Committee • Compensation Committee Chief Executive Officer Chief Financial Officer (responsible for sustainability) Ferrari Leadership Team (Strategic Level) Working Groups (Operational Level) ESG Strategic Committee • Members of Company management • Meet every quarter • Reviews and validates sustainability strategy, committments and targets Green Sustainability Steering Committee • Cross functional representatives • Meet weekly • Coordinate development and deployment of specific cross-functional programs on carbon footprint topics Diversity & Inclusion Committee • Cross functional representatives • Meet periodically • Coordinate development and deployment of specific cross-functional programs on diversity and inclusion topics INTEGRITY OF BUSINESS CONDUCT At Ferrari, we seek to develop a cooperative envi- ronment in which the dignity of each individual is respected and that embodies the highest ethical standards in business conduct. We are committed to maintaining a fair, secure, productive and inclu- sive workplace for all members of our workforce, in which everyone is valued for its unique contribution. The basis of Ferrari’s governance model is the Code of Conduct that embodies a set of values rec- ognized, adhered to and promoted by the Company. Ferrari believes that a conduct based on the princi- ples of diligence, integrity and fairness is a key driv- er for the social and economic development. Ferrari endorses the United Nations (“UN”) Declaration on Human Rights, the International Labor Organiza- tion (“ILO”) Conventions and the Organization for Economic Co-Operation and Development (“OECD”) Guidelines for Multinational Companies. Accordingly, our Code of Conduct aims to en- sure that all members of the Ferrari Group work- force act with the highest level of integrity and com- ply with applicable laws, thus contributing to build a better future for our Company and the communities in which we do business. 185 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FIn 2023, in light of the update of the Code of Conduct, a series of training activities have been carried out involving our employees. Moreover, in 2023, Ferra- ri implemented a training and verification project in different departments to raise awareness on the topic of information confidentiality. Furthermore, specific Business Ethics and Com- pliance (“BEC”) surveys are conducted by the Inter- nal Audit and Compliance departments in order to assess the Ferrari Group worldwide workforce’s awareness of the Code of Conduct and of other eth- ics related procedures. In 2023, BEC surveys were conducted on topics such as: Code of Conduct, Whistleblowing Procedure, Gifts and Entertainment Expenses’ Management, Group Regulatory Frame- work and Information Confidentiality. On the basis of the outcomes, dedicated and targeted training sessions and awareness activities were carried out. HUMAN RIGHTS Ferrari’s commitment to respect, protect and pro- mote human rights is laid down in the Human Rights Practice, which is inspired by the guiding principles set forth in the Code of Conduct and defines Ferrari’s main commitments to a corporate culture dedicated to ethics and integrity. In particular, the Human Rights Practice sets out key principles such as the prohibi- tion of child labor, compulsory labor and forced la- bor, the attention to a healthy and safe working envi- ronment for our employees, the rejection of any form of abuse, harassment and discrimination, the zero tolerance in respect of corruption and the protection of the rights of local communities. Moreover, in 2023, we adopted a dedicated Di- versity and Inclusion Practice to encourage the dif- fusion of a corporate culture based on inclusion and mutual respect in the belief that diversity represents a source of creativity, enrichment and innovation, see “Corporate Governance—Diversity Policy”. The table below provides an overview of the rel- evant information on human rights policies regard- ing four of our stakeholder groups, particularly re- lated to human rights issues. Ferrari’s Code of Conduct can be found on our cor- porate website at https://cdn.ferrari.com/cms/ network/media/pdf/codice_condotta_ferrari_eng_ def.pdf  Ferrari’s integrity system sets the foundation for the corporate governance of the Ferrari Group and includes a framework comprised of the following primary elements: • Principles, set out in the Code of Conduct, that capture Ferrari’s commitment to important val- ues in business and personal conduct; • Practices that are the basic rules that must guide our daily behaviors in order to achieve our over- arching Principles; • Procedures that further articulate Ferrari’s spe- cific operational approaches for achieving com- pliance and that may have specific applications limited to certain geographical regions and/or businesses, as appropriate. Ferrari's Practices and Procedures are drafted taking into consideration the needs of stakeholders and the precautionary principle. During 2023, we strengthened our ESG commitments by introduc- ing two Practices regarding the Environment and Diversity and Inclusion. Our public Practices are available on the Ferrari Corporate Website at the following link: https://www.ferrari.com/en-EN/cor- porate/practices Our Code of Conduct, which was updated in ear- ly 2023, also strengthening the reference to ESG as- pects, has been approved by the Board of Directors of Ferrari N.V. and is applicable to the whole Ferrari Group. It applies to all Ferrari Group board mem- bers and officers, full-time and part-time employ- ees, as well as to all temporary, contract and all other individuals and companies that act on behalf of the Ferrari Group, regardless of their location. The Code of Conduct also applies to Ferrari’s commercial partners and suppliers. Compliance with the Code of Conduct in its entirety would not be possible with- out their contribution and consequently they are re- quired to comply with principles such as integrity, transparency and responsibility. At the beginning of 2023, Ferrari N.V. adopted a Compliance Model in order to assess and govern, at a high level, corporate responsibility laws and reg- ulations that apply to the Company in all relevant ju- risdictions. The Model consists of a general part that describes the governance principles and structure of the Company, and a special part that highlights the at-risk areas together with a description of the prin- ciples and specific controls implemented to prevent the perpetration of offenses relevant for the Com- pany. As for the Code of Conduct, the principles set out in the Compliance Model are incorporated in our Practices and Procedures. The Group Compliance and Internal Audit de- partments investigate possible violations of the Code of Conduct, reported either through the Ethics Help- line, or eventually identified during standard audits. 186 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FREFERENCE TABLE ON HUMAN RIGHTS Stakeholders Material topics Key applicable policies Section Reference of Section Reference of particularly related to human rights issues main KPIs risks, opportunities and managemenet actions Employees and trade • Talent attraction, • Human Rights • Being the Employer • Proactively Fostering unions retention and development Practice • Ethics Helpline of Choice/Our Employees in Best Practice Governance/ • Health, safety • Code of Conduct Numbers Sustainability Risks and well-being • Stakeholder • Being the Employer • Being the Employer • Diversity and inclusion Engagement Practice of Choice/ of Choice Occupational Health • Ethics and human • Diversity and and Safety rights Inclusion Practice • Being the Employer of Choice/ Training and Talent Development • Being the Employer of Choice/Talent Recruitment and Employee Retention • Proactively Fostering • Best Practice Governance/ Integrity of Business Conduct/ Whistleblowing • SASB index/Labor practices Suppliers • Supply chain • Human Rights • Overview of • Proactively Fostering responsible management • Ethics and human rights Practice • Stakeholder Engagement Practice • Ethics Helpline • Third Parties’ Our Business/ Procurement/ Best Practice Governance/ Responsible Supply Sustainability Risks Chain • Overview of • Overview of Our Business/ Our Business/ Procurement/ Compliance Practice Procurement/ Responsible Supply • Anticorruption Conflict Minerals Chain Compliance Practice • Proactively Fostering • Overview of Best Practice Governance/ Integrity of Business Conduct/ Whistleblowing Our Business/ Procurement/ Conflict Minerals Community and • Responsibility • Human Rights • Creating and Sharing • Creating and Sharing university towards the Practice Value with the Value with the community and • Stakeholder Community/Ferrari Community/Ferrari future generations Engagement & Education & Education • Ethics and human Practice rights Clients • Product technology, • Human Rights • Proactively Fostering • Proactively Fostering design quality and safety • Ethics and human rights Practice • Stakeholder Engagement Practice Best Practice Governance/Data Best Practice Governance/ Protection, Privacy Sustainability Risks and Cybersecurity • Exceeding • Ethics Helpline • Exceeding Expectations/Vehicle Expectations/Vehicle Safety Safety ANTI-BRIBERY AND CORRUPTION The Ferrari Group is committed to the highest stan- dards of integrity, honesty and fairness in all internal and external affairs and does not tolerate any kind of bribery. The laws of virtually all countries in which Fer- rari operates prohibit bribery and any violation of anti-bribery and anticorruption laws would entail serious consequences for both companies and indi- viduals, which can result in significant fines, impris- onment of individuals and reputational damages. Ferrari’s policy is that no one– director, officer or other employee, consultant, agent, representative, supplier or business partner– shall, directly or indi- rectly, give, offer, request, promise, authorize, solicit 187 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-For accept bribes or any other perquisite (including gifts or gratuities, with the exception of commercial items universally accepted in an international con- text of modest economic value, permitted by appli- cable laws and in compliance with the Code of Con- duct and all applicable practices and procedures) in connection with their work for Ferrari at any time or for any reason. In this respect, Ferrari has adopted the Anticor- ruption Compliance Practice, which is considered the document of reference for anticorruption mat- ters by all worldwide Ferrari branches and subsid- iaries and is applied in each country in accordance with local legislation. The Anticorruption Compliance Practice establishes the general rules of conduct that must be followed in order to prevent corrup- tion-related crimes and ensure compliance with the anticorruption laws to which Ferrari is subject. Such rules are further enhanced in internal Procedures regulating those specific areas deemed at risk from an anticorruption perspective. Furthermore, during 2023 dedicated trainings and awareness initiatives on Anticorruption have been provided to our employees, with the aim to promote the consistency of their behaviors with the applicable anticorruption laws and regulations. DEALINGS WITH THIRD PARTIES Dealing with third parties entails inherent risks, in particular in terms of potential corporate liabilities, as well as financial and reputational damages that Ferrari may suffer as a consequence of unlawful conducts carried out by third parties with which it does business (“Third Parties”). Hence, Ferrari strongly believes that the capability to adequately evaluate Third Parties, as well as promptly address any threats and risk factors, represents an essential requirement for the protection of its assets, integri- ty and reputation in an overall and long-term vision. Ferrari is committed to only collaborating with third parties that meet certain requirements both in terms of compliance with applicable laws and regu- lations and in relation to ethics, integrity and trans- parency. In this respect, Ferrari has adopted the Third Parties Compliance Practice, that establishes the general rules of conduct that must be followed at Group level when dealing with any Third Parties, including active and passive counterparties as well as any further Third Parties with which Ferrari may establish contractual relationships. In particular, the Third Parties Compliance Prac- tice underlines the importance of carrying out a “compliance evaluation” before establishing any business relationship with a Third Party in order to examine its ethical reliability and reputation, its in- volvement in a legitimate and lawful business, and its commitment to share Ferrari’s values of integrity and fairness. By adhering to the principles outlined in the Third Parties Compliance Practice, Third Parties are therefore expected not only to comply with appli- cable laws and Ferrari’s ethical principles and stan- dards, but also to become active parties towards their own employees and their respective third par- ties in order to disseminate a culture of compliance, integrity and transparency. ANTITRUST Ferrari Group recognizes the paramount impor- tance of a competitive market and is committed to fully comply with antitrust and other pro-competition legislation in force in the countries where it operates (“Antitrust Laws”), believing that compliance with Anti- trust Laws is crucial to the Ferrari Group’s reputation. Ferrari defines and pursues its commercial ac- tivities and targets in autonomy and independence with respect to any competitors, operating on the basis of its own strategic and commercial decisions, and strictly rejects any form of anticompetitive con- duct. The Ferrari Group and its directors, officers, and other employees shall comply with these prin- ciples and refrain from any form of action, omission or business practices that might represent an anti- trust violation. To strengthen its commitment to a free and fair competition, Ferrari adopted the Antitrust Compli- ance Practice, which outlines - at group level - the rules and principles that all members of Ferrari’s workforce must follow as well as the actions and controls that they shall perform in order to prevent antitrust offences and ensure compliance with Anti- trust Laws. In 2022 Ferrari completed the adoption of an An- titrust Compliance Program in line with the Guide- lines on Antitrust Compliance developed by the Italian Competition Authority, which includes pro- cedures, internal controls, as well as training and awareness activities. Furthermore, during 2023 dedicated trainings and awareness initiatives on Antitrust have been provided to our employees, with the aim to promote the consistency of their behaviors with the applica- ble antitrust laws and regulations. ENVIRONMENTAL PRACTICE Ferrari’s commitment to minimizing its impact on the global environment is laid down in the Environmental Practice, which is inspired by the guiding principles set forth in the Code of Conduct and defines Ferra- ri’s main commitments to a corporate culture dedi- cated to the protection of the environment. Ferrari considers environmental protection to be a decisive aspect to be promoted in its overall ap- proach to business and is committed to continuous- ly improving the environmental performance of its operations and complying with the provisions con- tained in applicable laws and regulations. In particular, the Environmental Practice sets out key principles such as compliance with applicable regulatory and legal requirements, periodic and sys- tematic establishment of improvement objectives 188 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fand their monitoring and measurement through KPIs, the development of products that meet cus- tomers’ needs while ensuring respect for the envi- ronment, safety and quality, and the adoption of the best available technologies for the efficiency of pro- duction processes and the reduction of emissions and environmental impacts. For this reason, Ferrari is committed to reduc- ing greenhouse gas emissions produced through- out the product life cycle, to minimizing water use, to promoting the reuse of waste materials in the pro- duction process, to monitoring emissions into the atmosphere and sewage system, and to helping pro- tect biodiversity in the area on which its production processes impact. TAX STRATEGY Ferrari Tax Strategy is inspired by the Code of Con- duct, it was approved by the Board of Directors of the Company and it applies to the Ferrari Group. The Audit Committee of Ferrari is responsible for over- seeing that the Company’s compliance practices are in line with the Tax Strategy. TAX VALUES Inspired by the Code of Conduct, Ferrari tax man- agement is carried out in accordance with the fol- lowing tax values: TAX PAID 1 Integrity, the Ferrari Group strives to maintain high standards of integrity concerning tax ac- counting and tax compliance, in order to pay the amount of taxes legally due in any territory, in ac- cordance with the rules set out by governments. 2 Zero tolerance, to maintain Ferrari Group’s worldwide reputation, Ferrari does not tolerate infringement and complies with all applicable tax laws and regulations. 3 Sustainable and lasting growth, considering that taxes are a key contribution to the sustain- able and lasting growth of the economies of the countries where the Group carries out its busi- ness, Ferrari is committed to apply sustainable practices in its tax risk management activities. 4 Tax Authorities engagement, Ferrari engages proactively with the competent Tax Authorities in the jurisdictions where the Group operates, approaching them with openness, honesty and integrity. 5 Tax Disclosure, Ferrari is committed to disclose the most appropriate set of tax information in its financial and non-financial reporting, enabling it to communicate its approach in relation to tax and its own effective tax. Italy, 87% Rest of the World, 13% COMPLIANCE WITH ECONOMIC SANCTIONS’ REGULATIONS Economic Sanctions are those provisions adopted by governments and institutions for managing crisis scenarios, such as resolution of conflicts and fight against terrorism, and guaranteeing respect for hu- man rights and fundamental freedoms, in the com- mon foreign and security policy. Such provisions may include export license ob- ligations, commercial restrictions, such as the so- called trade embargoes, financial restrictions and restrictions on movement, which can be targeted to states, organizations, natural and legal persons. It follows that the Ferrari Group, in carrying out its activities, is required to evaluate and respect such blocks, prohibitions and restrictive measures, in par- ticular in relation to dealings with third parties and transactions that potentially determine the involve- ment of countries for which Sanctions risks apply. In this respect, in 2021 Ferrari adopted the Sanc- tions Compliance Practice, designed to formalize the internal roles and responsibilities as well as the principles and general rules aimed at preventing conducts that may violate Economic Sanctions laws and regulations. 189 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FWHISTLEBLOWING The Ferrari Group adopts the Ethics Helpline, a chan- nel which allows all stakeholders (employees, cus- tomers, suppliers and partners) to request advice and/or report concerns about alleged situations, events or actions which may be inconsistent with the values and principles set out in the Code of Con- duct, Organizational Models, laws and regulations, as well as business practices and corporate rules. The allegations are assessed by the relevant depart- ments of Ferrari and managed in accordance with the Whistleblowing Procedure, that has been pre- pared on the basis of the international best practic- es as well as to the applicable laws and regulations. The Ethics Helpline can be accessed either by phone or by web (with multiple languages available) and is an essential element of the management pro- cess, in accordance with the Code of Conduct. It is managed by an independent provider, available 24 hours a day, seven days a week. All reported subjects and facts are processed with the utmost confidenti- ality, so that the individuals who report an alleged vio- lation in good faith are not subject to any form of re- taliation. In addition, stakeholders can report alleged violations anonymously if permitted by local law. The training course on Ferrari’s Code of Conduct also in- cludes a section devoted to whistleblowing to ensure that all employees know how the Ethics Helpline works. Furthermore, Ferrari employees may also seek ad- vice concerning the application and/or interpreta- tion of the Code of Conduct by contacting the Group Compliance department. The Internal Audit and Group Compliance de- partments, with the potential support of the Legal Affairs and Human Resources departments, as well as other business functions possibly involved, as- sess all the allegations, classifying the reports re- ceived into four categories: Conducting Business, In- teracting with external parties, Managing our assets and Information and Protecting our workforce. The results and potential disciplinary actions resulting from each allegation are then notified to the relevant internal functions. In addition, in order to provide maximum trans- parency to the entire process, a Whistleblowing Committee has been appointed, composed of the heads of the Internal Audit, Group Compliance, Le- gal Affairs and Human Resources departments. The Whistleblowing Committee meets periodical- ly to monitor the progress of the investigations and ensures that the concerns raised are handled appropriately. Periodic reporting on whistleblow- ing management is provided to the CEO as well as to the Audit Committee and further internal con- trol bodies. The reports received and investigated in 2023 have been categorized as per the table below. WHISTLEBLOWING REPORTING AS OF DECEMBER 31, 2023 Category Reports received in 2023 Reports closed in 2023 Reports in which a violation was confirmed Conducting business Interacting with external parties Managing our assets and information Protecting our workforce Total In this context, the reports received are a key instru- ment for the Internal Audit and Group Compliance departments to identify violations of the Code of Conduct. For all Code of Conduct violations, the dis- ciplinary measures taken are commensurate with the seriousness of the case and comply with the ap- plicable legislation. Furthermore, a dedicated training on whis- tleblowing has been provided in favor of new em- ployees hired in 2023, to raise awareness on the im- portance of a company culture based on ethics and integrity, as well as to detail the process by which em- ployees can report suspected or actual misconducts. 1 2 4 4 11 1 1 1 3 6 RELATION WITH PUBLIC INSTITUTIONS AND TRADE ASSOCIATIONS We are committed to conducting our government and public institution relations, including corpo- rate lobbying activities, in compliance with the laws and regulations in force where Ferrari oper- ates, as well as in accordance with the principles established in our Code of Conduct and Anticor- ruption Compliance Practice. Our institutional relations are underpinned by criteria of transparency, legitimacy and responsibil- ity, both with reference to information disseminated in public offices and relationships with institutional interlocutors. We aim to contribute positively to the future development of regulations and standards in 1 1 5 4 11 190 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fthe automotive industry and in all other sectors re- lated to the mobility of people and goods. We are registered with the European Trans- parency Register. The Register provides informa- tion about the interest representatives that seek to contribute to the decision-making processes of the European Union, and a code of conduct serving as a framework to regulate their activities. As required by the applicable legislation, the es- timated annual costs attributable to activities cov- ered by the Register are publicly disclosed through the EU Transparency Register, also available online. We are a member of trade associations in main host countries. The main organizations of which we are a member are: turers’ Association; stria Automobilistica; • Europe: ACEA – European Automobile Manufac- • Italy: ANFIA – Associazione Nazionale Filiera Indu- • United Kingdom: SMMT – Society of Motor Manu- • USA: AFAI – Alliance For Automotive Innovation; • Canada: GAC – Global Automakers of Canada. facturers and Traders; In 2023, our membership fees for trade associations accounted for about € 700 thousand. Furthermore, we are member of several other associations as well as national and international ad- vocacy organizations. Please refer to the GRI con- tent index for the list of the main associations Ferrari is member of. DATA PROTECTION, PRIVACY AND CYBERSECURITY DATA PROTECTION AND PRIVACY We care about processing data in a safe and trans- parent manner and act in accordance with the current legislative framework that governs the processing of our personal data at a global scale, including but not limited to the General Data Protec- tion Regulation “GDPR” (EU Regulation no. 2016/679), the UK GDPR and the California Consumer Privacy Act of 2018 “CCPA”. The data protection legal frame- work has steadily developed in recent years and has brought a new consciousness about privacy. Data protection and privacy law requires, among others, the application of increased transparency obligations, the introduction of common records of processing activities, the appointment of a Data Pro- tection Officer “DPO”, an effective response mecha- nism to data subjects’ privacy-related requests and – where advisable – privacy impact assessments be- fore processing personal data. Within this context, we have adopted a progres- sive approach to ensure compliance with data pro- tection and privacy law requirements, such as the implementation of new processes (e.g. system col- lecting consents and privacy notices, adoption of a Governance tool in order to periodically update the records of processing activities, to perform privacy impact assessments, to perform the balancing test, to manage cookies), the creation of internal proce- dures (e.g. Privacy Procedure, Privacy by Design, Data Retention Procedure, Data Breach Procedure, Appointment and management of system admin- istrators, Management of requests from data sub- jects etc.), the guarantee of an effective and prompt response to requests from data subjects (e.g. im- plementation of an online portal which will allow consumers to make privacy requests), the update of privacy notices, the drafting of operating instruc- tions for authorized persons within the Company, the identification of internal privacy referents within Company departments and the creation of an inter- nal Privacy Committee. In case a transfer of Personal Data to third par- ties is necessary, we have implemented a Data Pro- cessing Agreement (DPA) to be signed by the third party. The process provides for the filling out of a specific “DPA” section during the issuance of the pur- chase request in favor of the supplier. An Intercom- pany Data Protection Agreement has been signed by Ferrari S.p.A. and its subsidiaries. E-learning cours- es, aimed at raising awareness on data privacy reg- ulations and requirements, are organized for and addressed to the employees who are involved in the processing of personal data. An e-learning course relating to the correct collection of clients’ data and their consents is organized for the Dealer Network. Dedicated face-to-face trainings have been deliv- ered to the Privacy Referents. CYBERSECURITY As our technology continues to evolve, we anticipate collecting and storing even more data in the future, and that our Information Technology (IT) systems will improve security countermeasures against the risks of willful and unintentional security breaches. Much of our value is derived from our confidential business information, including car design, propri- etary technology and trade secrets. We also collect, retain and use certain person- al information, including data we gather from cli- ents for product development and marketing pur- poses, and data we obtain from employees. Any unauthorized access to our information technol- ogy systems may compromise the confidentiality of Ferrari’s intellectual property or the privacy of our clients’ information and expose us to claims as well as reputational damage. For these reasons, we have always paid the utmost attention to cyberse- curity. We have created a system of procedures, 191 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fpolicies, services, infrastructures and trainings as well as awareness to address all facets of cyberse- curity currently known. The area that has been nurtured the most is in- formation protection with a focus on preventing data breaches, which has been addressed through several tools and countermeasures. In 2023, 75 cyber incidents were recorded, of which one was significant. It involved the theft of customer data for which a monetary ransom was demanded. Ferrari not only did not pay any ransom but reported to all customers and media the inci- dent and the refusal to pay. After the announcement the threat actor disappeared and no additional data publication occurred. Since then the entry point of the attack has been hardened, and additional cyber- security countermeasures, both preventive and de- tective, have been put in place. Cybersecurity topics are discussed in various inter- nal Committees several times per year, as well as at the Audit Committee level at least once a year. For further details see “Corporate Governance—Cybersecurity”. INFORMATION/CYBERSECURITY INCIDENTS(6) & BREACHE Total number of information security breaches or other cybersecurity incidents Total number of substantiated complaints received from regulatory authorities concerning breaches of customer privacy Total number of identified incident involving customer data Total amount of fines/penalties received from regulatory authorities (€ million) 2023 75 0 1 0 2022 72 0 1 0 2021 45 0 0 0 COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS In 2023, there were no significant final judgements relating to the breach of (i) corruption laws, (ii) an- ti-competitive, antitrust and monopoly laws. With reference to the same period, there were no significant(7) final judgements relating to non-com- pliance with laws and regulations. During the re- porting period, there were no significant fines and/ or non-monetary sanctions with respect to compli- ance with laws and regulations and no incidents of discrimination were identified. SUSTAINABILITY RISKS We are committed to creating a culture of sustain- ability. Creating such a culture requires effective risk management, responsible and proactive deci- sion-making, and innovation. Our efforts are aimed at minimizing the negative impacts of our business. We have integrated the analysis and assessment of socio-environmental risks in our risk manage- ment framework and are currently integrating our risk management activities with the outcomes of the double materiality analysis described in “Double Materiality Analysis and Stakeholder Engagement— Double Materiality Analysis of Ferrari Group”. Below, the key risks and risk trends most rele- vant to our material topics. Further information on sustainability risks and the related management approaches put in place by Ferrari are reported throughout this Statement. Key Risk Material topics Further references Competition (Strategic risk)(8) Product technology, design quality and Exceeding Expectations safety Key Risk Material topics Further references Technology, Product and Regulation Product technology, design quality and Exceeding Expectations; Reducing Our (Strategic risk) safety; Climate change; Raw materials and Environmental Footprint circular economy 192 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FKey Risk Material topics Further references Execution of lifestyle strategy for retail Talent attraction, retention and Being the Employer of Choice (Strategic risk) development Key Risk Material topics Further references Social and Geopolitical Instability (Operational risk)(9) Raw materials and circular economy; Reducing Our Environmental Footprint; Supply chain responsible management Overview of Our Business/Procurement; Proactively Fostering Best Practice Governance Key Risk Material topics Further references Production Disruption and Raw materials and circular economy; Reducing Our Environmental Footprint Transformation Costs (Operational risk) Climate change Key Risk Material topics Further references Supply Chain Resilience (Operational risk) Ethics and human rights; Supply chain Proactively Fostering Best Practice responsible management; Climate Change; Governance; Overview of Our Business/ Raw materials and circular economy Procurement; Reducing Our Environmental Footprint Key Risk Material topics Further references Human Capital Management and Internal Product technology, design quality and Exceeding Expectations; Being the Organization (Operational risk) safety; Talent attraction, retention and Employer of Choice development Key Risk Material topics Further references Scuderia Ferrari Success (Operational Talent attraction, retention and Being the Employer of Choice risk) development Key Risk Material topics Further references Cybersecurity Including Third Parties Supply chain responsible management; Overview of Our Business/Procurement; Vulnerabilities (Operational risk) Data responsibility, privacy and Proactively Fostering Best Practice cybersecurity Governance Key Risk Material topics Further references Climate Change (Health, Safety and Environmental risk and Strategic risk)(10) Product technology, design quality and Further Climate-related Disclosures (TCFD) safety; Climate Change; Raw materials and circular economy; Supply chain responsible management Key Risk Material topics Further references Non-compliance with Laws, Regulations, Product technology, design quality and Reducing Our Environmental Footprint; Local Standards (Including Tax) and Codes (Compliance risk)(11) safety; Climate change; Health, safety and Exceeding Expectations; Being the well-being; Natural resources management Employer of Choice; Proactively Fostering and biodiversity; Ethics and human Best Practice Governance rights; Data responsibility, privacy and cybersecurity A detailed description of these risks and how we respond to them can be found in the section “Risk Management Process and Internal Con- trol Systems”. 193 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FEXCEEDING EXPECTATIONS RESEARCH, INNOVATION AND TECHNOLOGY Innovation is in our DNA and we will continue push- ing boundaries to anticipate clients’ desires, always setting new standards in the “Ferrari way”. Innovation drives products and processes, which represents one of our key differentiating fac- tors. This is why we are focused on developing new technologies and distinctive designs. Participation in the FIA Formula 1 World Cham- pionship with Scuderia Ferrari and the World En- durance Championship with the Ferrari Endur- ance Team is an important source of innovation to support the technological advancement of Fer- rari’s product portfolio.  Moreover, our develop- ment efforts focus on innovation with the goal to enhance design, performance, as well as driving thrills. This will provide the basis for a future pow- ertrain offering, including full electric, and other technologies. In addition to these internally driven factors, regulation is key in determining the direc- tion of technical innovation. One of our other main focuses is on innovating our working methods, which involves stimulating the creativity of our employees. At Ferrari, we con- stantly propose and welcome new ideas. This deter- mination is also reflected in the significant increase in the number of patent proposals submitted by Fer- rari employees in recent years. In May 2023, we cele- brated the “Inventori Ferrari” at our Maranello head- quarters, this initiative was dedicated to employees who have distinguished themselves in the develop- ment of patents during the year 2022. Quality has always been at the basis of our suc- cess. With this in mind, we first certified our quality management system in 1996 and in 2015 we were among the first companies to be certified in confor- mity to the latest version of the ISO 9001:2015 stan- dard, relating to the planning, design, development, production, sales and after-sales service regarding our Sports Cars. Our approach to quality creates a fertile environment for the development of innova- tive ideas and solutions that will improve products, methods and the working environment. Among the programs that we have implemented, Pole Position rewards ideas put forward by individual staff mem- bers. In 2023, we received around 13 thousand sug- gestions from employees with a focus on carbon neutrality and process efficiency. Our focus on excellence requires a strong col- laboration with our suppliers, and a handful of them are considered “key strategic innovation partners”. Collaborations with leading universities are also in place to foster the development of new ideas. Technological breakthroughs are further en- hanced through design. In 2010, the Ferrari Design Center was established as a best-in-class in-house design department to improve control over the de- sign process and to ensure long-term continuity of the Ferrari style. A guiding principle of the Ferra- 194 RESEARCH AND DEVELOPMENT AND CAPITAL EXPENDITURES (€M) EXPENSED RESEARCH AND DEVELOPMENT AND CAPITAL EXPENDITURES 1,700 1,265 706 1,261 734 1,324 750 1,342 824 1,450 911 559 527 574 518 539 2019 2020 2021 2022 2023 Research and Development expensed to the P&L Gross Capital Expenditures GROSS CAPITAL EXPENDITURES 1,000 706 24 330 352 734 32 320 382 750 22 363 824 41 416 911 39 448 365 367 424 0 0 2019 2020 2021 2022 2023 Property, Plant and Equipment Capitalized Research and Development Other Intagible Assets NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F ri style is that each new model represents a clear departure from prior models and introduces new and distinctive aesthetic elements, delivering con- stant innovation within the furrow of tradition. Our designers, modelers and engineers work together to create car bodies that incorporate the most in- novative aerodynamic solutions within the elegant and powerful lines typical of Ferrari cars. The De- sign team has been presented with several design awards, among which in 2023 the “Red Dot: Best of the Best” award. We continue to regularly launch new cars with enhanced technological innovations and design improvements. We confirm our ambition to launch 15 new models between 2023-2026 with the purpose of maintaining the product portfolio’s leading position and unique- ness. Clients will have the possibility to choose from a range of powertrains: internal combustion engine, hybrid and electric. In addition, we are committed to develop solutions in energy efficiency and alterna- tive fuels for internal combustion engines. The Research and Development (R&D) invest- ments and expenses to fuel the growth of the Group, as described above, are represented in the charts below(12). RESEARCH AND DEVELOPMENT AND CAPITAL EXPENDITURES (€M) EXPENSED RESEARCH AND DEVELOPMENT AND CAPITAL EXPENDITURES 1,700 0 1,265 706 1,261 734 1,324 750 1,342 824 1,450 911 559 527 574 518 539 2019 2020 2021 2022 2023 Research and Development expensed to the P&L Gross Capital Expenditures GROSS CAPITAL EXPENDITURES 1,000 706 24 330 352 734 32 320 382 750 22 363 824 41 416 911 39 448 365 367 424 0 2019 2020 2021 2022 2023 Property, Plant and Equipment Capitalized Research and Development Other Intagible Assets 195 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FOPEN INNOVATION Innovation runs within Ferrari and we are well aware that partnerships and synergies with external enti- ties of different sectors have to be established to face the future challenges of the automotive industry. By getting access to the most advanced re- search and studies, we aim to develop new practical solutions for our industrial processes and technical products. We believe that open innovation is a profi- cient tool capable of helping us cross the boundaries between different sectors and technologies. Below are just a few examples on how we lead innovation in our Company. We have established partnerships with univer- sities and research centers to convert the most advanced theoretical research, especially in tech- nology, engineering and computer science, into practical solutions for our industrial processes. We also collaborate with research centers and other or- ganizations to find common solutions to technolog- ical problems, combining state-of-the-art expertise from different sectors. The spreading of cross-fertilization and high-end know-how between different companies is becom- ing increasingly relevant for the emergence of inno- vative ideas. Ferrari is one of the founding members of CRIT, a private company specialized in the research and analysis of technical and scientific information, and in the development of research project activities. The aim of CRIT is to spread collaborative innovation between different enterprises and to share differ- ent needs and knowledge in order to generate new ideas and access enabling technologies. In Decem- ber 2023, Ferrari was proud to host CRIT’s bi-annual Technical-Scientific Committee meeting. A more fertile environment for innovation can also be created by generating a virtuous circle be- tween big companies and start-ups. Ferrari, with the help of specialized partners, is scouting start-ups worldwide to develop specific innovation projects that will result in the realization of proof-of-concept prototypes. In 2023, we continued our partner- ship with technology scouting specialist CDILabs to identify interesting start-ups according to several targeted development topics. Collaborations with start-ups are also intended to support their develop- ment journey and facilitate them to become Ferra- ri’s future potential partners. In 2023, Ferrari became an official partner of the Motor Valley Accelerator start-up program, based in Modena, administered by Plug & Play, a globally rec- ognized specialist in start-up incubation, accelera- tion and investment. By working in close contact with key suppliers to foster innovative solutions and by sharing different expertise, we were able to overcome challenges in many different fields. An example of this approach can be found in the partnership created with com- ponent suppliers for our new electric and hybrid powertrains and additive manufacturing for vehicle components. Several added-value ideas are generated with- in our company. With the objective of sharing “in- novation pills” to allow the flow of ideas across all technical fields and improving the network of op- portunities in the innovation ecosystem, we share, twice a month, an “Innovation Newsletter” to all employees of the company with news and insights on future mobility, connectivity and advancements in science and technology, as well as news on inno- vative developments by our competitors, partners and start-ups. In 2023 we launched the “Open Innovation Hub”, an internal intranet site aiming to provide a single point of contact within Ferrari to find research and innovation resources, including a calendar of Tech Days, when external suppliers bring their road- shows to Maranello for all employees to join in and interact with. VEHICLE SAFETY Vehicle safety is among our top priorities and Ferra- ri cars are always designed and manufactured with the safety of our clients and other road users in mind. Given the nature of our cars, the electron- ic equipment is developed with an integrated ap- proach, ensuring the best balance between safety, control and best-in-class performance, to further enhance the Ferrari driving thrills. All of our models are subject to a series of tests to obtain approval from the relevant authorities. Moreover, we start assessing all our new models at an early stage of planning and design to identify ar- eas of improvement. To guarantee the highest level of passenger safety, we develop both passive and active safety systems. Passive safety requirements are the ini- tial guidelines assigned to the engineers in order to define the design of every component, from car framework to all the retain components (airbags, seat belts, etc.). Moreover, specific devices are in- stalled in racing cars to obtain FIA (Federation Inter- national de l’Automobile) approval. With the aim of solving issues beforehand and re- ducing the environmental impact of these activities, all tests are reproduced in a state-of-the-art virtual environment before conducting them with real cars. Regarding active safety, we believe that the fu- ture developments of vehicle safety will be linked to Advanced Driver Assistance Systems (ADAS) and Human-Machine Interface (HMI), capable of pre- venting or mitigating crash occurrences. We are currently assessing the implementation of the most recent trends and developments in terms of simpli- fying and facilitating the interaction between the car 196 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fand the driver to avoid any distraction. ADAS are in- cluded into our entire fleet, and we are working to implement new solutions for our upcoming models, such as lane keeping assist, intelligent speed assist and driving drowsiness. The SF90 Stradale, the first hybrid series-pro- duction car in Ferrari’s history, encapsulates the most advanced technologies developed in Maranello, including the HMI which, with its track-derived “eyes on the road, hands on the steering wheel” philosophy, takes on a truly central role. The result is an HMI (Hu- man- Machine Interface) that is a complete departure from previous models. The “hands-on-the-steering- wheel” philosophy has consistently driven the de- velopment of the human machine interface in every Ferrari Formula 1 car and its subsequent gradual transfer to our roadgoing sports cars. The SF90 Stradale’s steering wheel completes the transfer process from racing and also ushers in a new era by introducing a series of touch com- mands that allow the driver to control the most im- portant performance-related aspect of the car with- out ever taking their hands off the wheel. The Head Up Display is another part of the innovative HMI and allows various data to be projected onto the wind- shield within the driver’s field of vision so that their attention is not distracted from driving. We extend- ed this innovative HMI to the Roma and the 296 GTB, among others. For Ferrari, safety is also about on the road be- havior. To this effect, Charles Leclerc is also a testi- monial for 3500 LIVES, a campaign launched by FIA with the aim of promoting road safety and making the roads safer for everyone by outlining the golden rules that can help save lives when driving. Regarding further aspects of vehicle safety see “Overview of Our Business—Regulatory Matters— Vehicle safety”. 197 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBEING THE EMPLOYER OF CHOICE OUR PEOPLE “I believe factories are made of machines, walls and peolple. Ferrari is made most of all by people” — Enzo Ferrari collars, to work in remote working 2 days per week, based on an individual agreement between the Com- pany and the employee. The high attention and care for our products is the foundation upon which Ferrari’s success is built and this is feasible thanks to the efforts of the people working in Ferrari. One of the many strengths is the ability to attract, retain and develop talents. Since 1997, we have de- veloped the “Formula Uomo” initiative, with the in- tention of developing a high-quality working life for our employees. Over the years, the project has be- come a pillar of our culture, based on redesigning the working environment, enforcing a safety-first culture, enabling individual development, enhancing teamwork and building a community now compris- ing 71 different nationalities. After COVID-19 we committed to favor the phys- ical presence of people in offices and facilities while allowing certain categories of workers, such as white In 2023, we continued the program “Formula In- sieme”, whose aim is to pursue the continuous de- velopment of Ferrari through a “plan, do, check, act” approach, starting from our employees’ opin- ions, gaining awareness of their points of view and identifying opportunities for continuous improve- ment. We analyzed the important results of an on- line survey, which took place in 2023, through which we collected the opinions of our employees on dif- ferent topics concerning the working environment like safety, change readiness, open culture and many others. Following the survey, which involved more than 95% of our employees, aggregated re- sults were shared with employees and analyzed to identify possible areas for improvement and gather suggestions/proposals for action. The program will be repeated on a two-year basis, following a process of continuous improvement. 198 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F 199 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FWORKING ENVIRONMENT We know that the best individual and team perfor- mance is only achieved if employees feel they are in the right environment. We also believe that the qual- ity of our products cannot be separated from the lives of the people working at Ferrari. This is why the working environment and well-be- ing of the Company’s employees are among our most important priorities, representing the key focus of our “Formula Uomo” initiatives. Our complex in Maranello, a state-of-the-art work environment, was designed to reinforce the synergistic relationship between work and results. With the needs of our employees firmly in mind, our manufacturing facilities are specifically created to combine carefully designed lighting systems, pro- jected to maximize the amount of natural light, and several external and internal green areas. Thermal comfort throughout the factory is also a crucial requirement and, since 2013, the in-plant found- ry is equipped with a cooling system that makes it air-conditioned and climate controlled. Special measures aimed at reducing the environmental impact and noise using advanced technologies are also in place. As an example, the design of our Ma- chining department is aimed at providing the work- place with maximum acoustic comfort thanks to noise reduction solutions (source and reverbera- tion). To promote an active lifestyle among our em- ployees, we rely on our “Formula Benessere” pro- gram, aimed at providing preventative healthcare to employees and their children. A gym is available for all the employees in Maranello, while employ- ees at the Modena plant have a free membership in one of the city gyms, initially provided to the F1 racing team as part of their training program for the Grand Prix activities. As part of the “Formula Benessere” benefits, preventative healthcare and sports check-ups are provided to all employees and their children. Medical specialists are avail- able for consultation in areas such as ophthalmic, cardiology, osteopathy and dermatology, among others. A free annual check-up focusing on gener- al health and fitness is also provided to managers and employees’ children aged 5 to 15. In 2023, more than 1,900 employees and 820 children benefitted from medical and specialist check-ups performed through “Formula Benessere”. This program aims to foster people’s health by enhancing their psy- cho/physical performance through annual medical check-ups and nutritional, performance and medi- cal programs. For our people involved in F1 World Championship we developed the “Check-Up F1”. Moreover, people can access medical and physio- therapeutic support during trips related to the For- mula 1 World Championship. Our attention to the promotion of health and safety among our employees goes beyond what is required by law and, to this effect, special work- shops are organized for employees to raise aware- ness on the importance of these topics. 200 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FWe have launched the program “Formula Estate Junior” to foster a sense of belonging among em- ployees and their families and to offer concrete support to working parents with the demanding duties of childcare during school holidays. This ini- tiative consists of a free day camp for employees’ children aged 3 to 13, with various programs in- cluding sports, outdoor activities, excursions and workshops. The program, which has reached its 15th edition, allows children to enjoy an exciting ex- perience with a didactic purpose: each edition of the “Formula Estate Junior” camp has an education- al theme developed by professional educators (124 in 2023) and is organized in collaboration with the local community. The 2023 edition saw the partici- pation of more than 800 children. Education is also the focus of a series of differ- ent initiatives that provide scholarships to talented junior high, high school and university students. Our scholarship program, named after our found- er Enzo Ferrari, is intended for children of em- ployees and employees who have continued their studies and who have achieved excellent academ- ic results. In 2023, our scholarship program was awarded to 104 talented students with the awards handed out by our Chairman and our Chief Execu- tive Officer during an outdoor event. Moreover, in 2023 we reimbursed approximately 940 employ- ees for the cost of their children’s textbooks (reim- bursement is offered to all employees’ children un- til high school and, in certain cases, we reimburse the cost of school textbooks for employees in con- tinued education). We offer additional benefits to our employees in five different areas – food, free time, wellness, trav- el and personal services – including personalized loans at competitive rates within the internal branch of a local bank, special rates for housing needs and discounts at the Ferrari Museums, Ferrari Stores and at the Ferrari Company Outlet. Regarding sustainable mobility, we offered our employees the possibility of long-term rental of elec- tric cars and bicycles. The project “Bike to work” in col- laboration with local authorities to encourage the use of bicycles to reach the workplace has also continued. To foster the sense of belonging, the Company usually organizes multiple events. In 2023, we hosted at the Mugello circuit the Ferrari Challenge champi- onship Finali Mondiali, an event that brings together drivers and fans of the various Prancing Horse se- ries on a single circuit to celebrate the end of the sporting season. The event was attended by over 1,400 of our employees together with their guests. The aim of the project is to create a more familiar work environment and cohesion, interaction and collaboration among Ferrari employees. In December, we also organized the Ferrari Light Experience at our Maranello plant, a journey ded- icated to our Ferrari People and their loved ones through lights, sounds, and images that reflected the essence of who we are and celebrate the successes of our team. Moreover, during the month of Decem- ber, over 2 thousand children of our employees from 0 to 10 years old received their Christmas gifts. In 2023, in order to strengthen the sense of be- longing and allow our employees to experience the emotions associated with our models, we continued “Esperienza Ferrari”, an initiative that gives all em- ployees the opportunity to take a ride in a Ferrari driven by a professional pilot on the Fiorano circuit. Over the last years, several culture and sport associations have been created: employees and for- mer employees that share a common interest have the opportunity to cultivate their passions and or- ganize sport and recreational activities together. All these benefits are provided to all of our employees. TRAINING AND TALENT DEVELOPMENT Along with the need to hire, develop and retain tal- ents, we are aware that we must manage human capital as a critical resource to achieve the best possible results. The success, prestige and appeal of our brand depends on the ability to attract talents and retain them. In particular, top drivers, racing management, engineering talents and all the employees that make Ferrari unique have to be rewarded based on their ability, determination, and expectations. This is why we offer career progression opportunities tailored to each individual’s strengths, ambitions and our Company’s requirements, underpinned by substan- tial investments in training. A total of over 135 thousand hours (up 71% vs. 2022) of training have been provided to the Compa- ny’s employees in 2023, covering many areas, such as digitalization, globalization, sustainability and continuous improvement. This result was achieved mostly thanks to the high-quality volunteering train- ing we provide to our employees, such as the “Ag- ile learning for an Agile Company” project, the Har- vard Manage Mentor e-learning platform and the two MBA programs. The increase in the number of training hours is mainly attributed to the “Agile learn- ing for an Agile Company” project. What makes Fer- rari’s craftsmanship unique is the direct transfer of knowledge and expertise from senior to junior work- ers, which in our manufacturing process takes place directly on the job because we believe in constantly maintaining excellence through “learning by doing”. Human capital development ensures that our Company has the appropriate skill set to execute the business strategy and improve employee attrac- tion, retention, as well as motivation, and, as a result, enhance productivity and the quest for innovation. Training requests for employees who receive a reg- ular performance and career development review, 201 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fare identified during this review process in order to address the needs of both parties. A Training Plan with three specific objectives is in place: (1) TO PROTECT AND PASS ON THE STRATEGIC AND SPECIFIC KNOW-HOW OF FERRARI AND TO PROJECT OURSELVES INTO THE FUTURE OF INNOVATION. Among all the training initiatives in Ferrari, we are very proud of our “Scuola dei Mestieri”, started in 2009. It is a unique, in-house, technical training proj- ect for both white collars and blue collars, which increases the professionalism of junior talents and motivates senior employees, recognizing their com- petencies by asking them to become Maestri and to pass on Ferrari’s unique heritage to the next genera- tion. The initiative combines different didactic meth- odologies, including on the job sessions and in-class- room training, both focused on the consolidation of competencies and skills, with a particular focus on innovation, and visits to partner companies to learn about their best practices. Being a Maestro is an aspi- rational position and key to the Company’s success. In 2023, we further consolidated the activities of the previous years, with the three main areas of focus being: product innovation (mainly with re- gard to hybridization, HMI and new components, in a cross-functional training), process innovation (as in the case of welding and screwing processes) as well as support and induction of new colleagues. In par- ticular, in 2023 the topic of the transition to full elec- tric vehicles was enhanced in order to ensure that future models respect Ferrari quality standards. Moreover, the new courses on Cyber Security Man- agement System were continued. To support teaching activities, the use of aug- mented reality is also being experimented with to complement classrooms and laboratories. This ap- plication, which makes it possible for attendants to take advantage of this technology through specific tools but also through tablets or cell phones, will be- come structural in the coming years. In 2023, to ensure effective training opportu- nities for our employees, we continued to provide courses in hybrid mode through e-learning plat- forms, webinars and in classrooms. Employees were given access to a dedicated virtual library con- taining all the courses and tablets were distributed among participants to guarantee accessibility and to increase the experiential level of the course. Furthermore, within “Scuola dei Mestieri” we have implemented an activity called “Scuola delle Professioni”, dedicated to young engineers and all employees of the Purchasing and Quality depart- ment, in order to provide them with an overview of all the phases of product development and to pass on the Ferrari DNA. The course is based on four mac- ro areas: product development, vehicle technology, testing and factory, and supporting activities. The course comprises more than 40 lectures and more than 80 hours. The participants can conduct “techni- cal” visits to all production departments and under- stand the unique manufacturing process in Ferrari. We started a training course for blue collars ap- pointed as Conduttori, workers without hierarchi- cal responsibilities who play the role of link between the team and the supervisor (team leader). Condut- tori are chosen not only for their technical skills but also for their soft skills. The training course lasts 40 hours and covers management, hard and soft com- petences and problem-solving aspects. The training and improvement of their competences is essential as they have the task of training new employees. (2) TO SHAPE AND PREPARE THE FUTURE MANAGERIAL CLASS FOR BUSINESS, INNOVATION, MANAGEMENT AND HUMAN CAPITAL DEVELOPMENT CHALLENGES. In 2023, we completed the fourth edition of the Fer- rari Corporate Executive MBA (EMBA), our master’s program which aims to improve the management skills of the attendees, to let them gain experience on the most recent innovation trends and to con- vey the Ferrari leadership model. This master’s de- gree, which over the past four years has involved more than 150 people, offers a unique tailor-made program to form a critical mass within the manage- ment class that will be able to grasp the challenges of the future, while at the same time preserving the tradition of Ferrari. The EMBA is designed for 30 managers of the Ferrari Group who, for about 12-15 months, participate to face-to-face and online lec- tures. During the course of study, innovation talks, leadership workshops and site visits to production plants are carried out. This master’s degree helped to develop a group of managers with a shared ap- proach to leadership, while respecting and valuing individual differences. A group on which Ferrari can rely on to tackle future challenges. In addition to the Executive MBA, since 2021 a new program was launched for employees aged between 27 and 35 who have been mapped as high potential talents by the performance evaluation sys- tem: the Ferrari Global Corporate MBA. This mas- ter’s degree provides participants with managerial skills, paying special attention to the three main dis- ruptive trends of our time: technological innovation, digital transformation and sustainable transition. The master’s program concludes with an 8-weeks project work or internship in an innovative company operating in sectors other than the automotive one, at the end of which the main results are discussed through a session in front of the FLT. In order to strengthen the cohesion and fellow- ship of the Company’s top management, several team-building initiatives involving the FLT and cer- tain departments were carried out during 2023. This enabled our leadership team to consolidate the val- ues of team collaboration, transparency and com- 202 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fagency workers with more than 150 participants re- sulting in more than 3,500 training hours. The digitalization of processes and systems is one of the key aspects of our strategy, as part of the digital transition promoted by the Company, in fact, in 2023 we created a digitalization path for our employees. In addition to this, in 2022 we launched a course on vehicle connectivity in compliance with EU COM/2022/68 regulation proposal that was ex- tended in 2023 to all new hires. At the end of the course, we released a certification on vehicle con- nectivity to all attendees. In order to achieve the objective defined during the 2022 Capital Markets Day on CO2eq emissions reduction, a series of awareness trainings and ses- sions on carbon neutrality have been conducted for employees. is In addition, an online training campaign launched twice a year and includes all the corporate mandatory trainings dedicated to new employees. Among the mandatory courses relating to the Gen- eral Data Protection Regulation (GDPR), Antitrust and Anticorruption, a session is dedicated to our Code of Conduct that also covers human rights topics. In 2023, in light of the update of the Code of Conduct, a series of training activities have been carried out involving our employees. In 2023, we strove to ensure continuous prog- ress in all domains pertaining to training as to en- sure know-how continuity and the strengthening of our employee skills to meet our ambitions for the future. Collaboration, innovation, focus and learning, together with agility at all levels, represent some of the key values we pursue to thrive in a rapidly chang- ing world. Through the delivery of trainings to our employees, we commit to the advancement of a just transition, able to secure workers’ rights and liveli- hoods when economies are shifting to low-carbon production. Among which the development of spe- cific trainings involving the transition from internal combustion engines to electric ones. All these training activities, delivered both in presence and online, resulted in an increase in the overall number of training hours provided com- pared to the previous year. munication, as well as to share new ideas. In particu- lar, two main team-building projects were launched. The first involved the employees of the experimen- tal construction area at the E.Do learning center. The project allowed the various groups to observe the dynamics of teamwork and identify potential areas for improvement. The second team-building proj- ect involved the technical assistance service, the so called “flying doctors”, 20 people worldwide who work globally to solve problems related to Ferrari car systems. The objective was to stimulate mutual knowledge and create a sense of belonging to in- crease the efficiency in terms of collaboration and coordination as well as share best practices. (3) TO FOSTER AND SUPPORT THE INCLUSION, GROWTH AND DEVELOPMENT OF OUR PEOPLE. In line with business and Company requirements, and consistent with the needs expressed in the One Ferrari Performance and Feedback process(13), training activities were provided with respect to managerial, technical and language skills. Launched in 2019, we continue to offer our em- ployees the possibility to access the Harvard Man- age Mentor e-learning platform. The training provided through this platform has been customized according to our needs and the following three lines of development: to integrate this platform with the One Ferrari Performance and Feedback process; to give employees, especial- ly newcomers, the basic managerial skills that we consider essential requirements; and to adapt pro- fessional development paths based on employees’ career levels. Soft skills and language courses are included in this platform, as well as several training activities on diversity topics sustaining our Equal Salary Certification. In 2023, we launched the “Agile learning for an Agile Company” project. The goal of this project was to engage managers and individual contributors in a journey of skills reflection and learning, to live effec- tively and in balance with the constantly evolving con- text and work patterns. Interviews and focus groups were conducted with the help of an external supplier to understand the main challenges faced during the remote working experience, adopted in 2020. Based on these results, the training was structured around 9 winning practices, which include working and com- municating successfully with others through digital tools, the achievement of a work-life balance, the use of feedback to strengthen relationships, the value of effective meetings, the creation of a strong network, and the ability to learn from study and experience. The training sessions were made more interesting thanks to gamification, the creation of competitions and structured growth paths, and they were inte- grated with several online group meetings to share experiences and put into action what was learned. Moreover, a forum was opened for the exchange of ideas and opinions. The project was also extended to 203 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FNUMBER OF PARTICIPANTS AND TOTAL TRANING HOURS OF “SCUOLA DEI MESTIERI”(14) NUMBER OF PARTICIPANTS TOTAL TRAINING HOURS 6,000 25,000 5,196 4,009 16,258 13,547 19,709 1,610 0 0 2021 2022 2023 2021 2022 2023 AVERAGE HOURS OF TRAINING BY GENDER AND EMPLOYEE CATEGORY Gender Male Female Total Employee Category Managers and Senior Managers Middle Managers White Collars Blue Collars Total 2023 26.6 29.6 27.1 2022 15.7 18.4 16.1 2021 14.6 18.9 15.2 2023 2022 2021 42.1 43.7 42.2 8.3 27.1 28.6 27.5 24.3 5.8 16.1 17.9 26.0 21.3 7.4 15.2 TALENT RECRUITMENT AND EMPLOYEE RETENTION The excellence that our products and our brand embody is what attracts and retains the best talents worldwide. At Ferrari, recruitment and selection is about identifying, and sourcing the right qualities and skills that will represent the core of our future success. Our recruitment process provides a plat- form to engage with future employees, to assess competencies through a structured selection pro- cess and to prepare for post-recruitment integra- tion and development. The mission of the recruitment team is to identi- fy, evaluate and bring onboard the individuals which are aligned with our requirements and values. We received approximately 41 thousand applications during 2023, including specific as well as spontaneous applications from around the world for engineering, technical, marketing, digital and financial positions. We also undertake partnership programs with leading universities around the world to engage with students, professors, career offices and a net- work of professionals in order to identify talents for the future(15). In 2023, we organized 81 events (mainly in presence at university campuses or in Ferrari of- fices), attended by more than 4,470 students. We offer Company insight presentations, testimo- nials by Ferrari staff, selected case studies at uni- versity campus and, for partner universities such as the Motorvehicle University of Emilia-Romagna 204 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FNUMBER OF PARTICIPANTS AND TOTAL TRANING HOURS OF “SCUOLA DEI MESTIERI”(14) NUMBER OF PARTICIPANTS TOTAL TRAINING HOURS 6,000 25,000 5,196 4,009 16,258 13,547 19,709 1,610 0 0 2021 2022 2023 2021 2022 2023 (MUNER), we also offer the selected opportunity to visit the Ferrari facilities. These activities allow us to transmit the key values of the Company, and there- fore to engage directly, or indirectly through com- munications with professors, participants and on social media, nourishing our recruitment pipeline. Our program includes different graduate projects, which feature a 6-month internship: “Ferrari Sports Car Academy” is dedicated to the recruitment of Engi- neering, Technology & Manufacturing, Marketing and Commercial, with the aim of attracting, evaluating and hiring future talents and establishing and consolidat- ing partnerships with leading universities and compa- nies. Within this project, we also included our Lifestyle team with the goal to attract the best fashion and luxu- ry management and master’s graduates. The applications were opened to those who graduated in the past 12 months with an academ- ic background from key disciplines: Data Sciences, Management Engineering with a focus on Digital In- novation, Electric & Electronic engineering, Control Engineering, Business Analytics and similar. “Scuderia Ferrari Engineering Academy”, active since 2015, is dedicated to the recruitment of talent- ed engineers to be introduced to our F1 team. In 2023, we completed the ninth edition of this talent program, allowing a selection of race engineering talents of partner universities to work in Scuderia Ferrari. To ease employees into their new jobs, we pro- vide a pre-induction activity that is provided in a digital format, to foster team building, followed by a two-day induction program. The first day is dedicat- ed to introducing the Company culture and mission, as well as guiding new employees through the cor- porate offices and production plants. The following day is focused on health and safety training. During the induction activities carried out in 2023, the fo- cus was given to the messages conveyed during the 2022 Capital Markets Day, referring in particular to the Company's development strategy. To promote a responsible behavior during the assembling phase of cars and engines, we launched many years ago the “Pit Stop” and “Fiorano Race” initia- tives, where colleagues on the same shift are assigned to “teams”, with key performance indicators in place for the improvement of quality, efficiency and envi- ronmental sustainability. The teams are then ranked based on the data, with the best performers being re- warded. Furthermore, we organize the “Pole Position” program to evaluate individual performances. We reward our employees, excluding senior man- agement, through a productivity bonus called “Pre- mio di Competitività”, based on yearly shipments and Adjusted EBITDA results, as well as a product quality index adjusted for individual absenteeism rates. In 2023, each employee received around € 13 thousand as provided for in a specific agreement signed with the trade unions. Ferrari has signed the renewal of the agreement for its Competitiveness Award (Premio di Competitività), expiring in De- cember 2023. The new agreement will be valid for the four-year period 2024-2027, strengthened by the integration of an environmental factor into the award calculation. In 2023, in order to evolve and adapt to the cur- rent historical context, a new behavioral model, One Ferrari, was developed and shared with all Ferra- ri people. This new model has become part of the annual performance appraisal phase, which has brought with it a renewal in both the tools and the dy- namics of the performance management process, now called One Ferrari Performance and Feedback. Every employee, excluding blue collars, is able to continuously monitor performance, give and re- ceive feedback, work towards a final evaluation which is aimed to merge all the data into a definite and precise picture of the year spent, and ignite ac- tionable future developments. In 2023, approximately 2,500 employees re- ceived a performance evaluation, covering almost 100% of white collars and managers. All the people involved have access to the train- ing on our performance management process through online training video courses that are al- ways available to all of our employees globally. More- over, we organize assessment classes with external psychologists and HR experts with the aim of eval- uating employee potential. Blue collars, who are not involved in the performance management process, have access to an  assessment, based on develop- ment centers, aimed at developing their career path. In addition, we continue the leadership develop- ment project for our Managers and Senior Managers, an individual assessment of leadership behaviors aimed at continuous improvement and profession- al development, which also includes a 360-degree feedback. The results of these assessments are a fundamental asset for succession plans in key posi- tions, identifying career development opportunities and defining consistent retention actions. EMPLOYEES WHO RECEIVED A REGULAR PERFORMANCE AND CAREER DEVELOPMENT REVIEW BY GENDER Gender Male Female Total 2023 48% 69% 51% 2022 45% 65% 48% 2021 45% 66% 48% 205 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FEMPLOYEES WHO RECEIVED A REGULAR PERFORMANCE AND CAREER DEVELOPMENT REVIEW BY EM- PLOYEE CATEGORY Employee category Managers and Senior Managers Middle Managers White Collars Blue Collars Thanks to our career development program, we en- courage the professional growth of our employees and try to fill key positions with talented internal can- didates before tapping into the external market. The results of the analysis carried out on our key posi- tions covered by our employees are used to develop specific succession plans, with a timeframe of 2-4 years, to ensure the competitiveness of Ferrari over time and to take advantage of our employees’ talents. Moreover, in 2023, we created the Internal Job Posting within our employee corporate portal, to enable em- ployees to apply for new positions within the Compa- ny. The aim is to help talent emerge and to contribute to the creation of a culture of agility and innovation. In 2023, for the fourth year in a row, our effort to guarantee employee attraction and retention was also recognized by the Top Employers Institute who positively evaluated the Company’s programs in terms of talent attraction, training, career devel- opment, inclusion and respect for diversity, welfare, social commitment and innovation. DIVERSITY AND INCLUSION We believe in the importance of inclusion and the en- hancement of diversity. We continuously implement strategies to maintain an engaging, meritocratic and fair environment. Equal opportunities are the best way to ensure that merit is the decisive factor to keep on attracting, retaining and developing talents, accelerating Ferrari’s innovation process. To guarantee equal opportunities, our Compa- ny operates a merit-based remuneration policy, not discriminating on the basis of gender, age, nationali- ty, social status or cultural background. In 2023, we have received the renewal of the Equal-Salary Certificate for providing equal pay to men and women with the same qualifications and positions in the Company. For the first year, the Equal Salary Certificate covers all of our global reach. This accreditation attested the Company’s commitment to creating an inclusive and diverse working envi- ronment while fostering career development for everybody. In 2020, Ferrari was the first Italian Com- pany to receive this specific certification. The certifi- cation process involves both quantitative and quali- tative evaluations. The quantitative evaluation, which must be surpassed to proceed to the qualitative evaluation, consists of a detailed statistical analysis 2023 2022 98% 96% 92% —% 94% 96% 88% —% 2021 98% 96% 90% —% of compensation levels to verify that the gender pay gap is lower than 5% compared to a predictive statis- tical salary and that the accuracy of the data used is greater than 90%. The qualitative evaluation assess- es: (i) the CEO and Top Management’s commitment to Diversity and Inclusion matters, (ii) how Corporate processes and policies are fair in terms of gender, (iii) employees’ perception of the inclusiveness of the culture and (iv) the PDCA (Plan, Do, Check, Act) meth- odology application in all of the aforementioned pro- cesses. We see this certification not as an end point but as a further stage of growth of the Company and an opportunity to continue to implement tangible ac- tions to ensure that everyone can pursue their pro- fessional growth. In order to continuously improve our Diversity and Inclusion approach, we have defined some ini- tiatives to support our employees in their work-life journey, an example being a digital self-coaching project in collaboration with a specialized third par- ty for new parents. The aim is to recognize the val- ue of the parental experience to enable people to apply  the acquired parenting talents and expertise into their jobs. In 2023, we joined the “4 Weeks 4 Inclusion” (4W 4I), a marathon of events on Diversity and Inclusion, sharing our practices with a large number of Italian companies with the aim of contributing in enhanc- ing the culture of our country on Diversity and Inclu- sion topics. Furthermore, in 2023, we took advantage of all the training courses offered by Valore D, the asso- ciation with over 320 member companies in Italy, whose commitment is to promote gender balance and an inclusive culture in organizations and across the country: 35 women and 3 men were selected amongst Ferrari employees to get access to discus- sions on diversity, inclusive leadership, language, and soft skills. Moreover, on Ferrari intranet all employ- ees can access several “open talks” on these topics. In 2022 we defined as strategic goal to maintain a healthy growth rate in women in managerial posi- tions, considering the percentage of women in the total employee population. We define as an appro- priate target to have at least 18% women in manage- rial positions by 2027. The progresses journey are evident in our looking at some figures: women in managerial po- sitions(16) at December 31, 2017 were 11.8% (while 206 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fwomen represented 12.2% of the total employee population), at December 31, 2022 were 15.2% (while women represented 15.4% of the total employee population) and at December 31, 2023 were 16.2% (while women represented 15.7% of the total em- ployee population). Compared to 2022, at the end of December 2023, the percentage of women in mana- gerial positions increased by 1%. Our plan to achieve the target is to continue the implementation of initiatives and actions put in place in 2023, as mentioned above fostering the value of diversity in panel of hiring candidates, monitoring the percentage of men and women involved in ca- reer plans and salary review, defining clear diversity objectives for all levels in organization. For Ferrari it is important to guarantee equal opportunities at all levels, so the consistency between global percent- age and managerial percentage is a key indicator in our diversity strategy. Reflecting the Company’s ambition for diversity and inclusion in the entire Company, The Board of Directors adopted a Diversity and Inclusion Practice effective as of September 14, 2023. This Practice identifies and implements diversity and inclusion principles for the whole employees’ population of Ferrari Group as well as the Board of Directors. OCCUPATIONAL HEALTH AND SAFETY We are particularly focused on the safety of our people and we are dedicated to the prevention of accidents at work(17). ternal health and safety audits are performed to en- sure compliance with our health and safety manage- ment system, current laws and best practices. Our hazard identification, risk assessment and incident investigation processes are developed in ac- cordance with the highest international and national voluntary standards and normative requirements on health and safety. In addition to formal meetings being held with employee representatives, periodic meetings are also held with management to review safety issues and share best practices. Periodic in- Ferrari S.p.A. and Mugello Circuit S.p.A. health and safety management systems are certified ISO 45001:2018(18), a voluntary international standard, which specifies the requirements of an occupational health and safety management system with reference to the activities performed within the premises of the organization by its employees or external workers. HOURS OF HEALTH AND SAFETY TRAINING PER YEAR AND NUMBER OF PARTICIPANTS(19) TRAINING HOURS 35,000 NUMBER OF PARTICIPANTS 4,500 30,529 3,957 4,161 4,052 22,044 20,644 0 0 2021 2022 2023 2021 2022 2023 We continue to make significant investments in safe- ty at work: improvements in the existing structures and specific training have allowed us to achieve sig- nificant results. Mandatory health and safety training is provid- ed to all new hires during the second day of the in- duction program, while periodic sessions are devel- oped for all employees. We provide employees who test our cars with specific on-track driving train- ing to make sure they have all the skills required to perform emergency maneuvers, if necessary. As shown in the table above, in 2023, the number of training hours is higher than in the previous year, mainly due to the frequency of training of supervi- sors and managers which has changed from 5 to 2 years, following the fulfillment required by the up- dated legislation. In addition, a specific health and safety section is part of the training program of the “Department Team Leaders”. Moreover, periodic meetings with the Representatives of Safety Work- ers (RLS) are scheduled quarterly and not just annu- ally, as required by the CCSL (“Contratto Collettivo 207 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FSpecifico di Lavoro”) to address any potential health and safety threat that could arise. We continue to pursue the program aimed at highlighting the “near misses”: events that could have caused injuries but did not. The program works according to a “bottom-up” logic in which everyone, even those who carry out simple operational roles, can make reports. Moreover, most of the buildings are provided with a defibrillator along with the standard health and safety equipment. The table below shows a decrease in the lost time injuries rate over the last years. In 2023, the injury rate was 0.9, with 7 occurrences (19 in 2022) and no fatalities occurring. The types of work-related inju- ries include, among others, bruises and fractures. Each work-related injury is analyzed to determine the cause, and appropriate measures to avoid re- occurrences are then implemented. The reduction of injuries was also due to the intensified prevention and non-repetition analysis. NUMBER OF INJURIES AND INJURY RATE(20) Total number of lost time injuries of which causing more than 3 days of absence (excl. high- consequence injury and fatalities)(21) of which high-consequence injury of which fatalities Total lost time injury rate(22) of which causing more than 3 days of absence (excl. high- consequence injury and fatalities)(23) of which high-consequence injury of which fatalities Hours worked 2023 2022 2021 7 5 — — 0.9 0.7 — — 19 16 — — 2.6 2.2 — — 9 5 1 — 1.2 0.7 0.1 — 7,528,241 7,246,254 7,263,995 During the course of 2023, 3 injuries have been re- corded for agency workers, 2 of them resulting in more than 3 days of absence. During the last year, no cases of diseases arising from a work situation or activity, or from a work-re- lated injury have been recorded. Due to the nature of the activity conducted in Ferrari plants, workers are not considered exposed to high risks relating to specific diseases. Every employee undergoes a regular work-related medical examination, as pre- scribed by law. Health and safety contents are also covered by the CCSL (Contratto Collettivo Specifico di Lavoro), signed on March 8, 2023, and also by the Accordo Premio di Competitività Ferrari, signed on Septem- ber 25, 2019, and renewed on November 13, 2023 valid for the four year period 2024-2027, providing a specific Health and Safety Commission involving, on a monthly basis, both the Company and the workers’ representatives for health and safety. CCSL and Ac- cordo Premio di Competitività Ferrari cover 93.5% of Ferrari employees. OUR EMPLOYEES IN NUMBERS As of December 31, 2023, Group(24) employees were 4,988, an increase of 1.4% compared to December 31, 2022 (4,919). We expect to continue growing over the next few years in order to meet our key priorities. Number of employees December 31, 2023 December 31, 2022 December 31, 2021 Total of which women 4,988 15.7% 4,919 15.4% 4,609 15.2% 208 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FWe also rely on external collaborators such as contractors, self-employed persons, workers hired through external agencies and interns. NUMBER OF WORKERS WHO ARE NOT EMPLOYEES Number of workers who are not employees December 31, 2023 December 31, 2022 Agency workers Interns Total 907 81 988 755 70 825 PERCENTAGE OF EMPLOYEES PER EMPLOYEE CATEGORY BY GENDER Employee category December 31, 2023 December 31, 2022 Managers and Senior Managers Middle Managers White Collars Blue Collars Total Male Female Total Male Female Total 86.3% 83.4% 74.9% 91.9% 13.7% 16.6% 25.1% 8.1% 161 741 1,827 2,259 88.2% 84.1% 74.9% 92.0% 11.8% 15.9% 25.1% 8.0% 84.3% 15.7% 4,988 84.6% 15.4% 152 679 1,762 2,326 4,919 As indicated in the table above, compared to the previous year, in 2023 the percentage of female employees slightly grew from 15.4% to 15.7%. This was mainly due to an increase in the “White Collars” and “Blue Col- lars” categories. PERCENTAGE OF EMPLOYEES PER EMPLOYEE CATEGORY BY AGE GROUP Employee category December 31, 2023 December 31, 2022 Managers and Senior Managers <30 —% 30-50 >50 Total <30 30-50 >50 Total 49.1% 50.9% 161 0% 49.3% 50.7% 152 Middle Managers 0.5% 70.0% White Collars 14.8% 72.3% Blue Collars 12.6% 66.1% 29.5% 12.9% 21.3% 741 1.3% 70.6% 28.1% 679 1,827 16.2% 71.7% 12.1% 1,762 2,259 15.9% 64.6% 19.5% 2,326 Total 11.2% 68.4% 20.4% 4,988 13.5% 67.5% 19.0% 4,919 The majority of the workforce is between the age of 30 and 50 (68.4%). 209 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FTOTAL NUMBER OF EMPLOYEES BY EMPLOYMENT CONTRACT, BY GENDER AND REGION GROUP Employment contract December 31, 2023 December 31, 2022 Male 4,178 25 4,203 Female 760 25 785 Total 4,938 50 Male 4,137 26 4,988 4,163 Female 734 22 756 Permanent Temporary Total ITALY Employment contract December 31, 2023 December 31, 2022 Male Female 3,995 6 4,001 660 5 665 Permanent Temporary Total REST OF THE WORLD Male Female Total 4,655 11 3,965 8 4,666 3,973 632 1 633 Total 4,871 48 4,919 Total 4,597 9 4,606 Employment contract December 31, 2023 December 31, 2022 Permanent Temporary Total Male Female Total Male Female Total 183 19 202 100 20 120 283 39 322 172 18 190 102 21 123 274 39 313 As shown in the tables above, 93.5% of our employees work in Italy, which is considered the only significant location of operation as this is where our plants and most of our workforce is located. The vast majority of our employees have a permanent contract (99.0%). 210 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FTOTAL NUMBER OF EMPLOYEES BY EMPLOYMENT TYPE, BY GENDER AND REGION GROUP Full-time/Part-time December 31, 2023 December 31, 2022 Male Female 4,199 4 — 756 29 — Total 4,955 33 — Male 4,157 6 — Female 731 25 — Total 4,888 31 — 4,203 785 4,988 4,163 756 4,919 Full-time Part-time Non-guaranteed hours (e.g. casual employees, employees with zero-hour contracts, on-call employees) Total ITALY Full-time/Part-time December 31, 2023 December 31, 2022 Male Female 3,998 3 — 639 26 — Total 4,637 29 — Male Female 3,970 3 — 611 22 — Total 4,581 25 — 4,001 665 4,666 3,973 633 4,606 Full-time Part-time Non-guaranteed hours (e.g. casual employees, employees with zero-hour contracts, on-call employees) Total REST OF THE WORLD Full-time/Part-time December 31, 2023 December 31, 2022 Full-time Part-time Non-guaranteed hours (e.g. casual employees, employees with zero-hour contracts, on-call employees) Total Male 201 1 — Female 117 3 — Total 318 4 — Male 187 3 — Female 120 3 — Total 307 6 — 202 120 322 190 123 313 211 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FNEW EMPLOYEE HIRES AND EMPLOYEE TURNOVER EMPLOYEE TURNOVER BY GEOGRAPHICAL AREA 2023 2022 Italy Rest of the Total Group Italy Rest of the Total Group World World Employees as of January 1 4,606 313 4,919 4,337 272 4,609 New Hires Departures Transfer Employees as of December 31 New Hires (%) Departures (%) 244 184 — 4,666 5.2% 3.9% 71 62 — 315 246 — 322 4,988 22.0% 19.3% 6.3% 4.9% 484 215 — 4,606 10.5% 4.7% 92 51 — 313 29.4% 16.3% 576 266 — 4,919 11.7% 5.4% EMPLOYEE TURNOVER BY AGE 2023 2022 <30 30-50 >50 Total Group <30 30-50 >50 Total Group Employees as of January 1 New Hires Departures Age range 665 116 40 (182) 184 149 56 15 57 126 598 273 46 315 246 — (160) 282 150 32 3,320 934 4,919 3,156 855 4,609 Employees as of December 31 559 3,411 1,018 4,988 665 3,320 New Hires (%) Departures (%) 20.8% 7.2% 5.4% 4.4% 1.5% 5.6% 6.3% 41.1% 4.9% 6.9% 8.5% 4.5% 21 70 128 934 2.2% 7.5% 576 266 — 4,919 11.7% 5.4% EMPLOYEE TURNOVER BY GENDER Employees as of January 1 New Hires Departures Employees as of December 31 New Hires (%) Departures (%) 2023 2022 Female Total Group Male Female Total Group 756 86 57 785 11.0% 7.3% 4,919 3,909 315 246 4,988 6.3% 4.9% 453 199 4,163 10.9% 4.8% 700 123 67 756 16.3% 8.9% 4,609 576 266 4,919 11.7% 5.4% Male 4,163 229 189 4,203 5.4% 4.5% All the employees of the Group in Italy (representing 93.5% of the total workforce) are subject to collective agreements (Contratto Collettivo Specifico di Lavoro (CCSL), Accordo Premio di Competitività Ferrari and a collective bargaining agreement for our managers)(25). Ferrari pays sal- aries that are in line with industry standards. In addition to the statutory 212 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fminimum wages, salaries are often determined by collective bargaining agreements. All the individual notice periods are provided by the CCSL signed on March 8, 2023, referring to employee’s category and business seniority. The minimum notice period is fixed to 10 days. ANNUAL TOTAL COMPENSATION RATIO Total Annual Remuneration of CEO (A) 6,692,434(26) 4,993,961(26) 4,486,151 Median annual total compensation for all the organizations’ 50,741 47,000 45,852 2023 2022 2021 employees excluding the highest paid individual (B) Annual Total Compensation Ratio (A/B) Percentage increase in annual total compensation for the organization's highest-paid individual 131.9 34.0% 106.3 11.3% 97.8 (34.4)% Median percentage increase in annual total compensation for 8.0% 2.5% 6.0% all of the organization's employees excluding the highest-paid individual(27) Change in the Annual Total Compensation Ratio 4.3 4.5 (5.70) In line with the GRI standards, during 2023, the ratio of the annual total compensation(28) for the highest-paid individual to the median annual total compensation for all employees is 131.9. The ratio of the percentage in- crease in annual total compensation for the highest-paid individual to the median percentage increase in annual total compensation for all employ- ees is 4.3. In 2022, the ratio was 106.3, while the ratio of the percentage increase was 4.5. Both in 2023 and 2022, the highest-paid individual was the CEO. For further details on the internal pay ratios calculated in line with the Dutch Corporate Governance Code, please refer to the chapter “Remuneration of Directors—Remuneration of the Members of the Board of Directors and the Executive Council—1. Remuneration Strategy for the 2023 Financial Year—Lock up period—Internal pay ratios”. ABSENTEEISM RATE IN ITALY(29) Employees 2023 1.41% 2022 2.59% 213 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F214 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F215 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FREDUCING OUR ENVIRONMENTAL FOOTPRINT OUR ENVIRONMENTAL RESPONSIBILITY We aim to increase our environmental awareness to continuously set and implement related programs and actions. We deeply believe that ensuring access to a pure and blooming environment should not be a privilege but rather a basic human right. In this respect, our efforts aim to minimize the negative impacts of our activities on natural resources and the global envi- ronment, committing to protect the environment for present and future generations. In particular, we are aware of the challenges and opportunities posed by climate change for sustainable business development. The following section aims, among other things, at providing a transparent disclosure on climate change-related matters, in accordance with the recommendations of the Task Force on Cli- mate-related Financial Disclosures (“TCFD”). For fur- ther details, please refer to the TCFD table at the end of this Statement. OUR STRATEGY TO REACH CARBON NEUTRALITY BY 2030 Our business strategy is in line with climate change-re- lated commitments and developments at the inter- national, national and regional level, such as the Par- is Agreement and Sustainable Development Goals (SDGs). In this context, our most significant environ- mental efforts are deployed through a program for the reduction of polluting and GHG emissions, both direct and indirect. 216 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F Since 2021, we calculate our carbon footprint con- sidering the GHG emissions related to all Group ac- tivities over our entire value chain, based on GHG protocol methodology and verified by a third-party certification entity according to ISO 14064-1:2018 requirements. Each year we update our calcula tion to monitor our performance. During our 2022 Capital Markets Day, we have detailed our commit- ment to achieving carbon neutrality by 2030 on our entire value chain, addressing direct and indirect GHG emissions. In particular, we are currently working on our electrification journey, developing hybrid and elec- tric powertrains together with other innovations, in line with specific regulatory requirements, to pre- pare for a low-emissions future. Nevertheless, our commitment is to go beyond the decarbonization of the use phase and beyond cutting GHG emissions domestically. Being that the purchased goods cate- gory accounts for the majority of our Scope 3 emis- sions, we have started to act upstream to ensure fair and widespread actions at a global level, focusing on recycled materials and the development of innova- tive technologies.  For this reason, the engagement of our suppliers is a fundamental aspect of our de- carbonization strategy. Our contribution to achieving the targets set in 2015 by the Paris Agreement is threefold: 1 carbon neutrality in our operations already start- ing from 2021 emissions, through high quality projects with climate and social contributions (decreasing by at least 90% our Scope 1 and 2 absolute CO2eq emissions by 2030 versus 2021); 2 reduction of at least 40% of our Scope 3 emis- sions per car, focusing mainly on materials and vehicle use phase (upstream: -30% per car by 2030 vs. 2021 and downstream: -50% per car by 2030 vs. 2021); and 3 commitment to set science based targets. The final version of the Science Based Targets ini- tiative (SBTi) pathway for automakers has not been released as of the date of publication of this document. 2022 FERRARI GROUP CARBON FOOTPRINT(30) The whole Ferrari Group carbon footprint for 2023 is currently being processed, whereas, Scope 1 and 2 direct and energy indirect emissions are already available and equal to 78 ktCO2, as presented in the Reducing Our Direct Environmental Impacts section. 2022 FERRARI GROUP AVERAGE CARBON FOOTPRINT 309 ktCO2e 142 ktCO2e 84 ktCO2e 63 ktCO2e 228 ktCO2e Cradle to Gate Scope 3: Indirect Upstream GHG emissions Raw materials and manufacturing equipment for road cars Inbound logistics, business travel, and others materials Gate to Gate Scope 1&2: Direct and Energy Indirect GHG emissions Our facilities and manufacturing Gate to Use Scope 3: Indirect Downstream GHG emissions Outbound logistics and dealership Use phase Vehicle End-of-Life 0 ktCO2e A Ferrari is forever! 217 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FASSESSING AND GOVERNING CLIMATE-RELATED RISKS Our risk management approach is an important busi- ness driver and it is integral to the achievement of the Group’s long-term business plan. As relevant factors for long-term value creation, we consider pivotal to manage risks related to climate change. The fight against climate change and the preservation of the environment are becoming crucial around the world and these concerns have resulted in rapidly evolv- ing climate and environmental regulations emitted across international markets. Following the structure described in the “Risk Management Process and Internal Control Systems” section of this Report, at the first level of control, the FLT is responsible for identifying, prioritizing and mitigating risks and for the establishment and maintenance of a risk management system across our business functions. In particular, until December 2023, our CFO, who is a member of the FLT, was in charge of the risk management function that is in- volved, among other risks, in the assessment, mon- itoring and management of environmental and cli- mate-related risks. Since December 2023, this role has been assigned to the Chief of Internal Audit, Risk and Compliance Officer. Operating areas represent the first line of defense, they identify and assess cli- mate-related risks and, in collaboration with the cen- tral function of risk management, those risks are as- sessed, monitored and managed at corporate level. The Green Sustainability Steering Committee is composed of representatives from different func- tions and it has the objective of achieving the GHG emissions reduction targets by 2030. Specifically, within the Research & Development department, a team is responsible for future development aiming at reducing CO2eq emissions of Ferrari cars, among which the future full electric powertrain. Whereas, another team is in charge of overseeing regulatory developments while monitoring Ferrari cars’ emis- sions. In addition, the Research & Development, the Product Development and the Purchasing & Quality departments, are working with our suppliers to find solutions to meet our target of 30% reduction per car of our Scope 3 upstream emissions. These depart- ments report to the Chief Research & Development Officer, the Chief Product Development Officer and the Chief Purchasing & Quality Officer, respectively. In 2022, we conducted a thorough Climate Sce- nario Analysis of our prospective climate change risks, both physical and transitional, following the most up-to-date methodologies available interna- tionally, covering the 2030 to 2050 time-horizon, to strengthen our resilience strategy. In 2023, the as- sumptions of this analysis remained unchanged. The choice of the scenarios for physical and transi- tional risks is based on EU and international guide- lines (i.e.: EU Taxonomy and TCFD respectively), on climate literature, availability of impact studies and likelihood of scenarios. We used the International En- ergy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC) scenarios along with the 218 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FSwiss RE, Moody’s Analytics, and Wood Mackenzie international databases. More specifically, for physical risks, the Rep- resentative Concentration Pathways (RCP) corre- spond to defined emissions and global warming lev- els. Each RCP scenario is modeled by the scientific community in terms of physical impacts. In partic- ular, we have considered the RCP 8.5, RCP 4.5 and RCP 2.6 scenarios. With regard to transition scenarios analysis, ac- cording to different scenarios, transition speeds might vary greatly in the next two decades. The as- sessment of transition climate-related risks is based on a qualitative and quantitative climate-related sce- nario analysis. We take into account prospective scenarios for technological development, market conditions and normative evolutions. These scenari- os are based on the IEA (namely NZE, APS and STEPS scenarios), combined with many different literature studies, based on the definition of a climate ambition and technology progress parameter. Also, IPCC SSP scenarios were used to create charging infrastruc- ture projections. The overall structure of the anal- ysis relies on the pairing of physical and transition scenarios following the combinations: (1)SSP1/NZE- (2)SSP2/APS- (3)SSP3-5/STEPS. With the evolution of climate scenario analysis, we expect the processes and data quality to improve over time, which will advance our understanding of climate risks and opportunities and will support us in strengthening our resilience and adaptation to cli- mate change. Following this analysis, we have strengthened our mitigation plan related to physical risks regard- ing our production plants in Maranello and Modena. This plan includes actions to mitigate against ex- treme weather events such as floodings, hail epi- sodes and droughts. REDUCING OUR DIRECT ENVIRONMENTAL IMPACTS Our most significant environmental efforts are de- ployed through efficiencies in the manufacturing processes and a program for the reduction of pol- luting emissions. We assemble all of our cars and manufacture all the engines used in our cars or sold to Maserati at our production facility in Maranello(31) (Italy). The Carrozzeria Scaglietti plant, located in Modena (Ita- ly), is where we manufacture aluminum bodyworks and chassis. The two plants cover a cumulative area of approximately 860 thousand square meters. We also own the Mugello racing circuit in Scarperia, near Florence (Italy), which covers an area of 1.7 mil- lion square meters (of which approximately 1.2 mil- lion square meters of green or tree-covered areas). We directly operate 14 retail stores, maintain our Lifestyle office in Milan and other offices for our for- eign subsidiaries as well as other smaller facilities in Italy, such as the Museo Enzo Ferrari (MEF) in Mode- na and the Ferrari Museum in Maranello. The envi- ronmental impact of these additional facilities, even though deemed negligible, is still measured and re- ported in terms of energy consumption and green- house gas (herein after “GHG”) emissions. Other en- vironmental indicators, such as water withdrawals and discharges and waste generation are deemed negligible, and excluded. The monitoring and management of the environ- mental performance of our productive plants is as- signed to a team that reports to our Chief Technolo- gies & Infrastructures Officer. Their effort is aimed at minimizing the impact of our activities on the en- vironment, particularly in relation to the energy con- sumption of the production facilities. ENVIRONMENTAL MANAGEMENT SYSTEMS We have invested heavily to minimize our envi- ronmental impact since 2001, when the Company reached the ISO 14001 certification for its plants in Maranello and Modena. In 2022, we obtained the renewal of the certification of our environmental management system according to the standard ISO 14001:2015. In addition, in 2007, we obtained and since then renewed the Integrated Environmental Authorization. As mentioned in our Environmental Practice, our effort is to minimize the negative im- pact of our activities on natural resources and the global environment. In addition, in 2023 Ferrari S.p.A.  obtained the three stars of the FIA Environmental Accreditation Program. The program development by the Fédéra- tion Internationale de l’Automobile aims at helping key players in the motorsport and automotive sector mea- sure and enhance their environmental performance by means of an independent certification process. To further reflect our sustainability commit- ment, we have obtained several certifications as- sessing our sustainable event management. This includes, but is not limited to, the assessment of the following aspects: separate collection of waste and recycling of materials (circular economy), energy efficiency, mobility and logistics, accessibility for people with disabilities, diversity and inclusion, bat- tle against food waste, local development and eco- nomic impact. In this respect, in 2023, we obtained once again the ISO 20121 certification, the interna- tional standard for sustainable event management, for the Ferrari Challenge Europe. The standard 219 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fapplies to the planning and realization of the 2023 Championship. In the same year, also Passione Fer- rari, Esperienza Ferrari and Ferrari Tour, driving events dedicated to clients and sports car lovers, obtained the ISO 20121 certification. During 2023, we also obtained the ISO 20121 certification for the Ferrari Factory Tour, a unique experience for clients, prospects and guests of sponsors, where ad-hoc guided tours are orga- nized to the “Cittadella Ferrari” and the iconic plac- es of the “Cavallino Rampante”. In line with a contin- uous improvement approach, in 2023 we electrified our bus fleet. The Mugello Circuit S.p.A. obtained and renewed the certification for the environmental management system with ISO 14001:2015 and EMAS (Eco-Man- agement and Audit Scheme). Moreover, in 2020, Mugello Circuit S.p.A. obtained the ISO 20121 certifi- cation, confirmed also in 2023. Mugello Circuit S.p.A. has been the first circuit in the world to obtain this certification. This standard applies to the activities related to the events hosted and is evidence of the commitment of Mugello Circuit S.p.A. to implement a responsible and sustainable management system. Moreover, in 2023, Mugello arrived first in the Sus- tainable Circuits IndexTM (SCITM). EFFICIENT ENERGY USE Our culture embraces a rational use of energy, which is mainly utilized for the manufacturing of cars and engines. antee of Origin certificates and since 2021, 100% of the electricity purchased from the grid for our pro- duction plants is generated by renewable sources. Over the years, the Group has strived to lower its energy consumption and to minimize its environ- mental impact, adopting innovative solutions and using renewable energy sources for its manufac- turing facilities. In 2008, we installed our first solar panels and subsequently increased capacity since then. Since 2014, we have been purchasing electricity with Guar- In addition, from 2009, we started using electrici- ty along with hot and cold water generated by the tri- generation plant, allowing us to optimize our energy needs. In 2023, the trigeneration plant and the solid oxide fuel cell plant produced 67% of the electricity needed for the Maranello plant, while the renewable sources(32) cover the remaining 33%. In 2023, the tri- generator produced 95 GWh of electricity. ENERGY CONSUMPTION WITHIN THE ORGANIZATION Unit of measurement: TJ Non-renewable fuel consumption Natural Gas (used for trigenerator) Natural Gas (for other uses) Gasoline Diesel (33) Total electricity bought for consumption From renewable sources From non-renewable sources Electricity self-produced for consumption(34) Electricity sold Total 2023 1,299 788 434 63 14 217 199 18 6 (2) 2022 1,384 917 394 59 14 196 178 18 3 (3) 1,520 1,580 The total energy consumption within the Group for 2023 was 1,520 TJ, with a decrease of 4% from 2022 (1,580 TJ) mainly due to energy efficiency projects. We are planning to gradually reduce the use of trigeneration through an electrification process. During 2023, we have installed photovoltaic panels for about 2.4 MWp. In addition, in 2023, we have im- plemented actions such as the reduction of both the temperature and the degassing time of our light al- loys furnaces, the electrification of our facilities in- cluding the installation of high-efficiency heat pumps to replace gas boilers, and the optimization of the compressed air distribution network and of the op- eration time of the air treatment units. Moreover, we put into operation more efficient electric motors in our facilities, we installed LED technology and timers on our vending machines in order to let them shut down automatically during periods of disuse. 220 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FSCOPE 1 AND SCOPE 2 GHG EMISSIONS The GHG emissions deriving from the Maranello and Modena plants, from the Mugello racing circuit and from our stores, museums, subsidiaries’ offic- es and other facilities (Scope 1 and Scope 2 mar- ket-based), are equal to 77,691 tCO2eq in 2023, com- pared to 84,012 tCO2eq in 2022, 92,716 tCO2eq in 2021, and 82,307 tCO2eq in 2020. DIRECT AND ENERGY INDIRECT GHG EMISSIONS(35) Unit of measurement: tCO2eq Scope 1(36) 2023 2022 2021 2020 75,409 81,668 90,832 79,977 Scope 2 (market-based method)(37) 2,282 2,344 1,884 Scope 2 (location-based method)(38) 21,384 17,252 11,607 2,330 9,536 In 2023, our Scope 1 GHG emissions decreased by 7% compared to 2022, mainly due to the electrifi- cation process of our Maranello plant. Our Scope 2 (market-based method) GHG emissions remained stable as we continued to purchase Guarantee of Origin certificates for renewable energy for our production plants in Maranello and Modena, and for the Mugello circuit. Our Scope 2 (location-based method) GHG emissions have increased due to the gradual shift from natural gas to electricity in our production plants and an increase in the electricity emission factors. As shown in the table below, we managed to de- couple our economic growth from our environmen- tal impact. In other words, we continue growing our business activities while at the same time reducing our Scope 1 and 2 market-based GHG emissions, with the exception of 2020, which was impacted by the COVID-19 pandemic. Carbon ratio(39) Net Revenues (€ million) Adj. EBITDA (€ million) Carbon on net revenues ratio (CoR) (tCO2eq/€ million) Carbon on Adj. EBITDA ratio (tCO2eq/€ million) 2023 5,970 2,279 13.0 2022 5,095 1,773 16.4 2021 4,271 1,531 21.7 2020 3,460 1,143 23.8 2019 2023 vs. 2019 3,766 1,269 22.8 58.5 79.6 (48.2) 34.1 47.2 60.6 72.0 67.8 (54.3) Along with the implementation of GHG emission re- duction initiatives, we believe it is of the utmost im- portance to act now also by starting to purchase certified carbon avoidance credits. Through these credits, we have already achieved carbon neutrality in all our operations for 2021 and 2022 Scope 1 and 2 GHG emissions. Our climate action continues beyond the value chain to participate in the global race against climate change and its environmental and social challenges. Since 2022, we have partnered with ClimateSeed to support a unique carbon avoidance project in Cana- da that pools more than 800 local carbon-reduction micro-projects by SMEs, municipalities, and NGOs together to provide high additional social impacts. The Sustainability Community Project is certified by the Verified Carbon Standard (VCS) - Verra, one of the most recognized GHG crediting programs. The GHG reductions come from diverse sources of indi- vidual activities such as improved energy efficiency for buildings, redirection of waste away from land- fills, and promotion of fuel-switching activities. Since contributing to this project, the project developer has been innovating how it manages and monitors the micro-projects through digital solutions to scale the onboarding of new projects and digitally manage the carbon emissions inventory. The project carrier is continuously searching for new SME prospects to join their sustainable community, which includes more than 150 members and more than 1 thousand buildings in the province of Quebec. The project’s main objective is to bring up to 10 thousand custom- er facilities together in a “sustainable community” to reduce GHG emissions. Beyond project certification, ClimateSeed as- sesses project carriers to identify the ultimate beneficial owners behind every single project, pre- venting money laundering and terrorist financing. In addition, ClimateSeed developed an internal proj- ect evaluation framework which includes all key as- pects to assess the various dimensions of a project, such as additionality, permanence, leakage, social safeguards and rights, benefit-sharing structures, biodiversity impacts, and co-benefits related to 221 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FSustainable Development Goals. ClimateSeed guar- antees fair and transparent margins, no resale, no secondary market, and carbon credit retirement on behalf of Ferrari. As soon as deliberate actions will be implemented, we will reverse the trend reducing climate contribu- tion activities, decreasing by at least 90% our Scope 1 and 2 absolute CO2eq emissions by 2030 versus 2021. OTHER RELEVANT AIR EMISSIONS Other significant air emissions are mainly related to volatile organic compounds (VOCs) released during vehicle manufacturing. In addition, NOx, SOx and dust emissions are constantly monitored. OTHER SIGNIFICANT AIR EMISSIONS Unit of measurement: tons NOx SOx Volatile Organic Compounds (VOCs) Dusts 2023 61.7 1.0 68.3 4.4 2022 59.4 0.3 54.2 8.9 WASTE MANAGEMENT We acknowledge that rational use of raw materials, together with careful waste management, helps re- duce the environmental impact of the manufactur- ing process. In addition, innovative solutions and advanced technical processes minimize waste and negative environmental impact. The reuse of pro- duction scraps in our manufacturing process also has the objective of reducing waste. To achieve this target, in these past years, a se- ries of initiatives in the different phases of the man- ufacturing process have been implemented. As an example, aluminum scraps are melted in the found- ry to avoid waste, this is particularly important con- sidering that aluminum is the first raw material (by weight) used in our manufacturing process. Other projects aimed at reducing waste are undergoing a feasibility analysis. In particular, according to the concept of circular economy, in some cases our production scraps can be used for our manufactur- ing processes (for example processed sand used in the foundry and aluminum that cannot be smelted). Starting from 2021, we initiated a project to reduce the waste generated through the improvement of the existing on-site water treatment in Maranello. In addition, the project also allowed a reduction of the truck traffic for transport to third-party disposers. The project was developed in two phases. The first phase consisted in the installation of a treatment plant for washing and degreases solutions, while the second phase involved the installation of an evapo- rator treatment plant for oil emulsions. Total waste40 for 2023 was equal to 8,821 tons, with an increase of 4% compared to 2022 (8,448 tons), entirely treated offsite. This increase is mainly due to maintenance activities and an increase in the number of vehicles produced, in fact, total waste per vehicle produced remains stable. WASTE DIVERT- ED FROM DISPOSAL Unit of measurement: tons 2023 2022 Preparation for reuse Recycling Total Hazardous Waste Weight Percentage Weight Percentage — 669.6 669.6 —% 12.2% 12.2% — 616.0 616.0 —% 13.0% 13.0% 222 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FUnit of measurement: tons 2023 2022 Preparation for reuse Recycling 16.7 4,796.9 0.3% 87.5% 21.2 4,112.5 Total Non-Hazardous Waste 4,813.6 87.8% 4,133.7 0.4% 86.6% 87.0% Total Waste Diverted From Disposal 5,483.2 100.0% 4,749.7 100.0% Weight Percentage Weight Percentage WASTE DIRECTED TO DISPOSAL Unit of measurement: tons 2023 2022 Incineration with or without energy recovery Landfilling Other disposal operations Total Hazardous Waste Weight Percentage Weight Percentage — 0.3 602.1 602.4 —% —% 18.0% 18.0% — 0.4 802.6 803.0 —% —% 21.7% 21.7% Unit of measurement: tons 2023 2022 Incineration with or without energy recovery Landfilling — 120.6 —% 3.6% — 98.0 Other disposal operations 2,614.7 78.4% 2,797.1 Total Non-Hazardous Waste 2,735.3 82.0% 2,895.1 —% 2.7% 75.6% 78.3% Total Waste Directed to Disposal 3,337.7 100.0% 3,698.1 100.0% Weight Percentage Weight Percentage After the 2020 and 2021 suspension due to COVID-19, in 2022 and 2023 we organized KiSS Mugello (Keep it Shiny and Sustainable), the environmental and so- cial sustainability program of the Italian Grand Prix of MotoGP. Its aim is to raise awareness about the need to reduce the environmental footprint gener- ated by mega-events, such as the Italian Moto GP. On the one hand, some examples of the environmen- tal initiatives carried out are the installation of free drinking water dispensers to reduce the use of plas- tic during the events and the collection of used mo- tor and cooking oils, as well as the separate waste collection organized all around the Circuit by local operators. On the other hand, some examples of so- cial activities carried out are the donation of meals to help people in need from the local community and the solidarity pit lane walk that this year was extend- ed to 8 local associations. WATER MANAGEMENT We are well aware of the importance of a responsi- ble management of water and, even if our plants are not located in areas exposed to high or extremely high overall water risks, nor our production pro- cess can be considered water intensive, we have developed a series of initiatives to reduce water consumption in our manufacturing processes. This commitment was reinforced by introducing the adi- abatic cooling system in our New Technical Center, a new technology which allows us to save more wa- ter compared to traditional methods. Moreover, we collect and reuse rainwater and condensation for sanitary facilities. In 2023, we completed the instal- lation of additional water consumption meters inte- grated into the energy monitoring software, help- ing us map the allocation of water consumption. In 2023, the plant for the recovery of wastewater was approved, with the aim of reintroducing water into the production process. This project will result in a reduction of more than 3% in water consumption. 223 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FWhere there is no possibility of reuse, wastewater is treated in accordance with all applicable laws and regulations. All the water sourced comes from municipal water supplies and wells: as of today, no water bodies are directly affected by the withdrawal of water. WATER WITHDRAWAL BY SOURCE(41) Unit of measurement: ML 2023 2022 Groundwater Third-party water Total(44) All areas of which areas with water stress(42) All areas of which areas with water stress(43) 529.9 261.4 791.3 29.5 0.0 29.5 522.9 215.0 737.9 22.7 0.0 22.7 All the wastewater of our plants is always monitored and channeled in the public sewage system and not directly into water bodies. The water used in some of the industrial processes (such as washing solutions or paint washing), before its discharge in the pub- lic sewer system, is treated by an industrial water treatment plant where it undergoes the necessary chemical, physical, and biological treatments. The Mugello Circuit is self-sufficient in terms of wa- ter resources. In particular, the Circuit has the own- ership of the wells through which water is taken from the aquifer. The water is then stored in tanks and treated by an external company so that it can be used again. There have never been large decreases in the total water present in the aquifers. WATER DISCHARGE BY DESTINATION(45) Unit of measurement: ML 2023 2022 All areas of which areas with water stress(46) All areas of which areas with water stress(47) Effluents / Water bodies Public sewer system Freshwater (≤1.000 mg/l total dissolved solids) Other water (>1.000 mg/l total dissolved solids) Total — 455.8 29.5 426.3 455.8 — 29.5 29.5 — 29.5 — 420.7 22.7 398.0 420.7 — 22.7 22.7 — 22.7 The water consumption of Ferrari is calculated in terms of water with- drawal net of the amount of water discharged. In 2023, total consump- tion was 335.5 Megaliters (ML) of which the consumption from water stressed areas was 0 Megaliters. 224 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBIODIVERSITY AND NOISE POLLUTION We carried out a proximity analysis to investigate the presence of protected areas within a radius of ap- proximately 10 km from our sites. To our best knowl- edge, our plants and racing circuits do not have a sig- nificant environmental impact on such areas. Moreover, our Mugello racing circuit is located in an extremely important natural landscaping area, so the main tribune has been constructed using eco-ac- tive materials with zero impact on the surrounding zone to help reduce both pollutants and bacteria. Operational site owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas Site Geographic Type of Position Size of Protected Size of Biodiversity Biodiversity location operation in relation to the protected area or the high biodiversity value area outside protected areas (km) operational site in km2 biodiversity area biodiversity area km2 value value characterized characterized by the by listing of attribute of protection the protected status area or area of high biodiversity value outside the protected area (terrestrial, freshwater, or maritime ecosystem); Maranello Emilia- Manufacturing 7.60 km 0.46 km2 Faeto, 3.91 km2 Terrestrial & ZSC IT4040013 Romagna Varana, Torrente Fossa Freshwater 9.70 km San 7.85 km2 Terrestrial & ZSC IT4030016 Valentino, Rio della Rocca Freshwater 10.60 km Cassa di 2.76 km2 Terrestrial & ZSC/ZPS 3.01 km espansione del Fiume Panaro Salse di Nirano Freshwater IT4040011 3.71 km2 Terrestrial & ZSC IT404007 Freshwater Fiorano Emilia- Racing Circuit 7.04 km 0.37 km2 Faeto, 3.91 km2 Terrestrial & ZSC IT4040013 Romagna Varana, Torrente Fossa Freshwater 9.03 km San 7.85 km2 Terrestrial & ZSC IT4030016 2.23 km Valentino, Rio della Rocca Salse di Nirano Freshwater 3.71 km2 Terrestrial & ZSC IT404007 Freshwater Mugello Tuscany Racing Circuit 4.55 km 1.7 km2 Bosco ai Frati 1.71 km2 Terrestrial & SIC IT5140006 6.30 km 4.14 km Freshwater Conca di Firenzuola Colla di Casaglia 23.38 km2 Terrestrial & ZSC Freshwater IT5140003 61.11 km2 Terrestrial & ZSC Freshwater IT5140004 Scaglietti Emilia- Manufacturing 10.61 km 0.03 km2 Casse di 4.76 km2 Terrestrial & ZSC/ZPS Romagna espansione del Secchia Freshwater IT4030011 4.72 km Cassa di 2.76 km2 Terrestrial & ZSC/ZPS espansione del Fiume Panaro Freshwater IT4040011 225 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FWith regard to the noise produced in proximity of the Fiorano and Mugello circuits, the acoustic moni- toring of the plant perimeter is regularly carried out and the Mugello Circuit complies with the authoriza- tion received by the appropriate authorities. REDUCING THE ENVIRONMENTAL IMPACTS ALONG THE VALUE CHAIN (a) Transportation and distribution of products purchased between its tier 1 suppliers and its own operations (in vehicles and facilities not owned or controlled by Ferrari); (b) Transportation and distribution services purchased , including inbound logistics, out- bound logistics (e.g., of sold products), and transportation and distribution between its own facilities (in vehicles and facilities not owned or controlled by Ferrari); 5 Business travel: Transportation of employees for business-related activities (in vehicles not owned or operated by Ferrari); 6 Employee commuting: transportation of employ- ees between their homes and their worksites. 7 Downstream transportation and distribution: Transportation and distribution of products sold between its operations and the end consumer, including retail and storage (in vehicles and facil- ities not owned or controlled by Ferrari); 8 Use of sold products: End use of goods and ser- vices sold; 9 Franchises: the Scope 1 and Scope 2 emissions of franchisees, Ferrari reports its dealers in this category. Based on the methodology applied in 2022, the table below shows the details for each GHG emissions cat- egory. The ISO 14064-1 allows for judgment calls re- sulting in a range of possible outcomes and is subject to annual reviews to improve the calculation of the company’s GHG emissions, resulting in some cases in incomparability between one year and another. SCOPE 3 GHG EMISSIONS In our decarbonization strategy, we focus on both upstream and downstream Scope 3 GHG emissions. In fact, we believe that focusing only on the vehicle use phase is not enough, and we need to focus on raw materials as well. Our Scope 3 indirect upstream and downstream emissions for 2022 are reported in the section “— Our Strategy to Reach Carbon Neutrality by 2030”. The calculation of the Scope 3 emissions for 2023 is currently being processed. The Scope 3 emissions reduction target of at least an average of 40% per car by 2030 will be achieved, given current technology, through: 1 Electrification for the vehicle use phase, expand- ing our offering of hybrid and electric models, thereby reducing by 2030 at least an average of 50% CO2eq emissions per car; 2 Use, among others, of recycled aluminum to re- duce by 2030 at least an average of 30% CO2eq emissions per car to counteract the impact of mostly battery modules which will otherwise in- crease raw materials emissions. Constant dialogue with partners in the supply chain is key to identifying the innovative approaches to further reduce GHG emissions. While we are looking for new ideas to decarbonize our business, the un- avoidable GHG emissions will be managed through our engagement in the purchase of certified carbon avoidance and sequestration credits. We calculate our carbon footprint considering the GHG emissions related to all Group activities over our entire value chain, based on GHG protocol methodology and verified by a third-party certifica- tion entity according to ISO 14064-1:2018 require- ments. Hereafter the GHG protocol Scope 3 catego- ries reported: 1 Purchased goods and services: Extraction, pro- duction, and transportation of goods and ser- vices purchased or acquired; 2 Capital goods: Extraction, production, and trans- portation of capital goods purchased or ac- quired; 3 Fuel- and energy-related activities (not included in Scope 1 or Scope 2): Extraction, production, and transportation of fuels and energy pur- chased or acquired , not already accounted for in Scope 1 or Scope 2. 4 Upstream transportation and distribution: 226 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FScope 3 Category(48) Included Reason for Methodology exclusion Source Method(49) Emission factors Assumptions 1 Purchased goods Yes — Warehouse Supplier specific Ecoinvent, Processes of and services inbound method, Supplier specific, raw materials documents, Hybrid method, EEIO Supplier specific Average data data, method, Verified data Spend based included in method (services) Financial Reports (Services) not included for bought components. Services of the subsidiaries are not included (not material). 2 Capital Goods Yes — Verified data Spend based EEIO(50) Fuel and energy Yes related services Upstream Yes transportation and distribution — — included in Financial Reports method Invoices Activity data Ecoinvent(51) method Delivery inbound Supplier specific Ecoinvent, Packaging weight documents, method, Supplier specific not included. Supplier specific Distance based data method Waste generated in No Not Material — — — operations (< 5% of category) Business travel Yes — Supplier data Supplier specific Ecoinvent, Only employees in extraction, method, Scuderia Ferrari Distance based Supplier specific, DEFRA(52) Italy are included in the calculation. logistic plans method, Average data method Employee commuting Yes — Internal database, Distance based Ecoinvent Only employees in Internal survey method Italy are included in the calculation. Upstream leased No The leased — — — 3 4 5 6 7 8 assets cars are accounted for in Scope 1 (operational control) 9 Downstream Yes — Delivery outbound Supplier specific Ecoinvent, transportation and distribution documents, method, Supplier specific Supplier specific Distance based data method 10 Processing of sold No Not relevant — — — products for Ferrari 11 Use of sold products Yes — Official Activity data Homologation(53) Only Tank to homologation method process Wheel emissions are included. 12 End-of-Life No Ferrari cars — treatment of sold products are not disposed of 13 Downstream leased No Not relevant — assets for Ferrari — — — — 14 Franchises Yes — Internal data Activity data collection method ISPRA/EPA/Terna, Ecoinvent(54) 15 Investments No Not Material — — — (< 5% of category) 227 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FVEHICLE EMISSIONS We are subject to a variety of laws and regulations that, among others, are related to car emissions and fuel consumption. Ferrari vehicles must comply with extensive regional, national and local laws and regu- lations, as well as industry self-regulations (including those that regulate vehicle safety). However, we cur- rently benefit from certain regulatory exemptions because we qualify as a Small Volume Manufactur- er or similar designation in most of the jurisdictions where we sell our cars (for more details refer to “Overview of Our Business—Regulatory Matters”). Through innovations in areas such as turbo- chargers, engine downsizing, transmission, elec- tric steering and hybrid technology we constantly reduced our emissions on our entire fleet. Consis- tent with our mission to develop cutting edge range cars, product development efforts continually focus on improving core components such as the power- train, car dynamics and the use of materials such as special aluminum alloys and carbon fiber. The exper- tise acquired in these fields has recently enhanced our efforts to combine improved performance with reductions in CO2eq emissions. These efforts, through the investment of huge resources, allow the reduction of CO2 emissions and fuel consumption thanks to the development of CO2 emission reducing technologies. The main tech- nologies deployed so far in the Ferrari fleet are: the TITLE 8-gear Dual Clutch Transmission, optimized smart alternator, brake by wire with regenerative braking strategy and weight reduction, improved aerody- namic rims for drag reduction, gasoline direct injec- tion (200-350 bar), start & stop with improved direct start, increased compression ratio, multi-spark igni- tion, low friction synchromesh device, downsizing, finger follower valve actuation with rollers, variable displacement oil pump with variable feed pressure and smart cooling (transmission). As an example, in 2015 we decided to introduce the start & stop tech- nology as standard for the 488 family: the cars sold afterwards decreased their CO2 emissions by 6%(55). We continue to focus on researching technolo- gies that further reduce emissions in the use phase, such as hybrid and electric engines. We started our electrification journey in 2009, when we introduced the HY-KERS (Kinetic Energy Recovery System) tech- nology in our Formula 1 cars, which was transferred in 2013 to LaFerrari, our first road car to use hybrid technology. Further enhancing the hybrid technolo- gy, in 2014, we introduced hybrid power units in our Formula 1 cars and, in 2019, we launched the SF90 Stradale, our first hybrid series-production car. We now have four hybrid cars in our range. These new models reduced by around 30% the emissions generated by the vehicle during the use phase com- pared to our traditional internal combustion engines. 2009 Formula 1 experience 2013 Launch of the LaFerrari supercar 2019-2022 4 hybrid models SF90 Stradale SF90 Spider 296 GTB 296 GTS 2025 Full electric Ferrari unveil in 2025 100% 0% Full electric Hybrid ICE 0% 20% 80% ~5% 55% 40% ~40% ~40% ~20% 2021 2026E 2030E 228 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FAs outlined in our 2022-2026 Strategic Plan an- nounced during the 2022 Capital Markets Day, the first full electric Ferrari will be unveiled in 2025 and by 2026 we target a well-diversified product portfo- lio, composed of 55% hybrid, 5% full electric and 40% ICE in terms of number of models. By 2030, we are targeting an offering composed of 20% ICE, 40% hy- brid and 40% full electric. Together with the electrifi- cation journey, we are exploring solutions to reduce the otherwise growing emissions of raw materials mainly related to the battery module, looking into re- cycled aluminum and green steel. Our ambition is to launch 15 new models be- tween 2023-2026 with the purpose of maintaining the product portfolio’s leading position, and to re- spond quickly to market demand and technological breakthroughs. In this context, hybrid and electric technologies are a core component of our strate- gy. The increased offering of hybrid and electric powertrains will allow us to meet both specific reg- ulatory requirements but also to satisfy customers’ desires for significantly improved emissions, while enhancing performance and driving thrills that ren- der Ferrari cars simply unique. To deliver these innovations, we will enrich our plant in Maranello by adding a new ‘e-building’ where we will handcraft and assembled the unique Ferrari electric engines, inverters, battery mod- ules, magnets. This plant development will assure us a technical capacity in excess of our needs for the years to come. According to our environmental commitment, we also monitor other car-related air emissions, adopting new solutions to improve performances. In 2019, we introduced the GPF (gasoline particulate filter) to reduce particulate emissions. RAW MATERIALS Car makers consume large amounts of raw mate- rials and a conscientious planning of the manufac- turing process is essential to the management of scarce resources. Among the most used materials in our cars are light alloys, such as aluminum: to re- duce the sourcing of aluminum specific initiatives to reuse scraps have been developed, see “—Reducing our direct environmental impacts—Waste manage- ment”. Below an example of the materials used in one of our sports cars. PERCENTAGE OF MATERIALS USED IN THE FERRARI 296 GTB Light alloys and steel Other metals Polymers Elastomers Glass/Ceramics Fluids Other Total 62.5% 5.6% 15.8% 5.1% 3.5% 2.8% 4.7% 100.0% We measure and monitor the presence of hazard- ous substances in our homologated vehicles, as re- quired by local regulations. Every Ferrari homolo- gated vehicle, therefore, every component installed, follows the REACH prescriptions. Every Ferrari ve- hicle is compliant to 2000/53/EC (End-of-life Direc- tive), as applicable. Our suppliers are requested to comply with 2011/65/UE (RoHS Directive) and 2000/53/EC (End- of-life Directive), and to provide, through the Inter- national Material Data System, all the information re- lated to the composition of substances used in the manufacturing process. Our internal systems auto- matically reject non-compliant components. As presented during our 2022 Capital Markets Day, we set a target to reduce by an average of 30% per 229 car the GHG emissions deriving mainly from the pur- chase of raw materials by 2030. Therefore, we have already identified actions to meet this target and we are increasing our engagement with our suppliers. A considerable part of our relevant suppliers has been engaged and assessed through a question- naire that covered, among others, climate related topics. Based on the results of the assessment, dif- ferent action plans will be undertaken. In the next few years, we target to progressively extend the scope of this activity, with the goal of reducing supply chain emissions and driving the low-carbon transition. TITLE 100% 0% Full electric Hybrid ICE 2009 Formula 1 experience 2013 Launch of the LaFerrari supercar 2025 Full electric Ferrari unveil in 2025 2019-2022 4 hybrid models SF90 Stradale SF90 Spider 296 GTB 296 GTS ~5% 55% 40% 0% 20% 80% ~40% ~40% ~20% 2021 2026E 2030E NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FLOGISTICS We produce all of our vehicles and spare parts in our Maranello and Modena plants, however, our network of third-party dealers comprises 196 points of sale around the world. A meticulous work is constantly carried out to optimize logistical operations with the aim of reducing the environmental impact and asso- ciated air emissions. In 2023, together with our logistics partners we in- troduced for the first time Hydrotreated Vegetable Oil (HVO) fuel in our European outbound logistics on road. On average this allows us to reduce our GHG emissions for this sub-category by 80%. DEALERS We sell our cars exclusively through a network of authorized dealers (with the exception of one-offs and track cars which we sell directly to end clients). We regularly assess the composition of our deal- er network in order to maintain the highest level of quality. As of December 31, 2023, our network com- prised 178 dealers operating 196 points of sale, and we do not presently own any dealership. To sustain our goal of reaching carbon neutrali- ty by 2030, involving our dealers is a key part of our strategy. For this reason, we launched in 2023 the first edition of the Green Dealer Award, which has the objective of engaging dealers on their sustain- ability efforts with a focus on decarbonization. Our network was evaluated via three KPIs: energy con- sumption, energy reduction versus the previous year and initiatives they have undertaken such as efficiencies, water savings and social activities for the local community. This process has allowed us to collect and share on a global level best practices amongst our dealers. VEHICLE'S END OF LIFE We are not directly involved in product take back programs due to the nature of our business: the number of Ferrari cars demolished each year is very scarce as Ferrari cars are perceived as collectibles, which the G roup also supports through its “Ferrari Classiche” services and the active preowned mar- ket. In addition, our cars are generally not consid- ered means of transportation, see “Overview of Our Business—Client Relations—Ferrari Classiche”. EU TAXONOMY In order to meet the objectives of the European green deal and to establish a unified EU classifica- tion system of environmentally sustainable eco- nomic activities, the European Commission pub- lished in June 2020 Regulation (EU) 2020/852, the ‘Taxonomy Regulation’(56). The EU Taxonomy identifies the following six en- vironmental objectives: 1 climate change mitigation; 2 climate change adaptation; 3 sustainable use and protection of water and ma- rine resources; 4 transition to a circular economy; 5 pollution prevention and control; and 6 protection and restoration of biodiversity and ecosystems. Taxonomy-aligned activities are those that comply with the requirements laid down in Article 3 of the Taxonomy Regulation: • substantially contributes to one or more of the environmental objectives by meeting the tech- nical screening criteria defined for this eco- nomic activity; • does no significant harm to the other five objec- • complies with minimum safeguards. tives; and OUR REPORTING REQUIREMENTS Article 8 of the Taxonomy Regulation requires non-fi- nancial undertakings to disclose information on the proportion of the turnover, capital expenditure and operating expenditure (‘key performance indica- tors’) of their activities related to assets or process- es associated with environmentally sustainable eco- nomic activities. The Commission adopted and published the EU Taxonomy Delegated Acts(57) to implement the Tax- onomy Regulation. The Commission adopted in July 2021, a delegated act that specifies the disclosure 230 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fobligations of undertakings under Article 8 of the Taxonomy Regulation with respect to the Taxono- my-eligibility and alignment of their activities (‘Dis- closures Delegated Act’)(58). Relating to the climate change mitigation and adaptation objectives, non-financial undertakings including Ferrari begin to report on their Taxono- my Key Performance Indicators (KPIs) as specified in the Disclosures Delegated Act from January 1, 2023. Whereas regarding the remaining 4 environ- mental objectives, from January 1, 2024 until De- cember 31, 2024, non-financial undertakings had to disclose only the proportion of Taxonomy-eligible and Taxonomy non-eligible economic activities in their total turnover, capital and operational expen- diture and the qualitative information relevant for these disclosures. OUR APPROACH TO DISCLOSURE Ferrari has been developing specific analysis to re- spond to such disclosure requirements. A study was performed in accordance with the following meth- odological steps, briefly described below. ANALYSIS OF THE ECONOMIC ACTIVITIES OF FERRARI ELIGIBLE AND ALIGNED TO THE EU TAXONOMY We thoroughly analyzed the requirements estab- lished by the Taxonomy Regulation and related doc- umentation, identifying the economic activity 3.3 “Manufacture of low carbon technologies for trans- port” as the one that correlates the most with Ferra- ri’s core activities and operations. Further linkages can be found with the economic activity 6.5 “Trans- port by motorbikes, passenger cars and light com- mercial vehicles”, with particular reference to our financial services activities. Such a process was conducted by analyzing both formal Ferrari-related NACE codes as well as its substantial business activ- ities and operations in comparison to the list provid- ed by the EU Taxonomy. For both of these activities, the environmental objective most consistent with respect to Ferrari’s business is climate change miti- gation. Further residual Ferrari activities and opera- tions are currently considered not pertinent to oth- er Taxonomy-related economic activities and/or not significant for the purpose of this disclosure. SUBSTANTIAL CONTRIBUTION In the Annexes I and II of the Commission Delegat- ed Regulation (EU) 2021/2139 of June 4, 2021 are established the Technical Screening Criteria for determining the conditions under which a specific economic activity qualifies as contributing substan- tially to climate change mitigation or climate change adaptation, respectively. Consequently, those Tech- nical Screening Criteria specify the minimum re- quirements that the economic activity should meet in order to qualify as environmentally sustainable. In 2023, Ferrari conducted a detailed analysis of all Technical Screening Criteria related to econom- ic activities 3.3 and 6.5 to determine the share of Turnover, Capital Expenditure (CapEx) and Operat- ing Expenditure (OpEx) aligned with these require- ments. From the analysis performed, all the techni- cal screening criteria for substantial contribution to climate change mitigation are met. DO NO SIGNIFICANT HARM (DNSH) The Climate Delegated Act establishes, for the cli- mate change mitigation and climate change adapta- tion environmental objectives, Technical Screening Criteria for determining whether that economic ac- tivity causes no significant harm to one or more of the environmental objectives laid down in Article 9 of the Taxonomy Regulation. Similarly, the Environ- mental Delegated Act establishes Technical Screen- ing Criteria for the remaining four environmental objectives. The Technical Screening Criteria for ‘do no significant harm’ should ensure that the econom- ic activity has no significant negative environmental impact. In 2023, Ferrari conducted a detailed analy- sis of all DNSH criteria related to economic activities 3.3 and 6.5, including the requirements outlined in the Appendixes to Annex I of the Climate Delegated Act, to verify alignment with the EU Taxonomy. RESPECT OF THE MINIMUM SAFEGUARDS The minimum safeguards referred to in point (c) of Article 3 and Article 18 of the Taxonomy Regulation are represented by procedures implemented by an undertaking that is carrying out an economic activi- ty to ensure the alignment with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. Those procedures include the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organisation (ILO) on Fundamental Principles and Rights at Work and the International Bill of Human Rights. In order to verify compliance with Minimum safeguards on its activities, Ferrari conducted an analysis in light of the information reported in the Final Report on Mini- mum Safeguards published by the Platform on Sus- tainable Finance in October 2022. 231 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FANALYSIS OF 2023 FERRARI TURNOVER, CAPITAL EXPENDITURE AND OPERATING EXPENDITURE AND CALCULATION OF EU TAXONOMY-RELATED KPIs. We analyzed our turnover, capital and operating ex- penditure for the calculation of the KPIs requested pursuant to the Taxonomy Regulation and related documentation, according to our current interpre- tation of the applicable requirements. Potential double counting in the allocation in the numerator of turnover, capital expenditure and op- erating expenditure has been avoided through the use of the financial information which are at the base of the Consolidated Financial Statements as of December 31, 2023. Turnover(59) KPI: (a) Regarding the denominator, we based it on our consolidated net turnover in accordance with IAS 1.82(a). For further details on our account- ing policies regarding our consolidated net turn- over please refer to the Consolidated Financial Statements of our Annual Report. (b) Regarding the numerator, we analyzed our poten- tial turnover derived from products or services in line with the previous mentioned assumptions: • we considered as “eligible”: the revenues re- lated to the shipments of our cars, any per- sonalization generated and to financial ser- vices activities. We take into consideration the eligible activities which contribute at least 1% of total Group revenues. • we considered as “aligned”: the revenues related to the shipments of our cars and to financial services activities if these cars clas- sified as light-duty vehicles with specific emis- sions of CO2, as defined in Article 3(1), point (h), of Regulation (EU) 2019/631, lower than 50 g CO2/km (low-and zero-emission light-du- ty vehicles). As of 2023, our sports cars are above this threshold. At the same time, both the compliance with all DNSH criteria listed in the Delegated Regulation 2021/2139 for such activities and the fulfillment of the minimum safeguards as per Article 3 and 18 of the Tax- onomy Regulation was verified; • we considered as “not eligible”: the revenues generated from the sales of spare parts as well as of engines to Maserati for the use in their cars and from the rental of engines to other Formula 1 racing teams; the revenues earned by our racing teams (mainly in the For- mula 1 World Championship and the World Endurance Championship) through sponsor- ship agreements and our share of the Formu- la 1 World Championship commercial reve- nues; the net revenues generated through the Ferrari brand, including fashion collec- tion, merchandising, licensing and royalty in- come; any other revenue, primarily related to the management of the Mugello racetrack and other sports-related activities. • we considered as “not aligned”: the reve- nues related to the shipments of our cars and to financial services activities that have not met one or more of the Technical Screening Criteria specified in the Delegat- ed Regulations or that do not fulfil the mini- mum safeguards specified in the Article 18 of the Taxonomy Regulation. 232 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F233 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FPORTION OF TURNOVER FROM PRODUCTS OR SERVICES ASSOCIATED WITH TAXONOMY-ALIGNED ECONOMIC ACTIVITIES - DISCLOSURE COVERING YEAR 2023(60) Financial year 2023 Year Economic activities Code Turnover Proportion of turnover 2023 €/000 % A. TAXONOMY-ELIGIBLE ACTIVITIES A.1 Environmentally sustainable activities (Taxonomy-aligned) Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) Of which enabling Of which transitional 0 0 0 A.2 Taxonom-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) 3.3. Manufacture of low carbon technologies for transport CCM 3.3 4,910,557 6.5. Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5 99,661 Turnover of Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 5,010,218 A. Turnover of Taxonomy-eligible activities (A.1+A.2) 5,010,218 B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy-Non-Eligible activities 959,928 Total (A-B) 5,970,146 234 0% 0% 0% 82% 2% 84% 84% 16% 100% NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFinancial year 2023 Year Substantial contribution criteria DNSH criteria (“Does Not Significantly Harm” Economic activities Code Turnover Proportion of turnover 2023 e g n a h C e t a m i l C n o i t a g i t i m e g n a h c e t a m i l C n o i t a t p a d a r e t a W n o i t u l l o P y m o n o c e r a u c r C l i e g n a h C e t a m i l C n o i t a g i t i m e g n a h c e t a m i l C n o i t a t p a d a i e n r a m d n a r e t a W s e c r u o s e r n o i t u l l o P y m o n o c e r a u c r C l i d n a y t i s r e v d o B i i m e t s y s o c e s d r a u g e f a s m u n M i i y t i s r e v d o B i i €/000 % Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N N/EL N/EL N/EL N/EL N/EL N/EL y m o n o x a T f o n o i t r o p o r P 2 2 0 2 r a e y , r e v o n r u t g n i l b a n e y r o g e t a C y t i v i t i c a l a n o i t i s n a r t y r o g e t a C y t i v i t c a E T l e b g i i l e r o d e n g i l A % A. TAXONOMY-ELIGIBLE ACTIVITIES A.1 Environmentally sustainable activities (Taxonomy-aligned) Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) Of which enabling Of which transitional 0 0 0 A.2 Taxonom-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) 3.3. Manufacture of low carbon technologies for transport CCM 3.3 4,910,557 EL N/EL N/EL N/EL N/EL N/EL 6.5. Transport by motorbikes, passenger cars and light CCM 6.5 99,661 EL N/EL N/EL N/EL N/EL N/EL commercial vehicles EL N/EL EL N/EL EL N/EL EL N/EL EL N/EL EL N/EL Turnover of Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 5,010,218 A. Turnover of Taxonomy-eligible activities (A.1+A.2) 5,010,218 B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy-Non-Eligible activities 959,928 Total (A-B) 5,970,146 84% 84% 0% 0% 0% 82% 2% 84% 84% 16% 100% 0% 0% E 0% T 82% 1% 83% 83% 235 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F 236 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FIn 2023, the taxonomy-eligible turnover share has remained substantially stable from the previous year. PORTION OF TURNOVER/TOTAL TURNOVER Taxonomy-aligned per objective Taxonomy-eligible per objective —% —% —% —% —% —% 84% —% —% —% —% —% • we considered as “aligned”: the additions of tangible and intangible assets related to the development and production of vehi- cles, that in particular classify as light-duty vehicles with specific emissions of CO2, as defined in Article 3(1), point (h), of Regula- tion (EU) 2019/631, lower than 50 g CO2/km (low-and zero-emission light-duty vehicles). Moreover, we consider the additions of tan- gible and intangible assets related to the plan to allow Taxonomy-eligible economic activ- ities to become Taxonomy-aligned (‘CapEx plan’) under the conditions specified in the second subparagraph of the point 1.1.2.2 of Annex 1 of the Disclosure Delegated Act. At the same time, both the compliance with all DNSH criteria listed in the Delegated Regula- tion 2021/2139 for such activities and the ful- fillment of the minimum safeguards as per Article 3 and 18 of the Taxonomy Regulation was verified; • we considered as “not eligible”: the remaining • we considered as “not aligned”: the additions additions of tangible and intangible assets. of tangible and intangible assets related to the development and production of our ve- hicles that have not met one or more of the Technical Screening Criteria specified in the Delegated Regulations or that do not fulfil the minimum safeguards specified in the Article 18 of the Taxonomy Regulation. CCM CCA WTR CE PPC BIO As outlined in our 2022-2026 Strategic Plan an- nounced during the 2022 Capital Markets Day, the first full electric Ferrari will be unveiled in 2025. Therefore, to date, such revenues are equal to zero. Capital Expenditure(61) KPI: (c) Regarding the denominator, it consists of ad- ditions to tangible and intangible fixed assets during the financial year, before depreciation, amortization and any re-measurements, includ- ing those resulting from revaluations and im- pairments, as well as excluding changes in fair value. It includes acquisitions of tangible fixed as- sets (IAS 16), intangible fixed assets (IAS 38) and right-of-use assets (IFRS 16). Additions resulting from business combinations are also included. Goodwill and borrowing costs are not included in the denominator, as it is not defined as a tangi- ble or intangible asset in accordance with IAS 16 and IAS 38. For further details on our account- ing policies regarding our capital expenditure, please refer to the Consolidated Financial State- ments of our Annual Report. (d) Regarding the numerator, we analyzed our cap- ital expenditures in line with the previous men- tioned assumptions: • we considered as “eligible”: • the additions of tangible assets related to our production facilities in Maranello and Modena, plus our subsidiaries (excluding racetrack management and retail busi- ness) as well as financial services activi- ties; • the additions of intangible assets related to externally acquired and internally gen- erated development costs for our cars as well as patents, concessions and licenses and other intangible assets mainly relat- ed to the registration of trademarks. 237 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FPORTION OF CAPITAL EXPENDITURE FROM PRODUCTS OR SERVICES ASSOCIATED WITH TAXONOMY- ALIGNED ECONOMIC ACTIVITIES - DISCLOSURE COVERING YEAR 2023(62) Financial year 2023 Year Economic activities Code CapEx Proportion of CapEx 2023 €/000 % A. TAXONOMY-ELIGIBLE ACTIVITIES A.1 Environmentally sustainable activities (Taxonomy-aligned) CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) Of which enabling Of which transitional 0 0 0 A.2 Taxonom-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) 3.3. Manufacture of low carbon technologies for transport CCM 3.3 853,704 CapEx of Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) A. CapEx of Taxonomy-eligible activities (A.1+A.2) B. TAXONOMY-NON-ELIGIBLE ACTIVITIES CapEx of Taxonomy-Non-Eligible activities Total (A-B) 853,704 853,704 54,949 908,652 238 0% 0% 0% 94% 94% 94% 6% 100% NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFinancial year 2023 Year Substantial contribution criteria DNSH criteria (“Does Not Significantly Harm” Economic activities Code CapEx Proportion of CapEx 2023 e g n a h C e t a m i l C n o i t a g i t i m e g n a h c e t a m i l C n o i t a t p a d a r e t a W n o i t u l l o P y m o n o c e r a u c r C l i e g n a h C e t a m i l C n o i t a g i t i m e g n a h c e t a m i l C n o i t a t p a d a i e n r a m d n a r e t a W s e c r u o s e r n o i t u l l o P y m o n o c e r a u c r C l i d n a y t i s r e v d o B i i m e t s y s o c e s d r a u g e f a s m u n M i i y t i s r e v d o B i i €/000 % Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N N/EL N/EL N/EL N/EL N/EL N/EL y m o n o x a T f o n o i t r o p o r P 2 2 0 2 r a e y , x E p a C g n i l b a n e y r o g e t a C y t i v i t i c a l a n o i t i s n a r t y r o g e t a C y t i v i t c a E T l e b g i i l e r o d e n g i l A % A. TAXONOMY-ELIGIBLE ACTIVITIES A.1 Environmentally sustainable activities (Taxonomy-aligned) CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) Of which enabling Of which transitional CapEx of Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) A. CapEx of Taxonomy-eligible activities (A.1+A.2) B. TAXONOMY-NON-ELIGIBLE ACTIVITIES CapEx of Taxonomy-Non-Eligible activities Total (A-B) 0 0 0 853,704 853,704 54,949 908,652 0% 0% 0% 94% 94% 94% 6% 100% A.2 Taxonom-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) 3.3. Manufacture of low carbon technologies for transport CCM 3.3 853,704 EL N/EL N/EL N/EL N/EL N/EL EL N/EL EL N/EL EL N/EL EL N/EL EL N/EL EL N/EL 94% 94% 0% 0% E 0% T 97% 97% 97% 239 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F PORTION OF CAPEX/TOTAL CAPEX CCM CCA WTR CE PPC BIO Taxonomy-aligned per objective Taxonomy-eligible per objective —% —% —% —% —% —% 94% —% —% —% —% —% In 2023, capital expenditures increased in absolute terms for both taxonomy-eligible and non-eligible categories, the latter growing faster than the for- mer, primarily due to the increase of right-of-use as- sets (IFRS 16), resulting in a 3% decrease in the eligi- bility share compared to the previous year. From the analysis performed, our investments related to the development and production of elec- tric vehicles meet all the Technical Screening Cri- teria for substantial contribution to climate change mitigation and for DNSH outlined in Delegated Reg- ulation 2021/2139 under economic activity 3.3 “Man- ufacture of low carbon technologies for transport”. We compiled the financial figures based on the vehi- cle model and powertrain technology and we includ- ed the capital expenditure that are initially directly attributed to electric vehicles. Furthermore, we in- cluded in the capital expenditure all other activities that according to our medium-term planning, up to 2026, will contribute to the production of electric ve- hicles. Capital expenditure that was not clearly attrib- utable to a particular vehicle was taken into account on a proportionate basis using allocation formulas. Ferrari is compliant with the safeguards regard- ing human rights in our activities, grievance mech- anisms, anti-corruption, competition and taxation. Furthermore, we are developing actions aimed at ensuring full compliance with safeguards, through the development of a state-of-the-art corporate due diligence processes on human rights that will involve our business partners both upstream and down- stream. For this reason, in 2023, we joined Drive Sus- tainability(63) and were able to engage a selected base of our suppliers through a structured questionnaire. Suppliers were selected based on risk criteria (stra- tegic relevance, geographical location, company size, supplier strategy, product category or service). This initiative is the starting point of a structured ESG due diligence activity. This approach, integrat- ed into our integrity framework, will be carried out in accordance with the OECD Guidelines for Multina- tional Enterprises and the UN Guiding Principles on Business and Human Rights (UNGPs). Through this, it will be possible to classify such business activity as Taxonomy-aligned. The capital expenditure related to the develop- ment and production of our electric vehicles, dedicat- ed manufacturing building “e-building” and electrifi- cation activities such as heat pumps and photovoltaic panels, amounts to €197,811 thousand, 22% of total 2023 capital expenditure denominator. Operating Expenditure(64) KPI: (e) Regarding the denominator, it consists of direct non-capitalized costs that relate to research and development, building renovation measures, short-term lease, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment. (f) Regarding the numerator, we analyzed our di- rect non-capitalized costs in line with the previ- ous mentioned assumptions: • we considered as “eligible”: • the direct non-capitalized costs that pri- marily relate to research and development activities, including Formula 1 racing as well as development activities to support the innovation of our product portfolio and components, in particular, in relation to electric and other new technologies, • the maintenance expenditures related to the manufacturing of our vehicles, and our subsidiaries (excluding racetrack manage- ment and retail business) as well as those related to financial services activities; • we considered as “aligned”: the direct non-capitalized costs related to the devel- opment and production of vehicles, that in particular classify as light-duty vehicles with specific emissions of CO2, as defined in Arti- cle 3(1), point (h), of Regulation (EU) 2019/631, lower than 50 g CO2/km (low-and zero-emis- sion light-duty vehicles). Moreover, we con- sider the direct non-capitalized costs related to the CapEx plan to allow Taxonomy-eligi- ble economic activities to become Taxono- my-aligned within a predefined timeframe as set out in the second paragraph of the point 1.1.3.2 of Annex 1 of the Disclosure Delegated 240 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F Act. At the same time, both the compliance with all DNSH criteria listed in the Delegated Regulation 2021/2139 for such activities and the fulfillment of the minimum safeguards as per Article 3 and 18 of the EU Taxonomy Reg- ulation was verified; • we considered as “not eligible”: the remain- ing direct non-capitalized costs. • we considered as “not aligned”: the direct non-capitalized costs related to the devel- opment and production of our vehicles that have not met one or more of the Technical Screening Criteria specified in the Delegated Regulations or that do not fulfil the minimum safeguards specified in the Article 18 of the Taxonomy Regulation. 241 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FPORTION OF OPERATING EXPENDITURE FROM PRODUCTS OR SERVICES ASSOCIATED WITH TAXONOMY- ALIGNED ECONOMIC ACTIVITIES - DISCLOSURE COVERING YEAR 2023(65) Financial year 2023 Year Economic activities Code OpEx Proportion of OpEx 2023 €/000 % A. TAXONOMY-ELIGIBLE ACTIVITIES A.1 Environmentally sustainable activities (Taxonomy-aligned) OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) Of which enabling Of which transitional 0 0 0 A.2 Taxonom-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) 3.3. Manufacture of low carbon technologies for transport CCM 3.3 565,474 OpEx of Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) A. OpEx of Taxonomy-eligible activities (A.1+A.2) B. TAXONOMY-NON-ELIGIBLE ACTIVITIES OpEx of Taxonomy-Non-Eligible activities Total (A-B) 565,474 565,474 - 565,474 242 0% 0% 0% 100% 100% 100% 0% 100% NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFinancial year 2023 Year Substantial contribution criteria DNSH criteria (“Does Not Significantly Harm” Economic activities Code OpEx Proportion of OpEx 2023 e g n a h C e t a m i l C n o i t a g i t i m e g n a h c e t a m i l C n o i t a t p a d a r e t a W n o i t u l l o P y m o n o c e r a u c r C l i e g n a h C e t a m i l C n o i t a g i t i m e g n a h c e t a m i l C n o i t a t p a d a i e n r a m d n a r e t a W s e c r u o s e r n o i t u l l o P y m o n o c e r a u c r C l i y t i s r e v d o B i i d n a y t i s r e v d o B i i m e t s y s o c e s d r a u g e f a s m u n M i i €/000 % Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N N/EL N/EL N/EL N/EL N/EL N/EL y m o n o x a T f o n o i t r o p o r P 2 2 0 2 r a e y , x E p O g n i l b a n e y r o g e t a C y t i v i t i c a l a n o i t i s n a r t y r o g e t a C y t i v i t c a E T l e b g i i l e r o d e n g i l A % A. TAXONOMY-ELIGIBLE ACTIVITIES A.1 Environmentally sustainable activities (Taxonomy-aligned) OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) Of which enabling Of which transitional OpEx of Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) A. OpEx of Taxonomy-eligible activities (A.1+A.2) B. TAXONOMY-NON-ELIGIBLE ACTIVITIES OpEx of Taxonomy-Non-Eligible activities Total (A-B) 0 0 0 565,474 565,474 - 565,474 0% 0% 0% 100% 100% 100% 0% 100% A.2 Taxonom-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) 3.3. Manufacture of low carbon technologies for transport CCM 3.3 565,474 EL N/EL N/EL N/EL N/EL N/EL EL N/EL EL N/EL EL N/EL EL N/EL EL N/EL EL N/EL 100% 100% 0% 0% E 0% T 100% 100% 100% 243 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F PORTION OF OPEX/TOTAL OPEX CCM CCA WTR CE PPC BIO Taxonomy-aligned per objective Taxonomy-eligible per objective —% —% —% —% —% —% 100% —% —% —% —% —% In 2023, the taxonomy-eligible operating expenditure share has remained stable from the previous year. From the analysis performed, our investments related to the development and production of elec- tric vehicles meet all the Technical Screening Cri- teria for substantial contribution to climate change mitigation and for DNSH outlined in Delegated Regu- lation 2021/2139 under economic activity 3.3 “Man- ufacture of low carbon technologies for transport”. Ferrari is compliant with the safeguards regard- ing human rights in our activities, grievance mech- anisms, anti-corruption, competition and taxation. Furthermore, we are developing actions aimed at ensuring compliance with safeguards, through the development of a state-of-the-art corporate due dili- gence processes on human rights that will involve our business partners both upstream and downstream. For this reason, in 2023, we joined Drive Sustainability and were able to engage a selected base of our sup- pliers through a structured questionnaire. Suppliers were selected based on risk criteria (strategic rele- vance, geographical location, company size, supplier strategy, product category or service). This initiative is the starting point of a structured ESG due diligence activity. This approach, integrated into our integrity framework, will be carried out in accordance with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights (UNGPs). Through this, it will be possible to classify such business activity as Taxonomy-aligned. The operating expenditure related to electric vehicles amounts to € 18,389 thousand, 3% of total 2023 operating expenditure denominator. Potential double counting in the allocation in the nu- merator of Turnover, capital expenditure and oper- ating expenditure has been avoided through the use of the financial information which are at the base of the Consolidated Financial Statements as of Decem- ber 31, 2023. Further analysis will be made over time accord- ing to the progressive evolution of the Taxonomy Regulation, and its concrete interpretation/applica- tion for reporting purposes in accordance with Fer- rari’s strategic approach. In order to truly understand the importance and actions that Ferrari is putting in place to achieve the climate mitigation objective, it should be noted our unwavering pursuit of reaching carbon neutrality by 2030, addressing both direct and indirect emissions with a focus on energy and materials, in addition to our electrification journey. As a further step forward in this process, since 2019 we are monitoring our carbon footprint considering the emissions related to all the Group activities over our entire value chain. Our calculation, based on GHG protocol methodol- ogy, is certified according to ISO 14064-1:2018 re- quirements by a third-party player and allowed us to determine priority areas for action. We are strongly committed to expanding our Taxonomy-aligned ac- tivities through dedicated investment (“CapEx Plan”) and operating expenditures, as outlined in our 2022- 2026 Strategic Plan presented during our 2022 Cap- ital Markets Day, in line with the conditions specified in the second subparagraph of the point 1.1.2.2 of Annex 1 of the Disclosure Delegated Act. 244 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F245 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FCREATING AND SHARING VALUE WITH THE COMMUNITY FERRARI CONTRIBUTES TOWARDS THE COMMUNITY Our goal is to create and share long-term value with our stakeholders. Community engagement and in- volvement with the local territory are of fundamen- tal importance to us, with particular reference to Maranello and Modena, where all our cars are man- ufactured. To maintain alive the spirit of Ferrari and the story of its founder Enzo Ferrari, two different museums have been established, attracting every year thousands of visitors from all over the world to the heart of the Italian “Motor Valley”. In 2023, we donated € 1 million to the Emilia-Ro- magna Region's Agency for Territorial Safety and Civil Protection, joining the regional fundraising cam- paign. The funds have been devolved to help the local population affected by the flooding, with a particular focus on projects for environmental recovery and the management of hydrogeological instability. Moreover, in 2023, Ferrari also organized fund- raising initiatives together with its Cavalcade clients to support educational activities also through The Ferrari Foundation(66). The net proceeds from the auction, held in Morocco in March, were donated to support selected preschool projects of The Moroc- can Foundation for the Promotion of PreSchool Ed- ucation. In addition, the net proceeds of the Ferrari Cavalcade auction, held in Rome in July, were donat- ed to the Istituto Comprensivo Giuliano da Sangal- lo, a school in Ostia Ponente, through the Save the Children “Lo spazio che vorrei” (“The Space I Would Like”) initiative. This project aims to redevelop an ed- ucational and social hub of great significance in the fight against educational poverty. The starting point of the project is the conversion of the school build- ing’s external space into an area suitable for outdoor education. In 2023, the total amount donated by Fer- rari clients to these initiatives amounted to around €950 thousand. BOSCO FERRARI Ferrari continues to invest in its “Bosco Ferrari” proj- ect that aims to progressively afforest 30 hectares of land in the province of Modena, and to value the importance of natural ecosystems for the well-be- ing of the community. The first trees were planted in 2022 in the Mu- nicipality of Maranello in partnership with Rete Cli- ma. This area of woodland spans six hectares and is made up of a combination of oak and hornbeam, trees typical of the Po Valley. The first tree and shrub species have now been planted, having been grown from certified seeds and selected to recreate an ecosystem with significant environmental benefits. A hectare of land bordering the new wood has also been allocated to a new “Parco dello Sport” be- ing developed by the local council, with Ferrari sup- porting the installation of play apparatus for children, sports equipment and trails for walking and cycling. 246 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F Since 2022, we have planted a total of 14 hectares between the areas of Maranello, Soliera and For- migine, in the province of Modena. Bosco Ferrari is part of the Italian National Forest Campaign (CNFI), promoted by Rete Clima in part- nership with Coldiretti (the Italian Farmers’ Associ- ation) and PEFC (the Programme for Endorsement of Forest Certification). It has also received endorse- ments from Italy’s Ministry of Ecological Transition (MITE) and the Ministry of Farming, Food and Forest- ry (MIPAAF). FERRARI ENERGY COMMUNITY In 2023, Ferrari launched the “Ferrari Energy Com- munity”, a decarbonization project for the towns of Fiorano and Maranello. This is a further project pro- moted and developed by Ferrari within a sustainabil- ity strategy that is based on a scientific approach and the adoption of cutting-edge technologies. The project envisages the installation of a photovolta- ic system of approximately 1 MWp, on 10 thousand square meters of disused land owned by Ferrari adjacent to the Fiorano Circuit, whose energy will be entirely made available to the local community. Any public or private entity in Fiorano and Maranello may become a member of the Ferrari REC and thus use the renewable energy or even play the role of renewable energy prosumer by installing or con- necting additional photovoltaic power generator systems. The new Fiorano plant will generate an av- erage production of about 1,500 MWh for 20 years, avoiding about 450 tonnes of CO2 emissions per year and also supports the decarbonization process and contributes to the reduction of energy costs for citi- zens and businesses. FERRARI & EDUCATION We are aware of our responsibility towards the com- munity and our efforts are directed to support its de- velopment, mainly through collaborations with local universities and schools and thanks to the industry network in the Emilia-Romagna region. We believe that promoting the education of young talents is an essential step to reinforce the connection with lo- cal communities. Shaping brilliant engineers with a specific academic background that focuses on new technologies within the automotive industry, and in particular innovative solutions for state-of-the-art performance in luxury sports cars, is also a prereq- uisite for the Group to seize future opportunities. We aim to promote education in the local com- munity at the high school level by establishing long- term relationships with technical schools, such as the Istituti Tecnici Superiori, in Maranello and other towns nearby. The main collaborations consist in: participating in orientation committees; establishing “school-work” projects for students; bringing the testimony of Ferrari technicians in classrooms; im- plementing training of trainers (TOT) activities; do- nating Ferrari equipment; and participating in pub- lic tenders to finance technical classrooms and labs in collaboration with local schools. The aim of these initiatives is to support schools in providing the new generations with the skills and tools needed to meet the rapid technological changes taking place in so- ciety. Moreover, in 2023, we launched the “Road to Ferrari” initiative aimed at making students aware of the manufacturing life through the direct testimony of Ferrari employees. Starting from 2022, we have been the pioneers of an exclusive 3-year program dedicated to junior high school students of Maranello, that allows them to play and participate to aptitude tests, in order to evaluate their individual potential and to address their future careers. This experiment has been pro- moted in collaboration with the Agnelli Foundation. We also continue our work with the e.DO Learning Center, an innovative educational project born in 2022 from the synergy between Ferrari and the lo- cal area. The project was developed within a labo- ratory at the IIS Fermo Corni in Modena, which has been completely refurnished and equipped with new technology and furniture thanks to the sup- port from Ferrari. This space, dedicated to students starting from the age of 8 up to the university level, offers the opportunity to learn about artificial intelli- gence and new technologies through games, for the younger users, and through exercises, for the older ones. The laboratory is equipped with 5 e.DO robot, with modular and multi-axis mechanical arms with integrated open-source intelligence, developed by the company Comau. Ferrari is a partner of “ITS Maker”, the Emilia-Ro- magna Higher Institute of Mechanics, Mechatronics, Motor and Packaging. The project aims to deliver two-year courses to provide the most in-demand technical skills in a practical way, also thanks to an in- ternship that takes up 40% of the total course hours. In addition to this, the Company is involved in cours- es on engines, materials and composites. We have established collaborations with leading universities worldwide that include the possibility for students to develop bachelor and doctoral the- ses as well as other research projects. Ferrari is partner of the Motorvehicle Universi- ty of Emilia-Romagna (MUNER), an association which was strongly advocated by the Emilia-Romagna re- gion. It was created thanks to a synergistic connec- tion between the universities of Modena and Reg- gio Emilia, Bologna, Ferrara and Parma along with car companies (Automobili Lamborghini, Dallara, Ducati, HaasF1Team, HPE COXA, Marelli, Masera- ti, Pagani, Visa Cash App RB Formula One Team) in the region that represent the excellence of Italian brands, which of course includes Ferrari. Thanks to 247 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fexisting partners and those who join every year, the possibility of accessing new automotive knowledge and skills is increasing. The Motorvehicle University of Emilia-Romagna hub aims at attracting the best university students from all over the world, with the goal of training and introducing into the corporate world the engineers of tomorrow. The master’s degree offers the following cours- es, whose design and implementation saw the active participation of Ferrari: Advanced Automotive Engi- neering (AAE), Electronic Engineering for Intelligent Vehicles (EEIV) and Electronic Vehicle Engineering (EVE). The formative catalog of the latter is entirely devoted to electrical vehicles and aims at forging new professionals with a comprehensive view of all the phases and processes of the development of an electric vehicle. In all these courses, the partners of the initiative participate in educational activities by teaching and co-teaching courses, lessons, seminars and labora- tories and by inviting students to visit the production plants. This partnership opens up the opportunity for the most talented and motivated students to take part in internship programs with one of the compa- nies involved. We invest a lot in this activity, in par- ticular, the course Vehicle Conceptual Design (VCD) of the AAE program, is entirely taught by Ferrari Maestri, covering more than 20 lectures.  In 2023, the number of enrollments in the three master’s de- grees increased, with about a fifth of the students coming from foreign countries. In the summer of 2023, MUNER offered high school and university students a variety of academ- ic, business and cultural contents, aimed at under- standing high performance vehicles and engineer- ing subjects, by organizing: rience – High School Summer Program”; • the fifth edition of the “Italian Motor Valley Expe- • the third edition of the “Summer School in Indus- • the second edition of the “Summer School MUN- • the first edition of the “Future of Automotive for trial Engineering for Advanced Automotive”, ER - Women in Transport”, and; Intelligent Mobility”. In addition, Formula 1 has confirmed in 2023 its ex- tended funding commitment to the Formula 1 Engi- neering Scholarship program for underrepresent- ed groups until 2025, continuing its drive to increase diversity within the sport. The initiative provides each year 3 scholarships for engineering students: from diverse ethnic backgrounds that are un- der-represented in the degree program; from un- der-privileged socio-economic backgrounds; and with career ambitions in motorsport and/or Formu- la 1, allowing them to get access to prestigious uni- versities around the world. In this context, in 2023 Ferrari welcomed two students and they were of- fered a 3-week experience with Scuderia Ferrari. In 2023, we supported for the fourth year the education program “Arcipelago Educativo”, devel- oped in collaboration with Fondazione Agnelli and Save the Children. This project offers to local young students an innovative educational path that aims at promoting their psycho-social well-being, consoli- dating and recovering basic and transversal skills and contrasting the negative effects of extended school closures. Furthermore, in 2023, Ferrari Group around the world promoted educational and charity activities for their local communities, in collaboration with dif- ferent partners. FERRARI MUSEUM MARANELLO & MUSEO ENZO FERRARI (MEF) The Ferrari Museum Maranello invites visitors to ex- perience the Prancing Horse dream first-hand, of- fering them a journey through the Group’s history, values and automotive world. The Museo Enzo Ferrari (MEF) is built around the house in which Enzo Ferrari was born in 1898. The MEF tells the story of Enzo Ferrari as a young boy discovering the irresistible allure of the world of motor racing, his career as a driver in 1920s, as the driving force behind the Scuderia Ferrari in the 1930s, and then as Ferrari, the Constructor, from 1947 onwards. In 2023, the Ferrari Museum Maranello and the MEF welcomed more than 740 thousand visitors and the main exhibitions of were: • “Roaring 50s”, an exhibition on the history of the • “Supercars – The evolution of uniqueness” ded- Modena Street circuit. icated to all the Ferrari that hailed landmark ad- vances in the marque’s technological evolution. • “Game Changers”, an exhibition dedicated to the exploration of Ferrari’s most revolutionary models. SCUDERIA FERRARI CLUB We strive to maintain and enhance the power and passion we inspire in customers and the broader community of automotive enthusiasts by continu- ing our rigorous production and distribution model, promoting hard-to-satisfy demand and scarcity val- ue in our cars. We also support our brand value by enabling a strong connection between Ferrari and our community of enthusiasts. 248 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FScuderia Ferrari Club is a non-profit consortium company founded in 2006 by Ferrari S.p.A. to coor- dinate the activities of the Scuderia’s many fans who have founded clubs around the world. As of Decem- ber 2023, the Company has 190 officially recognized Clubs, in over 20 countries (152 in Italy and 38 world- wide), with more than 16 thousand active member- ships. An incredible mix of different nationalities, cultures and lifestyles is united by one enduring pas- sion for Ferrari. Scuderia Ferrari Club also works with the Clubs to support the organization of their events. Before joining Scuderia Ferrari Club, an or- ganization must demonstrate a significant engage- ment in the motorsport world and a conduct in line with Ferrari’s values. In 2023, Scuderia Ferrari Club continued with the adoption of a new brand identity and new online and social activities. FERRARI DRIVER ACADEMY The Ferrari Driver Academy was founded with the mission of providing young drivers with a training program that will ultimately reward them with a ca- reer in a Formula 1 prancing horse car. The Ferrari Driver Academy focuses on fos- tering the growth and training of talented young drivers who are handpicked from the international motor racing arena. The aim is to identify young tal- ented drivers which one day will be able to win for Scuderia Ferrari in the Formula 1 World Champi- onship by coaching them to develop their potential and always perform at their peak. In addition, the project also encompasses a scouting program to detect young talented karting drivers to potential- ly join FDA with partnerships in Italy, Latin America, Asia Pacific and Oceania. In fact on top of the two Scouting Camps run in Fiorano to evaluate Europe- an Drivers, FDA personnel coordinated other two regional selections with physical events to spot new talents coming from Latin America, Oceania and Asia Pacific. All those who passed the first selection rounds this year (6 boys between the ages of 14 and 16) were invited to take the final tests which took place in Maranello. The winner of the fourth edition of the FDA Scouting World Finals was the Dutch Driver Rene’ Lammers and FDA will keep monitor- ing him in 2024. The first driver to enter the program was Jules Bianchi in December 2009. The Academy’s line- up for 2023 will be composed out of nine drivers: Robert Shwartzman, Arthur Leclerc, Oliver Bear- man, Dino Beganovic, Rafael Camara, Maya Weug, James Wharton, Tuukka Taponen and Aurelia No- bels. Charles Leclerc joined at the beginning of 2016 and won within two years the GP3 and F2 champi- onships. Six years ago, he raced in Formula 1 with Alfa Romeo Sauber and from 2019 he has raced for Scuderia Ferrari as an official driver. The Swedish Driver Dino Beganovic won the 2022 FIA Formula Regional title. Moreover, in 2023 for the fourth year in a row, we hosted a new edition of “FIA Girls on track-Rising Stars”. The aim of this initiative is to help the best young female talents worldwide to compete at the highest level in automobile racing. The win- ner of the fourth edition was Alba Larsen and FDA will keep a close eye on her progresses through the 2024 Season. FDA aims not only at supporting drivers merely from a racing point of view, but also at developing them personally and professionally through a pro- gram that spans several years. The focus is on de- veloping both the person and the professional at a time in their life when they are growing rapidly, by providing them with all the required tools to make the right choices at the right time. Hence the idea of creating a “Campus” where the young drivers can live and breathe motorsport and, even more impor- tantly, Ferrari, 24 hours a day. METHODOLOGY AND SCOPE es to the chapter(s) or paragraph(s) of this Annual Report where the relevant aspects of the Dutch De- cree are discussed in particular. Through this Non-Financial Statement, we aim to provide our stakeholders with non-financial infor- mation, illustrate our sustainability strategy and our corporate social responsibility initiatives in 2023 (from January 1, 2023 to December 31, 2023) to en- sure transparent and structured communication with our stakeholders. This Statement was prepared in accordance with the Dutch Civil Code, and with the Dutch De- cree on Non-Financial Information (Besluit bekend- making niet-financiële informatie), which is a trans- position of Directive 2014/95/EU ‘Disclosure of non-financial and diversity information’ into Dutch law. The table below shows the internal referenc- 249 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FDutch Decree aspects Internal reference – Chapter / Paragraph Business model • Our Business Policies and due diligence • Corporate Governance • Proactively Fostering Best Practice Governance / Integrity of Business Conduct • Being the Employer of Choice / Working Environment • Being the Employer of Choice / Training and Talent Development • Being the Employer of Choice / Occupational Health and Safety • Reducing Our Environmental Footprint / Environmental management systems Principal risks and their management • Risk Factors • Proactively Fostering Best Practice Governance / Sustainability Risks • Reducing Our Environmental Footprint / Assessing and Governing Climate-Related Risks • Risk Management Process and Internal Control Systems Thematic aspects Environmental matters • Reducing Our Environmental Footprint / Our Strategy to Reach Carbon Neutrality by 2030 • Reducing Our Environmental Footprint / Assessing and Governing Climate-Related Risks • Reducing Our Environmental Footprint / Reducing Our Direct Environmental Impacts • Reducing Our Environmental Footprint / Reducing the Environmental Impacts along the Value Chain • Further Climate-related Disclosures (TCFD) Social matters • Our Business • Proactively Fostering Best Practice Governance / Integrity of Business Conduct • Overview of Our Business / Procurement / Responsible Supply Chain; Conflict Minerals • Exceeding Expectations / Research innovation technology • Overview of Our Business / Client Relations / Client Satisfaction • Exceeding Expectations / Vehicle safety • Creating and Sharing Value with the Community / Ferrari & Education Employee matters • Being the Employer of Choice / Working Environment • Being the Employer of Choice / Training and Talent Development • Being the Employer of Choice / Talent Recruitment and Employee Retention • Being the Employer of Choice / Occupational Health and Safety • Being the Employer of Choice / Our Employees in Numbers Respect for human rights • Proactively Fostering Best Practice Governance / Integrity of Business Conduct • Overview of Our Business / Procurement / Responsible Supply Chain; Conflict Minerals • Being the Employer of Choice / Talent Recruitment and Employee Retention • Being the Employer of Choice / Occupational Health and Safety • Being the Employer of Choice / Our Employees in Numbers Fight against corruption and bribery • Proactively Fostering Best Practice Governance / Integrity of Business Conduct Supply Chain • Proactively Fostering Best Practice Governance / Integrity of Business Conduct • Overview of Our Business / Procurement / Responsible Supply Chain Conflict minerals • Proactively Fostering Best Practice Governance / Integrity of Business Conduct • Overview of Our Business / Procurement / Conflict Minerals This Statement is prepared in accordance with the GRI standards defined by the GRI (Global Reporting Initiative). It also includes further disclosures in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), the Automobiles Sustainability Accounting Standards, prepared by the Sustainability Accounting Stan- dards Board (SASB), and the EU Taxonomy Regula- tion 2020/852. Several operating departments of the Group have been actively involved in the pro- cess of data gathering and report drafting in order to shape this Statement. This has prepared under the supervision of Ferrari Group’s Chief Financial Officer and has been shared with the Executive Of- ficers of the Group and with the ESG Committee of the Board of Directors. With regard to the financial data, the scope of re- porting corresponds to that of Ferrari N.V.’s Consoli- dated Financial Statements. Regarding the qualitative and quantitative data on social and environmental aspects, the scope of re- porting corresponds to Ferrari N.V. and our subsid- iaries consolidated on a line-by-line basis (as indicated in note 3 “Scope of consolidation” of the 2023 Annual Report). Environmental data and information are re- ported for our principal manufacturing facility in Ma- 250 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Franello, for our second plant in Modena and for our Mugello racing circuit. We continue to measure and report in terms of energy consumption and green- house gas (GHG) emissions of our 14 directly oper- ated retail stores, offices of our foreign subsidiaries and other smaller facilities in Italy, such as the Museo Enzo Ferrari (MEF) in Modena and the Ferrari Museum in Maranello. Other environmental indicators, such as water withdrawals and discharges and waste gener- ation are deemed negligible and excluded. Any exceptions, with regard to the scope of this data, are clearly indicated throughout this Statement. Directly measurable quantities have been includ- ed, while limiting, as far as possible, the use of esti- mates. Any estimated data is indicated accordingly, additionally certain totals in the tables included in this document may not add due to rounding. During the reporting period, we did not face any significant change concerning the organization’s size, structure, ownership or supply chain. The re- porting frequency will be annual. In this Statement, we define as significant the judgements and the fines that are above the finan- cial materiality threshold considered for the Finan- cial Statement. For more detail on how it was deter- mined, please refer to the Independent Auditor’s Report in this Report. The Statement, with the exception of the information included in the table “Sustainability Accounting Stan- dards Board Response (SASB) INDEX 2023”, is subject to a limited assurance engagement in accordance with the criteria established by the principle ISAE 3000 (Revised) by Deloitte & Touche S.p.A., which, at the end of the work performed, released the inde- pendent registered public accounting firm’s Report. Quantitative indicators that do not relate to any gen- eral or topic-specific disclosures of the GRI Stan- dards, which are reported in correspondence to the pages indicated in the Content Index, are not subject to limited Assurance by Deloitte & Touche S.p.A. This Statement is also available online at www.fer- rari.com. Please refer to the Investor Relations and Sustainability department for your inquiries about Fer- rari’s sustainability strategy (email: ir@ferrari.com). Furthermore, as identified in “Double Material- ity Analysis of Ferrari Group”, referring to the im- pact materiality, we identified actual and potential impacts on the economy, environment, and people, across our activities and our business relationships. This analysis informed the prioritization of the im- pacts based on their significance. The table below shows the impacts identified for each material topic, without being prioritized be- tween each other. Topic Main impacts Nature of the Type of involvement impacts Product technology, Responding to clients’ demands for a product of the highest Potential/Positive Causes design, quality and technology and design standards, also by promoting R&D for safety industrial development Reduced level of vehicle safety and quality with consequent Potential/Negative Causes increased risks for clients Climate change Energy consumption (within the organization) and related Actual/Negative Causes and directly Greenhouse gas emissions (Scope 1 / Scope 2) with negative impact on climate change and the community (e.g. Maranello) linked to Energy consumption and related GHG emissions for vehicles Actual/Negative Contributes to usage and Use of sold products (Scope 3) with negative impact on climate change Energy consumption and related GHG emissions for raw material Actual/Negative Contributes to purchased (Scope 3) with negative impact on climate change Energy consumption and related GHG emissions for logistics Actual/Negative Contributes to upstream and downstream (Scope 3) with negative impact on climate change Natural resources Group's contribution to depletion and pollution of natural Actual/Negative Causes management and resources (e.g. noise pollution, emissions of ozone-depleting biodiversity substances) Impacts on ecosystems and people in relation to the amount of Potential/Negative Causes water withdrawn and consumed by an organization Protection of biodiversity and of environmentally sound practices Actual/Positive Causes Impacts on biodiversity (terrestrial ecosystems) related to the Potential/Negative Causes direct operations (e.g. Maranello, Mugello) Raw materials and Production of hazardous / non hazardous waste Actual/Negative Causes circular economy 251 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FTopic Main impacts Nature of the Type of involvement impacts Talent attraction, Positive impacts on employees’ motivation and sense of Actual/Positive Causes retention and development belonging thanks to competitive remuneration, benefits, training opportunities and career development Loss of knowledge and key skills due to high turnover or low Potential/Negative Causes development with negative indirect impacts on stakeholders (e.g. customers) Health, safety and Work-life balance, attention to mental health with positive impacts Actual/Positive Causes well-being on employees’ physical and mental well-being Work-related injuries (employees, workers whose work or Potential/Negative Causes workplace is controlled by Ferrari) Diversity and Impacts on Ferrari’s employee’s satisfaction and engagement by Actual/Positive Causes inclusion promoting awareness and culture about diversity and inclusion Incidents of discrimination (including gender discrimination in Potential/Negative Causes remuneration) and/or abuse within company’s operations Responsibility Support community education through general and technical Actual/Positive Causes towards the programs community and future generations Operations with potential negative impacts on local communities’ Potential/Negative Causes development (e.g. environmental and social impacts with effects on local communities) Impact on the community (e.g. Maranello) wealth thanks to the Actual/Positive Causes employment (e.g. job opportunities for local students, financial stability of employees) Ethics and human Promote awareness and culture about ethics and human rights Actual/Positive Causes rights of Ferrari management, employees, business partners and other stakeholders Episodes of corruption, anti-competitive behavior and monopoly Potential/Negative Causes practices with negative impacts on the economy/markets Violation of human rights within the Group with impacts on human Potential/Negative Causes dignity Supply chain responsible management Violation of human rights along the value chain with impacts on Potential/Negative Contributes to and human dignity directly linked to Creation of a responsible value chain through the assessment and Actual/Positive Causes evaluation of suppliers on sustainability performances Group’s contribution to depletion and pollution of natural Actual/Negative Contributes to and resources along the value chain directly linked to Impacts on biodiversity related to the value chain (e.g. raw Actual/Negative Directly linked to materials extraction from mining activities) Impact on communities (where suppliers of Ferrari have their Potential/Negative Directly linked to operations) along Ferrari value chain Promotion of circularity within the value chain to reduce the use of Actual/Positive Causes natural resources and waste produced by suppliers Incidents of discrimination (including gender discrimination in Potential/Negative Directly linked to remuneration) and/or abuse along the value chain Data responsibility, Willful and/or unintentional security breaches involving Potential/Negative Causes and privacy and confidential business information, stakeholder privacy and contributes to cybersecurity losses of stakeholder data, for the detriment of the Group and stakeholders 252 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FSASB INDEX FERRARI – AUTOMOBILES ACCOUNTING STANDARD SUSTAINABILITY ACCOUNTING STANDARDS BOARD RESPONSE (SASB) INDEX 2023 Topic Metric Code Unit of M. Response/Comment Activity Metrics Number of vehicles manufactured TR-AU-000.A N° Number of vehicles sold TR-AU-000.B N° Product safety Percentage of vehicle models rated TR-AU-250a.1 % by NCAP programs with an overall 5-star safety rating, by region Number of safety-related defect TR-AU-250a.2 N° complaints, percentage investigated 14,290 13,663 N/A(67) 0 100% Number of vehicles recalled TR-AU-250a.3 N° Mandatory recalls: 4,942 Voluntary recalls: 87,105 Labor practices Percentage of active workforce TR-AU-310a.1 % 93.5% covered under collective bargaining agreements (1) Number of work stoppages and TR-AU-310a.2 N° 0 (2) total days idle Fuel Economy and Use- Sales-weighted average passenger TR-AU-410a.1 Avg phase Emissions fleet fuel economy, by region EU: 245 gCO2/km (provisional data) USA: 391 g/mi (GHG emissions) China: 9.68 L/100 km Number of (1) zero emission vehicles TR-AU-410a.2 N° 6,045 (plug-in hybrid) (ZEV), (2) hybrid vehicles, and (3) plug-in hybrid vehicles sold Discussion of strategy for managing TR-AU-410a.3 • Overview of Our Business/ fleet fuel economy and emissions risks and opportunities Regulatory Matters; • Reducing Our Environmental Footprint/Reducing the environmental impacts along the value chain/Vehicle Emissions; • Reducing Our Environmental Footprint/Assessing and governing climate-related risks Materials Sourcing Description of the management TR-AU-440a.1 • Reducing Our Environmental of risks associated with the use of critical materials Footprint/Reducing the environmental impacts along the value chain/Raw materials; • Overview of Our Business/ Procurement/Responsible Supply Chain; • Overview of Our Business/ Procurement/Conflict minerals; • Risk Management Process and Internal Control System 253 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FTopic Metric Code Unit of M. Response/Comment Materials Efficiency & Total amount of waste from Recycling manufacturing, percentage TR-AU- 440b.1 Tons 8,821 tons 56% recycled recycled Weight of end-of-life material recovered, percentage recycled TR-AU- 440b.2 • Reducing Our Environmental Footprint/Reducing our Direct Environmental Impacts/Waste management Tons; % • Reducing Our Environmental Average recyclability of vehicles sold TR-AU- 440b.3 % Footprint/Reducing the environmental impacts along the value chain/Vehicle’s end of life; 85% (recycled) - 95% (recovered) These values refer to the minimum percentage by mass guaranteed on our European fleet and determined in accordance with EU Directive 2005/64/ EC 85% This value refers to the minimum percentage by mass guaranteed on our European fleet and determined in accordance with EU Directive 2005/64/ EC FURTHER CLIMATE-RELATED DISCLOSURES (TCFD) The following section aims at providing a transparent disclosure on cli- mate change-related matters, in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”). TCFD REFERENCE TABLE For further details, please refer to the documents mentioned in the table below. TCFD area Recommended TCFD disclosure Further references Governance: a) Describe the board’s oversight of climate- • Corporate Governance. Disclose the organization’s related risks and opportunities. • Proactively Fostering Best Practice governance around climate- related risks and opportunities. Governance/Our Decision making process. • CDP Climate Change Questionnaire: C1 – Governance. b) Describe management’s role in assessing and • Corporate Governance. managing climate-related risks and opportunities. • Proactively Fostering Best Practice Governance/Our Decision making process; • Reducing Our Environmental Footprint/ Assessing and Governing Climate-Related Risks. • CDP Climate Change Questionnaire: C1 – Governance. 254 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FTCFD area Strategy: Recommended TCFD disclosure Further references a) Describe the climate-related risks and • Risk Factors; Risk Management Process and Disclose the actual and opportunities the organization has identified over Internal Control Systems. potential impacts of climate the short, medium, and long-term. • Double Materiality Analysis and Stakeholder related risks and opportunities on the organization’s businesses, strategy, and financial planning where such information is material. Engagement/ Double Materiality Analysis of Ferrari Group; • Proactively Fostering Best Practice Governance/Our Decision making process. • CDP Climate Change Questionnaire: C2 - Risks and Opportunities; C3 -Business strategy. b) Describe the impact of climate-related risks • Risk Factors/Risk Management Process and and opportunities on the Internal Control Systems. organization’s businesses, strategy, and financial • Double Materiality Analysis and Stakeholder planning. Engagement/ Double Materiality Analysis of Ferrari Group; • Proactively Fostering Best Practice Governance/Our Decision making process; • Reducing Our Environmental Footprint. • CDP Climate Change Questionnaire: C2 - Risks and Opportunities; C3 -Business strategy. c) Describe the resilience of the organization’s • Reducing Our Environmental Footprint/Our strategy, taking into consideration different Strategy to Reach Carbon Neutrality by 2030 climate-related - Assessing and Governing Climate-Related scenarios, including a 2°C or lower scenario. Risks. • CDP Climate Change Questionnaire: C3 -Business strategy. Risk Management: Disclose a) Describe the organization’s processes for • Risk Management Process and Internal how the organization identifies, identifying and assessing climate-related risks. Control Systems. assesses, and manages climate-related risks • Proactively Fostering Best Practice Governance; • Reducing Our Environmental Footprint/ Assessing and Governing Climate-Related Risks. • CDP Climate Change Questionnaire: C2 - Risks and Opportunities. b) Describe the organization’s processes for • Risk Factors/Risk Management Process and managing climate-related risks. Internal Control Systems. • Proactively Fostering Best Practice Governance/Our Decision making process • Proactively Fostering Best Practice Governance/Sustainability Risks; • Reducing Our Environmental Footprint. • CDP Climate Change Questionnaire: C2 - Risks and Opportunities. c) Describe how processes for identifying, • Risk Management Process and Internal assessing, and managing climate-related risks Control Systems. are integrated into the organization’s overall risk • Proactively Fostering Best Practice management. Governance/Our Decision making process; • Reducing Our Environmental Footprint/ Assessing and Governing Climate-Related Risks. • CDP Climate Change Questionnaire: C2 - Risks and Opportunities. Metrics & Targets: a) Disclose the metrics used by the organization Disclose the metrics and to assess climate-related risks and opportunities targets used to assess and in line with its • Reducing Our Environmental Footprint. • CDP Climate Change Questionnaire: C4 - Targets and performance; C6 -Emissions manage relevant climate strategy and risk management process. data; C7 – Emissions breakdowns; C8 – related risks and opportunities where such information is material. Energy. b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and • Reducing Our Environmental Footprint. • CDP Climate Change Questionnaire: C6 the related risks. -Emissions data; C7 – Emissions breakdowns. c) Describe the targets used by the organization to manage climate-related risks and opportunities • Reducing Our Environmental Footprint. • CDP Climate Change Questionnaire: C4 - and performance against targets. Targets and performance. 255 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FGRI CONTENT INDEX UNIVERSAL STANDARDS Statement of use Ferrari N.V. has reported in accordance with the GRI Standards for the period 1st January 2023 to 31st December 2023 GRI 1 used GRI 1: Foundation 2021 Applicable GRI Sector Standard(s) N/A GRI Standard Disclosure Page number / Link Notes/Reasons for omissions GRI 2: GENERAL DISCLOSURES (2021) The organization and its reporting practices 2-1 Organizational details 122-123; 249-251 Via Abetone Inferiore n. 4, I-41053 Maranello (MO), Italy 2-2 2-3 2-4 2-5 2-6 2-7 2-8 2-9 2-10 Entities included in the organizations’ sustainability 249-251 reporting Reporting period, frequency and contact point 249-251 Restatements of information External assurance Activities and workers The report was published on February 22, 2024 221; 463 450-451 Activities, value chain and other business 46-48; 51-77; 249-251 relationships Employees 208-211; 463 Workers who are not employees 209 Governance Governance structure and composition 122-132; 160-162; 184-185 Nomination and selection of the highest 122-128;130;160-162 governance body 2-11 Chair of the highest governance body 122-128 The Chairman of the Board of Directors is a Non-Executive Director 2-12 Role of the highest governance body in overseeing 122-128;132 the management of impacts 2-13 2-14 2-15 2-16 2-17 Delegation of responsibility for managing impacts 184-185 Role of the highest governance body in 132; 249-251 sustainability reporting Conflicts of interest 40-43; 131-134; 185-186 Communication of critical concerns 185-186; 190 Collective knowledge of the highest governance 132 body 2-18 Evaluation of the performance of the highest 132; 165-166 2-19 2-20 governance body Remuneration policies Process to determine remuneration 279-304 279-304 256 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FGRI Standard Disclosure Page number / Link Notes/Reasons for omissions 2-21 Annual total compensation ratio 213; 463 Strategy, policies and practices 2-22 2-23 2-24 2-25 2-26 2-27 2-28 2-29 2-30 Statement on sustainable development strategy 14-15 Policy commitments 158; 185-189; 190 Code of Conduct (Disciplinary measures; Contractual measures; Reporting of violations of the code of conduct; Queries and support, p. 24) Embedding policy commitments 180-182; 185-187; 190 Processes to remediate negative impacts 63-65; 71-72; 179; 192-193; 226-230; 266-279 Mechanisms for seeking advice and raising 190 concerns Compliance with laws and regulations 192 Membership associations 190-191 Ferrari has a significant role in the following associations/foundations: European Automobile Manufacturers’ Association - ACEA, Altagamma, Valore D, Motorvehicle University of Emilia-Romagna – MUNER, Fondazione Istituto Tecnico Superiore Meccanica, Meccatronica, Motoristica, Packaging - ITS Maker, Fondazione Bologna Business School, Fondazione Casa Enzo Ferrari Museo. Stakeholder engagement Approach to stakeholder engagement 180-182 Collective bargaining agreements 212-213; 253; 463 GRI 3: MATERIAL TOPICS (2021) 3-1 3-2 Process to determine material topics 176-177;181; 462 List of material topics 177; 179; 251-252 EXCEEDING EXPECTATIONS Topic: Product technology, design quality and safety GRI 3: Management Topics (2021) 3-3 Management of material topics 194-197; 249-251 GRI 416: Customer Health and Safety (2016) 416-1 Assessment of the health and safety impacts of 196-197 product and service categories GRI 417: Marketing and Labeling (2016) 417-1 Requirements for product and service information Depending on the market of destination and labeling and whenever applicable, Ferrari vehicles are equipped with labels indicating environmental data (e.g. mercury-free label, fuel consumption and CO2 emissions label, etc.) and additional labels related to the safe use of the vehicle and its components (e.g. battery, Start & Stop system, lubricants, anti- freeze fluid). These labels are sometimes given by an internal self-assessment, otherwise directly received from the authorities. Whenever applicable, the local representative is subject to the labeling obligations. 257 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FGRI Standard Disclosure BEING THE EMPLOYER OF CHOICE Topic: Talent attraction, retention and development GRI 3: Management Topics (2021) Page number / Link Notes/Reasons for omissions 3-3 Management of material topics 198-206; 212-213; 249-252 GRI 401: Employment (2016) 401-1 401-2 New employee hires and employee turnover 212 Benefits provided to full-time employees that are 200-201; 205 not provided to temporary or part-time employees GRI 404: Training and Education (2016) 404-1 Average hours of training per year per employee 204; 462 404-2 Programs for upgrading employee skills and 201-204 transition assistance programs 404-3 Percentage of employees receiving regular 205-206 performance and career development reviews GRI 402: Labor/Management Relations (2016) 402-1 Minimum notice periods regarding operational 213 changes Topic: Health, safety and well-being GRI 3: Management Topics (2021) 3-3 Management of material topics 200-201; 207-208; 249-252; 462 GRI 403: Occupational Health and Safety (2018) 403-1 Occupational health and safety management 207-208 system 403-2 Hazard identification, risk assessment, and incident 207-208; 462 investigation 403-3 Occupational health services 403-4 Worker participation, consultation, and communication on occupational health and safety 207-208 207-208 403-5 Worker training on occupational health and safety 207-208; 462 403-6 Promotion of worker health 200-201; 207-208 403-7 Prevention and mitigation of occupational health 207-208 and safety impacts directly linked by business relationships 403-9 Work-related injuries 208; 462-463 Topic: Diversity and inclusion GRI 3: Management Topics (2021) 3-3 Management of material topics 160-162; 185-187; 190; 192; 206-207; 249- 252 Code of Conduct (Defending human rights, p. 7; Ensuring a fair working environment, p. 8; Valuing people, p. 10) GRI 202: Market Presence (2016) 258 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FGRI Standard Disclosure Page number / Link Notes/Reasons for omissions 202-1 Ratios of standard entry level wage by gender 212-213 compared to local minimum wage All the employees of our Group in Italy are subject to Collective Agreements (CCSL, Contratto Collettivo Specifico di Lavoro and Accordo Premio di Competitività Ferrari). The proportion between Entry- Level Salary and Minimum Wage in Italy is 1:1.Minimum wage levels are identical between men and women. As per Italy, we consider as minimum wage the minimum wage determined by collective bargaining agreements. GRI 405: Diversity and Equal Opportunity (2016) 405-1 Diversity of governance bodies and employees 161; 209 GRI 406: Non-Discrimination (2016) 406-1 Incidents of discrimination and corrective actions 160-162; 192 taken REDUCING OUR ENVIRONMENTAL FOOTPRINT Topic: Climate change GRI 3: Management Topics (2021) 3-3 Management of material topics 216-220; 226-230; 249-251; 254-256; 463 GRI 302: Energy (2016) 302-1 Energy consumption within the organization 220; 463 GRI 305: Emissions (2016) 305-1 305-2 Direct (Scope 1) GHG emissions 221; 463 Energy indirect (Scope 2) GHG emissions 221; 463 305-6 Emissions of ozone-depleting substances (ODS) In 2023, leakages of refrigerant gas were recorded (HFC-23, HFC-134a, R-404A, R-407C, R-410A, R-32, R-472B), amounting to 0 tons of CFC-11 equivalent. 305-7 Nitrogen oxides (NOX), sulfur oxides (SOX), and 222 other significant air emissions Topic: Raw materials and circular economy GRI 3: Management Topics (2021) 3-3 Management of material topics 216; 222-223; 249-251 GRI 306: Waste (2020) 306-1 Waste generation and significant waste-related 222-223 impacts 306-2 Management of significant waste-related impacts 222-223 306-3 Waste generated 222-223; 463 306-4 Waste diverted from disposal 306-5 Waste directed to disposal 222-223 222-223 Topic: Natural resources management and biodiversity GRI 3: Management Topics (2021) 3-3 Management of material topics 216; 223-226; 249-251 GRI 303: Water and Effluents (2018) 303-1 303-2 Interactions with water as a shared resource 223-224 Management of water discharge-related impacts 223-224 259 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FGRI Standard Disclosure 303-3 Water withdrawal 303-4 Water discharge 303-5 Water consumption GRI 304: Biodiversity (2016) Page number / Link Notes/Reasons for omissions 224; 463 224; 463 224 304-1 Operational sites owned, leased, managed in, or 225 adjacent to, protected areas and areas of high biodiversity value outside protected areas CREATING AND SHARING VALUE WITH THE COMMUNITY Topic: Responsibility towards the community and future generations GRI 3: Management Topics (2021) 3-3 Management of material topics 246-249; 249-252 PROACTIVELY FOSTERING BEST PRACTICE GOVERNANCE Topic: Ethics and human rights GRI 3: Management Topics (2021) 3-3 Management of material topics 187-188; 190; 192; 249-252 GRI 205: Anti-Corruption (2016) 205-3 Confirmed incidents of corruption and actions 192 taken GRI 206: Anti-Competitive Behavior (2016) 206-1 Legal actions for anti-competitive behavior, anti- 192 trust, and monopoly practices Topic: Supply chain responsible management GRI 3: Management Topics (2021) 3-3 Management of material topics 63-65; 185-189; 249-252 Code of Conduct (Adding value to our supply chain, p. 16) GRI 414: Supplier Social Assessment (2016) 414-1 New suppliers that were screened using social 64; 462 criteria Beyond what is described in the above- mentioned section, we do not have any further screening procedures based on social criteria Topic: Data responsibility, privacy and cybersecurity GRI 3: Management Topics (2021) 3-3 Management of material topics 191-192; 249-252 GRI 418: Customer Privacy (2016) 418-1 Substantiated complaints concerning breaches of 192 customer privacy and losses of customer data 260 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F261 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F262 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F263 NON FINANCIAL STATEMENTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FPART II BOARD REPORT 265 RISK MANAGEMENT PROCESS AND INTERNAL CONTROL SYSTEM Our risk management approach is an important business driver and it is integral to the achievement of the Group’s long-term business plan. We take an integrated approach to risk management, where risk and opportunity assessment is at the core of the leadership team agenda. The Board of Directors is responsible for considering the ability to control and manage risks crucial to achieve its identified busi- ness targets and to ensure continuity of the Group. For this reason, Ferrari has developed varying ap- petites to achieve different strategic objectives, fo- cusing attention at all relevant risk levels, from risk management to internal control. Ferrari has adopted the last publication (“Enter- prise Risk Management - Integrating Strategy and Performance”) of the COSO Framework (Commit- tee of Sponsoring Organizations of the Treadway Commission) as the foundation of its Enterprise Risk Management (ERM) process, deeply embedded in its broader internal control system. Our internal con- trol system consists of a set of rules, procedures and organizational structures aimed at contributing proactively to the following objectives: • safeguard of Ferrari’s heritage; • efficient and effective management of the Group • reliability, accuracy and integrity of the infor- in line with corporate strategies; mation provided to corporate bodies and to the market; and • compliance with the current laws and regula- tions, with the Company’s Statute and Articles of Association and with the internal procedures of the Group. Contributing to informed and consistent deci- sion-making as well as to the spread of a correct knowledge of risks, legality and corporate values, the risk management process and the internal con- trol system play a central role in the corporate orga- nization, supporting the Company’s management in alignment with the corporate objectives as defined by the Board of Directors. The risk management process and the internal control system involve a plurality of organizational units and actors, requiring both coordination among each other and room to operate interdependent- ly, guaranteeing complementarity in the objectives pursued and in the rules of operation. In order to ensure the adequateness of its risk management and internal control system, Ferrari has allocated roles and responsibilities among the relevant organizational units and actors based on the international best practice of the “Three Line of Controls Model”. Each line of control has different functions with clearly defined boundaries: 1 The first line of control identifies and assesses the relevant risks and subsequently manages and implements specific response actions. It com- prises the set of control activities that each oper- ating unit applies to their processes to ensure op- 266 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Ferations are carried out properly. Such activities, the primary responsibility of which lies with the management of the applicable operating units, are considered an integral part of corporate op- erations. This first line of control comprises core business Risk Owners, staff functions Risk Own- ers and by the Ferrari Leadership Team; 2 The second line of control monitors the main risks to ensure the controls implemented by the first line are appropriate and effective. It also provides support to the first line of control in the identification and assessment of the main risks, as well as in the implementation of the manage- ment procedures, and related controls, neces- sary to address those risks. This control line is entrusted to compliance, strategic, operational and reporting functions. Additionally, on a case- by-case basis and depending on the significance of the risk, specific corporate departments can be assigned tasks pertaining to the second-line concerning specific risk areas; 3 The third line  of control provides for indepen- dent and objective assurance and advisory activ- ities, and it is aimed at assessing the adequacy of internal control, risk management and corporate governance processes according to a risk-based approach. Third-line controls and activities fall within the remit of Internal Audit department. The Board of Directors designs, implements, and maintains internal risk management and control sys- tems. In executing such responsibilities it is assisted by the Audit Committee, which is responsible for advis- ing the Board of Directors and acts under the authori- ty delegated by the Board of Directors with reference to internal controls and risk management systems. The Ferrari Leadership Team is responsible for the deployment and maintenance of a risk manage- ment system across our business functions. The Ferrari Leadership Team is a managerial group led by the CEO and composed of the heads of the vari- ous corporate departments; it reviews the risk man- agement framework and the Company’s key global risks on a regular basis. For risks deemed to be sig- nificant, comprehensive risk response plans are de- veloped and reviewed on a regular basis to ensure the actions are relevant and sufficient. Our risk man- agement framework is discussed with the Group’s Audit Committee on a regular basis. 2 Risk Culture: the values and the attitude con- sistent with our risk management culture are communicated and understood at all levels of the organization. 3 Risk Strategy & Appetite: our risk management principles are intended to enable the achieve- ment of our business plan, goals and strategic objectives. Our risk appetite is balanced through risk tolerance, limits and associated protocols to be activated in case of a breach, to ensure risk levels’ control within our organization. 4 Risk Assessment & Measurement: established activities that allow Ferrari to identify, assess and quantify potential risks on a regular basis. This ac- tivity allows Ferrari to consider the potential im- pact that events may have on the achievement of the Company’s objectives. Risks are assessed us- ing likelihood, impact, preparedness and velocity level criteria. The results of each risk assessment are consolidated on a risk map and analyzed to determine priority and risk treatment methods. 5 Risk Management & Monitoring: management’s response to manage, mitigate or accept risk. Risk management efforts create value through information on risks and controls in order to improve business performance. Systematically monitoring the identified risks and management activities against established metrics allows for timely and proactive response where warrant- ed. Key Risk Indicators are reviewed to ensure their consistency with the identified risks and their trends are analyzed to identify needs for further remediation plans. 6 Risk Reporting: reporting of risk and related in- formation (e.g. mitigation activities) provides genuine insight into the strengths and weakness- es of the risk management process. Disclosure of risk management information to key internal and external stakeholders supports the deci- sion-making processes. The risk map derived from Risk Assessment & Measurement activities is first shared with the top management (through quarterly FLT meetings) and then presented to the Group’s Audit Committee, with a specific fo- cus on the priority risk areas, the mitigation ac- tivities implemented, any management strate- gies that must be adopted and their priority. RISK APPETITE FERRARI’S ENTERPRISE RISK MANAGEMENT PROCESS The Ferrari Enterprise Risk Management system is ori- ented by and structured in six different components: 1 Risk Governance: a structure through which our organization directs, manages and reports its risk management activities. The Risk Gover- nance structure encompasses clearly defined roles and responsibilities, decision-making pow- ers, risk operating model and reporting lines. The risk appetite of Ferrari (i.e. the level of risk that Ferrari is willing to accept to achieve its objectives), is applied to our strategy, Code of Conduct, corpo- rate values and policies. Such risk appetite is mea- sured and tracked thanks to the so-called “Risk Ap- petite Framework”. The Risk Appetite Framework is integrated in all corporate decision-making levels. It defines Ferra- ri’s risk profile, provides explicit boundaries to risk levels within which the management is expected to safely operate, and iteratively reviews risk values, metrics and limits. 267 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTThe risks, divided into specific categories as set out in the table below, are all relevant to the Ferrari business in different ways and their order of appearance does not reflect a ranking by significance. Risk category Risk description Overall appetite Risk appetite statement Strategic risks (S) Risks which affect or are Moderate Ferrari is willing to accept moderate risks in order to created by Ferrari’s business strategy and could affect Ferrari’s long-term positioning and performance. achieve its strategic objectives. Ferrari recognizes the need of continuing to invest in research and development to design and build technically innovative, aesthetically iconic and highly performing cars able to deliver the most “fun to drive” experience and feature design excellence. Strategic risks are taken in a responsible way considering all stakeholders’ interests in order to preserve Ferrari’s brand exclusivity, a high level of demand, the unique customer experience and the current technological and regulatory trends. Operational risks (O) Risks which impact the internal Moderate Ferrari seeks to minimize operational risks on its business processes, people, systems and/ or external resources of the organization and affect Ferrari’s ability to implement its business plan. plans by implementing a manufacturing system capable of flexibly meeting expected targets, maintaining a quality of products and services in line with Ferrari’s customers’ expectations, developing and retaining talents within the organization, securing business continuity as well as production line performances and ensuring the adequacy of our business partners. Financial risks (F) Risks which include areas such Low Ferrari has a cautious approach with respect to financial as valuation, currency, liquidity, commodity and impairment risks. risks. Ferrari continuously seeks to improve and strengthen its financial position in order to generate the required cash to finance its operations and reward its stakeholders. Compliance risks (C) Risks of non-compliance Zero tolerance Ferrari does not tolerate infringements of, and abides with laws, regulations, local standards, code of conduct, to, all applicable laws and regulations through the implementation of preventive measures and the rigorous internal policies and procedures. enforcement of its internal Code of Conduct. This ensures that ethics and integrity are respected and the promotion of its values. Reputational risks Risks which affect Ferrari’s Zero tolerance Ferrari strives to protect and enhance its reputation by (R) brand image, credibility and/or mitigating all the potential threats that could influence integrity the Ferrari’s reputation, credibility and the operational integrity, while constantly increasing its brand awareness. Health, Safety and Risks which affect health and Zero Tolerance Ferrari does not tolerate risks that could have effect on Environmental risk safety and the environment its employees or clients as well as on the surrounding (H) environment. RISK TRENDS AND KEY RISKS Ferrari assesses risks according to their potential impact, likelihood and the entity’s preparedness, which, properly combined, determine an overall risk exposure to prioritize risks and focus the efforts on the most important ones. Ferrari expects that the risk responses which have been implemented or that will be deployed when activated by ad-hoc triggers, will mitigate the risks up to the level defined within the risk appetite. Below we identify and discuss some of our key Company-specific risks. The risks listed and the response plans are not exhaustive and may be adjusted from time to time. The image below shows the listed risks divid- ed by risk category. The following paragraphs present a more detailed discussion of the above risks and is organized by risk category. The main departments in- volved for each risk are listed in alphabetical order. 268 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FS t r ategic Risks (S) Competition Technology, product and regulation Execution of Lifestyle strategy for retail Brand image al Risks (R) n tatio u p e R Production disruption and transformation costs Social and Geopolitical instability SF Success Human Capital management and Organization O p e r a Supply Chain Resilience t i o n a l R i s k Cybersecurity including third parties vulnerabilities s ( O ) a n d E n H v e i r a o l t n h e , S m a n f t e a l t y R , i s k s ( H ) Climate Change B o t h I n t e r n a l a n d E x t e r n a l Internal External Non-compliance laws, regulations, local standards Internal control over financial reporting C o m s (C) e Ris k c n plia Exchange rate and commodity prices Financial Risks ( F ) BRAND IMAGE (S/R) The preservation and enhancement of the value of the Ferrari brand is crucial in driving revenue and demand for our cars. The perception and recogni- tion of the Ferrari brand are of strategic importance and depend on many factors such as design, tech- nology, performance, quality and image of our cars, as well as the appeal of our dealerships and stores, the success of our client activities, and our general profile, including our brand’s image of exclusivity. The entire Company is oriented and works to- wards preserving the image of Ferrari in all differ- ent company processes such as in the selection and management of business partners (e.g. selec- tion of licensing-franchising partners, preventive controls on suppliers, enhancement of the client community, Ferrari Academy training center for dealers, etc.), in the social media management (e.g. close monitoring of social media and Ferrari per- ception, adoption of a Ferrari Social Media Practice) and in the preservation of brand value (e.g. with an internal function dedicated to monitoring and max- imizing the residual value of Ferrari cars, monitor- ing of pre-owned market and estimating evolution of residual values, etc.). Key aspects Main departments involved Preserving brand value All Ferrari Departments Car Residual Value Success of the Formula 1 team Selection and management of business partners Social Media management 269 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT COMPETITION (S) We face competition in all product categories and markets in which we operate. We compete with oth- er international luxury performance car manufac- turers owning and operating well-known brands of high-quality cars. Some of them are part of larger automotive groups and may have greater financial resources and bargaining power with suppliers than us, particularly in light of our policy to maintain low volumes in order to preserve and enhance the exclusivity of our cars. We believe that we compete with other interna- tional luxury performance car manufacturers pri- marily thanks to our brand image, the performance and design of our cars, our reputation for quality and the driving experience we offer our customers. In addition, relations with clients are key to Ferra- ri, and we organize many initiatives to preserve and enhance them - among others: personalization ser- vices (Atelier and Tailor Made), Maranello Experience, selected participation for new model launches, Fer- rari clubs, dealers and client programs enhancing the clients community (e,g. Esperienza Fiorano, Cav- alcades, Tribute, Legacy tour, Finali Mondiali, etc) and a constant monitoring of customer satisfaction to en- sure a strong trend and performance over the years. Several global luxury automotive manufactur- ers have increased competitive pressure for luxu- ry cars, particularly in EMEA and the United States. Considering the maturity of these markets, we an- ticipate that existing market participants will try to aggressively protect or increase their market share. Increased competition may result in pricing pressure, reduction of marginality and our inabili- ty to meet our shipment targets, which could have a material adverse effect on our results of opera- tions and financial condition. Ferrari implemented different response plans related to these aspects: an internal department dedicated to the monitoring of the customer base renewal, indirect support of residual values through financial services products for pre-owned cars, definition and monitoring of waiting list targets. An additional element to be considered con- cerns the fact that our competitors could steal, in- fringe or copy our intellectual property. To protect our image, products, innovations and brand from competitors we have created dedicated teams that manage trademarks, logos and patents, and different actions are in place to limit the leakage of sensitive technical data and information, including non-disclosure agreements signed by all suppliers/ consultants, procedures and internal controls re- lated to internal sensitive information management, clean desk policy, tools to qualify the sensitive level of each information, and an awareness campaign on data/information/hardware management. Key aspects Main departments involved Customer base renewal Digital and Data Order book and residual value management Margin pressure Shipments Intellectual property protection Finance Legal Marketing and Commercial Manufacturing TECHNOLOGY, PRODUCT AND REGULATION (S) lead- Performance cars are characterized by ing-edge technology that is constantly evolving. In particular, advances in racing technology often lead technology improvements in road cars. We invest heavily in research and development to maintain our leading position in high performance car technol- ogy and our competitive position. As technologies change, we upgraded and adapted our cars intro- ducing new models, to keep providing cars with the latest and best-in-class technology. External factors such as the shortages of raw materials and components, faster obsolescence of components and the evolution or introduction of new regulations (for example, safety, noise, environ- mental and sustainability) required us to increase our focus on defining new strategies for products and components to preserve the individual initiatives’ profitability and our ability to develop new attractive products and to meet our customers’ preferences. The design of our electric cars and, more gener- ally, of future models, could be differentiated from past and successful designs in appearance and functionality. A failure in the challenge to make ap- pealing Ferrari new models, in renewing style over time, in differentiating ICE from hybrid/electric cars and in differentiating new models from older mod- els could impact our ability to meet the tastes of cli- ents and prospects. We are closely monitoring luxu- ry car market, technological evolution, social trends (for example connectivity expectations) and change in our customer experiences to offer the most ap- pealing future models possible. The transformation of our car technology creates risks and uncertainties such as the impact on driver 270 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fexperience and on the cars’ residual value over time, both of which may be met with an unfavorable mar- ket reaction. Furthermore, other luxury sports cars manufacturers may be more successful in imple- menting technology evolution. To mitigate such risks, we already have and will continue to increase R&D spending in the medium term, particularly on hybrid and electric technology-related projects. Another challenge that Ferrari is facing is keeping up with the evolution of software, also due to its impact on performance and client expectations. Advance- ments in this area require significant investments and integration of components across vehicles. Ferrari is focused on researching excellence in both its exist- ing and new software technologies. The Company is constantly working to integrate and increase soft- ware competences, and we have a dedicated internal department committed towards software develop- ment/integration. Our Quality Department is also in- volved in the definition and monitoring of processes aimed at ensuring respect of standards. The technology, product and regulation evolu- tion are impacting also after-sales activities, now characterized by a greater degree of complexity if compared with the past. Among other initiatives, Fer- rari invested to mitigate these risks through training activities for dealers/workshops, providing new technical tools and through the definition of a Glob- al RRR (Retain-Recruit-Reward). The aforementioned project is dedicated to dealerships with the aim to in- crease the efficiency and effectiveness of our deal- ership network and to maintain a strong customer satisfaction and enhance the Ferrari’s community. Key aspects Main departments involved Increase of complexity of products and components Design Misalignment between product features & customer Marketing and Commercial preferences Shortening of components and technologies life cycle New dominant design/technologies Increase of complexity in after sales activity Software Development and Integration Product Development Purchasing & Quality Research & Development Technologies & Infrastructures EXECUTION OF LIFESTYLE STRATEGY FOR RETAIL (S) Our lifestyle strategy for retail presents a high de- gree of complexity. It aims to establish Ferrari as a unique brand with a dual identity: exclusive in rela- tion to the luxury pricing and aspirational character of our cars, but also inclusive in relation to our com- munity. If we are unable to manage this duality, our brand’s image may be weakened, or we may be un- able to take fully advantage of our brand’s potential. The focus on carefully selected luxury and life- style categories outside of our car business and of the sporting activities requires new and different key competences. In recent years, we fostered the acqui- sition of skilled employees and the transition of ex- isting competences in line with the execution of our lifestyle strategy for retail. One of the actions imple- mented is the Ferrari Lifestyle & Fashion Academy, a program based in Milan and Maranello for the best Fashion & Luxury Management master’s graduates. Furthermore, due to the strategic importance of our business partners, our ability to recruit new business partners, in the current global social and geopolitical conditions, may impact and potentially delay the implementation of our new lifestyle strat- egy for retail. Dedicated resources are focused on business development activities and definition of procedures to identify, select and evaluate business partners. Business partners are assessed and qual- ified under different standards such as quality, fi- nancial, sustainability and ethics. Moreover, sections in new contracts are dedicated to aspects such as Health & Safety, and social audit procedures are per- formed to check compliance with the minimum re- quired reputational and ethical standards. Key aspects Main departments involved Deployment of lifestyle strategy for retail Finance Selection of new potential business partners Human Resources Relationship with business partners Communication Lifestyle 271 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTSOCIAL AND GEOPOLITICAL INSTABILITY (O) Operating and having business partners in certain markets may expose us to risks related to the so- cial and geopolitical conditions. Our activities could be affected by social restrictions such as those in response to new potential pandemics, imposing measures that may impact our sales, after-sales, manufacturing and procurement processes. Con- sequently, it could be difficult for Ferrari to ship cars to dealers, for dealers to sell cars and for clients to collect cars. Restrictions could also impact our sup- ply chain both by generating shortages of raw mate- rials and components and by leading to production delays and to an increase of costs. Moreover, our activities could also be affected by rising military tensions. As a consequence of these events, import and/or export restrictions could be imposed, or other international sanctions could be enacted. This could lead to limits in sales and after-sales services in specific markets and could potentially impact our supply chain with effects on our supplier base. Ferrari closely monitors social/geopolitical events in the areas of interest with coordination from both corporate functions and local hub organi- zations. We are prepared to adjust sales operations and consequently production processes in case sales to specific countries are restricted. To ensure the resilience of our supply chain, Fer- rari is scouting the availability of alternative suppli- ers that can be activated in case activities of a busi- ness partners are restricted, or the cost of supply excessively increases as a consequence of social and geopolitical events. Key aspects Main departments involved Social and Geopolitical Instability Finance Sales and After-Sales Activity Marketing and Commercial Supply Chain management Purchasing & Quality Research & Development Furthermore, insurance coverages have been struc- tured to avoid financial impacts from natural events. We face risks related to supply chain disruption and shortages of raw materials, parts, components and systems used in our cars. Key mitigations are in place such as: safety stock for critical components and an internal task force in charge of monitoring, identifying and addressing possible raw materials, parts and components shortages. Transformation costs are directly impacted by general market conditions and fluctuation of prices for raw materials, commodities, parts and compo- nents. Ferrari works to prevent an increase in oper- ating costs and reduction of profitability for exam- ple by putting in place hedging activities. PRODUCTION DISRUPTION AND TRANSFORMATION COSTS (O) All cars and engines are internally manufactured at our production facility in Maranello, Italy, where we also have our corporate headquarters and Formu- la 1 activities. We manufacture all of our car chassis in a nearby facility in Modena, Italy. Our Maranello or Modena plants could become unavailable either per- manently or temporarily for a number of reasons, including contamination, power shortage, labor strikes or other events related to information tech- nology business continuity. In addition, Maranello and Modena are located in the Emilia-Romagna re- gion of Italy, which has the potential for seismic ac- tivity. If major disasters such as earthquakes, fires, floods, hurricanes, wars, terrorist attacks, pandem- ics or other events occur, our headquarters, as well as our Formula 1 activities and production facilities, may be seriously damaged, or we may have to stop or delay the production and shipment of our cars. In the last 15 years, Ferrari increased investments to reduce the extent of possible damages from earthquakes and fires and has been implementing different activities to mitigate climate change risks. For example, to mitigate floods risk, the Company has implemented alert systems to monitor possi- ble floods near corporate facilities as well as floods management tools like flow diverters and pumps. Other actions in place further mitigate risks con- nected to disruptive events. For example to avoid im- pacts on the information technology business conti- nuity Ferrari implemented disaster recovery plans. 272 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FKey aspects Main departments involved Dependence on two manufacturing facilities located in close Finance proximity Production and operations suspension Supply chain management Shortage of critical production inputs (e.g., raw materials) Prices for raw materials, commodities, parts and components Digital and Data Manufacturing Purchasing and Quality Research and Development Technologies and Infrastructures SUPPLY CHAIN RESILIENCE (O) Our business depends on a significant number of suppliers that provide raw materials, parts and sys- tems we require to manufacture cars and parts to run our business. We source materials from a lim- ited number of suppliers. In addition, similar to oth- er small volume car manufacturers, most of the key components we use in our cars are purchased from single source suppliers. We work with strategic partners in various areas of our business, and since our strategic partners’ ap- proach might differ from our own standards, Ferra- ri is exposed to performance, operational, financial and reputational risks regarding its suppliers. The general macroeconomic conditions could contrib- ute to the financial distress for our suppliers leading to reduction or termination of their operations. Sup- pliers’ default could have a negative effect on Ferra- ri’s business activities resulting in additional costs, liabilities and leading to not having access to com- ponents/products supplied by the business partner. Furthermore, potential unethical or improper busi- ness practices by suppliers could have a negative effect on the Company’s reputation. Ferrari, through a dedicated department and with the collaboration of functional experts, assess- es its suppliers prior to assignation under different criteria; among others: logistic, quality, financial robustness, ethics, cyber security resilience and technical standards. Moreover, the Company has a dedicated supplier development function with the mandate to monitor suppliers’ conditions through the usage of KPIs and to encourage a continuous im- provement of their activities. Macroeconomic conditions led to an increase in commodities’ prices during the last years. The increase of these prices generated higher costs for suppliers, that were immediately reflected in requests for prices adjustments from our suppli- ers. Ferrari worked on two aspects: on one side, structuring a process to define and enact proper purchasing strategies (e.g. identifying alternative suppliers for critical components) and on the other side, performing analyses to assess the feasibility to increase prices for some of our car models. Furthermore, the increase of components and products’ complexity and the increase of car vol- umes produced could result in further pressure on suppliers’ activities. If suppliers are unable to strengthen their operation or are unable to work on multiple projects, this could lead to critical is- sues and lack of respect of requirements. The Company monitors suppliers’ activities and sup- ports its suppliers to ensure the respect of the highest standards in terms of technology, quality and timing in order to minimize the potential risk of reworks, delay in car deliveries and recall/ser- vices campaigns. We are strongly connected and impacted by our supply chain’s attention to climate change and other ESG aspects. Please refer to paragraph dedicated to “Climate Change” risk trend for further details on Ferrari’s view on this aspect. Key aspects Main departments involved Single source suppliers for raw materials, parts and Finance components Purchasing & Quality Critical issues from suppliers and lack of respect of requirements Difficulties in accessing and building long-term relationships with critical suppliers Increase in cost of supply 273 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT274 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FHUMAN CAPITAL MANAGEMENT AND INTERNAL ORGANIZATION (O) Our success and our innovation capacity depend on the ability of our senior executives and other mem- bers of management to effectively manage individu- al areas of our business and our business as a whole. The prestige, identity, and appeal of the Ferrari brand depend on the continued success of the Scu- deria Ferrari racing team in the Formula 1 World Championship, which depends on our ability to at- tract and retain top drivers, racing management and engineering talent. The fast technology evolution that automotive industry is experiencing requires us to always re- inforce and update our competences in new and emerging skill areas and guarantee a continuous alignment with market and technology trends. Fer- rari maps current, and analyzes future, pivotal com- petences and whenever a gap is identified, the tran- sition to new capabilities is pursued either through internal capabilities development or through com- petences acquisition on the external market. Ferrari works to attract, retain and incentivize senior executives, drivers, team managers and key employees to develop new car models and inno- vative technology and to succeed in international competitions. Some of the activities deployed are: improving talent development program for key re- sources, preparing current successful employees for future key positions, talent reviews, succession plans, retention plans, “Scuola dei mestieri” initiative, Ferrari Corporate Executive MBA, Ferrari Global Corporate MBA, people survey to measure employ- ees’ engagement rate and other training and devel- opment initiatives. Our current growth strategy, both in terms of volumes and international presence, in addition to new laws, regulations, and policies of governmen- tal organizations around the world, have increased the scope and complexity of our current operations as well as the need to deploy new corporate pro- cesses and to update our internal organization to address such increased scope and complexity. To avoid criticalities in internal processes or issues in the organizational integration that could affect the achievement of our strategic objectives, Ferrari is fostering collaborations between corporate divi- sions and implementing an efficient and agile deci- sion-making process. Key aspects Main departments involved Requirement for skilled employees All Departments Requirement to attract and retain the best talents Transition of key competences Internal Organization SCUDERIA FERRARI SUCCESS (O) Revenues from our Formula 1 activities depend pri- marily on the income from our sponsorship agree- ments and on our share of Formula 1 revenues from broadcasting and other sources. A dedicated function is in charge to perform business development activities, negotiate new sponsorship contracts, renew existing ones and de- fine new services and partners experience as well as different activities to provide to our sponsors. Moreover, branding guidelines have been defined through specific procedures on topics such as se- lection of brand partners, selection of sponsors and management of Ferrari branded items. Our ability to renew our existing sponsorship agreements and to have other more competitive sponsorship agreements also depends on our per- formance in Formula 1 activities and on our ability to win Formula 1 championships, both drivers and constructors. To compete effectively on track we have been investing significant resources in re- search and development and in compensating com- petitively the best available drivers and other racing team members. Periodic changes in Formula 1 frameworks and (technical-sporting-financial) require regulations modifications to our engines, chassis, cars and more generally processes. Ferrari structured an activity of continuous monitoring for changes in the For- mula 1 regulations which is aimed at identifying as soon as possible new activities to be put in place to comply with frameworks and regulations (including through the involvement of our business partners). Key aspects Main departments involved Formula 1 sponsorship revenues Finance Formula 1 financial regulation SF Business Partners Racing Revenue Scuderia Ferrari 275 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTCYBERSECURITY INCLUDING THIRD PARTIES VULNERABILITIES (O) Our information technology systems architecture and industrial machinery are exposed to exter- nal cyber-attacks. The number and sophistication of attacks have dramatically increased in recent years. Furthermore, external cyber organizations are currently better structured and organized than in the past and can more effectively perform cy- ber-attacks. To manage this risk, Ferrari is working on different lines of action, among which: protect our information technology systems architecture and industrial machinery, design a well-function- ing security architecture for our cars, increase employees’ awareness on phishing activities and prevention of external cyber-attacks, continuous monitoring of potential external cyber-attacks and remediation plans, assessment of internal vulnera- bility levels through vulnerability assessments and implementation of further technical actions where necessary. All of these activities are also aimed at avoiding the stealing and dissemination of both our internal sensitive data, customers’ data stored in the cars and the potential ransomware practices. We have developed dedicated activities and teams for the minimization of cybersecurity risks for road users in terms of safety, operational condi- tions of cars, financial impact and privacy damage. If in the coming years, we will increase the connectivi- ty features of our cars, the cyber security risk of our cars could increase, with the chance that an exter- nal attack may occur. In addition, our third parties could be subject to external cyber-attacks. In case the third party is con- nected to our systems, the cyber attackers could also penetrate our information technology systems. Ferrari assesses and monitors the cybersecurity maturity level of third parties (suppliers and deal- ers) and promotes good practices internally and to- wards business partners. Moreover, we have to consider that, UN-ECE regulations have been introduced and we will be re- quired to maintain over time and periodically renew the Cyber Security Management System (“CSMS”) to register and sell our cars and to demonstrate that we are able and aware to deal with potential cyber risk, both at car level and enterprise level. Ferrari, in addition to specific departments dedicated to these processes, has appointed a CSMS Committee to co- ordinate activities related to CSMS and cybersecuri- ty, both at corporate level and car level. For additional information relating to cybersecu- rity see “Corporate Governance—Cybersecurity”. Key aspects Main departments involved Increased sophistication of cyber attacks Digital & Data Third parties cybersecurity Finance Remote working impact on information technology security Marketing & Commercial Cars connectivity CSMS certification Product Development Purchasing & Quality Research & Development CLIMATE CHANGE (H/S) As relevant factors for long-term value creation, Fer- rari considers pivotal to manage risks related to cli- mate change. The fight against climate change and the preservation of the environment are becoming crucial around the world and these concerns have resulted in rapidly evolving climate and environmen- tal regulations emitted across international markets. By 2030, Ferrari aims to address direct and indirect GHG emissions, focusing on energy and materials, in addition to its electrification journey. Any difficulty or delay in implementing actions to become carbon neutral by 2030, could negatively affect our reve- nues, profits, image and our capacity to work with new and existing third parties that ask more atten- tion on climate change matters. Ferrari is working to increase the environmental awareness to continuously set and implement new programs and actions. We are conscious that these goals require an effort both from us and from our third parties and the Company is working on adapt- internal processes, developing components, ing studying materials and sharing this perspective with our partners. Ferrari has been performing a complete map- ping of direct and indirect emissions, including an estimation of indirect emissions by suppliers/mate- rials and the monitoring of fleet emissions over time. In addition, to build an effective resilience climate change strategy, we have performed a climate sce- nario analysis of our climate change risks, both phys- ical and transitional, covering the 2030-2050 period. Carbon footprint matters are considered also during product development and R&D activities, as specific attention to this is dedicated during the identification of new co-designers and partners and new products and innovations. 276 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FDue to our reliance on a highly complex supply chain, characterized by a high number of suppliers and by a worldwide presence, we are working to support our supply chains in improving and adopting both environmental standards and other sustainability standards and regulations (such as those related to health, safety, human rights, governance best prac- tices, diversity and inclusion, misconducts, etc.). Support to the supply chain is performed by: engag- ing and assessing a considerable part of our suppli- ers through a questionnaire that covers sustainabili- ty standards (ethics, human rights, health and safety and environment) and for suppliers with identified room for improvement, activating action plans such as: sharing best practice governance, encouraging the adoption of sustainable practices, sharing our knowledge and support in committing to improve their sustainability level. With specific reference to carbon footprint, Ferrari is working on mapping suppliers carbon footprint and is raising awareness to improve bottom-up information sharing among the supply chain business partners. Climate Change is also strongly connected to environmental laws’ changes and tightening. Please refer to paragraph dedicated to “Technological and regulatory uncertainty” risk for further details on Ferrari’s view on this aspect. Key aspects Climate Change Main departments involved Finance Manufacturing Product Development Purchasing & Quality Research & Development Technologies and Infrastructures view, report and adapt our policies and procedures to relevant changes in rules and regulations. More- over, specific project teams are activated in case of new laws or regulation requirements to comply with the new requirements thanks to organizational and processes changes as well as to start specific training activities aimed at creating awareness at all company levels. NON-COMPLIANCE WITH LAWS, REGULATIONS, LOCAL STANDARDS (INCLUDING TAX) AND CODES (C) We are subject to comprehensive and constantly evolving laws, regulations and policies throughout the world. We expect that legal and regulatory re- quirements affecting our business and our costs of compliance will continue to increase significant- ly in scope and complexity in the future. In Europe, United States and China, for example, significant governmental regulation is driven by environmen- tal, fuel economy, vehicle safety and noise emission concerns, and regulatory enforcement has become more active in recent years. Evolving regulatory re- quirements could significantly affect our product de- velopment plans and may limit the number and types of cars we sell and where we sell them, which may adversely affect our revenue and operating results. Ferrari has specific compliance controls, pol- icies, and procedures in place in order to comply with applicable laws and regulations and to protect itself from acts committed by employees, agents, contractors or associates that would violate the laws or regulations of the jurisdictions in which Fer- rari operates, including employment, foreign cor- rupt practices, environmental, competition, privacy and other laws and regulations. In parallel, we work to increase our employees knowledge and awareness of the laws, regulations, standards and codes that apply to Ferrari and we have specific departments dedicated to monitor, re- 277 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTKey aspects Main departments involved Technical regulatory requirements regarding Ferrari cars All Ferrari Departments HSE (Health, Safety and Environment) Tax Human Resources Legal Anti-Bribery & Corruption Code of Conduct Personal Data Management EXCHANGE RATE FLUCTUATIONS, INTEREST RATE CHANGES, COMMODITY PRICES, CREDIT RISK AND OTHER MARKET RISKS (F) Ferrari operates in numerous markets worldwide and is exposed to market risks stemming from fluc- tuations in currency and to a lesser extent interest rates and commodity prices. The Group has in place various financial risk management policies, which primarily relate to for- eign exchange rates and commodity prices, interest rates and liquidity risks. The analysis of the exposure to financial risks and the definition of the related hedging strategies are reviewed on a periodic basis. The Group’s risk management policies allow deriva- tives to be used to mitigate the impact of such risks (primarily forward currency contracts, currency options and commodity swaps); such derivatives are executed for hedging purposes. Counterparties to these agreements are major financial institutions. The exposure to foreign exchange rate risks is mainly linked to our cash flow from revenues de- nominated in currencies different from the ones connected to purchases or production activities. We incur a large portion of our capital and operat- ing expenses in Euro while we receive the majority of our revenues in currencies other than Euro. Several subsidiaries are located in countries that are outside the Eurozone exposing Ferrari to translational exchange risk, in particular the United States, China, Japan and Australia. The Group moni- tors its principal exposure to translational exchange risk, although there was no specific hedging in this respect at the reporting date because the relative exposure is not material. In addition, an increase of certain commodity prices can have a negative impact on Ferrari’s results. The Group’s exposure to interest rate risk aris- es from the need to fund certain activities and the necessity to deploy surplus funds. Changes in mar- ket interest rates may have the effect of either in- creasing or decreasing the Group’s net profit/(loss), thereby indirectly affecting the costs and returns of financing and investing transactions. Ferrari generally has a positive cash flow that almost offsets the exposure to liquidity risk. The 278 Group uses various forms of financing to cover the funding requirements of its industrial activity and for financing offered to customers and dealers. The terms of these financings, which include bank facilities (committed and uncommitted), access to capital markets and private placements, are intend- ed to ensure an adequate level of available liquidity with a limited exposure to interest rate fluctuation. Ferrari enters into interest rate caps as requested by certain of its asset-backed financing agreements for its financial services activities. Considering the current capital structure of the Group, Ferrari has not entered into any interest rate derivatives other than the interest rate caps mentioned, however, the exposure is regularly monitored. Ferrari’s most important financial asset is cash. It is held on bank and deposit accounts with primary financial institutions and high-quality liquid instru- ments. It is the Ferrari Group’s policy to continuously monitor counterparty risk and limit concentration of bank and deposit accounts to a maximum of 25% of the total with a single financial counterpart. With specific reference to Money Market Funds, instead, the invested amounts in any specific fund must not exceed 10% of the par value of such. Ferrari owns a financial services portfolio secured on the titles of cars or other guarantees, spread over more than 4,800 clients that are mainly in the U.S. Impairment risk mainly relates to the financial services portfolio which is evaluated on an individual basis for mate- rial or overdue credit positions. The amount of any write-down is based on an estimate of the recover- able cash flows, their timing, recovery costs and the fair value of any guarantees received. Further qualitative and quantitative information on these risks as well as response plans are includ- ed in Note 30 “Qualitative and Quantitative Informa- tion on Financial Risks” to the Consolidated Financial Statements included elsewhere in this document for additional information related to our financial risks and policies for managing those risks. BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FKey aspects: Main departments involved: Exposure to foreign exchange movements from non-Euro Finance related sales Exposure to interest rate movements on financial assets and liabilities Exposure to commodity price increase Credit risk of default or insolvency INTERNAL CONTROL OVER FINANCIAL REPORTING (C) Starting from October 2015, Ferrari N.V. is listed on the New York Stock Exchange (NYSE), while from January 2016 Ferrari N.V. is also listed on the Eu- ronext Milan (formerly Mercato Telematico Azionar- io, or MTA). Our shares’ listing on regulated markets in- volves being compliant with the related securities regulations and listing rules. In particular, publicly traded companies filing financial statements with the US Securities and Exchange Commission are required to comply with the Sarbanes Oxley Act re- quirements, in particular sections 302, 404 and 906 that involve a periodical management assessment of internal controls and CEO and CFO Certifications of Periodic Financial Reports and SEC Filings. In addi- tion, our independent registered public accounting firm is also required to report on the effectiveness of the internal control over financial reporting. Under the COSO Within the abovementioned context, Internal Control-Integrated Framework, according to which the internal control system is defined as a set of rules, procedures and tools designed to provide reasonable assurance of the achievement of corporate objectives, Ferrari has developed an Internal Control System over the Finan- cial Reporting in order to assure completeness, ac- curacy and reliability of the group financial reporting. identifi- cation and evaluation of the risk of misstatements which could have material effects on financial re- porting is carried out through a risk assessment process that uses a top-down approach to identify the organizational entities, processes and the re- lated accounts, in addition to specific activities that could potentially generate significant errors. Under the methodology adopted by the Company, risks and related controls are associated with the accounting and business processes upon which accounting in- formation is based. Significant risks identified through the assess- ment process require definition and evaluation of key controls that address those risks, thereby mit- igating the possibility that financial reporting will contain any material misstatements. In accordance with international best practices, the Group has two principal types of control in place: • controls that operate at Group or subsidiary lev- el, such as delegation of authorities and respon- 279 sibilities, separation of duties, and assignment of access rights to information technology sys- tems; and • controls that operate at process level, such as authorizations, reconciliations, verification of consistencies, etc. This category includes controls for operating processes, controls for financial closing processes and controls car- ried out by specific service providers. These controls can be preventive (i.e., designed to prevent errors or fraud that could result in misstatements in financial reporting) or de- tective (i.e., designed to reveal errors or fraud that have already occurred). These controls may also be classified as manual or automatic, such as application-based controls relating to the technical characteristics and configuration of information technology systems supporting business activities. An assessment of the design and operating ef- fectiveness of key controls is carried out through tests performed periodically during the year, both at Group and subsidiary level, using sampling tech- niques recognized as best practices internationally. The assessment of the controls may require the definition of compensating controls and plans for remediation and improvement. The results of moni- toring are subject to periodic review by the manager responsible for the Company’s financial reporting and communicated by him to senior management and to the Audit Committee. REMUNERATION OF DIRECTORS INTRODUCTION The description below summarizes the guidelines and the principles followed by Ferrari in order to define and implement the remuneration policy ap- plicable to the executive Directors and non-execu- tive Directors of the Company, as well as members of the Ferrari Leadership Team (FLT). In addition, this section provides the remuneration paid to these in- dividuals for the year ended December 31, 2023. The form and amount of compensation received by the Directors of Ferrari for the year ended December 31, 2023 was determined in accordance with the re- muneration policy. FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTThe Compensation Committee oversees the remu- neration policy, remuneration plans and practices of Ferrari and recommends changes when appro- priate. The Committee is solely comprised of non-ex- ecutive Directors from the Board of Directors who are independent pursuant to the Dutch Corporate Governance Code (the “Code”). Through this docu- ment, Ferrari aims to provide its stakeholders with a high level of transparency and disclosure in order to strengthen the trust they and the market place in Ferrari, as well as provide them with the information they need to assess the Company’s remuneration principles and exercise shareholders’ rights in an informed manner. The Company may from time to time amend the remuneration policy, subject to our shareholders’ approval when necessary. This Com- pensation Report consists of two sections: 1 Remuneration strategy: our current remunera- tion policy (which is available on our corporate website) governs compensation for both exec- utive and non-executive Directors. In 2020, Fer- rari confirmed these remuneration features through the positive vote expressed by share- holders in the Annual General Meeting held on April 16, 2020 (the “2020 AGM”). Our current re- muneration strategy further strengthens the alignment with shareholders’ interests and long- term sustainability of our business, adopting certain updates to reflect developing best prac- tices in the Dutch Corporate Governance Code. Implementation of remuneration strategy: de- tails how remuneration features have been im- plemented during the 2023 financial year and actual remuneration received by each executive and non-executive Director. In 2023, there was no deviation from the remuneration policy. 2 (1) REMUNERATION STRATEGY FOR THE 2023 FINANCIAL YEAR Our remuneration policy is aligned with Dutch law and the Code. In particular, the Code requires listed companies to disclose certain information about the compensation of their Board and executive Direc- tors. Through this remuneration strategy, Ferrari fulfills the requirements of the Code ensuring full transparency with our shareholders. REMUNERATION PRINCIPLES The main goal of Ferrari’s remuneration strategy is to develop a system which consistently supports the business strategy and value creation for all sharehold- ers, establishing a compensation structure that allows us to attract and retain the most highly qualified exec- utive talents and motivate such executives to achieve business and financial goals that create long-term val- ue for shareholders in a manner consistent with our core business and leadership values and taking into account the social context around the Company. 280 In defining the remuneration strategy, the Compen- sation Committee has taken into account certain principles which characterize Ferrari’s remunera- tion policy, such as: 1 2 3 the identity, mission and values of the Company, to attract, retain and reward skilled women and men who constitute the soul of the Company. Their passion, courage, creativity, ambition and pride constitute the essence of Ferrari and fuel its legend to ever greater heights. Being Ferra- ri means being part of a unique future-focused team in which people are the most valuable re- source. Together with all our employees we have crafted the vision, mission and values that are the very essence of being part of Ferrari and which guide our employees as we tackle our day-to-day challenges; the provision of statutory requirements, with specific focus on the Shareholder Rights Direc- tive (Directive (EU) 2017/828) and the implemen- tation thereof into Dutch law; international competitive remuneration market trends, based on the idea that it is becoming in- creasingly challenging to attract and retain em- ployees in today’s competitive labor market. For our executive Directors and members of the FLT, fixed remuneration, short-term incentive oppor- tunities and long-term incentive opportunities are calculated based on the position and respon- sibilities assigned to each, taking into account average remuneration levels on the market for positions with similar levels of responsibility and managerial complexity in large internation- al companies, in order to maintain high levels of competitiveness and engagement; 5 4 corporate governance and executive remuner- ation best practices as expressed by institutional investor guidelines, developing a remuneration policy compliant with the Code and the interest of Ferrari’s shareholders. We analyze any gaps in each of our remuneration components in or- der to provide a high level of alignment with the main guidelines of our stakeholders; the societal context around and social support in respect of the Company, developing a specific focus on trends in sustainability among our em- ployees. We are committed to provide a healthy and safe workplace for all employees and stake- holders by implementing a high level of safety standards to avoid potential risks to people, as- sets or the environment, in order to guarantee an optimal working environment for all employ- ees and attract the best talents. Our results in this field reflect, once again, our strategic com- mitment to protecting the environment and en- suring personal safety; the views of the Board of Directors, members of the FLT, other senior leaders and all employees, in order to make the health and safety of the Com- pany’s employees essential to the successful conduct and future growth of the Company. In 6 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F7 this respect and in line with the Code, the internal pay ratio is an important input for determining the remuneration for the Board of Directors; and the centrality for Ferrari of value creation and the interest of our shareholders, the importance of which is recognized through the use of Total Shareholder Return (TSR) as a performance met- ric in the Company’s long-term incentive plans. The Compensation Committee considers that the use of relative TSR remains one of the most ap- propriate measures of long-term performance for Ferrari. The structure of our PSU awards demonstrates the centrality of this factor and helps to promote a strong correlation between pay and performance for our executives. The main principles of Ferrari’s remuneration policy are outlined in the chart below: MAIN PRINCIPLES OF FERRARI’S REMUNERATION POLICY Alignment with Ferrari Industrial’s Strategy Compensation is strongly linked to the achievement of target aligned witht the Company’s publically disclosed objectives. Pay For Performance Compensation must reinforce our performance driven culture and meritocracy. Our incentive plans are based on peer and market benchmarked performaced metrics. Competitiveness Programs are designed to recruit, motivate and reward Executive Directors and members of the FLT delivering operational and strategic performance over time. Compensation program provisions and financial objectives are evaluated on an annual basis and modified in accordance with industry and business conditions. Long-Term Shareholder Target triggering any variable compensation payment aligned to interests of shareholders. Our Value Creation compensation structure places an appropriate amount of compensation at risk based on long-term results. Compliance Ferrari compensation policies and plans are designed to comply with applicable laws and corporate governance requirements. OVERVIEW OF REMUNERATION ELEMENTS As anticipated above, Ferrari’s current remuner- ation policy was approved by shareholders at the 2020 Annual General Meeting and will be resubmit- ted to a vote by the Company’s General Meeting at least every four years. The structure of the remuner- ation applicable to our executive Directors, non-ex- ecutive Directors and other key management under Ferrari’s remuneration policy has not changed in 2023 and consists of the following elements: (i) Fixed Remuneration linked to the third pillar of Ferrari’s remuneration policy (Competitiveness) with the objective of attracting, retaining and motivating our qualified executives and effective leaders. For this reason, we periodically bench- mark comparable salaries paid to executives with similar experience by comparable companies; (ii) Short-Term Incentives (STI) linked to the first and second pillars of Ferrari’s remuneration policy (Alignment with Ferrari’s Strategy and Pay for Performance) and tied to specific finan- cial targets which are set at challenging lev- els; short-term incentives are also linked to the contribution of the individual member (Individ- ual Performance Factor) in order to motivate its beneficiaries to achieve challenging targets. In particular, Ferrari’s 2023 achievements, suc- cess and developments were driven by organi- zation-wide alignment with the Company’s strat- egy and values, through incentives that reward the achievement of those goals; (iii) Long-Term Incentives (LTI) linked to the first and fourth pillars of Ferrari’s remuneration policy (Alignment with Ferrari’s Strategy and Long- Term Shareholder Value Creation) with the aim to align the behavior of executives critical to the business with shareholders’ interests, motivate executives to achieve long-term strategic objec- tives, and enhance retention of key resources; (iv) Non-Monetary Benefits which are related to the overall remuneration and linked to the third pillar of Ferrari’s remuneration policy (Competitiveness). Ferrari’s remuneration policy provides that a sub- stantial portion of the compensation of our exec- utive Directors and members of the FLT should be “at-risk”, meaning that each will receive a certain percentage of his or her total compensation only to the extent Ferrari and the executive accomplish short- and long-term goals established by the Com- pensation Committee. STAKEHOLDER ENGAGEMENT The Compensation Committee regularly reviews the Directors’ remuneration policy against the best corporate governance practices adopted by insti- tutional shareholders and the recommendations of 281 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTthe main proxy advisors, considering also the view of the stakeholders on the remuneration policy and main features of the compensation report. In this re- spect, the Annual General Meeting of shareholders held on April 14, 2023 approved the remuneration report for the year 2022 (the “Ferrari Remuneration Report 2022”) and the voting results are reflected in the following table: Resolution Votes For % Votes Against % Votes Total Abstain 2.c - Remuneration Report 2022 207,134,035 99.27366% 1,515,514 0.72634% 208,649,549 543,771 (discussion and advisory vote) Considering the previous vote of the Annual General Meeting of shareholders and to further understand shareholders’ feedback to the Ferrari Remuneration Report 2022, we engaged with our stakeholders prior to drafting the remuneration report for the year 2023. We believe that those conversations have been very constructive and have led to improvements in our remuneration report. This year, the compensation re- port’s has been enhanced to increase transparency and disclosure towards the market and stakeholders through disclosure of target achieved for the FY 2023 Performance Period for our Short-Term Incentive. Through this remuneration report we continue to pursue our objective to provide our stakeholders each year with clear and comprehensive disclosure of the decisions relating to the remuneration of our executive and non-executive Directors and mem- bers of the FLT. The remuneration report for the year 2023 is subject to a consultative vote at the Annual General Meeting of Shareholders scheduled for April 2024. 282 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F283 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTREMUNERATION STRUCTURE FOR 2023 AND OUTLOOK 2024 The purpose and features of the different elements of our remuneration structure for 2023 which will remain unchanged for 2024 are outlined in the table below: Component Purpose Terms and Conditions 2023 Implementation and Outlook 2024 Remuneration • Attract, retain and motivate Ferrari’s remuneration structure is • Offer a highly competitive Structure highly qualified executives to organized as follows: achieve challenging results compensation package compared to the reference • Competitively position our • Fixed remuneration market. compensation package • Short-term incentives • Reference Market: Roles compared to the compensation • Long-term incentives with the same managerial of comparable companies, • Non-monetary benefits complexity and responsibilities mainly represented by the reference panel (“Reference Panel”) and companies that compete for similar talent • Reinforce our performance driven culture and meritocracy Fixed Remuneration Reward skills, contribution and • Executive Chairman: Fixed experience required for the position remuneration is set in relation held to the delegated powers assigned over the term and positions held in line with the Reference Market based on yearly benchmarking (see “Benchmarking for Executive within comparable companies, comprised of those represented by the Reference Panel. Executive Chairman: €500,000 annually. CEO: €1,500,000 annually. Non-Executive Directors: $75,000 annually. FLT Members: The fixed remuneration is related Directors Remuneration” to the position held and the Paragraph). responsibilities attributed, as well • CEO: Fixed remuneration is as the experience and strategic set in relation to the delegated nature of the resource, in line with powers assigned over the term reference market offering for and positions held in line with roles of similar responsibility and the Reference Market (see complexity. “Benchmarking for Executive Directors Remuneration” Paragraph). • Non-executive Directors: Remuneration of non-executive Directors is fixed and not dependent on the Company’s financial results. It is approved by the Company’s shareholders and periodically reviewed by the Compensation Committee. • FLT Members: The fixed remuneration is related to the position held and the responsibilities attributed, as well as the experience and strategic nature of the resources, in line with reference market offering for roles of similar responsibility and complexity. 284 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F Component Purpose Terms and Conditions 2023 Implementation and Outlook 2024 Short-Term Incentives • Achieve the annual financial, Short-term incentives targets: operational and other targets • Based on achievement of Executive Chairman: The compensation package includes and additional business annually predetermined a short-term incentive plan with priorities performance objectives a target pay-opportunity equal to • Motivate and guide executives’ • Annual financial, operational 100% of base salary and maximum activities over the short-term and other identified objectives pay-opportunity equal to 225% of period base salary. CEO: The compensation package includes a short-term incentive plan with a target pay-opportunity equal to 100% of base salary and maximum pay-opportunity equal to 225% of base salary. FLT Members: Variable incentive percentage of fixed remuneration based on the position held with an average target pay-opportunity equal to 100% of base salary and an average maximum pay-opportunity equal to 225% of base salary. Long-Term Incentives • Align the behavior of executives • Equity awards to promote Executive Chairman: critical to the business with creation of value for the • The Equity Incentive Plan shareholders’ interests shareholders 2021-2023 provides for a target • Motivate executives to achieve Equity Incentive Plan 2021-2023 pay-opportunity of 300% and long-term strategic objectives • PSUs and RSUs: vest at the end maximum pay-opportunity is • Enhance retention of key of the three year performance 400% of base salary. resources and service periods • The Equity Incentive Plan 2022- • PSUs: 50% linked to TSR compared to Peer Group, 30% 2024 and 2023-2025 provides for a target pay-opportunity linked to EBITDA; 20% linked to a equal to 200% and a maximum qualitative factor related to the pay-opportunity equal to 274% sustainability and innovation of of base salary. business CEO:  Equity Incentive Plan 2022 – 2024 and 2023 – 2025 • The Equity Incentive Plan 2022- 2024 and 2023-2025 provides • Executive Directors: awarded for a target pay-opportunity only PSUs. equal to 200% and a maximum • FLT Members: were awarded a pay-opportunity equal to 274% combination of PSUs and RSUs of base salary. • PSUs: 40% linked to TSR FLT Members:  compared to Peer Group, 40% • variable incentive percentage linked to EBITDA, 20% linked to of fixed remuneration based ESG Target on the position held with an average target opportunity equal to 125% and average maximum pay opportunity equal to 156% of base salary. Non-Monetary • Retain executives through a Represent an integral part of the Customary welfare, Benefits total reward approach remuneration package with welfare retirement-related and fringe • Enhance executive and and retirement-related benefits benefits such as company cars and employee security and productivity drivers, personal/home security, medical insurance, accident insurance, tax preparation and financial counselling. Lock Up Period • Ensures alignment with In 2022 a lock up provision was Under the lock up provision, 50% of shareholders’ interests introduced for the Executive the vested shares under the equity Chairman, the CEO, the members incentive plan will be subject from of the FLT and other key members the date of vesting to unavailability of the Group. The Lock Up provision and non-transferability for a period applies retroactively to all equity determined according to the incentive plans in place. corporate role: • CEO and Chairman: 36 months • FLT members: 24 months • Other key members of the Group: 12 months 285 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT2023 REMUNERATION OF EXECUTIVE DIRECTORS AND FLT MEMBERS The Board of Directors determines the compensa- tion for our executive Directors following the recom- mendation of the Compensation Committee and with reference to the remuneration policy. The compensa- tion structure for executive Directors and FLT mem- bers includes a fixed component and a variable com- ponent based on short and long-term performance. BENCHMARKING FOR EXECUTIVE DIRECTORS REMUNERATION We believe that this compensation structure pro- motes the interests of Ferrari in the short and the long-term and is designed to encourage the exec- utive Directors and FLT members to act in the best interests of Ferrari. In determining the level and structure of the compensation of the executive Di- rectors, the non-executive Directors will take into account, among other things, Ferrari’s financial and operational results and other business objectives, while considering the executive Directors’ view con- cerning the level and structure of their own remu- neration. Performance targets are set by the Com- pensation Committee to be both achievable and stretching, considering Ferrari’s strategic priorities and the automotive landscape. The performance measures that are used for variable components have been chosen to support Ferrari’s strategy, long-term interests and sustainability. For the abovementioned reasons, the compen- sation packages adopted by Ferrari are significantly balanced towards the variable components in order to reinforce the performance-driven culture and meritocracy. This is in line - as per the short-term incentive component - with the first and second pil- lars of Ferrari’s remuneration policy (see “Alignment with Ferrari’s Strategy and Pay for Performance”) and - as per the long-term incentive component (which has a dominant weight, as shown in the fig- ures below) - with the first and fourth pillars of Fer- rari’s remuneration policy (see “Alignment with Fer- rari’s Strategy and Long-Term Shareholder Value Creation”), with the ultimate aim to align the perfor- mance with shareholders’ interests and value cre- ation in the medium- to long-term, to motivate exec- utives to achieve long-term strategic objectives, and to enhance retention of key resources. This compensation structure, inspired by Ferrari’s remuneration policy, is mirrored in the compensa- tion package for the Ferrari workforce at every lev- el, in order to promote and better pursue the organi- zation-wide alignment with the Company’s strategy and values and contribute to pay-for-performance culture and long-term value creation. The structure of the compensation package (base salary and variable compensation, composed of LTI and STI components) specifically provided for the CEO and the Executive Chairman is aligned to, and consistent with, the main pillars of the Ferrari’s remuneration policy applied to the entire workforce as well as to the best market practice and to the Ref- erence Panels, as better explained below. In this re- gard, we establish target compensation levels using 286 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fa market-based approach and we monitor compen- sation levels and trends in the market. We also pe- riodically benchmark our executive compensation program against peer companies. In 2023, Ferrari conducted the periodic review of the Reference Panel it uses to assess the com- petitiveness and alignment of the compensations awarded to the CEO and Executive Chairman, as well as to ensure the consistency of the adopted com- pensation policies with the reference market. As for the CEO, Ferrari identified an ad hoc Ref- erence Panel composed of 17 companies. In continuity with previous years, Ferrari bench- marked its CEO’s total remuneration with those of listed companies deemed comparable with Ferrari in light of some or all of the following criteria: a) rep- resenting excellence and luxury in their respective sectors; b) operating in the same business as Ferra- ri; c) acting in similar sectors; d) presenting overall a similar market capitalization, revenues and number of employees with Ferrari. Compared to 2022, the CEO’s Reference Panel has been updated by adding Volvo and Ermenegil- do Zegna, each of which meets the selection criteria outlined above. The companies in the Reference Panel used by Ferrari for the CEO’s compensation benchmarking are listed below: Chief Executive Officer Reference Panel Aston Martin Lagonda Bayerische Motoren Worke Brembo Burberry Compagnie Financiere Richemont Mercedes-Benz Group Harley-Davidson Hermes International Kering Moncler Porsche Volkswagen Ermenegildo Zegna LVMH Pirelli The Estée Lauder Companies Volvo The Executive Chairman’s Reference Panel com- prises the companies of the CEO’s Reference Pan- el which have a chairman with powers and delega- tions comparable to the powers and authority of the Executive Chairman (5 Companies out of 17 of those inserted in CEO’s Reference Panel), along with three additional companies (added in order to benchmark a statistically significant number of peers and deter- mined based on companies that have a chairman with powers and authority comparable to the pow- ers and authority of the Executive Chairman). Compared to 2022, the Executive Chairman’s Reference Panel has been updated by adding Prada Group, which meets the selection criteria outlined above, in replacement of Salvatore Ferragamo. The companies forming part of the Reference Panel for the Executive Chairman target compensa- tion benchmarking are listed below: Executive Chairman Reference Panel Aston Martin Lagoonda Compagnie Financiere Richemont Hermes International Brembo Ford Motors Prada Group The Estèe Lauder Companies Ariston Group Holding As described above, both Reference Panels are composed of companies representing excellence in their respective sectors and offering very competi- tive compensation levels to their executives. The level and structure of the Executive Chair- man’s and CEO’s compensation packages for 2023 have therefore been compared to the practices of the companies belonging to the abovementioned Reference Panels. As for the compensation struc- ture, the current Executive Chairman’s and CEO’s compensation packages are in line with (i) market practice and the compensation packages offered by companies belonging to the Reference Panels; and (ii) Ferrari’s remuneration policy as approved by shareholders at the 2020 AGM. 287 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTBecause the Reference Panels consist of several companies that are larger than Ferrari in terms of revenues and/or number of employees and that have competitive remuneration packages, the CEO’s base salary is positioned around the median of the CEO’s Reference Panel (as it was in 2022) while the Executive Chairman’s base salary is below the 25th percentile of the Executive Chairman’s Reference Panel (as it was in 2022); the total target compensa- tion for the CEO is above the 25th percentile and be- low the median while the Executive Chairman’s total target compensation is positioned below the 25th percentile (as it was in 2022). Our Executive Chairman’s and CEO’s compensa- tion packages are structured as follows: EXECUTIVE CHAIRMAN’S AND CEO’S COMPENSATION PACKAGES 25% 17% 50% Chairman target amounts 46% Chairman maximum amounts 25% 25% 37% 17% 50% CEO target amounts 46% CEO maximum amounts 25% 37% Share Fixed remuneration Short-term incentives Long-term incentives On the basis of the remuneration policy objectives, com- pensation of executive Directors and FLT members consists, inter alia, of the elements discussed below. Fixed component The primary objective of the base salary (the fixed part of the annual cash compensation) for execu- tive Directors and FLT members is to attract and retain highly qualified senior executives. Our policy is to periodically benchmark comparable salaries paid to executives with similar experience by com- parable companies. Variable components Executive Directors and FLT members are also eligi- ble to receive variable compensation subject to the achievement of pre-established financial and other identified performance targets. The short and long- term components of executive Directors’ and FLT members’ variable remuneration are linked to pre- determined, assessable targets in order to create long-term value for the shareholders. Our variable compensation programs are de- signed to recruit, motivate and reward executive Directors and members of the FLT delivering oper- 288 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FEXECUTIVE CHAIRMAN’S AND CEO’S COMPENSATION PACKAGES 25% 17% 50% 46% Chairman target amounts Chairman maximum amounts 25% 25% 37% 17% 50% 46% CEO target amounts CEO maximum amounts 25% 37% Share Fixed remuneration Short-term incentives Long-term incentives ational and strategic performance over time. The provisions and financial objectives of our variable compensation programs are evaluated on an annual basis and modified in accordance with industry and business conditions. Short-term incentives The primary objective of our performance-based short-term variable cash-based incentives is to in- centivize the executive Directors and the members of the FLT to focus on the business priorities for the current or next year. The short-term incentive plan is designed to motivate its beneficiaries to achieve challenging targets, by recognizing individual con- tributions to the Group’s results on an annual ba- sis. The Compensation Committee believes that it is appropriate to use a balance of corporate financial targets, strategic objectives and individual perfor- mance objectives. The methodology for calculating payouts under our short-term incentive plan is the following: PAYOUT UNDER SHORT-TERM INCENTIVE PLAN METHODOLOGY Base Salary X STI % Adjust opportunity based on business results Links directly to individual current contribution Target Bonus × Company Performance Factor × Individual Performance Factor = STI Payout The target level for both the Company Performance Factor and the Individual Performance Factor is 100%, reaching a possible maximum level which is equal to the 150% of target set level, resulting in a maximum pay-opportunity equal to 225% of base salary. There is no minimum bonus payout; as a re- sult, if none of the threshold objectives are satisfied, there is no bonus payment. To determine the executive Directors’ annual performance bonus, the non-executive Directors, upon proposal of the Compensation Committee: maximum allowable bonuses; • approve the executive Directors’ targets and • select the appropriate metrics and their weighting; • set the stretch objectives; • consider any unusual items in a performance year to determine the appropriate measure- ment of achievement; and • approve the final bonus determination. In 2023, the Compensation Committee defined the Company Performance Factor by reference to four metrics: • Net Revenues (20%) • Consolidated Adjusted Operating profit (Adjust- • Consolidated Adjusted EBITDA Margin (20%) • Industrial Free Cash Flow (40%) ed EBIT) (20%) The Compensation Committee established chal- lenging goals for each metric linked to budget, each of which pays out independently. The achievement of the budget target implies the application of a co- 289 efficient equal to 100 to the relevant metric, and deviations within thresholds defined from year to year imply a linear variation of the coefficient be- tween 50 and 150; outside these thresholds the co- efficient goes to zero or remains equal to 150 which represents the cap of the coefficient, resulting in a maximum pay-opportunity equal to 225% of base salary. The overall Company Performance Factor coefficient is a weighted average of those obtained for the each metric. In addition, upon proposal of the Compensation Committee, the non-executive Directors have au- thority to grant special bonuses for specific trans- actions that are deemed exceptional in terms of strategic importance and effect on Ferrari’s results, taking into account standards of reasonableness and fairness. The form of any such bonus (cash, common shares of Ferrari or options to purchase common shares) is determined by the non-execu- tive Directors from time to time. No special bonuses were awarded to the execu- tive Directors or members of the FLT for 2023. Beginning in 2022, our executive Directors (Ex- ecutive Chairman and CEO) are included in the short-term incentive plan, in order to better align executive Directors’ action to Ferrari’s strategy and performance and with market practice. Short-term incentives clawback clause In 2023 Ferrari introduced a clawback clause for its short-term incentives, which allows the Company to claim the refund of part or all of the variable com- ponent of remuneration received during the three fiscal years immediately preceding the date the FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTCompany is required to prepare an accounting re- statement due to the material noncompliance of the Company with any financial reporting requirement under applicable securities laws, including any re- quired accounting restatement to correct an error in previously issued financial statements that is ma- terial to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. This new clawback clause is in accordance with the NYSE listing requirements, and we have adopt- ed a specific internal policy abiding to those require- ments (the “NYSE Clawback Policy”). The NYSE Claw- back Policy, which became effective on December 1, 2023, provides for the recovery of certain erro- incentive-based compensation neously awarded earned by current or former executive officers of the Company in the event that the Company is re- quired to prepare an accounting restatement. Long-term incentives We believe that the equity incentive plan discussed below increases the alignment between the Com- pany’s performance and shareholder interests, by linking the compensation opportunity of the execu- tive Directors and members of the FLT to increasing shareholder value. During 2023, Ferrari had three long-term equity incentive plans in place, consistent with the Compa- ny’s business plans presented at the Capital Markets Day in June 2022 and awarding to their beneficiaries, as the case may be, a combination of performance share units (“PSUs”) and restricted share units (“RSUs”), each representing the right to receive one Ferrari common share: • Equity Incentive Plan 2021-2023, approved on Feb- ruary 26, 2021 by the Board of Directors, covering a performance period from 2021 to 2023, having the Executive Chairman and Interim CEO of the Company, as well as members of the FLT and oth- er key members of the Group as beneficiaries; • Equity Incentive Plan 2022-2024, approved on February 25, 2022 by the Board of Directors, cov- ering a performance period from 2022 to 2024, having the Executive Chairman and CEO of the Company, as well as members of the FLT and oth- er key members of the Group as beneficiaries; • Equity Incentive Plan 2023-2025, approved on February 23, 2023 by the Board of Directors, cov- ering a performance period from 2023 to 2025, having the Executive Chairman and CEO of the Company, as well as members of the FLT and oth- er key members of the Group as beneficiaries. Further details about vesting of Equity Incentive Plan 2021-2023, covering a performance period from 2021 to 2023, which will vest on March 2024 and hav- ing the Executive Chairman and the CEO of the Com- pany, as well as members of the FLT and other key employees of the Group, as beneficiaries, ended on December 31, 2023 are provided in Section 2. 290 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFor the Equity Incentive Plan 2021-2023, the PSU awards are earned based on the level of achieve- ment of defined key performance indicators relat- ing to: i) a relative total shareholder return (“TSR”) target (which is relative to the TSR of a defined peer group (“Peer Group”)), ii) an EBITDA target, and iii) an innovation target. For the Equity Incentive Plan 2022- 2024 and the Equity Incentive Plan 2023-2025, the in- novation target has been replaced by an ESG target focusing on an Environment Factor and a Social Fac- tor described below. Each target is measured inde- pendently of the other targets and relates to sepa- rate portions of the aggregate awards. For the Equity Incentive Plan 2022-2024 and for the Equity Incentive Plan 2023-2025, executive Directors will be awarded only PSUs. The RSU awards (for the Equity Incentive Plan 2022-2024 and for the Eq- uity Incentive Plan 2023-2025, only for members of the FLT and other key employees of the Group) are service-based and vest conditional on the employ- ees’ continued employment with the Company at the time of vesting. Details of the equity long-term incentives grant- ed to the Executive Chairman and CEO are summa- rized below: EQUITY INCENTIVE PLAN 2021-2023 Type of Equity Long-Term Proportion of Equity Holding Period Incentive Vehicle Long-Term Grant Performance Metrics (Weighting) or Vesting Condition Executive Chairman Equity Incentive Plan 2021- 67% 6 years: 3 years 1) TSR (50%) and Interim CEO 2023 Performance Share Units (PSUs) Performance + 3 years 2) EBITDA (30%) Lock Up 3) Innovation Performance Goal (20%) Equity Incentive Plan 2021- 33% 6 years: 3 years Conditional on continued 2023 Retention Restricted Share Units (RSUs) Performance + 3 years employment Lock Up EQUITY INCENTIVE PLAN 2022-2024 AND EQUITY INCENTIVE PLAN 2023-2025 Type of Equity Long-Term Proportion of Equity Holding Period Incentive Vehicle Long-Term Grant Performance Metrics (Weighting) or Vesting Condition Executive Chairman Equity Incentive Plan 100% 6 years: 3 years 1) TSR (40%) Performance Share Units (PSUs) Performance + 3 years 2) EBITDA (40%) Lock Up 3) ESG Goal (20%) CEO Equity Incentive Plan 100% 6 years: 3 years 1) TSR (40%) Performance Share Units (PSUs) Performance + 3 years 2) EBITDA (40%) Lock Up 3) ESG Goal (20%) The number of PSU awards earned is determined based on the level at which the three performance criteria described below are achieved. At the end of the vesting period, the total number of PSUs earned is equal to the sum of: mance Goal and (ii) for the Equity Incentive Plan 2022-2024 and the Equity Incentive Plan 2023- 2025, the ESG Factor. out factor; plus • the number of PSUs earned under the TSR pay- • the number of PSUs earned under the EBITDA • the number of PSUs earned under (i) for Equity payout factor; plus Incentive Plan 2021-2023, the Innovation Perfor- 291 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTEQUITY INCENTIVE PLAN 2021-2023 MAIN FEATURES Metrics (weight) Metrics (type) Benchmark Rationale Link between pay and performance TSR (50%) Financial criteria Peer Group TSR is tracked for Ranking % of Target (8 companies: Ferrari, Aston both Ferrari and the Martin, Burberry, Hermes, companies in the Kering, LVMH, Moncler, Richemont) defined Peer Group calculating starting and ending prices as an average of the 30 1° 2° 3° 4° 5° calendar days prior 6°-7°-8° to grant and award date Awards 150% 120% 100% 75% 50% 0 EBITDA (30%) Financial criteria 5-year Business Plan EBITDA is defined Performance % of Target as net profit before income tax expense, +10% financial expenses, +5% net and amortization 5 Years Plan and depreciation -5% and is an indicator of <-5% Ferrari’s profitability Awards 140% 120% 100% 80% 0 Innovation Non-financial criteria Critical project milestones The Innovation Performance Factor focuses on the Performance Factor (20%) new product launches in line with Ferrari’s plan and on technological innovation. It is measured in terms of product launches (milestones, volumes and contribution margin), for a weight of 70%, and key technological projects, for the remaining 30%, to be achieved during the performance period. Our non-financial criterion, the Innovation Perfor- mance Factor, is included in the Equity Incentive Plan in order to have a performance indicator directly linked to the long-term sustainability and technologi- cal innovation of our business. In relation to the vesting of the PSUs awarded to the Executive Chairman, the vesting of all units under the plan occurs after the end of the relevant performance period (i.e. December 31, 2023), to the extent that the conditions for vesting are satisfied. The performance period for the Equity Incentive Plan 2021-2023 PSUs commenced on January 1, 2021. The fair value of the awards used for account- ing purposes was measured at the grant date using a Monte Carlo Simulation model. The fair value of the PSUs that were granted to Mr. Elkann in 2021 is €130.42 per share. Key Assumptions Grant date share price Expected volatility Dividend yield Risk-free rate PSU Awards Granted to the Executive Directors in 2021 €175.80 27.0% 0.75% 0% The expected volatility was based on the observed volatility of the defined Peer Group. The risk-free rate was based on the iBoxx sovereign Eurozone yield. The RSUs granted under the Equity Incentive Plan 2021-2023 will vest in 2024 at the end of the three-year cliff vesting period, subject to continued employment with the Company. The fair value of the RSUs that were granted to Mr. Elkann in 2021 is €171.86 per share. EQUITY INCENTIVE PLAN 2022-2024 AND EQUITY INCENTIVE PLAN 2023-2025 MAIN FEATURES  The Equity Incentive Plan 2022-2024 and the Equi- ty Incentive Plan 2023-2025, provide for significant changes compared to the former long-term equity incentive plan. The main changes include: • Combination of PSUs and RSUs: different weight of RSU and PSU distribution in relation to the re- sponsibilities and the level of contribution to the results of each cluster of beneficiaries. Execu- tive Directors were awarded only PSUs in order 292 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fto strengthen the alignment of their long-term interests with those of shareholders; • Different relative weight of the metrics: TSR is now weighted 40% (instead of 50%) and EBITDA 40% (instead of 30%); • TSR Peer Group: TSR Peer Group increased by three companies (Mercedes Benz Group AG, Prada and Estee Lauder), in order to have an odd number of companies and, consequently, modifying the pay-out scale providing that ex- ecutives will become eligible to earn awards only in case of performance at the bench- mark median; • Non-financial criteria: the Innovation Perfor- mance Factor has been replaced by the ESG fac- tor described in the table below. In particular, the component of ESG factor linked to the Environ- ment is consistent to actions adopted by Ferrari to achieve carbon neutrality by 2030, as already explained in the Capital Markets Day 2022. For Scope 1 and 2, Ferrari is planning to gradually reduce the use of trigeneration through an elec- trification process. While for Scope 3, electrifi- cation will reduce the vehicle use phase CO2eq emissions; additionally, Ferrari is exploring solu- tions to reduce the otherwise growing emis- sions of raw materials. Metrics (weight) Metrics (type) Benchmark Rationale Link between pay and performance TSR (40%) Financial criteria Peer Group TSR is tracked for both Ferrari Ranking % of Target (11 companies: and the companies in the Ferrari, Aston Martin, defined Peer Group calculating Burberry, Estee starting and ending prices as an Lauder, average of the 30 calendar days Hermes, Kering, prior to grant and award date LVMH, Mercedes Benz Group AG, Moncler, Prada and Richemont) EBITDA (40%) Financial criteria 5-year Business Plan EBITDA is defined as net profit before income tax expense, 1° 2° 3° 4° 5° 6° Awards 175% 150% 120% 100% 75% 50% 7°-8°-9°-10°-11° 0 Performance +15% Payout 175% financial expenses, net and +10% amortization and depreciation +5% and is an indicator of Ferrari’s 5 Years Plan profitability -5% <-5% 150% 125% 100% 75% 0 ESG Factor (20%) Non-financial criteria Project linked to E The ESG focuses on an Environment Factor and a Social Factor: and S spheres • 50% is based on the Reduction CO2 Carbon Emission following the milestones of the Ferrari’s sustainability plan – Rolling KPI until 2030: for the intermediate years leading up to 2030, the amount of the incentive attributed to this KPI will be assessed based on targets calculated through a year-by-year reduction proportional to product development up to 2030. This methodical approach ensures a progression towards the final targets established for the year 2030, allowing for a consistent and measurable tracking of the CO2 emission reduction efforts in alignment with Ferrari’s long-term sustainability objectives. • 50% is based on the maintenance of Equal Salary Certification or equivalent certification. The award of certification is based not only on equal pay for men and women, but in a more extensive way on targets of continuous improvement of D&I culture and inclusive environment. The certification process involves both quantitative and qualitative evaluations. The quantitative evaluation, which must be surpassed to proceed to the qualitative evaluation, consists of a detailed statistical analysis of compensation levels to verify that the gender pay gap is lower than 5% compared to a predictive statistical salary and that the accuracy of the data used is greater than 90%. The qualitative evaluation assesses: (i) the CEO and Top Management’s commitment to Diversity and Inclusion matters, (ii) how Corporate processes and policies are fair in terms of gender, (iii) employees’ perception of the inclusiveness of the culture and (iv) the PDCA (Plan, Do, Check, Act) methodology application in all of the aforementioned processes. 293 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTIn relation to the vesting of the PSUs awarded to the Executive Chairman and the CEO, the settlement of all units under the plans occur after the end of the performance period (i.e. December 31, 2024 and De- cember 31, 2025), to the extent that the conditions for vesting are satisfied. The performance period for the Equity Incen- tive Plan 2022-2024 PSUs commenced on January 1, 2022. The fair value of the awards used for account- ing purposes was measured at the grant date using a Monte Carlo Simulation model. The fair value of the PSUs that were granted to Mr. Elkann and Mr. Vigna in 2022 is €162.02 per share. The key assumptions used to calculate the grant-date fair values for these awards are summarized below: Key Assumptions Grant date share price Expected volatility Dividend yield Risk-free rate PSU Awards Granted to the Chairman and CEO in 2022 € 177.95 27.75%(1) 0.75% 0% (1) The expected volatility was based on the observed volatility of the defined Peer Group. The risk-free rate was based on the iBoxx sovereign Eurozone yield. The performance period for the Equity Incentive Plan 2023-2025 PSUs commenced on January 1, 2023. The fair value of the awards used for accounting purposes was measured at the grant date using a Monte Car- lo Simulation model. The fair value of the PSUs that were granted to Mr. Elkann and Mr. Vigna in 2023 is € 221.76 per share. The key assumptions used to calculate the grant-date fair values for these awards are summarized below: Key Assumptions Grant date share price Expected volatility Dividend yield Risk-free rate (2) See Footnote no. 1. PSU Awards Granted to the Chairman and CEO in 2023 € 242.30 27.93%(2) 0.75% 2.90% Any RSUs awarded to FLT members and other key members of the Group are service-based and will vest in March 2025 or March 2026 (as applicable) conditional on the continued employment of the beneficiaries with the Company or the Group at the time of vesting. The executive Directors were not awarded any RSUs in 2022 and 2023. RECOUPMENT OF INCENTIVE COMPENSATION (CLAWBACK POLICY) The Equity Incentive Plans include a clawback clause, which allows the Company to claim the refund of part or all of the variable component of remunera- tion awarded or paid on the basis of information or data that subsequently prove manifestly incorrect, if the Board of Directors determines that circum- stances that would have constituted “cause” (as defined) existed while the remuneration remained unvested or due to the beneficiaries’ fraud or negli- gence (each, a “Recovery Event”). In particular, if a Recovery Event occurs within three years after the payment of cash or delivery of any shares in respect of the PSUs or RSUs, a par- ticipant will be required to repay the net amount re- ceived, as determined by the Board of Directors in its discretion. As discussed above, the NYSE Clawback Policy also governs the recovery of certain erroneously awarded incentive-based compensation earned by current or former executive officers of the Compa- ny in the event that the Company is required to pre- pare an accounting restatement. LOCK UP PERIOD In 2022, the Board of Directors approved a lock up provision for its Executive Chairman, CEO, mem- 294 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fbers of the FLT and other key members of the Group which replaces the former stock ownership guide- lines and applies to all long-term incentive plans is- sued and to be issued by the company. Under the lock up provision 50% of the vested shares under the Equity Incentive Plans will be sub- ject from the date of vesting to unavailability and non-transferability for a period determined accord- ing to the corporate role: • CEO and Chairman: 36 months after the vesting • FLT members: 24 months after the vesting • Other key members of the Group: 12 months af- ter the vesting The Executive Chairman and the CEO are each re- quired to retain 100% of the shares of common stock issued, on a net, after-tax basis, upon vesting and settlement of any equity awards granted to such individual until the fifth anniversary of the grant date of the applicable award other than in the event of death, termination of service due to total disability, approved leave of absence or retirement. Other benefits Executive Directors may also be entitled to custom- ary fringe benefits such as personal use of aircraft, company cars and drivers, personal/home security, medical insurance, accident insurance, tax prepa- ration and financial counselling. The Compensation Committee may grant other benefits to the execu- tive Directors in particular circumstances. Severance The terms of service of the CEO provide that termi- nation of the contract by either party is subject to six months’ notice period. However, if the Company terminates his services for reasons other than for just cause (as defined) or if he terminates his ser- vices due to the reduction or limitations of his man- aging powers or following his dismissal in case of change of control, the Company shall pay the CEO an amount equal to 18 monthly installments of his base monthly salary, including any amount due for the six months’ notice period (which means that the severance amount does not exceed 12 months’ sala- ry, in line with the Code), plus the accrued pro rata of the Company’s contribution to the pension fund as well as STI and LTI variable compensation accrued at the date of termination of employment. If an actual severance payment will be made at the termination of employment and such severance payment would exceed 12 months’ base salary, then a disclosure will be made in line with the Code. If within twenty-four months following a change of control (as defined), the Chairman’s services are terminated by the Company (other than for cause), or are terminated by the Chairman for good rea- son, the Chairman is entitled to receive the acceler- ated vesting of awards under his long-term incen- tive plan. Internal pay ratios In line with the Code, the internal pay ratio is an im- portant input for determining the Remuneration Pol- icy for the Board of Directors. The internal pay ratio is calculated as the ratio between (i) the total annual remuneration of the CEO(68) and (ii) the average total annual remuneration of the employees of the com- pany and the group companies of which the com- pany consolidates the financial data(69). The following table presents the internal pay ratio for 2023, 2022, 2021, 2020 and 2019. Total Annual Remuneration of CEO (A) 6,692,434(1) 4,993,961(1) 4,486,151 6,835,721 8,631,030 Average Total Annual Employee (FTE) Remuneration Costs (B) 99,857 97,182 92,656 78,193 83,780 Pay Ratio (A/B) 67.0 51.4 48.4 87.4 103.0 2023 2022 2021(2) 2020 2019 (1) Includes €1,994,433 and €1,009,045 recognized as share- Bonus. There is no significant difference between the based compensation expense during the years ended pay ratio so calculated and the pay ratio calculated based December 31, 2023, 2022, respectively, for equity awards on the target remuneration elements pro rated on a full granted under the Group’s Equity Incentive Plan 2023-2025 year basis. In addition, the compensation payable to Mr. and the Equity Incentive Plan 2022-2024 that will vest in 2026 Elkann as interim CEO during 2021 is not included in the and 2025, respectively, subject to certain performance and calculation of the pay ratio because such compensation service conditions. See also “—Directors’ compensation” and was forfeited by Mr. Elkann. The decrease in the pay ratio in “—Share-Based Compensation of Executive Directors” below. 2021 when compared to 2020 can be explained, inter alia, (2) For 2021 the pay ratio is calculated considering the by the fact that for 2020 and 2019 the pay ratio is calculated remuneration of the current CEO, Benedetto Vigna, considering the remuneration of the former CEO, Louis payable for the period from September 16, 2021 (the date Camilleri, whose compensation package was different from when Mr. Vigna began acting as Chief Executive Officer) that of the current CEO and included a large portion of LTI to December 31, 2021, which includes a one-off Welcome variable compensation. 295 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTCHAIRMAN AND CEO COMPENSATION LEVELS CHAIRMAN, € 4,000,000 2,000,000 1,000,000 500,000 500,000 500,000 500,000 500,000 1,050,000 300,000 250,000 500,000 Minimum Threshold Target Maximum Fixed remuneration Short-term remuneration Long-term remuneration 2,995,000 1,370,000 1,125,000 8,975,000 4,110,000 3,375,000 6,000,000 3,000,000 1,500,000 3,150,000 900,000 750,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 Minimum Threshold Target Maximum Fixed remuneration Short-term remuneration Long-term remuneration CEO, € 10,000,000 0 0 SCENARIO ANALYSIS On an annual basis, the non-executive Directors, upon proposal of the Compensation Committee, ex- amine the relationship between the performance criteria chosen and the possible outcomes for the variable remuneration of our executive Directors (scenario analysis). To date, the non-executive Di- rectors believe the remuneration policy has prov- en effective in terms of establishing a correlation between Ferrari’s strategic goals and the chosen performance criteria, as the main key performance criteria of our executive Directors’ long-term incen- tive plan, which represents a significant part of the Executive Chairman’s and the CEO’s compensation package, supports both Ferrari’s business strategy and value creation for our shareholders. The Compensation Committee evaluates the mix of variable compensation linked to financial and non-financial performance, as well as sharehold- er returns, taking also into account the wages and employment conditions of our employees. Our in- centive plans are based on peer and market bench- marked performance metrics. In the event that specific long-term threshold performance targets are not achieved, there will be no variable pay vesting or payout for executive Di- rectors for the relevant period. The following table and chart describe com- pensation levels that the Executive Chairman and the CEO could receive under the compensation packages in place and different scenarios in a cal- endar year, assuming a constant share price (i.e. no appreciation): Element of remuneration Details of assumption Fixed remuneration The Executive Chairman’s base salary is €500,000 and the CEO’s base salary is €1,500,000. Short-term Incentive Plan The compensation packages for 2023 for the Chairman and the CEO include a short-term incentive plan with a threshold pay-opportunity equal to 50% of base salary, a target pay-opportunity equal to 100% of base salary and maximum pay-opportunity equal to 225% of base salary. Long-term Incentive Plan Executive Chairman and CEO: • in case of failure to achieve any of the performance criteria the scenario assumes no award of PSUs; • in case of achievement of the threshold for each of the performance criteria, the scenario assumes an award equal to threshold pay opportunity (60% of base salary); • in case of achievement of the targets for each of the performance criteria, the scenario assumes an award equal to target pay opportunity (200% of base salary); • in case of achievement of the maximum level of each performance criteria the scenario assumes the award equal to maximum pay opportunity (274% of base salary). N.B. Details about the Chairman and the CEO’s actual 2023 remuneration are included in section 2. CHAIRMAN AND CEO COMPENSATION LEVELS CHAIRMAN, € 4,000,000 2,995,000 1,370,000 1,125,000 2,000,000 1,000,000 500,000 500,000 500,000 500,000 500,000 1,050,000 300,000 250,000 500,000 Minimum Threshold Target Maximum Fixed remuneration Short-term remuneration Long-term remuneration 296 0 0 CEO, € 10,000,000 8,975,000 4,110,000 3,375,000 6,000,000 3,000,000 1,500,000 3,150,000 900,000 750,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 Minimum Threshold Target Maximum Fixed remuneration Short-term remuneration Long-term remuneration BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FCHAIRMAN AND CEO COMPENSATION LEVELS CHAIRMAN, € 4,000,000 2,000,000 1,000,000 500,000 1,050,000 300,000 250,000 500,000 500,000 500,000 500,000 500,000 0 Minimum Threshold Target Maximum Fixed remuneration Short-term remuneration Long-term remuneration 2,995,000 1,370,000 1,125,000 8,975,000 4,110,000 3,375,000 6,000,000 3,000,000 1,500,000 1,500,000 1,500,000 CEO, € 10,000,000 1,500,000 1,500,000 0 3,150,000 900,000 750,000 1,500,000 Minimum Threshold Target Maximum Fixed remuneration Short-term remuneration Long-term remuneration In the event of performance below the set threshold, both in the short and long term incentive plan, the Executive Chairman and the CEO will be recognized with fixed remuneration only. REMUNERATION POLICY FOR NON-EXECUTIVE DIRECTORS Remuneration of non-executive Directors is approved by the Company’s shareholders and periodically reviewed by the Compensation Committee. Remuneration of non-executive Directors is fixed and not depen- dent on the Company’s financial results. Non-executive Directors are not eligible for variable compensation and do not participate in any in- centive plans. The current annual remuneration for the non-executive Directors (which was approved at the 2020 AGM) is shown in the table below: Non-Executive Director Compensation Annual cash retainer Additional retainer for Audit Committee member Additional retainer for Audit Committee Chairman Additional retainer for Compensation Committee member Additional retainer for Compensation Committee Chairman Additional retainer for ESG Committee member Additional retainer for ESG Committee Chairman Additional retainer for the senior non-executive Director U.S. $ $75,000 $10,000 $20,000 $5,000 $15,000 $5,000 $15,000 $25,000 All remuneration of the non-executive Directors is paid in cash. 297 CHAIRMAN AND CEO COMPENSATION LEVELS CHAIRMAN, € 4,000,000 2,000,000 1,000,000 500,000 500,000 500,000 500,000 500,000 1,050,000 300,000 250,000 500,000 Minimum Threshold Target Maximum Fixed remuneration Short-term remuneration Long-term remuneration 2,995,000 1,370,000 1,125,000 8,975,000 4,110,000 3,375,000 6,000,000 3,000,000 1,500,000 3,150,000 900,000 750,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 Minimum Threshold Target Maximum Fixed remuneration Short-term remuneration Long-term remuneration CEO, € 10,000,000 0 0 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTREMUNERATION OF OTHER EMPLOYEES AND EQUAL SALARY CERTIFICATION Being the Employer of Choice—Talent Recruitment and Employee Retention—Diversity and Inclusion”. Ferrari strongly believes in the Equal Salary Cer- tification and since 2022 the maintenance of the certification is part of the vesting conditions of the equity incentive plans (as a component of the ESG performance factor). Ferrari aims to provide a market-competitive and fair remuneration package for its workforce, in line with the remuneration policy and in order to better pursue the Company’s strategy and purpose and contribute to long-term value creation. Furthermore, Ferrari operates a merit-based re- muneration policy, which does not discriminate on the basis of gender, age, nationality, social status or cultural background. In 2023, we received the renewal of the Equal-Sal- ary Certificate for providing equal pay to men and women with the same qualifications and positions in the Company. For the first time, the Equal Salary Cer- tification is global. See also “Non Financial Statement— (2) IMPLEMENTATION OF REMUNERATION STRATEGY IN 2023 in a manner consistent with our core business and leadership values and taking into account the social context around the Company. INTRODUCTION DIRECTORS’ COMPENSATION The following table summarizes the remuneration received by the members of the Board of Directors for the year ended December 31, 2023 from Ferrari and its subsidiaries. This section sets out the implementation of Ferrari’s remuneration strategy for the year ended Decem- ber 31, 2023. The remuneration granted in the year ended December 31, 2023 is in accordance with the substance and the procedures of the remuner- ation strategy (as set out above) and therefore we believe it allows us to seek to attract and retain the most highly qualified executive talent and motivate such executives to achieve business and financial goals that create long-term value for shareholders 298 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FName Office held Fixed remuneration Variable Extraordinary Pension LTI (€) Annual Fringe fee (€) benefits (€) remuneration items (€) benefits (€) (€) Total remuneration (2) (€) John Elkann Chairman 513,833 13,279(1) 984,900(*) — — 878,667 2,390,679 and Executive Director Benedetto Chief Executive 1,501,560 11,741(1) 2,954,700(*) — 230,000 1,994,433 6,692,434 Vigna Officer and Total Executive Director Executive Directors 2,015,393 25,020 3,939,600 — 230,000 2,873,100 9,083,113 Piero Ferrari Vice Chairman 73,777 13,080(1) and Non- Executive Director Sergio Duca Senior Non- 110,665 Executive Director Delphine Non-Executive 73,777 Arnault Director Francesca Non-Executive 78,387 Bellettini Director Eddy Cue Non-Executive 78,387 Director John Non-Executive 82,999 Galantic Director Maria Patrizia Grieco Adam Keswick Non-Executive 78,387 Director Non-Executive 69,166 Director Mike Volpi Non-Executive 49,513 Director — — — — — — — — Total Non-Executive 695,058 13,080 Directors — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 86,857 110,665 73,777 78,387 78,387 82,999 78,387 69,166 49,513 708,138 Total 2,710,451 38,100 3,939,600 — 230,000 2,873,100 9,791,251 (1) Relate to car benefits provided to Mr. Vigna, Mr. Elkann and Mr. Ferrari in accordance with the remuneration policy. (2) Certain amounts have been converted from U.S. Dollars to Euro. (*) This amount refers to short-term incentives. 299 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTThe following table summarizes the remuneration received by the mem- bers of the Board of Directors for the year ended December 31, 2022 from Ferrari and its subsidiaries. Name Office held Fixed remuneration Variable Extraordinary Pension Annual Fringe fee (€) benefits (€) remuneration items benefits (€) (€) (€) LTI (€) Total remuneration (2) (€) John Elkann Chairman 514,355 11,842(1) 680,000(*) — — 770,998 1,977,195 and Executive Director Benedetto Chief Executive 1,500,000 10,916(1) 2,244,000(*) — 230,000 1,009,045 4,993,961 Vigna Officer and Total Executive Director Executive Directors 2,014,355 22,758 2,924,000 — 230,000 1,780,043 6,971,156 Piero Ferrari Vice Chairman 76,563 19,402(1) and Non- Executive Director Sergio Duca Senior Non- 114,844 Executive Director Delphine Non-Executive 76,563 Arnault Director Francesca Non-Executive 81,348 Bellettini Director Eddy Cue Non-Executive 81,348 Director John Non-Executive 86,133 Galantic Director Maria Patrizia Grieco Adam Keswick Non-Executive 81,348 Director Non-Executive 71,777 Director — — — — — — — Total Non-Executive 669,924 19,402 Directors — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 95,965 114,844 76,563 81,348 81,348 86,133 81,348 71,777 689,326 Total 2,684,279 42,160 2,924,000 — 230,000 1,780,043 7,660,482 (1) Relate to car benefits provided to Mr. Vigna, Mr. Elkann and Mr. Ferrari in accordance with the remuneration policy. (2) Certain amounts have been converted from U.S. Dollars to Euro. (*) This amount refers to short-term incentives. 300 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FThe following table shows a comparison of the total remuneration of Di- rectors over the last five years, based on Ferrari Directors who served as Directors in 2023. Directors’ Total Remuneration (€) Name Office held 2023 2022 2021 2020 2019 John Elkann (*) Executive Chairman and 2,390,679 1,977,195 (1) 336,938 77,790 223,586 (2) Executive Director Benedetto Vigna (*) Chief Executive Officer and 6,692,434 4,993,961 (4) 4,486,151 — — Executive Director Piero Ferrari Vice Chairman and Non- 86,857 95,965 81,062 30,041 83,472 Executive Director Sergio Duca Senior Non-Executive 110,665 114,844 103,238 27,233 109,810 Director Delphine Arnault Non-Executive Director 73,777 76,563 68,171 17,020 67,080 Francesca Bellettini (6) Non-Executive Director 78,387 81,348 73,127 — — Eddy Cue Non-Executive Director 78,387 81,348 73,127 19,290 73,542 John Galantic (6) Non-Executive Director 82,999 86,133 77,429 — — Maria Patrizia Grieco Non-Executive Director 78,387 81,348 73,127 19,290 76,024 Adam Keswick Non-Executive Director 69,166 71,777 64,524 17,020 67,080 MIke Volpi Non-Executive Director 49,513 — — — — Adjusted EBITDA (5) (€ thousand) 2,279 1,773 1,531 1,143 1,269 Average Ferrari Share Price 275.25 196.34 185.25 155.98 131.44 Median fixed remuneration of employees (6)  37,210 34,960 34,071 32,876 31,782 (1) From January 1, 2021, to September 15, 2021: Chairman, in each case subject to approval by shareholders at the 2022 CEO and Executive Director. From September 16, 2021, Annual General Meeting. to December 31, 2021: Executive Chairman and Executive (4) Mrs. Francesca Bellettini and Mr. John Galantic were Non- Director. Executive Directors from April 16, 2020. (2) From January 1, 2019, to December 4, 2019: Chairman (5) For additional information relating to this non-IFRS financial and Non-Executive Director. From December 4, 2019, to measure, see "Financial Overview—Non-GAAP Financial December 31, 2019: Executive Chairman and Executive Measures—EBITDA and Adjusted EBITDA”. Director. (6) This information does not include the “Premio di (3) Mr. Vigna joined Ferrari as CEO and Executive Director on Competitività”, which is on top of the fixed remuneration. September 16, 2021. As a Welcome Bonus for having joined (*) For information regarding equity-based variable Ferrari, Mr. Vigna was granted (i) an extraordinary lump compensation see “Share-Based Compensation of sum of €1,000,000 and (ii) 16,256 Ferrari common shares, Executive Directors” below. 301 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTSHORT-TERM INCENTIVE OF EXECUTIVE DIRECTORS In March 2024, the CEO and the Executive Chairman will receive the pay- out of their short-term incentives for the performance year 2023: Net Revenues Adj. EBITDA % Adj. Operating profit (EBIT) Industrial Free Cash Flow Weight % Payout % 20% 20% 20% 40% 150% 150% 150% 126.7% The results of linear interpolation is Company Performance Factor 2023 = 140.7% SHARE-BASED COMPENSATION OF EXECUTIVE DIRECTORS The following table provides an overview of the outstanding equity in- centive plans provided to Ferrari executive Directors in 2023: Name, position Main conditions of share award plans Movements in share awards during 2023 Plan Performance Grant Vesting Number Shares Shares Shares Number of of which are period date date of awarded vested forfeited/ unvested subject to John Elkann, Equity 2020 - 2022 Executive Incentive Chairman Plan 2020- 2022 Equity 2021 - 2023 Incentive Plan 2021- 2023 Equity 2022 - 2024 Incentive Plan 2022- 2024 Equity 2023 - 2025 Incentive Plan 2023- 2025 Benedetto Equity 2022 - 2024 Vigna, Chief Incentive Executive Plan 2022- Officer 2024 Equity 2023 - 2025 Incentive Plan 2023- 2025 April 2020 March 2023 April 2021 March 2024 April 2022 March 2025 April 2023 March 2026 April 2022 March 2025 April 2023 March 2026 unvested shares at January 1, 2023 other shares at performance December conditions 31, 2023 4,829 — 4,652 177 — — 4,448 — — — 4,448 2,965 5,042 — — — 5,042 5,042 — 4,170 — — 4,170 4,170 15,126 — — — 15,126 15,126 — 12,510 — — 12,510 12,510 302 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FIn March 2023, 3,042 PSUs and 1,610 RSUs held by the Executive Chair- man under the Equity Incentive Plan 2020-2022 vested. The evidence of the level of achievement of the KPIs relating to the PSUs is summarized in the following table: EVIDENCE OF THE LEVEL OF THE ACHIEVEMENT KPY Actual performance Pay-out Relative TSR (weight 50%) 4th place positioning in the TSR ranking against the Peer Group Payout 75% EBITDA (weight 30%) Innovation (weight 20%) +5.85% vs 5 years plan Payout 123.4% Achievement of launches (70%) of the Innovation Factor and technological projects (30%) of the Innovation Factor Payout 100% 37.5% 37% 20% 94.5% PSU total pay-out In March 2024, the Equity Incentive Plan 2021-2023 will vest and the evi- dence of the level of the achievement is summarized in the following table: EVIDENCE OF THE LEVEL OF THE ACHIEVEMENT KPY Actual performance Pay-out Relative TSR (weight 50%) 2th place positioning in the TSR ranking against the Peer Group Payout 120% EBITDA (weight 30%) Innovation (weight 20%) +11.2% vs 5 years plan Payout 140% Achievement of launches (70%) of the Innovation Factor and technological projects (30%) of the Innovation Factor Payout 100% 60% 42% 20% 122% PSU total pay-out Threshold, Target and Maximum are presented in the “Equity Incentive Plan 2021-2023” paragraph. 303 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORTCOMPENSATION OF THE MEMBERS OF THE FLT CONTROLS AND PROCEDURES The compensation paid to or accrued during the year ended December 31, 2023 by Ferrari and its subsidiaries to the members of the FLT (excluding the CEO) amounted to €39.1 million in aggregate, consisting of €26.5 million for salary and €7.6 mil- lion for other short-term benefits (which is linked to the FY 2023 performance and represents slight- ly more than the target set levels), €4.5 million for share-based compensation in relation to PSUs and RSUs awarded under the Group’s Equity Incentive Plans (2021-2023; 2022-2024; 2023-2025) and oth- er share-based awards, and €0.5 million for the Group’s contributions to pension funds. The PSU and RSU awards will vest in March 2024, 2025 and 2026, subject to continued employment and, for the PSU awards, to the achievement of performance conditions related to TSR, EBITDA and Innovation Factor (for LTI Plan 2021-2023) or ESG Factor (for LTI Plan 2022-2024 and 2023-2025), as described above. Given: (i) Ferrari’s fourth place positioning in the TSR ranking against the Peer Group (correspond- ing to the vesting of 75 percent. of the target PSUs awarded); (ii) the result of the EBITDA factor payout (+5.85% vs 5-years plan) and (iii) the achievement of technological projects (30% of the Innovation Fac- tor), for the vesting of the Equity Incentive Plan 2020- 2022, which covers the performance period from 2020 to 2022, ending at December 31, 2022, 13,256 PSUs and 9,785 RSUs had vested for FLT members. DIRECTOR AND OFFICER OVERLAPS There are overlaps among certain Directors and of- ficers of Stellantis (formerly FCA) and Exor and our Directors and officers. These individuals owe du- ties both to us and to the other companies that they serve as officers and/or Directors. This may raise certain conflicts of interest as, for example, these individuals review opportunities that may be appro- priate or suitable for both Ferrari and such other companies, or business transactions are pursued in which both Ferrari and such other companies have an interest, such as Ferrari’s arrangement to supply engines for Maserati cars. For example, Mr. John El- kann our Executive Chairman, is also the Chairman of Stellantis and the Chairman and Chief Executive Officer of Exor. As of February 9, 2024, Exor held ap- proximately 24.65 percent of our outstanding com- mon shares and approximately 36.48 percent of the voting power in the Company, while it holds approx- imately 14.90 percent of the outstanding common shares in Stellantis, based on 2024 SEC filings. The percentages of ownership and voting power above are calculated based on the number of outstanding shares net of treasury shares. See “Risk Factors— Risks related to our Common Shares—We may have potential conflicts of interest with Stellantis and Exor and its related companies”. DISCLOSURE CONTROLS AND PROCEDURES Under the supervision, and with the participation, of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2023 pursuant to Exchange Act Rule 13a-15(b). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure con- trols and procedures are effective to provide rea- sonable assurance that information required to be disclosed in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and com- municated to our management, including our Chief Executive Officer and Chief Financial Officer, as ap- propriate, to allow timely decisions regarding re- quired disclosure. MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING The Company’s management is responsible for es- tablishing and maintaining adequate internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance regarding the preparation and fair pre- sentation of published financial statements in ac- cordance with IFRS. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be ef- fective can provide only reasonable assurance with respect to financial statement preparation and pre- sentation in accordance with IFRS. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, using the criteria set forth in the “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Or- ganizations of the Treadway Commission (COSO). Based on that assessment, management believes that, as of December 31, 2023, the Company’s inter- nal control over financial reporting was effective. The Company’s independent registered public accounting firm has issued an audit report on the ef- fectiveness of the Company’s internal control over financial reporting. That report is included herein. CHANGES IN INTERNAL CONTROL No change to our internal control over financial re- porting occurred during the year ended December 31, 2023 that has materially affected, or is reason- ably likely to materially affect, our internal control over financial reporting. 304 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F305 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT306 BOARD REPORTFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FSTATEMENT BY THE BOARD OF DIRECTORS Based on the assessment performed, the Board of Directors believes that, as of December 31, 2023, the Group’s and the Company’s Internal Control over Financial Reporting is considered effective and that (i) the Board Report provides sufficient insights into any material weaknesses in the effectiveness of the internal risk management and control sys- tems (please refer to section “Principal Characteristics of the Internal Control System and Internal Control over Financial Reporting” of this An- nual Report), (ii) the internal risk management and control systems are designed to provide reasonable assurance that the financial reporting does not contain any material inaccuracies (please refer to section “Prin- cipal Characteristics of the Internal Control System and Internal Control over Financial Reporting” of this Annual Report), (iii) based on the current state of affairs, it is justified that the Group’s and the Company’s financial reporting is prepared on a going concern basis (please refer to Note 1 to the Consolidated Financial Statements of this Annual Report and Note 2 to the Company Financial Statements of this Annual Report for additional information on the basis of preparation), and (iv) the Board Report states those material risks and uncertainties that are, in the Board of Director’s judgment, relevant to the expectation of the Company’s continuity for the period of twelve months after the preparation of the Board Report (please refer to the chapter “Risk Factors” of this Annual Report). February 22, 2024 John Elkann [Executive Chairman] Benedetto Vigna [Chief Executive Officer] 307 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBOARD REPORT309 00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem IpsumFINANCIAL STATEMENTSFINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENT AT AND FOR THE YEAR ENDED DECEMBER 31 2023 312 Consolidated Income 314 Consolidated Statement of 317 Consolidated Statement of Statement Financial Position Changes in Equity 313 Consolidated Statement of 315 Consolidated Statement of 318 Notes to the Consolidated Comprehensive Income Cash Flows Financial Statements 311 00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum FERRARI N.V. CONSOLIDATED INCOME STATEMENT FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 Net revenues Cost of sales Selling, general and administrative costs Research and development costs Other expenses, net Result from investments Operating profit (EBIT) Financial income Financial expenses Financial expenses, net Profit before taxes Income tax expense Net profit Net profit attributable to: Owners of the parent Non-controlling interests Basic earnings per common share (in €) Diluted earnings per common share (in €) For the years ended December 31, Note 2023 2022 2021 4 5 6 7 8 9 9 9 (€ thousand) 5,970,146 5,095,254 4,270,894 2,995,877 2,648,953 2,080,613 462,580 427,974 348,024 881,559 775,572 768,104 18,898 21,548 6,137 6,175 5,561 6,896 1,617,369 1,227,382 1,075,488 132,319 83,858 42,999 147,334 133,474 76,256 15,015 49,616 33,257 1,602,354 1,177,766 1,042,231 10 344,897 238,472 209,095 1,257,457 939,294 833,136 1,252,048 932,614 830,767 5,409 6,680 2,369 6.91 6.90 5.11 5.09 4.50 4.50 3 12 12 The accompanying notes are an integral part of the Consolidated Financial Statements. 312 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFERRARI N.V. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 For the years ended December 31, Note 2023 2022 2021 (€ thousand) Net profit 1,257,457 939,294 833,136 Items that will not be reclassified to the consolidated income statement in subsequent periods: Gains/(Losses) on remeasurement of defined benefit plans Related tax impact Total items that will not be reclassified to the consolidated income statement in subsequent periods Items that may be reclassified to the consolidated income statement in subsequent periods: (Losses)/Gains on cash flow hedging instruments Exchange differences on translating foreign operations Related tax impact 20 20 20 20 20 221 (52) 169 1,605 (376) 1,229 (463) 110 (353) (26,284) 92,898 (64,130) (6,323) 9,798 14,229 6,403 (24,626) 17,960 Total items that may be reclassified to the consolidated income (26,204) 78,070 (31,941) statement in subsequent periods Total other comprehensive (loss)/income, net of tax (26,035) 79,299 (32,294) Total comprehensive income 1,231,422 1,018,593 800,842 Total comprehensive income attributable to: Owners of the parent Non-controlling interests 1,226,428 1,012,215 797,988 4,994 6,378 2,854 The accompanying notes are an integral part of the Consolidated Financial Statements. 313 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS  FERRARI N.V. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT DECEMBER 31, 2023 AND 2022 At December 31, Note 2023 2022 (€ thousand) Assets Goodwill Intangible assets Property, plant and equipment Investments and other financial assets Deferred tax assets Total non-current assets Inventories Trade receivables Receivables from financing activities Tax receivables Other current assets Current financial assets Cash and cash equivalents Total current assets Total assets Equity and liabilities Equity attributable to owners of the parent Non-controlling interests Total equity Employee benefits Provisions Deferred tax liabilities Debt Other liabilities Other financial liabilities Trade payables Tax payables 13 14 15 16 10 17 18 18 18 18 19 32 3 20 22 23 10 24 25 19 26 785,182 1,419,699 1,575,200 67,671 217,553 785,182 1,307,388 1,457,825 59,534 203,382 4,065,305 3,813,311 948,514 261,380 674,662 232,414 1,451,158 1,399,997 11,616 130,228 61,130 16,054 153,183 87,301 1,121,981 1,388,901 3,986,007 3,952,512 8,051,312 7,765,823 3,060,888 2,592,857 9,734 9,630 3,070,622 2,602,487 123,045 187,276 136,846 2,477,186 1,022,967 13,539 930,560 89,271 110,807 180,694 126,507 2,811,779 952,025 19,993 902,968 58,563 Total equity and liabilities 8,051,312 7,765,823 The accompanying notes are an integral part of the Consolidated Financial Statements. 314 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F FERRARI N.V. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 For the years ended December 31, Note 2023 2022 2021 (€ thousand) Cash and cash equivalents at the beginning of the year 32 1,388,901 1,344,146 1,362,406 Cash flows from operating activities: Net profit Income tax expense 1,257,457 939,294 833,136 10 344,897 238,472 209,095 Amortization and depreciation 14,15 662,305 546,225 455,989 Provision accruals Result from investments Financial income Financial expenses Other non-cash expenses, net Change in inventories Change in trade receivables Change in trade payables Change in receivables from financing activities Change in other operating assets and liabilities Finance income received Finance costs paid Income tax paid 23 64,834 72,331 30,284 (6,137) (6,175) (6,896) (132,319) (83,858) (42,999) 147,334 133,474 76,256 79,813 46,653 23,941 (309,564) (153,890) (81,309) (33,381) (48,400) 1,771 43,277 103,981 72,568 (107,247) (187,890) (122,746) 48,642 140,008 (29,840) 32,432 5,158 1,679 (83,243) (37,351) (29,202) 9 9 32 17 18 26 27 9 9 10 (292,463) (304,692) (109,001) Total cash flows from operating activities 1,716,637 1,403,340 1,282,726 Cash flows used in investing activities: Investments in intangible assets Investments in property, plant and equipment 16 15 (487,148) (456,894) (384,827) (381,762) (347,725) (352,316) Investments in joint ventures — (1,367) — Proceeds from the sale of property, plant and equipment and 15,16 2,458 578 4,405 intangible assets Total cash flows used in investing activities (866,452) (805,408) (732,738) Cash flows used in financing activities: Proceeds from borrowings from banks and other financial institutions Repayments of borrowings from banks and other financial institutions Proceeds from securitizations Repayments of securitizations Proceeds from other debt Repayments of other debt Repayments of lease liabilities Repayments of bonds and notes 24 24 24 24 24 24 24 24 250,000 8,909 142,344 (72,500) (55,000) (20,959) 151,217 218,924 248,714 (49,611) (72,824) (177,270) 34,596 34,456 17,265 (35,566) (23,215) (25,302) (17,691) (16,500) (21,605) (575,702) — (500,000) 315 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSProceeds from bonds and notes Dividends paid to owners of the parent Dividends paid to non-controlling interests Share repurchases 24 20 20 20 — — 149,495 (328,631) (249,522) (160,101) (4,890) (2,266) (1,354) (460,629) (396,522) (230,899) Total cash flows used in financing activities (1,109,407) (553,560) (579,672) Translation exchange differences (7,698) 383 11,424 Total change in cash and cash equivalents (266,920) 44,755 (18,260) Cash and cash equivalents at the end of the year 32 1,121,981 1,388,901 1,344,146 The accompanying notes are an integral part of the Consolidated Financial Statements. 316 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFERRARI N.V. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 Share Retained Cash flow Currency Remeasurement Equity Non- capital earnings hedge translation of defined attributable to controlling Total equity and other reserve differences benefit plans owners of the interests reserves parent (€ thousand) At December 31, 2020 2,573 1,739,380 24,164 28,774 (9,705) 1,785,186 4,018 1,789,204 Net profit Other comprehensive income/(loss) — — 830,767 — — — 830,767 2,369 833,136 — (46,170) 13,744 (353) (32,779) 485 (32,294) Total comprehensive — 830,767 (46,170) 13,744 (353) 797,988 2,854 800,842 income Dividends to owners of the — (160,272) parent Dividends to non-controlling — — interests Share repurchases — (230,899) Share-based compensation Other movements — — 13,895 (418) — — — — — — — — — — — — — — (160,272) — (160,272) — (1,354) (1,354) (230,899) — (230,899) 13,895 418 — — — 13,895 — At December 31, 2021 2,573 2,192,453 (22,006) 42,518 (9,640) 2,205,898 5,518 2,211,416 Net profit Other comprehensive income/(loss) — — 932,614 — — — 932,614 6,680 939,294 — 68,272 10,100 1,229 79,601 (302) 79,299 Total comprehensive — 932,614 68,272 10,100 1,229 1,012,215 6,378 1,018,593 income Dividends to owners of the — (249,522) parent Dividends to non-controlling — — interests Share repurchases — (396,522) Share-based compensation Other movements — — 20,860 (112) (33) — — — — — — — — — — — — — 73 (249,522) — (249,522) — (2,266) (2,266) (396,522) — (396,522) 20,860 (72) — — 20,860 (72) At December 31, 2022 2,573 2,499,771 46,233 52,618 (8,338) 2,592,857 9,630 2,602,487 Net profit — 1,252,048 — — — 1,252,048 5,409 1,257,457 Other comprehensive — — (19,881) (5,908) 169 (25,620) (415) (26,035) income/(loss) Total comprehensive — 1,252,048 (19,881) (5,908) 169 1,226,428 4,994 1,231,422 income Dividends to owners of the — (328,631) parent Dividends to non-controlling — — interests Share repurchases — (460,629) Share-based compensation — 30,863 — — — — — — — — — — — — (328,631) — (328,631) — (4,890) (4,890) (460,629) — (460,629) 30,863 — 30,863 At December 31, 2023 2,573 2,993,422 26,352 46,710 (8,169) 3,060,888 9,734 3,070,622 The accompanying notes are an integral part of the Consolidated Financial Statements. 317 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS(1) BACKGROUND AND BASIS OF PREPARATION BACKGROUND Ferrari is among the world’s leading luxury brands. The activities of Ferrari N.V. (herein referred to as “Ferrari” or the “Company” and together with its subsidiaries the “Group”) and its subsidiaries are focused on the design, engineering, production and sale of luxury performance sports cars. The cars are designed, engineered and produced in Ma- ranello and Modena, Italy and sold in approximately 60 markets worldwide through a network of 178 authorized dealers operating 196 points of sale. The Ferrari brand is licensed to a selected number of producers and retailers of luxury and lifestyle goods, with Ferrari branded merchandise also sold through a network of 14 Ferrari-owned directly operated stores and 2 franchised stores (as of De- cember 31, 2023), as well as on Ferrari’s website. To facilitate the sale of new and pre-owned cars, the Group provides various forms of financing to cli- ents, as well as to dealers in certain territories, di- rectly or through cooperation or other agreements with financial institutions. Ferrari also participates in the Formula 1 World Championship through its team Scuderia Ferrari and the World Endur- ance Championship through its Ferrari endurance teams. Ferrari’s racing activities are a core element of Ferrari marketing and promotional activities, as well as an important source of innovation to sup- port the technological advancement of Ferrari’s product portfolio. BASIS OF PREPARATION AUTHORIZATION OF CONSOLIDATED FINANCIAL STATEMENTS AND COMPLIANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS These consolidated financial statements of Ferrari N.V. were authorized for issuance by the Board of Di- rectors on February 22, 2024. The consolidated financial statements have been prepared in accordance with the International Finan- cial Reporting Standards (“IFRS”) as issued by the In- ternational Accounting Standards Board (“IASB”), as well as IFRS as adopted by the European Union. There is no effect on these consolidated financial state- ments resulting from differences between IFRS as issued by the IASB and IFRS as adopted by the Euro- pean Union. The designation IFRS also includes Inter- national Accounting Standards (“IAS”) as well as the interpretations of the International Financial Report- ing Interpretations Committee (“IFRIC” and “SIC”). The consolidated financial statements are pre- pared on a going concern basis and applying the historical cost method, modified as required by IFRS for the measurement of certain financial instru- ments, which are generally measured at fair value. The Group’s presentation currency is the Euro, which is also the functional currency of the Compa- ny, and unless otherwise stated amounts are pre- sented in thousands of Euro. (2) MATERIAL ACCOUNTING POLICIES FORMAT OF THE FINANCIAL STATEMENTS The consolidated financial statements include the consolidated income statement, consolidated state- ment of comprehensive income, consolidated state- ment of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and the accompanying notes (referred to col- lectively as the “Consolidated Financial Statements”). For presentation of the consolidated income statement, the Group uses a classification based on the function of expenses, as it is more representa- tive of the format used for internal reporting and management purposes and is consistent with inter- national practice. In the consolidated income state- ment, the Group presents a subtotal for its operat- ing profit before interest and taxes which is named operating profit (EBIT). Operating profit (EBIT) dis- tinguishes between the profit before taxes arising from operating items and those arising from financ- ing activities. Operating profit (EBIT) is one of the pri- mary measures used by the Board of Directors (the Group’s “Chief Operating Decision Maker” as defined in IFRS 8 — Operating Segments) to assess perfor- mance and allocate resources. Starting in 2023, the Company also disaggregates financial income and financial expense in the consolidated income state- ment, as already reported in the related note disclo- sures. This information was previously presented on a net basis in the consolidated income statement and on a gross basis in the related note disclosures. For presentation of the consolidated statement of financial position, a mixed format has been se- lected to present current and non-current assets and liabilities, as permitted by IAS 1 paragraph 60. More specifically, the Consolidated Financial State- ments include both industrial and financial services activities. Receivables from financing activities are included in current assets as the investments will be realized in their normal operating cycle. The funding for financial services activities is primarily obtained through securitization programs and funding from certain of the Group’s operating companies. This fi- nancial service structure within the Group does not allow the separation of financial liabilities funding the financial services operations (whose assets are re- ported within current assets) and those funding the industrial operations. Presentation of financial liabili- ties as current or non-current based on their date of maturity would not facilitate a meaningful compari- 318 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fson with financial assets, which are categorized on the basis of their normal operating cycle. Disclosure as to the due date of the various components of debt is provided in Note 24. The consolidated statement of cash flows is pre- sented using the indirect method. Starting in 2023, the Company also disaggregates proceeds and re- payments of debt (securitizations, banks and other financial institutions, other debt) in the consolidated statement of cash flows, as already reported in the related debt note disclosures. This information was previously presented on a net basis in the consoli- dated statement of cash flows and on a gross basis in the related debt note disclosures. NEW STANDARDS AND AMENDMENTS EFFECTIVE FROM JANUARY 1, 2023 The following new standards and amendments ef- fective from January 1, 2023 were adopted by the Group for the preparation of these Consolidated Fi- nancial Statements. In May 2017, the IASB issued IFRS 17 — Insur- ance Contracts, which establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts issued as well as guidance relating to reinsurance contracts held and investment contracts with discretionary partic- ipation features issued. In June 2020 the IASB issued amendments to IFRS 17 aimed at helping companies implement IFRS 17 and make it easier for compa- nies to explain their financial performance. The new standard and amendments are effective on or after January 1, 2023. There was no effect from the adop- tion of these amendments. In February 2021, the IASB issued amendments to IAS 1 — Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies which require companies to disclose their material accounting policy information rather than their significant accounting policies and provide guidance on how to apply the concept of material- ity to accounting policy disclosures. These amend- ments are effective on or after January 1, 2023. Cer- tain accounting policy disclosures were updated a result of the adoption of these amendments. In February 2021, the IASB issued amendments to IAS 8 — Accounting Policies, Changes in Account- ing Estimates and Errors: Definition of Accounting Estimates which clarify how companies should dis- tinguish changes in accounting policies from chang- es in accounting estimates. These amendments are effective on or after January 1, 2023. There was no effect from the adoption of these amendments. In May 2021, the IASB issued amendments to IAS 12 — Income Taxes: Deferred Tax related to Assets and Liabilities Arising From a Single Transaction that clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. These amendments are effective on or after January 1, 2023. There was no effect from the adoption of these amendments. In December 2021, the IASB issued amendments to IFRS 17 — Insurance Contracts: Initial Application of IFRS 17 and IFRS 9 - Comparative Information, which provides a transition option relating to comparative information about financial assets presented on ini- tial application of IFRS 17. The amendment is aimed at helping entities to avoid temporary accounting mismatches between financial assets and insur- ance contract liabilities, and therefore improve the usefulness of comparative information for users of financial statements. The amendment is effective on or after January 1, 2023. There was no effect from the adoption of these amendments. In June 2020, the IASB issued amendments to IFRS 4 — Insurance Contracts which defer the expi- ry date of the temporary exemption from applying IFRS 9 to annual periods beginning on or after Jan- uary 1, 2023. There was no effect from the adoption of these amendments. In May 2023, the IASB issued amendments to IAS 12 — Income taxes: International Tax Reform – Pillar Two Model Rules, to clarify the application of IAS 12 — Income taxes to income taxes arising from tax law enacted or substantively enacted to implement the Organisation for Economic Co-operation and Devel- opment (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) Pillar Two model rules (Pillar Two income taxes). The amendments in- troduce: (i) a mandatory temporary exception to the accounting for deferred taxes arising from the juris- dictional implementation of the Pillar Two model rules, which was effective immediately upon issuance of the amendment, and (ii) disclosure requirements for affected entities to help users of the financial state- ments better understand an entity’s exposure to Pillar Two income taxes arising from that legislation, partic- ularly before the effective date of the Pillar Two model rules, which apply for annual reporting periods begin- ning on or after January 1, 2023, but not for any interim periods ending on or before December 31, 2023. The Group started applying the mandatory temporary ex- ception to accounting for deferred taxes arising from the Pillar Two model rules on its effective date. The Pillar Two model rules introduce a mini- mum effective taxation of 15 percent on a jurisdic- tional basis for multinational enterprise groups and large-scale domestic groups with annual revenues of at least €750 million in their consolidated finan- cial statements in at least two of the four prior fiscal years. Many countries where the Group operates have enacted domestic tax legislation for the Pillar Two model rules that are effective from January 1, 2024, including Italy, the Netherlands, France, Ger- many, Japan, Switzerland and the UK. The Group did not recognize any tax expense or liability relating to Pillar Two in 2023 as the legislation was not in effect at the reporting date. The Pillar Two model rules are complex and management is in the process of as- sessing and determining its impact on the Group, if any, and based on the information available to date, management does not expect any material impacts for the Group as a result of the legislation. 319 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSNEW STANDARDS, AMENDMENTS AND INTERPRETATIONS NOT YET EFFECTIVE The standards, amendments and interpretations is- sued by the IASB that will have mandatory applica- tion in 2024 or subsequent years are listed below: In January 2020, the IASB issued amendments to IAS 1 — Presentation of Financial Statements: Clas- sification of Liabilities as Current or Non-Current to clarify how to classify debt and other liabilities as current or non-current, and in particular how to clas- sify liabilities with an uncertain settlement date and liabilities that may be settled by converting to equity. These amendments are effective on or after Janu- ary 1, 2024. The Group does not expect any material impact from the adoption of these amendments. In September 2022, the IASB issued amendments to IFRS 16 — Leases: Liability in a Sale and Leaseback to improve the requirements for sale and leaseback transactions, which specify the measurement of the liability arising in a sale and leaseback transaction, to ensure the seller-lessee does not recognize any amount of the gain or loss that relates to the right of use it retains. These amendments are effective on or after January 1, 2024. The Group does not ex- pect any material impact from the adoption of these amendments. In October 2022, the IASB issued amendments to IAS 1 — Presentation of Financial Statements: Non-current Liabilities with Covenants, that clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. These amend- ments are effective on or after January 1, 2024. The Group does not expect any material impact from the adoption of these amendments. In May 2023, the IASB issued amendments to IAS 7 — Statement of Cash Flows and IFRS 7 — Financial Instruments: Disclosures: Supplier Finance Arrange- ments, that introduce new disclosure requirements to enhance the transparency and usefulness of the information provided by entities about supplier fi- nance arrangements and are intended to assist users of financial statements in understanding the effects of supplier finance arrangements on an en- tity’s liabilities, cash flows and exposure to liquidity risk. The amendments are effective on or after Janu- ary 1, 2024. The Group is evaluating the potential im- pact from the adoption of these amendments. In August 2023, the IASB issued amendments to IAS 21 — The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability, to clarify how an en- tity has to apply a consistent approach to assessing whether a currency is exchangeable into another currency and, when it is not, to determine the ex- change rate to use and the disclosures to provide. These amendments are effective on or after Janu- ary 1, 2025. The Group does not expect any material impact from the adoption of these amendments. BASIS OF CONSOLIDATION SUBSIDIARIES Subsidiaries are entities over which the Group has control. Control is achieved when the Group has power over the investee, when it is exposed to, or has rights to, variable returns from its involvement with the investee, and has the ability to use its pow- er over the investee to affect the amount of the in- vestor’s returns. Subsidiaries are consolidated on a line by line basis from the date on which the Group achieves control. The Group reassesses whether or not it controls an investee if facts and circumstanc- es indicate that there are changes to one or more of the three elements of control listed above. The Group recognizes any non-controlling inter- ests (“NCI”) in the acquiree on an acquisition-by-ac- quisition basis, either at fair value or at the non-con- trolling interest’s share of the recognized amounts of the acquiree’s identifiable net assets. Net profit or loss and each component of other comprehen- sive income/(loss) are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income/(loss) of subsidiaries is at- tributed to owners of the parent and to the non-con- trolling interests even if this results in the non-con- trolling interests having a deficit balance. All intra-group balances and transactions and any unrealized gains and losses arising from in- tra-group transactions are eliminated in preparing the Consolidated Financial Statements. Subsidiaries are deconsolidated from the date when control ceases. When the Group ceases to have control over a subsidiary, it derecognizes the assets (including any goodwill) and liabilities of the subsidiary at their carrying amounts, derecognizes the carrying amount of non-controlling interests in the former subsidiary and recognizes the fair value of any consideration received from the transaction. Any retained interest in the former subsidiary is then remeasured to its fair value. INTERESTS IN ASSOCIATES An associate is an entity over which the Group has significant influence. Significant influence is the pow- er to participate in the financial and operating policy decisions of the investee but without having control or joint control over those policies. Associates are ac- counted for using the equity method of accounting from the date significant influence is obtained. Under the equity method, the investments are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the profit/(loss) and other comprehensive income/(loss) of the investee. The Group’s share of the investee’s profit/(loss) is recognized in the consolidated income statement. Distributions received from an investee reduce the carrying amount of the investment. Post-acquisition movements in other comprehensive income/(loss) are recognized in other comprehensive income/ 320 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(loss) with a corresponding adjustment to the carry- ing amount of the investment. Unrealized gains on transactions between the Group and its associates are eliminated to the ex- tent of the Group’s interest in the associate. Unre- alized losses are also eliminated unless the trans- action provides evidence of an impairment of the asset transferred. When the Group’s share of the losses of an as- sociate exceeds the Group’s interest in that associ- ate, the Group discontinues recognizing its share of further losses. Additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obliga- tions or made payments on behalf of the associate. The Group discontinues the use of the equity method from the date the investment ceases to be an associate or when it is classified as available-for-sale. INTERESTS IN JOINT OPERATIONS A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the lia- bilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an ar- rangement, which exists only when decisions about the relevant activities require the unanimous con- sent of the parties sharing control. When the Group undertakes its activities under joint operations, it recognizes in relation to its inter- est in the joint operation: (i)  its assets, including its share of any assets held jointly, (ii)  its liabilities, in- cluding its share of any liabilities incurred jointly, (iii) its revenue from the sale of its share of the out- put arising from the joint operation, (iv)  its share of the revenue from the sale of the output by the joint operation, and (v) its expenses, including its share of any expenses incurred jointly. FOREIGN CURRENCY TRANSACTIONS The functional currency of the Group’s entities is the currency of their primary economic environment. In individual companies, transactions in foreign cur- rencies are recorded at the exchange rate prevail- ing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the for- eign currency exchange rate prevailing at that date. Exchange differences arising on the settlement of monetary items or on reporting monetary items at rates different from those at which they were initial- ly recorded during the period or in previous finan- cial statements are recognized in the consolidated income statement. CONSOLIDATION OF FOREIGN ENTITIES All assets and liabilities of foreign consolidated com- panies with a functional currency other than the Euro are translated using the closing rates at the date of the consolidated statement of financial posi- tion. Income and expenses are translated into Euro at the average foreign currency exchange rate for the period. Translation differences resulting from the application of this method are classified as cur- rency translation differences within other compre- hensive income/(loss) until the disposal of the invest- ment. Average foreign currency exchange rates for the period are used to translate the cash flows of foreign subsidiaries in preparing the consolidated statement of cash flows. Goodwill, assets acquired and liabilities assumed arising from the acquisition of entities with a func- tional currency other than the Euro are recognized in the Consolidated Financial Statements in the func- tional currency and translated at the foreign currency exchange rate at the acquisition date. These balanc- es are translated at subsequent balance sheet dates at the relevant foreign currency exchange rate. The principal foreign currency exchange rates used to translate other currencies into Euro were as follows: 2023 2022 2021 Average At December 31, Average At December 31, Average At December 31, U.S. Dollar Pound Sterling Swiss Franc 1.0814 0.8699 0.9717 1.1050 0.8691 0.9260 1.0530 0.8528 1.0047 1.0666 1.1827 0.8869 0.8596 0.9847 1.0811 1.1326 0.8403 1.0331 Japanese Yen 151.8540 156.3300 138.0274 140.6600 129.8767 130.3800 Chinese Yuan Australian Dollar Singapore Dollar Canadian Dollar 7.6568 1.6283 1.4521 1.4595 Hong Kong Dollar 8.4663 7.8509 1.6263 1.4591 1.4642 8.6314 7.0788 1.5167 1.4512 1.3695 8.2451 321 7.3582 1.5693 1.4300 1.4440 8.3163 7.6282 1.5749 1.5891 1.4826 9.1932 7.1947 1.5615 1.5279 1.4393 8.8333 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSINTANGIBLE ASSETS PATENTS, CONCESSIONS AND LICENSES GOODWILL Goodwill is not amortized, but is tested for impair- ment annually or more frequently if events or chang- es in circumstances indicate that it might be im- paired. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. DEVELOPMENT COSTS Development costs for car project production and related components, engines and systems are rec- ognized as an asset if, and only if, the required con- ditions under IAS 38 —  Intangible Assets are met, including, among others: (i) that development costs can be measured reliably, (ii) that the technical fea- sibility of the product, volumes and pricing support the view that the development expenditure will gen- erate future economic benefits, and (iii) the Group has the intention to complete the development and the ability to use the intangible asset. Capitalized de- velopment costs include all direct and indirect costs that may be directly attributed to the development process. All other research and development costs are expensed as incurred, net of any government grants received. Capitalized development costs are amortized on a straight-line basis from the start of production over the estimated lifecycle of the model or the use- ful life of the related components or other assets (generally between four and eight years). Increas- ing an asset’s expected lifecycle or its residual value would result in a reduced amortization charge in the consolidated income statement. The Group incurs significant research and de- velopment costs also for its Formula 1 racing ac- tivities. These costs are considered fundamental to the development of the road and track car models and prototypes. Technological developments and changes in the regulations of the Formula 1 World Championship generally require the Group to de- sign, develop and construct a new racing car to be used for one year only. The costs incurred for the design, development and construction of a new racing car are generally expensed as incurred un- less the technology will be used for more than one year and the costs meet the capitalization criteria in IAS 38. Separately acquired patents, concessions and li- censes are initially recognized at cost. Patents, concessions and licenses acquired in a business combination are initially recognized at fair value. Pat- ents, concessions and licenses are amortized on a straight-line basis over their useful economic lives, which is generally between three and five years. OTHER INTANGIBLE ASSETS Other intangible assets mainly relate to the regis- tration of trademarks and have been recognized in accordance with IAS 38 —  Intangible Assets, where it is probable that the use of the asset will generate future economic benefits for the Group and where the cost of the asset can be measured reliably. Oth- er intangible assets are measured at cost less any impairment losses and amortized on a straight-line basis over their estimated life, which is generally be- tween three and five years. PROPERTY, PLANT AND EQUIPMENT COST Property, plant and equipment is initially recognized at cost which comprises the purchase price, any costs directly attributable to bringing the assets to the location and condition necessary to be capable of operating in the manner intended by management, capitalized borrowing costs and any initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Self-con- structed assets are initially recognized at production cost. Subsequent expenditures and the cost of re- placing parts of an asset are capitalized only if they increase the future economic benefits embodied in that asset. All other expenditures are expensed as incurred. When such replacement costs are cap- italized, the carrying amount of the parts that are replaced is recognized as a loss in the period of re- placement in the consolidated income statement. DEPRECIATION Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows: Industrial buildings Plant, machinery and equipment Other assets Depreciation rates 3% - 20% 5% - 22% 12% - 25% 322 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FLand is not depreciated. If the asset being depreci- ated consists of separately identifiable components whose useful lives differ from that of the other parts making up the asset, depreciation is charged sepa- rately for each of its component parts through appli- cation of the ‘component approach’. LEASES The Group recognizes a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use. Each lease pay- ment is allocated between the principal liability and finance costs. Finance costs are charged to the con- solidated income statement over the lease period using the effective interest rate method. The right- of-use asset is depreciated on a straight-line basis over the lease term. Right-of-use assets are measured at cost com- prising the following: (i) the amount of the initial mea- surement of lease liability; (ii) any lease payments made at or before the commencement date less any lease incentives received; (iii) any initial direct costs and, if applicable, (iv) restoration costs. Payments as- sociated with short-term leases and leases of low-val- ue assets are recognized as an expense in the con- solidated income statement on a straight-line basis. Lease liabilities are measured at the net present value of the following: (i) fixed lease payments, (ii) variable lease payments that are based on an index or a rate and, if applicable, (iii) amounts expected to be payable by the lessee under residual value guar- antees, and (iv) the exercise price of a purchase op- tion if the lessee is reasonably certain to exercise that option. Lease liabilities do not include any non- lease components that may be included in the relat- ed contracts. Lease payments are discounted using the inter- est rate implicit in the lease. If that rate cannot be de- termined, the Group’s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environ- ment with similar terms and conditions. Some lease contracts contain variable payment terms that are linked to sales generated from Fer- rari stores. Variable lease payments that depend on sales are recognized in the consolidated income statement in the period in which the condition that triggers those payments occurs. Extension and termination options are includ- ed in a number of leases related to Ferrari stores, warehouses and machinery and equipment of the Group. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension op- tions (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). BORROWING COSTS General and specific borrowing costs directly at- tributable to the acquisition, construction or pro- duction of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until such time as the assets are sub- stantially ready for their intended use. All other borrowing costs are expensed in finan- cial expenses if related to the Group’s industrial ac- tivities or cost of sales if related to the Group’s finan- cial services activities in the consolidated income statement, as incurred. IMPAIRMENT OF ASSETS The Group continuously monitors its operations to assess whether there is any indication that its in- tangible assets (including development costs) and its property, plant and equipment may be impaired. Goodwill is tested for impairment annually or more frequently, if there is an indication that an asset may be impaired. If indications of impairment are present, the car- rying amount of the asset is reduced to its recov- erable amount, which is the higher of fair value less costs of disposal and its value in use. The recover- able amount is determined for the individual asset, unless the asset does not generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets, in which case the asset is tested as part of the cash-generating unit (“CGU”) to which the asset belongs. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. In assessing the value in use of an asset or CGU, the estimated future cash flows are discounted to their present value using a discount rate that reflects cur- rent market assessments of the time value of money and the risks specific to the asset or CGU. An impair- ment loss is recognized if the recoverable amount is lower than the carrying amount. Where an impairment loss for assets other than goodwill, subsequently no longer exists or has de- creased, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, but not in excess of the carrying amount that would have been recorded had no impairment loss been recognized. The reversal of an impairment loss is recognized in the consolidated income state- ment immediately. FINANCIAL INSTRUMENTS  PRESENTATION Current financial assets include trade receivables, receivables from financing activities, derivative fi- nancial instruments, other current financial assets and cash and cash equivalents. 323 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSInvestments and other financial assets include invest- ments accounted for using the equity method as well as other securities and non-current financial assets. Financial liabilities include debt (which primarily includes bonds, notes, asset-backed financing (se- curitizations) and borrowings from banks), trade payables and other financial liabilities, which mainly include derivative financial instruments. MEASUREMENT Financial assets, other than investments account- ed for using the equity method, and financial liabil- ities are measured in accordance with IFRS 9 - Fi- nancial Instruments. Except for investments accounted for using the equity method, the Group initially measures finan- cial assets at fair value plus, in the case of financial assets not measured at fair value through profit or loss, transaction costs. Equity instruments held by the Group are rec- ognized at fair value through profit or loss. When market prices are not directly available, the fair value is measured using appropriate valuation techniques (e.g. discounted cash flow analysis based on market information available at the bal- ance sheet date). Trade receivables and receivables from financ- ing activities are originated in the ordinary course of business and held within a business model with the objective to hold the receivables in order to collect contractual cash flows that meet the ‘solely pay- ments of principal and interest’ criterion under IFRS 9, therefore they are measured at amortized cost using the effective interest rate method. Receiv- ables with maturities greater than one year are dis- counted to present value. Assessments are made regularly as to whether there is any objective evidence that a financial asset or group of financial assets may be impaired. If any such evidence exists, an impairment loss is recog- nized within selling, general and administrative costs for trade receivables and within cost of sales for re- ceivables from financing activities. Under IFRS 9, a forward-looking expected credit loss model must be applied when assessing impairment. In making impairment assessments for trade receivables and receivables from financing activities that are with- in the scope of IFRS 16, the Group applies the sim- plified approach to estimate the lifetime expected credit losses and considers its historical credit loss experience, adjusted for forward-looking factors specific to the nature of the Group’s receivables and economic environment. For all other receivables from financing activi- ties, the Group applies the general approach, which requires the application of a three-stage model to assess whether there has been a significant in- crease in credit risk on the financial instrument since initial recognition. Based on an internal analy- sis performed by management, the loss allowance calculated for such receivables is not materially dif- ferent if calculated using the general approach or the simplified approach. Stage Description Time period for measurement of ECL Stage 1 A financial instrument that is not credit-impaired on initial recognition 12-month ECL Stage 2 A financial instrument with a significant increase in credit risk since initial Lifetime ECL recognition Stage 3 A financial instrument that is credit-impaired or has defaulted Lifetime ECL The Group considers a default to occur and a signif- icant increase in credit risk to occur when the coun- terparty fails to make contractual payments within a certain number of days of when they fall due. For example, for receivables from financing activities this typically occurs when the counterparty fails to make contractual payments within 60 days of when the related receivables fall due, while for trade re- ceivables this is assessed on a case by case basis. Receivables are written off when the counter- party fails to make contractual payments and there is no reasonable expectation of recovery, and in any circumstance no later than 360 days. When trade receivables or receivables from financing activities have been written off, the Company may continue to engage in enforcement actions to attempt to re- cover the receivables. Receivables from financing activities are generally secured on the title of cars or other guarantees. Financial liabilities, with the exception of derivative financial instruments, are measured at amortized cost using the effective interest rate method. DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial instruments are used for eco- nomic hedging purposes only in order to reduce financial risks and in particular, foreign curren- cy risks. Derivative financial instruments qualify for hedge accounting only when at the inception of the hedge there is formal designation and doc- umentation of the hedging relationship, the hedge is expected to be highly effective, its effectiveness can be reliably measured and it is highly effective throughout the financial reporting periods for which it is designated. All derivative financial instruments are mea- sured at fair value. 324 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FWhen derivative financial instruments qualify for hedge accounting, the following accounting treat- ments apply: CASH FLOW HEDGES Where a derivative financial instrument is desig- nated as a hedge of the exposure to variability in fu- ture cash flows of a recognized asset or liability or a highly probable forecasted transaction and could affect the consolidated income statement, the ef- fective portion of any gain or loss on the derivative financial instrument is recognized directly in other comprehensive income/(loss). The cumulative gain or loss is reclassified from other comprehensive in- come/(loss) to the consolidated income statement at the same time as the economic effect arising from the hedged item affects the consolidated income statement. The gain or loss associated with a hedge or part of a hedge that has become ineffective is recognized in the consolidated income statement immediately within net financial income/expenses. When a hedging instrument or hedge relationship is terminated but the hedged transaction is still ex- pected to occur, the cumulative gain or loss realized to the point of termination remains in other com- prehensive income/(loss) and is recognized in the consolidated income statement at the same time as the underlying transaction occurs. If the hedged transaction is no longer probable, the cumulative unrealized gain or loss held in other comprehensive income/(loss) is recognized in the consolidated in- come statement immediately. The Group does not use fair value hedges or hedges of a net investment. If hedge accounting cannot be applied, the gains or losses from the fair value measurement of deriv- ative financial instruments are recognized immedi- ately within financial expenses. In the case of a transfer of receivables, if the Group transfers substantially all the risks and rewards of ownership of the receivables, it derecognizes the receivables and separately recognizes as assets or liabilities any rights and obligations created or re- tained in the transfer. On derecognition of the re- ceivables, the difference between their carrying amount and the consideration received or receiv- able for the transfer of the receivables is recognized within cost of sales for receivables from financing activities and within financial income or financial ex- penses for trade receivables. TRADE RECEIVABLES Trade receivables are amounts due from clients for goods sold or services provided in the ordinary course of business. Trade receivables are recog- nized initially at fair value and subsequently mea- sured at amortized cost using the effective interest rate method, less any provision for allowances. INVENTORIES Inventories of raw materials, semi-finished products and finished goods are stated at the lower of cost and net realizable value, cost being determined on a first-in first-out (FIFO) basis. The measurement of inventories includes the direct costs of materials, la- bor and indirect costs (variable and fixed). Purchase costs include ancillary costs. Prototypes are recog- nized at their estimated realizable value, if lower than production cost. Provision is made for obsolete and slow-moving raw materials, finished goods, spare parts and other supplies based on their expected fu- ture use and realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs for sale and distribution.  TRANSFERS OF FINANCIAL ASSETS CASH AND CASH EQUIVALENTS The Group sells certain of its receivables from fi- nancing activities under securitization programs. Securitization transactions involve the sale of finan- cial receivables to a special purpose vehicle, which in turn finances the purchase of such financial re- ceivables by issuing asset-backed securities in the form of notes whose repayment of principal and in- terest depends on the cash flows generated by the related financial receivables. The receivables sold as part of securitization programs are consolidat- ed until collection from the customer as they do not meet the requirements for derecognition in accor- dance with IFRS 9. The Group may also sell certain of its trade re- ceivables through factoring transactions without recourse. The Group derecognizes the trade receiv- ables when, and only when, the contractual rights and risks to the cash flows arising from the related trade receivables are no longer held or the Group has transferred the financial assets. Cash and cash equivalents includes cash in hand, de- posits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.  EMPLOYEE BENEFITS DEFINED CONTRIBUTION PLANS Costs arising from defined contribution plans are expensed as incurred. DEFINED BENEFIT PLANS The Group’s net obligations are determined sepa- rately for each plan by estimating the present val- ue of future benefits that employees have earned in the current and prior periods, and deducting the fair value of any plan assets. The present value of the defined benefit obligation is measured using actu- 325 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSarial techniques and actuarial assumptions that are unbiased and mutually compatible and attributes benefits to periods in which the obligation to provide post-employment benefits arise by using the Pro- jected Unit Credit Method. The components of the defined benefit cost are recognized as follows: • the service costs are recognized in the consol- idated income statement by function and pre- sented in the relevant line items (cost of sales, selling, general and administrative costs, re- search and development costs, etc.); • the net interest on the defined benefit liability is recognized in the consolidated income state- ment as net financial income /(expenses), and is determined by multiplying the net liability/(asset) by the discount rate used to discount obligations taking into account the effect of contributions and benefit payments made during the year; and • the remeasurement components of the net ob- ligations, which comprise actuarial gains and losses and any change in the effect of the as- set ceiling are recognized immediately in other comprehensive income/(loss). These remea- surement components are not reclassified in the consolidated income statement in a subse- quent period. conditional only on a recipient’s continued service to the Company is measured using the share price at the grant date adjusted for the present value of fu- ture distributions which employees will not receive during the vesting period. Share-based compensation expense relating to the equity incentive plans is recognized over the service period within selling, general and admin- istrative costs or cost of sales in the consolidated income statement depending on the function of the employee, with an offsetting increase to equi- ty. Share-based compensation expense relating to commercial agreements with certain suppliers is recognized over the period in which the supplier’s services are received and classified within the con- solidated income statement depending on the func- tion of the supplier’s services, with an offsetting in- crease to equity. PROVISIONS Provisions are recognized when the Group has a present obligation, legal or constructive, as a result of a past event, it is probable that an outflow of re- sources embodying economic benefits will be re- quired to settle the obligation and a reliable estimate of the amount of the obligation can be made. OTHER LONG-TERM EMPLOYEE BENEFITS WARRANTY AND RECALL CAMPAIGNS PROVISION The Group’s obligations represent the present val- ue of future benefits that employees have earned in return for their service during the current and prior periods. Remeasurement components on oth- er long-term employee benefits are recognized in the consolidated income statement in the period in which they arise. SHARE-BASED COMPENSATION The Group has implemented equity incentive plans that provide for the granting of share-based com- pensation to the Chairman, the Chief Executive Of- ficer, all other members of the Ferrari Leadership Team and other key employees of the Group. The Group also provides share-based compensation as part of commercial agreements with certain suppli- ers. The share-based compensation arrangements are accounted for in accordance with IFRS 2 — Share-based Payment, which requires the Company to recognize share-based compensation expense based on fair value of awards granted. Compensa- tion expense for the equity-settled awards contain- ing market performance conditions is measured at the grant date fair value of the award using a Mon- te Carlo simulation model, which requires the input of subjective assumptions, including the expected volatility of the Company’s common stock, the div- idend yield, interest rates and a correlation coeffi- cient between the common stock and the relevant market index. The fair value of the awards which are All cars are sold with warranty coverage. The war- ranty coverage generally applies to defects that may become apparent within a certain period from the purchase of the car. The warranty provision is recognized at the time of the sale of the car, based on the present value of management’s estimate of the expected cost to ful- fill the obligations over the contractual warranty pe- riod. Estimates are principally based on the Group’s historical claims or costs experience and the cost of parts and services to be incurred in the activities. The costs related to these provisions are recog- nized within cost of sales at the time when they are probable and reasonably estimable. See “—Use of estimates” below for further details relating to recall campaigns. DEFERRED INCOME Deferred income relates to amounts received by the Group under various agreements, which are reliant on the future performance of a service or other act of the Group. Deferred income is recognized as net revenues when the Group has fulfilled its obligations under the terms of the various agreements. Range models (models belonging to the Ferrari product portfolio, excluding Special Series, Icona, limited edition supercars and one-off models) are sold with a scheduled maintenance program to en- sure that the cars are maintained to the highest stan- dards to meet the Group’s strict requirements for 326 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fperformance and safety. Amounts attributable to the maintenance program are not recognized as in- come immediately, but are deferred over the main- tenance program term. The amount of the deferred income related to this program is based on the esti- mated fair value of the service to be provided. ADVANCES Advances relate to amounts received from or billed to customers in advance of having delivered the related cars or provided the related services. The advances are recognized in net revenues when the cars are shipped or the services provided. REVENUE RECOGNITION Revenue is recognized when control over a product or service is transferred to a customer. Revenue is measured at the transaction price which is based on the amount of consideration that the Group expects to receive in exchange for transferring the prom- ised goods or services to the customer and excludes any sales incentives as well as taxes collected from customers that are remitted to government author- ities. The transaction price will include estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized will not occur. The Group enters into contracts that may include both products and services, which are gen- erally capable of being distinct and accounted for as separate performance obligations. The Group generates revenue from the sale of cars, spare parts and engines as well as from spon- sorship, commercial and brand activities. The Group accounts for a contract with a customer when there is a legally enforceable contract between the Group and the customer, the rights of the parties are iden- tified, the contract has commercial substance, and collectability of the contract consideration is prob- able. Payments from customers are typically due within 30 and 40 days of invoicing. The Group does not recognize any assets as- sociated with the incremental costs of obtaining a contract with a customer that are expected to be re- covered. The majority of revenue is recognized at a point-in-time or over a period of one year or less, and the Group applies the practical expedient to recog- nize the incremental costs of obtaining a contract as an expense when incurred if the amortization peri- od of the asset that would otherwise be recognized is one year or less. CARS, SPARE PARTS AND ENGINES The sales of cars, spare parts and engines have mul- tiple performance obligations that include products, services, or a combination of products and services as contracts may include maintenance programs and extended warranties that are separately priced or not separately priced. Contracts may also include variable consideration for discounts such as sales incentives and performance based bonuses and product returns. The Group offers incentives to its third-party dealers, which are designed to promote the sale of cars and parts, as well as a variety of other performance indicators, which may be qualitative or quantitative, such as quality service, customer satis- faction and preservation of the Ferrari brand, among others. The cost of incentives is estimated at the in- ception of a contract at the expected amount that will ultimately be paid and is recognized as a reduction to revenue generally at the time of the sale or when the dealer is expected to achieve the required perfor- mance if in relation to other performance indicators different from sales. Revenues recognized are limit- ed to the amount of consideration the Group expects to receive. The Group allocates the transaction price to the performance obligations based on the stand alone selling prices (SSP) for each obligation. When the SSP does not exist, the Group estimates the SSP based on the adjusted market approach. Revenues for the sale of cars, spare parts and engines are recognized at a point in time when con- trol of the cars, spare parts or engines is trans- ferred to the customer based on shipping terms, which generally corresponds to the date when the cars, spare parts and engines are released to the carrier responsible for transportation to deal- ers or Maserati. Revenues relating to the mainte- nance program are recognized over time based on the input method of measuring progress towards complete satisfaction of the related performance obligation, calculated as a proportion of overall revenues expected during the maintenance period equal to the ratio of costs incurred in the reporting period compared to the overall costs to be incurred during the maintenance period. Revenues relating to the extended warranties are recognized on a straight-line basis over the extended warranty pe- riod. Revenues from the supply of engines and re- lated services to other Formula 1 racing teams are recognized over time on a time and materials basis when the services are provided. Management has exercised judgment in deter- mining performance obligations, variable consider- ation, allocation of transaction price and the timing of revenue recognition. SPONSORSHIP, COMMERCIAL AND BRAND ACTIVITIES Revenues from sponsorship agreements in connec- tion with our participation in racing competitions are generally recognized ratably over the contract term as the customer benefits from the service throughout the service period. Revenues from sponsorship agreements that contain variable con- sideration based on the performance of the Group’s racing teams are estimated and recognized over the relevant period to the extent that it is highly probable that a significant reversal in the amount of the cu- mulative revenue recognized will not occur, which is 327 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTStypically when it is considered highly probable that the related conditions associated with the variable consideration will be achieved. Revenues from commercial activities primarily relate to the revenues from participating in the For- mula 1 World Championship. The revenues attribut- able to each racing team are governed by a specific agreement and depend upon, among other factors, the prior year ranking of each of the racing teams. Revenues of the commercial activities are recog- nized ratably over the contract term. Revenues from brand licensing agreements where the customer has a right to access the Group’s brands or the contract includes minimum guaranteed payments are recognized on a straight- line basis over the contract term. Licensing reve- nues in excess of the minimum guaranteed pay- ments are recognized when the related conditions are satisfied. Revenues from sales-based licensing agreements are recognized when the sales occur. Management has exercised judgment in deter- mining variable consideration. OTHER REVENUES Interest income generated by our financial service activities from the provision of client and dealer fi- nancing is reported within revenues using the effec- tive interest rate method and not within net financial income/expenses. COST OF SALES Cost of sales comprises expenses incurred in the manufacturing and distribution of cars and parts (including the engines rented to other Formula 1 rac- ing teams), of which, cost of materials, components and labor costs are the most significant portion. The remaining costs principally include depreciation, amortization, insurance and transportation costs. Cost of sales also includes warranty and product-re- lated costs, which are estimated and recorded at the time of sale of the car. Expenses which are directly attributable to the financial services companies, including the interest expenses related to their financing as a whole and provisions for risks and write-downs of assets, are also reported in cost of sales. OTHER EXPENSES AND OTHER INCOME Other expenses consist of miscellaneous costs which cannot be allocated to specific functional ar- eas, such as indirect taxes, accruals for provisions not attributable to cost of sales or selling, general and administrative costs, and other miscellaneous expenses, including marketing expenses incurred on behalf of our third-party dealers. Other income consists of miscellaneous income that is not directly attributable to the sale of goods or services, such as gains on the disposal of proper- ty plant and equipment, the release of certain provi- sions originally recognized as other expenses, rental income and other miscellaneous income. TAXES Income taxes include all taxes based upon the tax- able profits of the Group. Current and deferred tax- es are recognized as income or expense and are in- cluded in the consolidated income statement for the period, except tax arising from (i)  a transaction or event which is recognized, in the same or a different period, either in other comprehensive income/(loss) or directly in equity, or (ii) a business combination. Deferred taxes are accounted using the balance sheet method. Deferred tax liabilities are recognized for all taxable temporary differences between the carrying amounts of assets or liabilities and their tax base, except to the extent that the deferred tax liabil- ities arise from the initial recognition of goodwill or the initial recognition of an asset or liability in a trans- action which is not a business combination and at the time of the transaction, affects neither account- ing profit nor taxable profit. Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized, unless the deferred tax assets arise from the initial recognition of an asset or liability in a transaction that is not a business com- bination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax assets and liabilities are measured at the substantively enacted tax rates in the respec- tive jurisdictions in which the Group operates that are expected to apply to the period when the asset is realized or liability is settled. Any remeasurements to deferred tax assets and liabilities as a result of changes in substantially enacted tax rates are rec- ognized in the consolidated income statement. The recoverability of deferred tax assets is de- pendent on the Group’s ability to generate sufficient future taxable income in the period in which it is as- sumed that the deductible temporary differences reverse and tax losses carried forward can be uti- lized. In making this assessment, the Group consid- ers future taxable income arising on the most re- cent budgets and plans, prepared by using the same criteria described for testing the impairment of as- sets and goodwill, moreover, it estimates the impact of the reversal of taxable temporary differences on earnings and it also considers the period over which these assets could be recovered. The carry- ing amount of deferred tax assets is reduced to the extent that it is not probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax assets to be utilized. The car- rying amount of deferred tax assets is reviewed at each reporting date. The Group recognizes deferred tax liabilities as- sociated with the existence of a subsidiary’s undis- tributed profits, except when it is able to control the timing of the reversal of the temporary difference 328 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fand it is probable that this temporary difference will not reverse in the foreseeable future. The Group recognizes deferred tax assets associated with the deductible temporary differences on investments in subsidiaries only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be avail- able against which the temporary difference can be utilized. Deferred tax assets relating to the carry-for- ward of unused tax losses and tax credits, as well as those arising from deductible temporary differ- ences, are recognized to the extent that it is proba- ble that future profits will be available against which they can be utilized. Current income taxes and deferred taxes are offset when they relate to the same taxation author- ity and there is a legally enforceable right of offset. Imposta Regionale sulle Attività Produttive (“IRAP”) is recognized within income tax expense. IRAP is calculated on a measure of income defined by the Italian Civil Code as the difference between operating revenues and costs, before financial in- come and expense, and in particular before the cost of fixed-term employees, credit losses and any inter- est included in lease payments. IRAP is applied on the tax base at 3.9 percent for the years ended Decem- ber 31, 2023, 2022 and 2021. Tax uncertainties are accounted for in accor- dance with IFRIC 23. Other taxes not based on income, such as prop- erty taxes and capital taxes, are included in other ex- penses, net. DIVIDENDS Dividends payable by the Group are reported as a change in equity in the period in which they are ap- proved by shareholders or the Board of Directors as applicable under local rules and regulations. ROUNDING OF AMOUNTS All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand Euro unless otherwise stated. SEGMENT REPORTING The Group has determined that it has one operating and one reportable segment based on the informa- tion reviewed by the Board of Directors (the Group’s “Chief Operating Decision Maker” as defined in IFRS 8 — Operating Segments) in making decisions re- garding the allocation of resources and to assess performance. USE OF ESTIMATES AND JUDGMENTS The Consolidated Financial Statements are prepared in accordance with IFRS, which require the use of estimates, judgments and assumptions that affect the carrying amount of assets and liabilities, the dis- closure of contingent assets and liabilities and the amounts of income and expenses recognized. The estimates and associated assumptions are based on elements that are known when the financial state- ments are prepared, on historical experience and on any other factors that are considered to be relevant. Estimates and underlying assumptions are re- viewed periodically and continuously by the Group. If the items subject to estimates do not perform as as- sumed, then the actual results could differ from the estimates, which would require adjustments. The effects of any changes in estimates are recognized in the consolidated income statement in the period in which the changes are made, or prospectively in future periods. The most significant estimates that could be exposed to the management judgment are described below. MAINTENANCE PROGRAMS AND EXTENDED WARRANTIES The Group’s new cars are sold with a scheduled maintenance program to ensure that the cars are maintained to the highest standards to meet the Group’s strict requirements for performance and safety. Amounts attributable to the maintenance programs are not recognized as income imme- diately, but are recognized over the maintenance program term based on the input method of mea- suring progress towards complete satisfaction of the related performance obligation, calculated as a proportion of overall revenues expected during the maintenance period equal to the ratio of costs incurred in the reporting period compared to the overall costs to be incurred during the maintenance period. The amount of the deferred income related to this program is based on the estimated fair value of the service to be provided. The Group also offers various extended warranty programs to customers that provide additional coverage beyond the war- ranty period required by applicable law or includ- ed with all new car sales. Revenues relating to the extended warranties are recognized on a straight- line basis over the extended warranty period. Man- agement has exercised judgment in determining performance obligations, variable consideration, allocation of the transaction price and the timing of revenue recognition in relation to its maintenance programs and extended warranties. For additional disclosures required by IFRS 8, RECALL CAMPAIGNS see Note 31 “Entity-Wide Disclosures”. The Group periodically initiates voluntary service actions to address various client satisfaction, safety and emissions issues related to cars sold. Included in the reserve is the estimated cost of these services 329 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSand recall actions. Considering the nature of the re- call campaigns, in certain circumstances manage- ment may exercise judgment in determining the re- lated provisions. The estimated future costs of these actions are based primarily on historical experience and the cost of parts and services to be incurred in the specified activities, and are recognized at the time when they are probable and reasonably esti- mable. Estimates of the future costs of these actions are inevitably imprecise due to several uncertain- ties, including the number of cars affected by a ser- vice or recall action. It is reasonably possible that the ultimate cost of these service and recall actions may require the Group to make expenditures in excess of (or less than) established reserves over an extended period of time and the estimates are periodically re- viewed during the year. Due to the uncertainty and potential volatility of these estimated factors, chang- es in the assumptions used could affect the results of operations. CLIMATE-RELATED MATTERS Global climate change is resulting, and is expected to continue to result, in natural disasters and extreme weather occurring more frequently or with greater intensity, including droughts, wildfires, storms, rising sea-levels, flooding, heat waves and cold waves. Such extreme events are driving changes in market dy- namics, stakeholder expectations, local, national and international climate change policies and regulations. The global automotive industry in particular is currently experiencing significant developments due to an increased focus on climate change and evolving regulatory requirements and technolog- ical changes relating to fuel efficiency, electrifica- tion and greenhouse gas emissions, among others, which are also impacting the luxury performance sports car market in which the Group operates. As these regulatory developments and techno- logical changes continue to evolve, the Group’s strat- egies, operations and business plans may change and the recoverability of the Group’s assets could be impacted, including the recoverability of goodwill, capitalized development costs and property, plant and equipment. Goodwill The Group’s goodwill amounted to €785,182 thou- sand at December 31, 2023 and December 31, 2022. As required by IFRS, an annual impairment test must be performed for goodwill, which may require man- agement to exercise judgment in determining ex- pected future cash flows. Based on the impairment test performed by management, the recoverable amount of goodwill was significantly higher than its carrying amount for the years ended December 31, 2022, 2021 and 2020. Furthermore, the exclusivity of the Group’s business, its historical profitability and its future earnings prospects indicate that the carrying amount of the goodwill will continue to be recoverable even in the event of difficult economic and market conditions, including those that may be caused by regulatory developments or climate-re- lated matters. For additional information relating to the goodwill test performed, see Note 13 “Goodwill”. Non-current assets with definite useful lives The Group’s non-current assets (excluding goodwill) primarily include intangible assets, which primarily relate to development costs, and property, plant and equipment. At December 31, 2023 and December 31, 2022, the Group’s intangible assets amounted to €1,419,699 thousand and €1,307,388 thousand, respectively (of which €1,369,895 thousand and €1,264,467 thousand related to development costs), and the Group’s property, plant and equipment amounted to €1,575,200 thousand and €1,457,825 thousand, respectively. The Group makes signifi- cant investments for the development of its existing and future product portfolio, and capitalized devel- opment costs of €448,380 thousand and €416,368 thousand for the years ended December 31, 2023 and 2022, respectively. These costs were capitalized in accordance with the criteria in IAS 38 - Intangible Assets, including, among others: (i) the costs can be measured reliably, (ii) the technical feasibility of the product, estimated volumes and expected pricing all support the view that the development expendi- ture will generate future economic benefits, based primarily on information specific to business initia- tives underlying the Group’s business plans, and (iii) the Company has the intention to complete the development and the ability to use the related in- tangible assets. Management may use judgment in distinguishing between research phases and devel- opment phases, including as a result of regulatory developments. For the years ended December 31, 2023, 2022 and 2021, no impairment indicators were identified and the Group did not recognize any im- pairment charges for non-current assets with defi- nite useful lives. Provisions The Group sells its cars around the world and is sub- ject to a variety of laws and regulations relating to the environment, and in particular, to the emissions of its cars. The group’s cars, together with the en- gines that power them, must comply with extensive regional, national and local laws and regulations, and industry self-regulations (including those that regu- late vehicle safety). The Group is currently benefit- ing from certain regulatory exemptions because it qualifies as a small vehicle manufacturer or similar designation in certain jurisdictions where it sells cars. These exemptions provide a range of benefits, from less stringent emissions caps and compliance date extensions, to exemptions from zero emission vehicle production requirements, which may re- quire management to use judgment. The Group rec- ognized provisions for environmental risks based 330 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fon management’s best estimates of the future cash outflows that will be required to settle the Group’s related obligations. For additional information see Note 23 “Provisions”. Other areas requiring estimates in the prepara- tion of the consolidated financial statements include the following: revenue recognition, product warran- ty liabilities, recoverability of goodwill, recoverabil- ity of non-current assets with definite useful lives, share-based compensation, litigation and contin- gent liabilities, and current and deferred taxes. 331 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS(3) SCOPE OF CONSOLIDATION Ferrari N.V. is the parent company of the Group and it holds, directly and indirectly, interests in the Group’s main operating companies. The Group’s scope of consolidation at December 31, 2023 and 2022 was as follows: Name Country Nature of business Shares Shares Shares Shares held by the held by NCI held by the held by NCI Group Group At December 31, 2023 At December 31, 2022 Directly held interests Ferrari S.p.A. Italy New Business 33 S.p.A. (1) Italy Indirectly held through Ferrari S.p.A. Ferrari North America Inc. USA Ferrari Japan KK Japan Ferrari Australasia Pty Australia Limited Ferrari International Cars China Trading (Shanghai) Co. L.t.d. Ferrari (HK) Limited Hong Kong Engineering, manufacturing and sales Engineering, manufacturing and sales Importer and distributor Importer and distributor Importer and distributor Importer and distributor Importer and distributor Ferrari Far East Pte Limited Singapore Service company Ferrari Management China Service company Consulting (Shanghai) Co. L.t.d. 100% —% 100% —% 100% —% 100% —% 100% —% 100% 100% —% 100% 100% —% 100% —% —% —% 80% 20% 80% 20% 100% —% 100% 100% 100% —% —% 100% 100% Ferrari South West Europe France Service company 100% —% 100% S.a.r.l. Ferrari Central Europe Germany Service company 100% —% 100% GmbH G.S.A. S.A. in liquidation Switzerland Service company Mugello Circuit S.p.A. Italy Racetrack management 100% 100% —% —% 100% 100% Ferrari Financial Services, USA Financial services 100% —% 100% Inc. Indirectly held through other Group entities Ferrari Auto Securitization Transaction LLC (2) USA Ferrari Auto Securitization Transaction - Lease, LLC (2) USA Ferrari Auto Securitization Transaction - Select, LLC (2) USA Ferrari Financial Services Titling Trust (2) Ferrari Lifestyle North America, Inc. (3)(4) USA USA Financial services 100% —% 100% Financial services 100% —% 100% Financial services 100% —% 100% Financial services 100% —% 100% Retail 100% —% 100% 332 —% —% —% —% —% —% —% —% —% —% —% —% —% FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(1) New Business 33 S.p.A. was consolidated by the Group (3) Shareholding held by Ferrari North America Inc. starting in 2022, which is when it started operational (4) Effective as of January 12, 2024, the company changed its activities. name from 410 Park Display, Inc to Ferrari Lifestyle North (2) Shareholding held by Ferrari Financial Services Inc. America, Inc. NON-CONTROLLING INTERESTS The non-controlling interests at December 31, 2023 and 2022 and the net profit attributable to non-controlling interests for the years ended De- cember 31, 2023, 2022 and 2021 relate to Ferrari International Cars Trad- ing (Shanghai) Co. L.t.d. (“FICTS”), in which the Group holds an 80% interest. Equity attributable to non-controlling interests At December 31, 2023 (€ thousand) 9,734 2022 9,630 For the years ended December 31, 2023 2022 2021 (€ thousand) Net profit attributable to non-controlling interests 5,409 6,680 2,369 The non-controlling interests in FICTS are not considered to be signifi- cant to the Group for the periods presented in these Consolidated Finan- cial Statements. (4) NET REVENUES Net revenues are as follows: For the years ended December 31, 2023 2022 2021 (€ thousand) Revenues from: Cars and spare parts (1) 5,119,181 4,321,120 3,552,838 Sponsorship, commercial and brand (1) Engines Other 571,759 126,748 152,458 498,861 155,342 119,931 450,860 189,432 77,764 Total net revenues 5,970,146 5,095,254 4,270,894 (1) Starting in 2023, sponsorship revenues relating to the WEC and other racing activities of €20,362 thousand Group’s WEC and other racing activities are presented and €20,281 thousand for the years ended December within sponsorship, commercial and brand as a result of 31, 2022 and 2021, respectively, which were previously the increased relevance of those activities for the Ferrari presented within cars and spare parts as they were brand in 2023, primarily in connection with the return of treated as incidental to the sale of our track cars, have been Ferrari to the top-tier “Hypercar” category of the FIA WEC reclassified retrospectively to sponsorship, commercial after 50 years. As a result, sponsorship revenues from and brand to conform to the current presentation. 333 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSOther net revenues primarily relate to financial services activities, man- agement of the Mugello racetrack and other sports-related activities. Interest and other financial income from financial services activi- ties included within net revenues in 2023, 2022 and 2021 amounted to €99,661 thousand, €69,389 thousand and €55,043 thousand, respectively. (5) COST OF SALES Cost of sales in 2023, 2022 and 2021 amounted to €2,995,877 thousand, €2,648,953 thousand and €2,080,613 thousand, respectively, consisting mainly of the cost of materials, components and labor related to the man- ufacturing and distribution of cars and spare parts. Cost of sales also include depreciation and amortization, insurance, transportation costs, and warranty and product-liability related costs, as well as production costs for engines sold to Maserati and engines rented to other Formula 1 racing teams. Interest and other financial expenses from financial services activities included within cost of sales in 2023, 2022 and 2021 amounted to €60,808 thousand, €27,145 thousand and €16,639 thousand, respectively. (6) SELLING, GENERAL AND ADMINISTRATIVE COSTS Selling, general and administrative costs are as follows: Selling costs General and administrative costs Total selling, general and administrative costs For the years ended December 31, 2023 2022 2021 (€ thousand) 236,443 226,137 462,580 226,988 200,986 427,974 168,466 179,558 348,024 Selling costs consist mainly of costs for sales personnel, marketing and events, and retail stores. Costs for marketing and events primarily re- late to corporate events, trade shows and media and client events for the launch of new models, lifestyle events (including the use of digital solu- tions), as well as indirect marketing costs incurred mainly through the Formula 1 racing team, Scuderia Ferrari. General and administrative costs consist mainly of administration and other general expenses that are not directly attributable to manufactur- ing, sales or research and development activities, including for personnel and the continuous development of the Group’s digital infrastructure. 334 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(7) RESEARCH AND DEVELOPMENT COSTS Research and development costs are as follows: Research and development costs expensed during the year Amortization of capitalized development costs Total research and development costs For the years ended December 31, 2023 2022 2021 (€ thousand) 538,903 342,656 881,559 517,842 257,730 775,572 573,632 194,472 768,104 Research and development costs expensed during the period primari- ly relate to research and development activities for Formula 1 racing as well as development activities to support the innovation of our product portfolio and components, in particular, in relation to electric and other new technologies. Amortization of capitalized development costs have increased in recent years as a result of our strategy to update and broad- en our product range and significantly increase our efforts relating to innovation and advanced technologies, including hybrid and electric. Research and development costs for the year ended December 31, 2022 and, to a lesser extent, for the year December 31, 2023 are recog- nized net of technology-related government incentives. (8) OTHER EXPENSES, NET Other expenses, net are as follows: Other income Other expenses Total other expenses, net For the years ended December 31, 2023 2022 2021 10,958 29,856 18,898 (€ thousand) 12,446 33,994 21,548 8,105 13,666 5,561 Other expenses mainly related to indirect taxes, provisions, and other miscellaneous expenses and other income mainly related to rental in- come, gains on the disposal of property, plant and equipment and other miscellaneous income. 335 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS(9) FINANCIAL EXPENSES AND FINANCIAL INCOME Financial expenses and financial income are as follows: Foreign exchange gains Interest income Other financial income Financial income Foreign exchange losses Interest expenses Other financial expenses Financial expenses Financial expenses, net For the years ended December 31, 2023 2022 2021 (€ thousand) 91,019 25,813 15,487 132,319 111,216 29,258 6,860 147,334 15,015 78,674 4,150 1,034 83,858 104,597 25,489 3,388 133,474 49,616 37,860 1,579 3,560 42,999 49,267 23,669 3,320 76,256 33,257 Financial expenses primarily relate to foreign exchange losses, including the net costs of hedging, and interest expenses on debt. Financial income primarily relates to foreign exchange gains, inter- est income on cash and cash equivalents and for 2023, also to gains of €7,940 thousand realized on the partial cash tender executed during the third quarter of 2023 on a bond due in 2025. For additional information see Note 24 “Debt”. Interest and other financial income, and interest expenses and other financial charges, from financial services activities are recognized with- in net revenues and cost of sales, respectively. (10) INCOME TAXES Income tax expense is as follows: Current tax expense Deferred tax benefit Taxes relating to prior years Total income tax expense For the years ended December 31, 2023 2022 2021 347,162 (4,541) 2,276 (€ thousand) 269,924 (30,178) (1,274) 218,540 (12,001) 2,556 344,897 238,472 209,095 The Italian Group’s entities participate in a group Italian tax consolidation under Ferrari N.V. Income tax expense amounted to €344,897 thousand, €238,472 thou- sand and €209,095 thousand for the years ended December 31, 2023, 2022 and 2021, respectively. 336 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FIncome taxes for the years ended December 31, 2023, 2022 and 2021 benefited from the application of the Patent Box tax regime by Article 1, par. 37-45 of Law No. 190 of December 23, 2014, as amended and supplemented from time to time, which provides tax benefits for companies that generate income through the use of intangible assets. Starting in 2020 the Group has implemented the Patent Box tax regime, covering the period from 2020 to the con- clusion of this regime in 2024, with the recognition of the associated tax benefit distributed over three equal annual installments. The Law Decree (Decree) n. 146 enacted by the Italian authorities, effective from October 22, 2021 and as amended by the 2022 Italian budget law, re- places the previous Patent Box tax regime with a new one that provides a 110% “super tax deduction” for certain costs related to eligible intangible assets. The Decree also outlines a transitional procedure for the coexistence of both regimes during their ap- plicable periods. The table below provides a reconciliation be- tween actual income tax expense and the theoret- ical income tax expense, calculated on the basis of the applicable corporate tax rate in effect in Italy, which was 24.0 percent for each of the years ended December 31, 2023, 2022 and 2021. Profit before taxes Theoretical income tax rate For the years ended December 31, 2023 2022 2021 (€ thousand) 1,602,354 1,177,766 1,042,231 24.0% 24.0% 24.0% Theoretical income tax expense 384,565 282,664 250,136 Tax effect on: Permanent and other differences Italian Regional Income Tax (IRAP) Effect of changes in tax rates and tax regulations Differences between foreign tax rates and the theoretical Italian tax rate and tax holidays Taxes relating to prior years Withholding tax on earnings Income tax expense Effective tax rate (95,836) 48,912 961 2,156 2,276 1,863 (85,736) 39,446 553 1,945 (1,274) 875 (79,267) 32,422 633 2,077 2,556 539 344,897 238,472 209,095 21.5% 20.2% 20.1% The effective tax rate was 21.5 percent, 20.2 percent and 20.1 percent for the years ended December 31, 2023, 2022 and 2021, respectively. The Patent Box benefit relating to 2023, 2022 and 2021 is included within “permanent and other differences” in the tax rate reconciliation above. Imposta Regionale sulle Attività Produttive (“IRAP”) (current and deferred) in 2023 and 2022 amounted to €48,912 thousand and €39,446 thou- sand, respectively. IRAP is only applicable to Italian entities and is calculated on a measure of income defined by the Italian Civil Code as the difference be- tween operating revenues and costs, before finan- cial income and expense, and in particular before the cost of fixed-term employees, credit losses and any interest included in lease payments. IRAP is cal- culated using financial information prepared under Italian accounting standards. IRAP is applied on the tax base at 3.9 percent for each of the years ended December 31, 2023, 2022 and 2021. The analysis of deferred tax assets and deferred tax liabilities at December 31, 2023 and 2022, is as follows: 337 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSDeferred tax assets: To be recovered after 12 months To be recovered within 12 months Deferred tax liabilities: To be realized after 12 months To be realized within 12 months Net deferred tax assets At December 31, 2023 (€ thousand) 128,110 89,443 217,553 (100,865) (35,981) (136,846) 80,707 2022 107,252 96,130 203,382 (86,160) (40,347) (126,507) 76,875 The movements in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, are as follows: At December 31, Recognized in 2022 consolidated Charged to equity  income statement  (€ thousand) Translation At December 31, differences and other changes  2023 Deferred tax assets arising on: Provisions Deferred income Employee benefits Foreign currency exchange rate differences Inventory obsolescence Allowances for doubtful accounts Depreciation Trademark step-up Patent box Other 120,279 51,635 2,665 3,439 100,835 5,223 17,533 85,374 78,381 14,844 Total deferred tax assets 480,208 Deferred tax liabilities arising on: 11,121 — — 388 19,305 (166) 264 (6,696) 15,887 2,149 42,252 Depreciation (5,057) 1,507 Capitalization of development costs Employee benefits Foreign currency exchange rate differences Cash flow hedge reserve Tax on undistributed earnings Other (355,574) (29,683) (1,510) (1,160) (16,171) (10,578) 26 (1,520) (8,281) (13,283) 240 338 — — (52) — — — — — — — (52) — — — — — — — — — — (220) 3 (15) — — (2,560) (2,792) 92 — — — — — 131,400 51,635 2,613 3,827 119,920 5,060 17,782 78,678 94,268 14,433 519,616 (3,458) (385,257) (1,484) (2,680) (9,768) (18,859) (4,360) (17,403) — 6,403 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FTotal deferred tax liabilities (403,333) (37,711) Total net deferred tax assets/ 76,875 4,541 (liabilities) 6,403 6,351 (4,268) (438,909) (7,060) 80,707 At December 31, Recognized in 2021 consolidated Charged  to equity  income statement (€ thousand) Translation At December 31, differences and other changes  2022 Deferred tax assets arising on: Provisions 103,981 16,556 Deferred income Employee benefits Foreign currency exchange rate differences Cash flow hedge reserve Inventory obsolescence Allowances for doubtful accounts Depreciation Trademark step-up Patent box Other 51,635 3,041 610 8,455 69,107 5,178 17,555 84,537 65,693 14,328 — — 2,830 — — (376) — — (8,455) 31,648 50 (15) 837 12,688 575 — — — — — — Total deferred tax assets 424,120 65,169 (8,831) Deferred tax liabilities arising on: Depreciation (6,781) 2,076 Capitalization of development costs Employee benefits Foreign currency exchange rate differences Cash flow hedge reserve Tax on undistributed earnings Other (311,438) (44,134) (1,053) (526) — (17,404) (457) (634) — 6,826 (14,134) 1,332 — — — — (16,171) — — Total deferred tax liabilities (351,336) (34,991) (16,171) (258) 120,279 — — (1) — 80 (5) (7) — — (59) (250) (352) (2) — — — — 51,635 2,665 3,439 — 100,835 5,223 17,533 85,374 78,381 14,844 480,208 (5,057) (355,574) (1,510) (1,160) (16,171) (10,578) (481) (835) (13,283) (403,333) Total net deferred tax assets/ 72,784 30,178 (25,002) (1,085) 76,875 (liabilities) aggregate amount of temporary differences related to remaining distributable earnings of the Group’s subsidiaries where deferred tax liabilities have not been recognized amounted to €251,029  thousand (€268,923 thousand at December 31, 2022). The decision to recognize deferred tax assets is made for each company in the Group by assessing whether the conditions exist for the future recover- ability of such assets by taking into account the ba- sis of the most recent forecasts from budgets and business plans. Deferred taxes on the undistributed earnings of subsidiaries have not been recognized, except in cases where it is probable the distribution will occur in the foreseeable future. At December 31, 2023, the 339 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS(11) OTHER INFORMATION BY NATURE Personnel costs in 2023, 2022 and 2021 amount- ed to €575,215 thousand, €527,316 thousand and €483,747 thousand, respectively. These amounts in- clude costs that were capitalized in connection with product development activities. In 2023, 2022 and 2021 the Group had an average number of employ- ees of is 4,960, 4,691 and 4,571, respectively. Depreciation amounted to €290,204 thousand, €259,849 thousand and €230,097 thousand for the years ended December 31, 2023, 2022 and 2021, re- spectively, and amortization amounted to €372,101 thousand, €286,376 thousand and €225,892  thou- sand for the years ended December 31, 2023, 2022 and 2021, respectively. (12) EARNINGS PER SHARE BASIC EARNINGS PER SHARE Basic earnings per share is calculated by dividing the profit attributable to equity holders of Ferrari by the weighted average number of common shares issued and outstanding during the period. The following table provides the amounts used in the calculation of basic earnings per share for the years ended December 31, 2023, 2022 and 2021: Profit attributable to owners of the Company € thousand 1,252,048 Weighted average number of common shares for thousand 181,220 basic earnings per common share 2023 For the years ended December 31, 2022 932,614 182,836 2021 830,767 184,446 Basic earnings per common share € 6.91 5.11 4.50 DILUTED EARNINGS PER SHARE For the years ended December 31, 2023, 2022 and 2021, the weighted average number of shares for diluted earnings per share was increased to take into consideration the theoretical effect of the potential common shares that would be issued for the Group’s equity incentive plans (as- suming 100 percent of the target awards vested). See Note 21 “Share- Based Compensation” for additional details related to the Group’s equity incentive plans. The following table provides the amounts used in the calculation of diluted earnings per share for the years ended December 31, 2023, 2022 and 2021: Profit attributable to owners of the Company € thousand 1,252,048 Weighted average number of common shares for thousand 181,511 diluted earnings per common share 2023 2022 932,614 183,121 2021 830,767 184,771 Diluted earnings per common share € 6.90 5.09 4.50 For the years ended December 31, 340 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FThe following table provides a reconciliation from the weighted average number of common shares for basic earnings per share to the weighted average number of common shares for diluted earnings per share. Number of shares 2023 2022 2021 Weighted average number of common shares for basic earnings 181,220 182,836 184,446 For the years ended December 31, per share Adjustments for calculation of diluted earnings per share: Share-based compensation 291 285 325 Weighted average number of common shares for diluted 181,511 183,121 184,771 earnings per share (8.10 percent in 2022 and 6.84 percent in 2021). The WACC used reflects the current market assessment of the time value of money for the period being con- sidered and the risks specific to the CGU under con- sideration. The increase in the WACC between 2021 and 2023 is primarily the result of a higher risk free rate driven by central banks raising interest rates in several regions where the Group operates, as well as a higher equity risk premium driven by market factors and conditions. The recoverable amount of the CGU was significantly higher than its carrying amount. Fur- thermore, the exclusivity of the business, its histor- ical profitability and its future earnings prospects indicate that the carrying amount of the goodwill will continue to be recoverable, even in the event of diffi- cult economic and market conditions. (13) GOODWILL At December 31, 2023 and 2022 goodwill amounted to €785,182 thousand. In accordance with IAS 36, goodwill is not amor- tized and is tested for impairment annually, or more frequently if facts or circumstances indicate that the asset may be impaired. Impairment testing is performed by comparing the carrying amount and the recoverable amount of the CGU. The recover- able amount of the CGU is the higher of its fair value less costs of disposal and its value in use. The assumptions used in this process represent management’s best estimate for the period under consideration. The estimate of the value in use of the CGU for purposes of performing the annual impair- ment test was based on the following assumptions: The expected future cash flows covering the period from 2024 through 2027 have been de- rived from the Ferrari business plan. In particular the estimate considers expected EBITDA adjusted to reflect the expected capital expenditure. These cash flows relate to the CGU in its condition when preparing the consolidated financial statements and exclude the estimated cash flows that might arise from restructuring plans or other structur- al changes. Expected volumes and sales mix used for estimating the future cash flows are based on assumptions that are considered reasonable and sustainable and represent the best estimate of ex- pected conditions regarding market trends for the CGU over the period considered. The expected future cash flows include a nor- malized terminal period used to estimate the future results beyond the time period explicitly considered, which were calculated by using the specific medi- um/long-term growth rate for the sector equal to 2.0 percent in 2023 (2.0 percent in 2022 and 2021). The expected future cash flows have been es- timated in Euro, and discounted using a post-tax discount rate appropriate for that currency, deter- mined by using a base WACC of 9.21 percent in 2023 341 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS (14) INTANGIBLE ASSETS Intangible assets are as follows: Externally Development Patents, Other Total acquired costs concessions intangible development internally and licenses assets costs generated 2,065,450 862,015 257,889 51,620 3,236,974 (€ thousand) 270,329 146,039 30,566 9,960 456,894 (962) (350) — — — — — 2,924 — — (1,312) (2,924) 9 — 9 Gross carrying amount at December 31, 2021 Additions Divestitures Reclassifications Translation differences and other movements Balance at December 31, 2022 2,334,817 1,007,704 291,379 58,665 3,692,565 Additions Divestitures Reclassifications Translation differences and other movements 272,975 175,405 23,849 — — — — 5,558 (296) — 3,399 (42) 14,919 (2,564) (3,399) 167 487,148 (2,564) 5,558 (171) Balance at December 31, 2023 2,607,792 1,188,371 318,585 67,788 4,182,536 Accumulated amortization at 1,320,578 499,746 231,842 46,635 2,098,801 December 31, 2021 Amortization 189,546 68,184 27,153 1,493 286,376 Balance at December 31, 2022 1,510,124 567,930 258,995 48,128 2,385,177 Amortization Reclassification Translation differences and other movements 250,033 — — 92,623 5,558 — 27,923 (4,283) (7) 1,522 4,283 8 372,101 5,558 1 Balance at December 31, 2023 1,760,157 666,111 282,628 53,941 2,762,837 Carrying amount at: December 31, 2021 744,872 362,269 December 31, 2022 824,693 439,774 December 31, 2023 847,635 522,260 26,047 32,384 35,957 4,985 1,138,173 10,537 1,307,388 13,847 1,419,699 Additions were primarily attributable to externally acquired and internal- ly generated development costs relating to existing and new models. 342 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(15) PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are as follows: Gross carrying amount at December 31, 2021 Additions Divestitures Land Industrial Plant, buildings machinery Other assets and equipment (€ thousand) Advances and assets under construction Total 50,056 486,677 2,766,723 233,094 318,900 3,855,450 8,287 10,155 154,008 26,479 167,645 366,574 — (3,805) (15,388) (6,018) (154) (25,365) Reclassifications 73,631 4,691 165,210 4,322 (247,854) — Translation differences and other 16 334 (19) 796 77 1,204 movements Balance at December 31, 2022 131,990 498,052 3,070,534 258,673 238,614 4,197,863 Additions Divestitures 2,014 29,948 113,282 36,416 242,155 423,815 — (12,935) (40,270) (25,030) (369) (78,604) Reclassifications 17,235 9,132 62,236 (2,303) (88,603) (2,303) Translation differences and other (10) (1,050) (49) (2,511) (5) (3,625) movements Balance at December 31, 2023 151,229 523,147 3,205,733 265,245 391,792 4,537,146 Accumulated amortization at December 31, 2021 Depreciation Divestitures Translation differences Balance at December 31, 2022 Depreciation Divestitures Translation differences and other movements Balance at December 31, 2023 Carrying amount at: — — — — — — — — — 201,845 2,141,624 158,816 — 2,502,285 19,405 216,661 23,783 (1,983) (14,921) (5,921) 109 (39) 659 219,376 2,343,325 177,337 21,654 243,633 24,917 (8,338) (39,322) (18,401) (624) (15) (1,596) — — — — — — — 259,849 (22,825) 729 2,740,038 290,204 (66,061) (2,235) 232,068 2,547,621 182,257 — 2,961,946 December 31, 2021 50,056 284,832 625,099 74,278 318,900 1,353,165 of which right-of use assets under — 21,613 3,484 28,661 — 53,758 IFRS 16 December 31, 2022 131,990 278,676 727,209 81,336 238,614 1,457,825 of which right-of use assets under — 18,972 2,756 32,420 — 54,148 IFRS 16 December 31, 2023 151,229 291,079 658,112 82,988 391,792 1,575,200 of which right-of use assets under — 22,971 3,396 41,888 — 68,255 IFRS 16 343 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSAdditions primarily relate to investments for car production and en- gine assembly lines (including those for models to be launched in future years), industrial tools needed for the production of cars and personal- ization programs, as well as investments for the ongoing construction of the new e-building (which will be used primarily for the production of battery electric vehicles (BEVs) and related components) and the new paint shop. The following table summarizes the changes in the carrying amount of right-of-use assets for the year ended December 31, 2023 and 2022: Balance at December 31, 2021 Additions Disposals Depreciation Translation differences and other movements Balance at December 31, 2022 Additions Disposals Depreciation Translation differences and other movements Industrial buildings Plant, machinery Other assets Total and equipment (€ thousand) 21,613 4,854 (1,495) (5,933) (67) 18,972 16,746 (4,597) (7,933) (217) 3,484 510 (6) (1,223) (9) 2,756 2,069 — (1,402) (27) 28,661 13,485 (93) (9,677) 44 32,420 23,238 (3,008) 53,758 18,849 (1,594) (16,833) (32) 54,148 42,053 (7,605) (10,254) (19,589) (508) (752) Balance at December 31, 2023 22,971 3,396 41,888 68,255 Amounts recognized in the consolidated income statement in relation to leases for the year ended December 31, 2023 and 2022 were as follows: Depreciation of right-of-use assets Interest expense on lease liabilities Variable lease payments not included in the measurement of lease liabilities For the year ended December 31, 2023 2022 2021 (€ thousand) 16,833 1,219 822 19,589 1,450 1,213 15,348 868 1,622 Expenses relating to short-term leases and leases of low-value 2,842 3,227 3,671 assets Total expenses recognized 25,094 22,101 21,509 For the year ended December 31, 2023 depreciation of right-of-use assets amounted to €19,589 thousand and interest expense on lease liabilities amounted to €1,450 thousand (€16,833 thousand and €1,219 thousand, respectively, for the year ended December 31, 2022 and €15,348 thousand and €868 thousand respectively, for the year ended December 31, 2021). At December 31, 2023, the Group had contractual commitments for the purchase of property, plant and equipment amounting to €115,330 thousand (€200,949 thousand at December 31, 2022). 344 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F345 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS(16) INVESTMENTS AND OTHER FINANCIAL ASSETS The composition of investments and other financial assets is as follows: Investments accounted for using the equity method Other securities and financial assets Total investments and other financial assets At December 31, 2023 (€ thousand) 55,200 12,471 67,671 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Changes in the carrying amount of investments accounted for using the equity method during the period were as follows: Balance at December 31, 2021 Proportionate share of net profit for the year ended December 31, 2022 Proportionate share of remeasurement of defined benefit plans Balance at December 31, 2022 Proportionate share of net profit for the year ended December 31, 2023 Proportionate share of remeasurement of defined benefit plans and other movements Balance at December 31, 2023 2022 49,087 10,447 59,534 (€ thousand) 42,927 6,175 (15) 49,087 6,137 (24) 55,200 Investments accounted for using the equity method mainly relate to the Group’s investment in Ferrari Financial Services GmbH (“FFS GmbH”), a German entity that offers retail client financing in certain markets in EMEA (primarily the UK, Germany and Switzerland). FFS GmbH is the Group’s partnership with CA Auto Bank S.p.A. (“CA Auto Bank”, formerly FCA Bank S.p.A., “FCA Bank”), which, following the sale by the Stellantis Group of its 50 percent ownership interest in FCA Bank to Crédit Agri- cole Consumer Finance S.A. (“CACF”) in April 2023, is now fully owned by CACF. Investments accounted for using the equity method also relate to the Group’s investment in FS China Limited, a joint venture formed in Chi- na in 2021 to manage certain lifestyle activities in the local market, which is at the early stage of its activities. Summarized financial information relating to FFS GmbH at and for the years ended December 31, 2023 and 2022 is presented below: 346 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FAssets Non-current assets Receivables from financing activities Other current assets Cash and cash equivalents Total assets Equity and liabilities Equity Debt Other liabilities Total equity and liabilities Net revenues Cost of sales Selling, general and administrative costs Other expenses/(income), net Profit before taxes Income tax expense Net profit At December 31, 2023 (€ thousand) 3,566 1,187,535 29,590 21,275 2022 3,685 1,037,350 2,637 19,123 1,241,966 1,062,795 108,134 999,206 134,626 94,914 868,652 99,229 1,241,966 1,062,795 For the year ended December 31, 2023 2022 2021 (€ thousand) 66,446 37,198 9,314 1,574 18,360 5,147 13,213 52,100 22,943 8,923 1,116 19,118 5,336 13,782 46,103 16,971 8,565 2,730 17,837 4,045 13,792 OTHER SECURITIES AND FINANCIAL ASSETS Other securities and financial assets primarily include Liberty Media Cor- poration (Series C Formula One Group Common Stock) shares (the “Lib- erty Media Shares”) of Liberty Media Corporation (the group responsi- ble for the promotion of the Formula 1 World Championship), which are measured at fair value and amounted to €10,519 thousand at December 31, 2023 (€9,954 thousand at December 31, 2022). 347 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS(17) INVENTORIES Inventories are as follows: Raw materials Semi-finished goods Finished goods Total inventories At December 31, 2023 (€ thousand) 203,247 229,791 515,476 948,514 The increase in inventories is mainly due to higher car volumes, the start of production of new models and enriched product mix, as well as higher raw materials to protect the Group's delivery plans. The amount of inventory write-downs recognized as an expense within cost of sales during 2023 was €20,822  thousand (€18,021  thou- sand in 2022 and €9,392 thousand in 2021). Changes in the provision for slow moving and obsolete inventories were as follows: At January 1, Provision Utilizations and other changes At December 31, 2023 (€ thousand) 110,963 20,822 (8,357) 123,428 (18) CURRENT RECEIVABLES AND OTHER CURRENT ASSETS Current receivables and other current assets are as follows: 2022 142,430 145,459 386,773 674,662 2022 102,098 18,021 (9,156) 110,963 Trade receivables Receivables from financing activities Current tax receivables Other current assets Total 348 At December 31, 2023 (€ thousand) 261,380 1,451,158 11,616 130,228 1,854,382 2022 232,414 1,399,997 16,054 153,183 1,801,648 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F349 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSTRADE RECEIVABLES The following table sets forth a breakdown of trade receivables by nature: Trade receivables due from: Dealers Sponsorship and commercial activities Brand activities Stellantis Group companies Other Total At December 31, 2023 (€ thousand) 122,177 32,357 30,587 20,398 55,861 2022 85,696 42,981 24,213 19,184 60,340 261,380 232,414 Trade receivables due from dealers relate to receiv- ables for the sale of cars across the dealer network and are generally settled within 30 to 40 days from the date of invoice. Trade receivables due from sponsorship and commercial activities mainly relate to the Group’s participation in the Formula 1 World Championship and the World Endurance Championship. Trade receivables due from brand activities relate to amounts receivable for licensing and merchandis- ing activities. Trade receivables due from Stellantis Group companies mainly relate to the sale of engines and car bodies to Maserati S.p.A., which is controlled by the Stellantis Group. The contract with Maserati ended in December 2023. For additional information, see Note 28 “Related Party Transactions”. The Group is not exposed to significant concen- tration of third party credit risk. The following table sets forth a breakdown of trade receivables by currency: Trade receivables denominated in: Euro U.S. Dollar Pound Sterling Chinese Yuan Japanese Yen Other currencies Total At December 31, 2023 (€ thousand) 118,104 118,233 6,096 5,099 7,230 6,618 2022 95,894 108,369 8,178 3,203 6,832 9,938 261,380 232,414 Trade receivables are shown net of an allowance for doubtful accounts determined on the basis of insolvency risk and historical experience, adjusted for forward-looking factors specific to the receivables and the economic environment. Additional provisions to the allowance for doubtful accounts are recorded within selling, general and administra- tive costs in the consolidated income statement. Changes in the allowance for doubtful accounts of trade receivables during the year were as follows: 350 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FAt January 1 Additional provisions Utilizations Releases Other changes At December 31 2023 2022 (€ thousand) 25,800 2,767 (1,845) (1,280) (24) 25,418 25,984 3,844 (1,579) (2,522) 73 25,800 RECEIVABLES FROM FINANCING ACTIVITIES Receivables from financing activities are as follows: Client financing Dealer financing Total receivables from financing activities At December 31, 2023 2022 (€ thousand) 1,451,158 — 1,451,158 1,390,956 9,041 1,399,997 Receivables from financing activities relate to the financial services port- folio in the United States and are generally secured on the title of cars or other guarantees. Receivables from financing activities are shown net of an allowance for doubtful accounts and additional provisions are recorded within cost of sales in the consolidated income statement. Changes in the allowance for doubtful accounts of receivables from financing activities during the year are as follows: At January 1 Additional provisions Utilizations Releases Other changes At December 31 2023 (€ thousand) 9,950 6,423 (3,509) (1,327) (372) 11,165 2022 11,204 3,064 (2,587) (2,470) 739 9,950 CLIENT FINANCING Client financing relates to financing provided by the Group to Ferrari clients to finance their car acquisi- tions. During 2023 the average contractual duration at inception of such contracts was approximately 67 months (67 months in 2022) and the weighted av- erage interest rate was approximately 7.8 percent (approximately 6.3 percent in 2022). Receivables for client financing are generally secured on the titles of the related cars or other personal guarantees. Client financing relates entirely to financial ser- vices activities in the United States and is denominat- ed in U.S. Dollars. 351 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSDEALER FINANCING In 2022, the Group discontinued dealer financing with the exception of one existing long-term loan bearing a rate of interest based on LIBOR plus a variable spread based on dealer’s performance, which was fully collected in 2023. OTHER CURRENT ASSETS Other current assets are detailed as follows: Italian and foreign VAT credits Prepayments Other Total other current assets At December 31, 2023 (€ thousand) 65,529 53,846 10,853 130,228 2022 79,858 42,908 30,417 153,183 Other includes security deposits, amounts due from personnel and oth- er receivables. At December 31, 2023, the Group had provided guarantees through third parties amounting to €236,910 thousand (€224,630 thousand at December 31, 2022), principally to (i) banks for a U.S. Dollar denominat- ed credit facility of FFS Inc., (ii) tax authorities for VAT reimbursements according to Italian legislation and (iii) customs authorities for duties on import and export activities. The analysis of receivables and other current assets (excluding pre- payments) by due date is as follows: Due within one Due between Due beyond Overdue Total At December 31, 2023 year one and five five years years (€ thousand) Trade receivables 225,445 — — 35,935 261,380 Receivables from financing activities (1) 223,841 1,076,552 68,736 82,029 1,451,158 Current tax receivables Other current assets (excluding prepayments) Total 11,616 76,382 — — — — — — 11,616 76,382 537,284 1,076,552 68,736 117,964 1,800,536 352 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FDue within one Due between Due beyond Overdue Total At December 31, 2022 year one and five five years years (€ thousand) Trade receivables 186,757 — — 45,657 232,414 Receivables from financing activities (1) 208,407 1,060,819 Client financing Dealer financing Current tax receivables Other current assets (excluding prepayments) Total 207,186 1,052,999 1,221 16,054 110,276 7,821 — — 67,992 67,992 — — — 62,779 1,399,997 62,779 1,390,956 — — — 9,041 16,054 110,276 521,494 1,060,819 67,992 108,436 1,758,741 (1) Excluding interest generated on these receivables. Overdue amounts represent receivables and other current assets where payments are past their due date. (19) CURRENT FINANCIAL ASSETS AND OTHER FINANCIAL LIABILITIES Current financial assets are as follows: Financial derivatives Other financial assets Current financial assets At December 31, 2023 (€ thousand) 55,562 5,568 61,130 2022 80,233 7,068 87,301 Current financial assets and other financial liabilities mainly relate to for- eign exchange derivatives and interest rate caps. 353 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS354 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FThe following table sets forth a breakdown of derivative assets and liabil- ities at December 31, 2023 and 2022. Cash flow hedge: Currency swaps Interest rate caps Commodities At December 31, 2023 2022 Positive fair Negative fair Positive fair Negative fair value  value value value (€ thousand) 34,542 (10,170) 41,270 (16,976) 17,407 — — (174) 36,771 5 — (772) Total Cash flow hedges 51,949 (10,344) 78,046 (17,748) Other foreign exchange derivatives 3,613 (3,195) 2,187 (2,245) Current financial assets/(liabilities) 55,562 (13,539) 80,233 (19,993) Foreign currency derivatives that do not meet the requirements to be recognized as cash flow hedges are presented as other foreign cur- rency derivatives. Interest rate caps relate to derivative instruments re- quired as part of certain securitization agreements. The following tables provide an analysis of outstanding derivative financial instruments by foreign currency based on their fair value and notional amounts: Currencies: U.S. Dollar Pound Sterling Japanese Yen Swiss Franc Chinese Yuan Other(1) At December 31, 2023 At December 31, 2022 Fair Value Notional Amount Fair Value Notional Amount (€ thousand) 32,069 2,515,057 49,466 2,385,494 (678) 145,216 2,811 121,881 14,086 392,343 (3,660) 106,911 915 (709) 141,493 153,207 2,711 (991) 2,702 3,541 275,700 108,459 176,062 131,319 Total amount 42,023 3,454,227 60,240 3,198,915 (1) Other mainly includes the Australian Dollar, the Canadian Dollar and the Hong Kong Dollar. At December 31, 2023 and 2022, substantially all derivative financial instruments had a maturity of twelve months or less. CASH FLOW HEDGES The effects recognized in the consolidated income statement mainly relate to currency risk management and in particular the exposure to fluctuations in the Euro/U.S. Dollar exchange rate for sales in U.S. Dollars. The policy of the Group for managing foreign currency risk normally requires hedging of a por- tion of projected future cash flows from trading activities and orders acquired (or contracts in prog- ress) in foreign currencies that will occur within the following 12 months. Derivatives relating to foreign 355 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTScurrency risk management are treated as cash flow hedges where the derivative qualifies for hedge ac- counting. The amounts recorded in the cash flow hedge reserve within other comprehensive income will be recognized in the consolidated income state- ment according to the timing of the flows of the un- derlying transactions. Management believes that substantially all of the hedging effects arising from these derivative contracts and recorded in the cash flow hedge reserve will be recognized in the con- solidated income statement within the following 12 months from the reporting date. The Group reclassified gains and losses, net of the related tax effects, from other comprehensive income/(loss) to the consolidated income statement as follows: Net revenues/(costs) Income tax (expense)/benefit Total recognized in the consolidated income statement For the years ended December 31, 2023 2022 2021 48,393 (13,502) 34,891 (€ thousand) (75,749) 21,134 (54,615) 7,275 (2,030) 5,245 The ineffectiveness of cash flow hedges was not material for the years 2023, 2022 and 2021. (20) EQUITY SHARE CAPITAL At December 31, 2023 and 2022 the fully paid up share capital of the Company was €2,573 thousand, consisting of 193,923,499 common shares and 63,349,112 special voting shares, all with a nominal value of €0.01. At December 31, 2023, the Company had 13,505,409 common shares and 16,240 spe- cial voting shares held in treasury, while at Decem- ber 31, 2022, the Company had 11,970,001 common shares and 5,199 special voting shares. Shares in treasury include shares repurchased under the Group’s share repurchase program, which are re- corded based on the transaction trade date. The in- crease in common shares held in treasury primarily reflects the repurchase of shares by the Company through its share repurchase programs, partially offset by shares assigned under the Group’s equity incentive plans. At December 31, 2023 and 2022 the Company held in treasury 5.26 percent and 4.65 per- cent of the total issued share capital of the Company, respectively.(70) The following table summarizes the changes in the number of outstanding common shares and out- standing special voting shares of the Company for the years ended December 31, 2023 and 2022: Common Shares Special Voting Total Shares Outstanding shares at December 31, 2021 183,843,396 63,344,922 247,188,318 Common shares repurchased under share repurchase program (1) (1,966,816) Common shares assigned under equity incentive plans (2) Other changes (3) 76,918 — — — (1,009) (1,966,816) 76,918 (1,009) Outstanding shares at December 31, 2022 181,953,498 63,343,913 245,297,411 Common shares repurchased under share repurchase program(4) (1,630,171) Common shares assigned under equity incentive plans (5) 94,763 — — Other changes (3) — (11,041) (1,630,171) 94,763 (11,041) Outstanding shares at December 31, 2023 180,418,090 63,332,872 243,750,962 (1) Includes shares repurchased under the share repurchase (2) On March 16, 2022, 122,125 common shares, which were program between January 1, 2022 and December 31, previously held in treasury, were assigned to participants of 2022 based on the transaction trade date, for a total the equity incentive plans as a result of the vesting of certain consideration of €384,869 thousand, including transaction performance share unit and retention restricted share costs. unit awards. On the same day, the Company purchased 356 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F56,517 common shares, for a total consideration of (3) Relates to the deregistration of certain special voting shares €10,365 thousand, from a group of those employees who under the Company’s special voting shares term and were assigned shares in order to cover the individual’s conditions. taxable income as is standard practice (“Sell to Cover”) in a (4) Includes shares repurchased under the share repurchase cross transaction. On May 25, 2022, 6,643 common shares, program between January 1, 2023 and December 31, which were previously held in treasury, were assigned 2023 based on the transaction trade date, for a total to certain employees. On the same day, the Company consideration of €460,629 thousand (including Sell to Cover purchased 3,185 common shares, for a total consideration as described below), including transaction costs. of €562 thousand, from a group of those employees who (5) On March 15, 2023, 80,305 common shares, which were were assigned shares in order to cover the individual’s previously held in treasury, were assigned to participants taxable income as is standard practice (“Sell to Cover”) in a of the equity incentive plans as a result of the vesting of cross transaction. On December 2, 2022, 11,218 common certain performance share unit and retention restricted shares, which were previously held in treasury, were share unit awards. On March 15, 2023, the Company assigned to participants of the equity incentive plans. On the purchased 34,671 common shares, for a total consideration same day, the Company purchased, 3,366 common shares, of €8,448 thousand, from a group of employees who were for a total consideration of €726 thousand, from a group assigned shares in order to cover the individual’s taxable of those employees who were assigned shares in order to income as is standard practice (“Sell to Cover”) in a cross cover the individual’s taxable income as is standard practice transaction. On July 17, 2023 the Company assigned 49,129 (“Sell to Cover”) in a cross transaction. See Note 21 “Share- shares related to commercial agreements with certain Based Compensation” for additional details relating to the suppliers and other shares awards. See Note 21 “Share- Group’s equity incentive plans. Based Compensation” for additional details relating to the Group’s equity incentive plans. • a treasury reserve of €1,704,673 thousand at De- cember 31, 2023 and €1,244,045 thousand at De- cember 31, 2022. • a share-based compensation reserve of €38,106 thousand at December 31, 2023 and €28,574 thousand at December 31, 2022. Following approval of the annual accounts by the shareholders at the Annual General Meeting of the Shareholders on April 14, 2023, a dividend distribu- tion of €1.810 per outstanding common share was approved, corresponding to a total distribution of €328,631  thousand, which was fully paid in 2023). The distribution was made from the retained earn- ings reserve. Following approval of the annual accounts by the shareholders at the Annual General Meeting of the Shareholders on April 13, 2022, a dividend dis- tribution of €1.362 per outstanding common share was approved, corresponding to a total distribution of €249,522 thousand, which was fully paid in 2022). The distribution was made from the retained earn- ings reserve. Following approval of the annual accounts by the shareholders at the Annual General Meeting of the Shareholders on April 15, 2021, a dividend distribution of €0.867 per common share was ap- proved, corresponding to a total distribution of €160,272  thousand (of which €160,101  thousand was paid in 2021). The distribution was made from the retained earnings reserve. THE LOYALTY VOTING STRUCTURE The purpose of the loyalty voting structure is to re- ward ownership of the Company’s common shares and to promote stability of the Company’s share- holder base by granting long-term shareholders of the Company with special voting shares. Following the separation of Ferrari from the Stellantis Group (previously referred to as Fiat Chrysler Automobiles N.V. or FCA prior to the merger between FCA and Peugeot S.A. completed on January 16, 2021, which resulted in the creation of Stellantis N.V.) in 2016, Exor N.V. (“Exor”) and Piero Ferrari participate in the Company’s loyalty voting program and, therefore, effectively hold two votes for each of the common shares they hold. Investors who purchase common shares may elect to participate in the loyalty voting program by registering their common shares in the loyalty share register and holding them for three years. The loyalty voting program will be affected by means of the issue of special voting shares to eligi- ble holders of common shares. Each special voting share entitles the holder to exercise one vote at the Company’s shareholder meetings. Only a minimal dividend accrues to the special voting shares allo- cated to a separate special dividend reserve, and the special voting shares do not carry any entitlement to any other reserve of the Group. The special voting shares have only immaterial economic entitlements and, as a result, do not impact the Company’s earn- ings per share calculation. RETAINED EARNINGS AND OTHER RESERVES Retained earnings and other reserves includes: • a share premium reserve of €5,768,544 thou- sand at December 31, 2023 (€5,768,544 thou- sand at December 31, 2022). • a legal reserve of €46 thousand at December 31, 2023 and €19 thousand at December 31, 2022, determined in accordance with Dutch law. 357 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSOTHER COMPREHENSIVE INCOME/(LOSS) The following table presents other comprehensive income/(loss): Items that will not be reclassified to the consolidated income statement in subsequent periods: Gains/(Losses) on remeasurement of defined benefit plans (1) Total items that will not be reclassified to the consolidated income statement in subsequent periods Items that may be reclassified to the consolidated income statement in subsequent periods: For the years ended December 31, 2023 2022 2021 (€ thousand) 221 221 1,605 1,605 (463) (463) Gains/(Losses) on cash flow hedging instruments arising 22,109 17,149 (56,855) during the period (Gains)/Losses on cash flow hedging instruments reclassified (48,393) 75,749 (7,275) to the consolidated income statement (Losses)/Gains on cash flow hedging instruments Exchange differences on translating foreign operations (26,284) (6,323) 92,898 9,798 (64,130) 14,229 Total items that may be reclassified to the consolidated income (32,607) 102,696 (49,901) statement in subsequent periods Total other comprehensive (loss)/income (32,386) 104,301 (50,364) Related tax impact Total other comprehensive (loss)/income, net of tax 6,351 (26,035) (25,002) 79,299 18,070 (32,294) (1) Includes a loss of €30 thousand, a loss of €15 thousand and proportionate share of the remeasurement of defined a gain of €83 thousand for the years ended December 31, benefit plans of FFS GmbH, for which the Group holds a 49.9 2023, 2022 and 2021, respectively, related to the Group’s percent interest. Gains and losses on the remeasurement of defined benefit plans in- clude actuarial gains and losses arising during the period and are offset against the related net defined benefit liabilities. The tax effects relating to other comprehensive income/(loss) are summarized in the following table: For the years ended December 31, 2023 2022 2021 Pre-tax Related Net Pre-tax Related Net Pre-tax Related Net balance tax balance balance tax balance balance tax balance impact impact (€ thousand) impact Gains/(Losses) on 221 (52) 169 1,605 (376) 1,229 (463) 110 (353) remeasurement of defined benefit plans (Losses)/Gains on cash flow (26,284) 6,403 (19,881) 92,898 (24,626) 68,272 (64,130) 17,960 (46,170) hedging instruments Exchange (losses)/gains (6,323) — (6,323) 9,798 — 9,798 14,229 — 14,229 on translating foreign operations Total other comprehensive (32,386) 6,351 (26,035) 104,301 (25,002) 79,299 (50,364) 18,070 (32,294) (loss)/income 358 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FTRANSACTIONS WITH NON-CONTROLLING INTERESTS 2021-2023 PSU awards The vesting of the awards is based on the achieve- ment of defined key performance indicators as fol- lows: (i) TSR Target - 50 percent of the awards vest based on the achievement of the TSR ranking of Ferrari compared to an industry specific Peer Group of eight; (ii) EBITDA Target - 30 percent of the awards vest based on the achievement of an EBITDA target determined by comparing Adjusted EBITDA to the Adjusted EBITDA targets derived from the Group’s business plan; (iii) Innovation Target - 20 percent of the awards vest based on the achievement of defined objec- tives for technological innovation and the devel- opment of the new model pipeline over the per- formance period. Each target is settled independently of the other tar- gets. The awards vest in 2024 and the total number of shares assigned upon vesting depends on the lev- el of achievement of the targets. In March 2024, 41,338 2021-2023 PSU awards are expected to vest (representing approximately 122 percent of the target PSU awards) as a result of the achievement of the related performance con- ditions (described above) and an equal number of common shares held in treasury will be assigned to participants of the plan, following which there will be no further 2021-2023 PSU awards outstanding. 2021-2023 RSU awards In March 2024, 29,550 2021-2023 RSU awards are expected to vest as a result of the achievement of the related service condition, which is the recipi- ent’s continued employment with the Company at the time of vesting, and an equal number of com- mon shares held in treasury will be assigned to par- ticipants of the plan, following which there will be no further 2021-2023 RSU awards outstanding. EQUITY INCENTIVE PLAN 2022-2024 Under the Equity Incentive Plan 2022-2024 approved in 2022, the Company awarded approximately 72 thousand 2022-2024 PSUs to the Executive Chair- man, the CEO, the remaining members of the FLT and other employees of the Group, and approxi- mately 26  thousand 2022-2024 RSUs to members of the FLT and other employees of the Group. These PSUs and RSUs cover the three-year performance and service periods from 2022 to 2024. With the exception of dividends paid to non-con- trolling interests, there were no transactions with non-controlling interests for the years ended De- cember 31, 2023, 2022 or 2021. POLICIES AND PROCESSES FOR MANAGING CAPITAL The Group’s objectives when managing capital are to create value for shareholders as a whole, safe- guard business continuity and support the sustain- able growth of the Group. As a result, the Group en- deavors to maintain a satisfactory economic return for its shareholders and guarantee economic ac- cess to external sources of funds. (21) SHARE-BASED COMPENSATION EQUITY INCENTIVE PLANS The Group has several equity incentive plans un- der which a combination of performance share units (“PSUs”) and retention restricted share units (“RSUs”), which each represent the right to receive one Ferrari common share, have been awarded to the Executive Chairman, the Chief Executive Officer (“CEO”), members of the Ferrari Leadership Team (hereinafter also the “FLT”) and other key employees of the Group. EQUITY INCENTIVE PLAN 2020-2022 In the first quarter of 2023, 36,090 2020-2022 PSU awards vested (representing 95 percent of the tar- get PSU awards) as a result of the achievement of the related performance conditions and 32,339 2020-2022 RSU awards vested upon achievement of the related service conditions. As a result, 68,429 common shares, which were previously held in treasury, were assigned to participants of the plan in the first quarter of 2023. There are no further awards outstanding for the Equity Incentive Plan 2020-2022. EQUITY INCENTIVE PLAN 2021-2023 Under the Equity Incentive Plan 2021-2023 approved in 2021, the Company awarded approximately 50 thousand 2021-2023 PSUs and approximately 41 thousand 2021-2023 RSUs to the Executive Chair- man, members of the FLT and other key employ- ees of the Group. These PSUs and RSUs cover the three-year performance and service periods from 2021 to 2023. 359 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS2022-2024 PSU awards 2023-2025 PSU awards The vesting of the awards is based on the achievement of defined key performance indicators as follows: The vesting of the awards is based on the achievement of defined key performance indicators as follows: (i) TSR Target - 40 percent of the awards vest based on the achievement of the TSR ranking of Ferrari compared to an industry specific Peer Group of eleven; (ii) EBITDA Target - 40 percent of the awards vest based on the achievement of an EBITDA target determined by comparing Adjusted EBITDA to the Adjusted EBITDA targets derived from the Group’s business plan; (iii) ESG Target - 20 percent of the awards vest based on the achievement of defined objectives relating to environmental and social factors. In particular, 50 percent of the ESG Target is based on the reduction of CO2 carbon emissions and 50 percent is based on the maintenance of the equal salary certification. (i) TSR Target - 40 percent of the awards vest based on the achievement of the TSR ranking of Ferrari compared to an industry specific Peer Group of eleven; (ii) EBITDA Target - 40 percent of the awards vest based on the achievement of an EBITDA target determined by comparing Adjusted EBITDA to the Adjusted EBITDA targets derived from the Group’s business plan; (iii) ESG Target - 20 percent of the awards vest based on the achievement of defined objectives relating to environmental and social factors. In particular, 50 percent of the ESG Target is based on the reduction of CO2 carbon emissions and 50 percent is based on the maintenance of the equal salary certification. Each target is settled independently of the other tar- gets. The awards vest in 2025 and the total number of shares assigned upon vesting depends on the lev- el of achievement of the targets. Each target is settled independently of the other tar- gets. The awards vest in 2026 and the total number of shares assigned upon vesting depends on the lev- el of achievement of the targets. 2022-2024 RSU awards 2023-2025 RSU awards The awards vest in 2025, subject to the recipient’s continued employment with the Company at the time of vesting. The awards vest in 2026, subject to the recipient’s continued employment with the Company at the time of vesting. EQUITY INCENTIVE PLAN 2023-2025 Incentive Plan 2023-2025 is summarized below. Supplemental information relating to the Equity Under the Equity Incentive Plan 2023-2025 approved in 2023, the Company awarded approximately 58 thousand 2023-2025 PSUs to the Executive Chair- man, the CEO, the remaining members of the FLT and other employees of the Group, and approxi- mately 22  thousand 2023-2025 RSUs to members of the FLT and other employees of the Group. These PSUs and RSUs cover the three-year performance and service periods from 2023 to 2025. TSR TARGET The number of 2023-2025 PSUs with a TSR Target that vest under the Equity Incentive Plan 2023-2025 is based on the Company’s TSR performance over the relevant performance period compared to an industry-specific peer group as summarized below. Ferrari TSR Ranking % of Target Awards that Vest 1 2 3 4 5 6 >6 175% 150% 125% 100% 75% 50% 0% 360 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F361 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSThe defined peer group (including the Company) for the TSR Target is presented below. Ferrari Hermes Moncler Aston Martin Kering Prada Burberry LVMH Richemont Estee Lauder Mercedes Benz Group AG EBITDA TARGET The number of 2023-2025 PSUs with an EBITDA Target that vest under the Equity Incentive Plan 2023-2025 is determined by comparing Adjust- ed EBITDA to the Adjusted EBITDA targets derived from the Group’s busi- ness plan, as summarized below. Actual Adjusted EBITDA Compared to Business Plan % of Awards that Vest +15% +10% +5% Business Plan Target -5% <-5% 175% 150% 125% 100% 75% 0% FAIR VALUES AND KEY ASSUMPTIONS The fair value of the PSUs and RSUs that were awarded under the Eq- uity Incentive Plan 2023-2025, which is determined based on actuarial calculations that apply certain assumptions and take into consideration the specific characteristics of the awards granted, is summarized in the following table. Equity Incentive Plan 2023-2025 PSUs RSUs €236.30 €253.76 The fair value of the 2023-2025 PSU awards was measured at the grant date using a Monte Carlo Simulation model. The fair value of the 2023- 2025 RSU awards was measured using the share price at the grant date adjusted for the present value of future distributions which the recipi- ents will not receive during the vesting period. The key assumptions utilized to calculate the grant-date fair values of the PSUs that were awarded under the Equity Incentive Plan 2023-2025 are summarized below: 362 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FEquity Incentive Plan 2023-2025 Grant date share price Expected volatility Dividend yield Risk-free rate €259.60 27.9% 0.75% 2.90% The expected volatility was based on the observed volatility of the defined peer group. The risk-free rate was based on the iBoxx sovereign Eurozone yield. BROAD-BASED EMPLOYEE SHARE OWNERSHIP PLAN In November 2023 the Company announced that it would launch a broad-based employee share own- ership plan in the early months of 2024 under which each employee will be given the option to become a shareholder of the Company, receiving a one-off grant of shares worth up to a maximum of approxi- mately €2 thousand. If the employee holds the shares for at least 36 months, the Company will grant them an additional tranche of shares worth up to 15 per- cent of the value of the first allocation. OTHER SHARE-BASED COMPENSATION During 2022, the Company awarded 15,271 share awards, which each represent the right to receive one Ferrari common share, to certain employees, of which 6,643 share awards vested immediately at the grant date. In 2023 6,838 share awards vested and 1,309 share awards were forfeited. At December 31, 2023, 481 share awards remained outstanding and will vest in 2024, subject to the recipient’s continued employment with the Company at the time of vest- ing. The fair value of the awards was equal to €203 per award, measured using the share price at the grant date adjusted for the present value of future distributions which the recipients will not receive during the vesting period. The Company also provides share-based pay- ments for services received as part of commercial agreements with certain suppliers. OUTSTANDING SHARE AWARDS The following table presents the changes to the out- standing share awards under the Group’s share- based payment arrangements: PSU Awards RSU Awards Other Total Awards Outstanding Awards Balance at December 31, 2021 152,172 123,661 — 275,833 Granted Forfeited Vested 72,373 26,574 64,048 162,995 (16,327) (8,934) — (25,261) (68,013) (54,112) (6,643) (128,768) Balance at December 31, 2022 140,205 87,189 57,405 284,799 Granted Forfeited Vested 58,381 21,939 63,217 143,537 (8,117) (3,544) (1,309) (12,970) (36,090) (32,339) (55,614) (124,043) Balance at December 31, 2023 154,379 73,245 63,699 291,323 363 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSSHARE-BASED COMPENSATION EXPENSE The following table presents the share based compensation expense recognized for the years ended December 31, 2023, 2022 and 2021, as well as the unrecognized share-based compensation at December 31, 2023, 2022 and 2021. For the years ended December 31, 2023 2022 2021 Equity incentive plans and other share-based awards Broad-based employee share ownership plan Commercial agreements with suppliers (€ thousand) 16,172 — 4,688 15,154 10,222 4,563 Total share-based compensation expense 29,939 20,860 11,689 — 2,206 13,895 Unrecognized share-based compensation expense 12,954 16,069 11,082 At December 31, 2023 2022 2021 (€ thousand) (22) EMPLOYEE BENEFITS The Group’s provisions for employee benefits are as follows: Present value of defined benefit obligations: Italian employee severance indemnity (TFR) Total present value of defined benefit obligations Other provisions for employees Total provisions for employee benefits At December 31, 2023 (€ thousand) 13,903 13,903 109,142 123,045 2022 15,142 15,142 95,665 110,807 DEFINED CONTRIBUTION PLANS DEFINED BENEFIT OBLIGATIONS The Group recognizes the cost for defined contribu- tion plans over the period in which the employee ren- ders service and classifies this by function in cost of sales, selling, general and administrative costs and research and development costs. The total income statement expense for defined contributions plans in the years ended December 31, 2023, 2022 and 2021 was €18,832 thousand, €16,944 thousand and €15,729 thousand, respectively. ITALIAN EMPLOYEE SEVERANCE INDEMNITY (TFR) Trattamento di fine rapporto or “TFR” relates to the amounts that employees in Italy are entitled to re- ceive when they leave the company and is calculated based on the period of employment and the taxable earnings of each employee. Under certain condi- tions the entitlement may be partially advanced to an employee during the employee’s working life. The Italian legislation regarding this scheme was amended by Law 296 of 27 December 2006 and sub- 364 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fsequent decrees and regulations issued in the first part of 2007. Under these amendments, companies with at least 50 employees are obliged to transfer the TFR to the “Treasury fund” managed by the Ital- ian state-owned social security body (“INPS”) or to supplementary pension funds. Prior to the amend- ments, accruing TFR for employees of all Italian companies could be managed by the company itself. Consequently, the Italian companies’ obligation to INPS and the contributions to supplementary pen- sion funds take the form, under IAS 19 revised, of “Defined contribution plans” whereas the amounts recorded in the provision for employee severance pay retain the nature of “Defined benefit plans”. Ac- cordingly, the provision for employee severance indemnity in Italy consists of the residual obligation for TFR until December 31, 2006. This is an unfund- ed defined benefit plan as the benefits have already been almost entirely earned, with the sole exception of future revaluations. Since 2007 the scheme has been classified as a defined contribution plan, and the Group recognizes the associated cost, being the required contributions to the pension funds, over the period in which the employee renders service. The following table summarizes the changes in the defined benefit obligations relating to the TFR liability: Amounts at December 31, 2021 Included in the consolidated income statement Included in other comprehensive income/loss (*) Other Benefits paid Other changes Amounts at December 31, 2022 Included in the consolidated income statement Included in other comprehensive income/loss (*) Other Benefits paid Other changes Amounts at December 31, 2023 (*) Relates to actuarial losses/(gains) from financial assumptions. Total 18,430 22 (1,605) (1,705) (1,731) 26 15,142 518 (221) (1,536) (1,536) — 13,903 Amounts recognized in the consolidated income statement relating to the TFR liability are as follows: Current service cost Interest expense Total recognized in the consolidated income statement For the years ended December 31, 2023 2022 2021 (€ thousand) — 518 518 — 22 22 6 — 6 The discount rates used for the measurement of the Italian TFR obliga- tion are based on yields of high-quality (AA- rated) fixed income secu- rities for which the timing and amounts of payments match the timing and amounts of the projected benefit payments. For this plan, the single weighted average discount rate that reflects the estimated timing and amount of the scheme future benefit payments for 2023 is equal to 4.1 percent (3.8 percent in 2022 and 0.9 percent in 2021). The average dura- 365 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTStion of the Italian TFR was approximately 6 years at December 31, 2023 (7 years and 8 years at December 31, 2022 and 2021, respectively). Retire- ment or employee leaving rates are developed to reflect actual and pro- jected Group experience and legal requirements for retirement in Italy. Current service cost is recognized by function in cost of sales, selling, general and administrative costs or research and development costs. The expected future benefit payments for the defined benefit obliga- tions as of December 31, 2023 are as follows: 2024 2025 2026 2027 2028 2029 - 2033 Total TFR (€ thousand) 1,464 1,507 1,451 1,647 1,214 5,826 13,109 The sensitivity of the defined benefit obligations to changes in the weight- ed principal assumptions is: At December 31, 2023 2022 Changes in Changes in Changes in Changes in assumption of +1% assumption of -1% assumption of +1% assumption of -1% discount rate discount rate discount rate discount rate (€ thousand) Impact on defined benefit obligation (778) 868 (904) 1,013 The above sensitivity analysis is based on an assumed change in the dis- count rate while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be cor- related. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method has been applied as when calculating the defined benefit liability recognized in the state- ment of the financial position. OTHER PROVISIONS FOR EMPLOYEES Other provisions for employees consist of the expected future amounts payable to employees in connection with other remuneration schemes, which are not subject to actuarial valuation, including long-term bonus plans. At December 31, 2023, other provisions for employees comprised short-term bonus benefits amounting to €105,043 thousand (€92,463 thousand at December 31, 2022) and other benefits amounting to €4,099 thousand (€3,202 thousand at December 31, 2022), primarily relating to jubilee benefits granted to certain employees by the Group in the event of achieving 30 years of service. 366 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(23) PROVISIONS Movements in provisions are as follows: At December Additional Utilization Releases Translation Reclassification At December 31, 2022 provisions differences and other 31, 2023 (€ thousand) movements Warranty and recall 126,069 63,325 (50,573) (7,751) (572) — 130,498 campaigns provision Legal proceedings 12,062 239 (2,833) (1,879) (74) (35) 7,480 and disputes Environmental and 42,563 26,526 (4,627) (15,626) (730) 1,192 49,298 other risks Total provisions 180,694 90,090 (58,033) (25,256) (1,376) 1,157 187,276 WARRANTY AND RECALL CAMPAIGNS The provision for warranty and recall campaigns represents the best estimate of commitments given by the Group for contractual, legal, or constructive obligations arising from product warranties given for a specified period of time. Warranty and recall campaigns provisions are recognized upon ship- ment and estimated on the basis of the Group’s past experience and contractual terms. Related costs are recognized within cost of sales. LEGAL PROCEEDINGS AND DISPUTES The provision for legal proceedings and disputes represents management’s best estimate of the ex- penditures expected to be required to settle or oth- erwise resolve legal proceedings and disputes. This class of claims relates to allegations by contractu- al counterparties that the Group has violated the terms of the arrangements, including by terminat- ing the applicable relationships. Judgments in these proceedings may be issued in 2023 or beyond, al- though any such judgments may remain subject to ongoing judicial review. While the outcome of these proceedings is uncertain, any losses in excess of the provisions recorded are not expected to be mate- rial to the Group’s financial condition or results of operations. Additions to the provision for legal pro- ceedings and disputes are recognized within other expenses, net. ENVIRONMENTAL AND OTHER RISKS The provision for environmental and other risks primarily relates to environmental risks, including those relating to emissions regulations, as well as to disputes and matters which are not subject to legal proceedings, including disputes with suppliers, dis- tributors, employees and other parties. The following table presents where the addi- tional provisions to environmental and other risks recognized for the years ended December 31, 2023, 2022 and 2021 were recorded within the consolidat- ed income statement. Recorded in the consolidated income statement within: Cost of sales Selling, general and administrative costs Total For the years ended December 31, 2023 2022 2021 (€ thousand) 25,128 1,398 26,526 15,616 1,562 17,178 10,562 1,744 12,306 367 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS(24) DEBT The following table provides a breakdown of debt by nature and split be- tween current and non-current. At December 31, 2023 2022 Current Non-current Total Current Non-current Total (€ thousand) Asset-backed financing (Securitizations) 514,597 651,876 1,166,473 422,736 682,689 1,105,425 Bonds and notes — 903,673 903,673 394,628 1,095,691 1,490,319 Borrowings from banks and other financial 166,763 124,167 290,930 100,665 12,500 113,165 institutions Lease liabilities Other debt Total debt 16,450 56,597 73,047 15,917 41,506 57,423 43,063 — 43,063 45,447 — 45,447 740,873 1,736,313 2,477,186 979,393 1,832,386 2,811,779 The following tables present the change in debt, indicating separately fi- nancing cash flows and other movements. Financing cash flows Other movements Balance at Proceeds Repayments Interest Translation Balance at December from of accrued/ differences December 31, 2022 borrowings borrowings (paid) and other (1)(2) 31, 2023 (€ thousand) Asset-backed financing (Securitizations) 1,105,425 151,217 (49,611) 445 (41,003) 1,166,473 Bonds and notes 1,490,319 — (575,702) (10,944) — 903,673 Borrowings from banks and other 113,165 250,000 (72,500) 2,891 (2,626) 290,930 financial institutions Lease liabilities 57,423 — (17,691) 34,448 (1,133) 73,047 Other debt Total debt 45,447 34,596 (35,566) — (1,414) 43,063 2,811,779 435,813 (751,070) 26,840 (46,176) 2,477,186 Financing cash flows Other movements Balance at Proceeds Repayments Interest Translation Balance at December from of accrued/ differences December 31, 2021 borrowings borrowings (paid) and 31, 2022 other (1) (€ thousand) Bonds and notes 1,487,110 — — Asset-backed financing (Securitizations) 900,213 218,924 (72,824) 3,209 1,733 — 1,490,319 57,379 1,105,425 Borrowings from banks and other 154,419 8,909 (55,000) 560 4,277 113,165 financial institutions 368 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFinancing cash flows Other movements Balance at Proceeds Repayments Interest Translation Balance at December from of accrued/ differences December 31, 2021 borrowings borrowings (paid) and 31, 2022 other (1) (€ thousand) Lease liabilities 56,210 — (16,500) 17,409 304 57,423 Other debt Total debt 32,059 34,456 (23,215) — 2,147 45,447 2,630,011 262,289 (167,539) 22,911 64,107 2,811,779 (1) Other changes in lease liabilities relates entirely to non-cash movements for the recognition of additional lease liabilities (2) Includes gains of €7,940 thousand realized on the partial cash tender executed during the third quarter of 2023 on a in accordance with IFRS 16. bond due in 2025. CONTRACTUAL UNDISCOUNTED CASH FLOWS The following tables present the contractual maturities (contractual un- discounted cash flows, including interest) of the Group’s debt based on relevant maturity groupings. Contractual cash flows at December 31, 2023 Less than 1 Between 1 Between 2 Over 5 years Total As reported year and 2 years and 5 years contractual cash flows at December 31, 2023 (*) (€ thousand) Asset-backed financing (Securitizations) 542,960 390,256 277,783 — 1,210,999 1,166,473 Bonds and notes 11,714 458,619 14,850 460,106 945,289 903,673 Borrowings from banks and other 172,441 83,047 46,813 — 302,301 290,930 financial institutions Lease liabilities 17,934 12,571 28,131 22,316 80,952 73,047 Other debt Total debt 43,063 — — — 43,063 43,063 788,112 944,493 367,577 482,422 2,582,604 2,477,186 Contractual cash flows at December 31, 2022 Less than 1 Between 1 Between 2 Over 5 years Total As reported year and 2 years and 5 years contractual cash flows at December 31, 2022 (*) (€ thousand) Bonds and notes 400,475 14,700 668,777 464,648 1,548,600 1,490,319 Asset-backed financing (Securitizations) 439,919 408,462 283,786 Borrowings from banks and other 117,349 — — financial institutions — — 1,132,167 1,105,425 117,349 113,165 Lease liabilities 16,178 11,373 20,289 12,785 60,625 57,423 Other debt Total debt 45,447 — — — 45,447 45,447 1,019,368 434,535 972,852 477,433 2,904,188 2,811,779 (*) As reported in the consolidated statement of financial position 369 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSASSET-BACKED FINANCING (SECURITIZATIONS) As a means of diversifying its sources of funds, the Group sells certain of its receivables originated by its financial services activities in the United States through asset-backed financing or securitization programs (the terms asset-backed financing and securitization programs are used synonymously throughout this document), without transferring the risks typically associated with the related re- ceivables. As a result, the receivables sold through securitization programs are still consolidated un- til collection from the customer. The securitization agreements for both programs require the mainte- nance of an interest rate cap. The following table presents information relat- ing to the revolving securitization programs. Program Funding Limit (2) Amount Amount Maturity Date Retail (1) Leasing (1) Total asset-backed financing (Securitizations) Outstanding at Outstanding at December 31, 2023 December 31, 2022 ($ million) ($ million) ($ million) 975 400 1,375 977 312 1,289 December 2024 November 2025 896 283 1,179 (1) At December 31, 2023 the notes relating to the retail the notes relating to the leasing securitization program bore securitization program bore interest at a rate per annum interest at a rate per annum equal to the aggregate of SOFR equal to the aggregate of a synthetic base rate substantially plus a margin of 70 basis points. replicating the LIBOR plus a margin of 70 basis points and (1) Excluding accrued interest. Cash collected from the settlement of receivables under securitization programs is subject to certain restrictions regarding its use and is primarily ap- plied to repay principal and interest of the related funding. Such cash amounted to €31,820 thousand at December 31, 2023 (€44,085 thousand at Decem- ber 31, 2022). BONDS AND NOTES 2023 BOND On March 16, 2023 the Company fully repaid the 2023 Bond for a total consideration of €390,374 thousand (including accrued interest). The bond was previous- ly issued on March 16, 2016, for a principal amount of €500  million at a coupon of 1.5 percent and due on March 2023. Following a cash tender offer, in July 2019 the Company executed the partial repurchase of these notes for an aggregate nominal amount of €115,395  thousand. The amount outstanding at De- cember 31, 2022 was €388,947  thousand including accrued interest of €4,567 thousand. 2025 BOND On May 27, 2020 the Company issued 1.5 percent coupon notes due May 2025 (“2025 Bond”), having a principal of €650 million. The notes were issued at a discount for an issue price of 98.898 percent, resulting in net proceeds of €640,073 thousand, after related expenses, and a yield to maturity of 1.732 percent. The bond was admitted to trading on the regulated market of Euronext Dublin. Following a cash tender offer, in July 2023, the Group accept- ed for purchase valid tenders of the 2025 Bond for an aggregate nominal amount of €199,037 thou- sand and at a purchase price of €191,097 thou- sand, resulting in gains of €7,940 thousand, which were recognized within financial income. The re- purchases were settled in July 2023. The amount outstanding of the 2025 Bond at December 31, 2023 was €453,027  thousand, including accrued interest of €4,097  thousand (€650,923  thousand, including accrued interest of €5,818  thousand at December 31, 2022). 2029 AND 2031 NOTES On July 31, 2019, the Company issued 1.12 per- cent senior notes due August 2029 (“2029 Notes”) and 1.27 percent senior notes due August 2031 (“2031 Notes”) through a private placement to cer- tain US institutional investors, each having a prin- cipal of €150  million. The net proceeds from the issuances amounted to €298,316  thousand and the yields to maturity on an annual basis equal the nominal coupon rates of the notes. The 2029 Notes and the 2031 Notes are primarily used for general corporate purposes, including the funding of capi- tal expenditures. The amount outstanding of the 2029 Notes at De- cember 31, 2023 was €150,218 thousand, including accrued interest of €700 thousand (€150,135 thou- sand, including accrued interest of €700 thousand at December 31, 2022). The amount outstanding of the 2031 Notes at December 31, 2023 was €150,246 thou- sand, including accrued interest of €794  thousand (€150,178  thousand including accrued interest of €794 thousand at December 31, 2022). 370 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F2032 NOTES On July 29, 2021, the Company issued 0.91 per- cent senior notes due January 2032 (“2032 Notes”) through a private placement to certain US institu- tional investors having a principal of €150  million. The net proceeds from the issuance amounted to €149,495  thousand and the yield to maturity on an annual basis equals the nominal coupon rates of the notes. The 2023 Notes are used for general corpo- rate purposes. The amount outstanding of the 2032 Notes at December 31, 2023 was €150,182  thou- sand, including accrued interest of €587  thousand (€150,136  thousand, including accrued interest of €577 thousand at December 31, 2022). The aforementioned bonds and notes impose covenants on Ferrari including: (i) negative pledge clauses which require that, in case any security interest upon assets of Ferrari is granted in con- nection with other notes or debt securities with the consent of Ferrari are, or are intended to be, listed, such security should be equally and ratably extended to the outstanding notes, subject to cer- tain permitted exceptions; (ii) pari passu clauses, under which the notes rank and will rank pari pas- su with all other present and future unsubordinat- ed and unsecured obligations of Ferrari; (iii) events of default for failure to pay principal or interest or comply with other obligations under the notes with specified cure periods or in the event of a payment default or acceleration of indebtedness or in the case of certain bankruptcy events; and (iv) other clauses that are customarily applicable to debt se- curities of issuers with a similar credit standing. A breach of these covenants may require the early repayment of the notes. At December 31, 2023 and 2022, Ferrari was in compliance with the covenants of the notes. BORROWINGS FROM BANKS AND OTHER FINANCIAL INSTITUTIONS The following table presents information relating to borrowings from banks and other financial institutions. Borrowing Entity Currency 2023 2022 Maturity Date Amount Outstanding at December 31, Ferrari N.V. (1) Ferrari N.V. (1) Ferrari Financial Services, Inc. (2) Ferrari S.p.A. (3) Total borrowings from banks and other financial institutions EUR EUR USD EUR (€ thousand) 130,224 75,040 73,153 12,513 — — 75,665 37,500 January 2026 March 2026 April 2024 June 2024 290,930 113,165 (1) Amortized term loans bearing an average interest of 4.663 activities bearing interest at SOFR plus 75 basis points. percent as of December, 31 2023. (3) An amortized term loan bearing fixed interest at 0.118 (2) Financial liabilities of FFS Inc to support financial services percent. LEASE LIABILITIES COMMITTED CREDIT LINES The Group recognizes lease liabilities in relation in accordance with IFRS to right-of-use assets 16 - Leases. At December 31, 2023 lease liabilities amounted to €73,047 thousand (€57,423  thousand at December 31, 2022). At December 31, 2023, the Group had total commit- ted credit lines available and undrawn amounting to €600 million and with maturities ranging from 2024 to 2026 (€669 million at December 31, 2022). OTHER DEBT Other debt mainly relates to US based financial ser- vice activities with specific reference to expected cash out for new funding request as per contractual commitment. 371 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS(25) OTHER LIABILITIES An analysis of other liabilities is as follows: Advances for supplies and services Deferred income Accrued expenses Payables to personnel Social security payables Other Total other liabilities At December 31, 2023 (€ thousand) 516,096 295,683 100,305 44,880 25,857 40,146 1,022,967 2022 451,166 270,353 98,535 55,789 26,498 49,684 952,025 Deferred income primarily includes amounts re- ceived under maintenance and power warranty programs of €262,644 thousand at December 31, 2023 and €239,879 thousand at December 31, 2022, which are deferred and recognized as net revenues over the length of the maintenance program. Of the total liability related to maintenance and power warranty programs at December 31, 2023, the Group expects to recognize in net revenues ap- proximately €62 million in 2024, €57 million in 2025, €48 million in 2026 and €95 million in periods subse- quent to 2026. Deferred income also includes amounts collect- ed under various other agreements, which are de- pendent upon the future performance of a service or other act of the Group. Advances and security deposits include ad- vances received from customers for the purchase of Ferrari cars, mainly for our Icona, limited edition and Special Series models, as well as certain Range models in selected markets. The advances are rec- ognized in net revenues when the cars are shipped. The increase during 2023 primarily relates to ad- vances received during the year for the Purosangue and the Roma Spider. Changes in the Group’s contract liabilities for maintenance and power warranties, and advances from customers, were as follows: At December Additional Amounts Other changes At December 31, 2022 amounts recognized 31, 2023 arising during within revenue the period (€ thousand) Maintenance and power warranty 239,879 112,362 (89,617) 20 262,644 programs Advances from customers 446,394 990,468 (925,406) (831) 510,625 At December Additional Amounts Other changes At December 31, 2021 amounts recognized 31, 2022 arising during within revenue the period (€ thousand) Maintenance and power warranty 218,982 100,710 (79,593) (220) 239,879 programs Advances from customers 236,516 761,714 (551,885) 49 446,394 372 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(26) TRADE PAYABLES Trade payables of €930,560 thousand at Decem- ber 31, 2023 (€902,968 thousands at December 31, 2022) are entirely due within one year. The carrying amount of trade payables is considered to be equiv- alent to their fair value. (27) FAIR VALUE MEASUREMENT IFRS 13 — Fair Value Measurement establishes a three level hierarchy for the inputs to the valuation techniques used to measure fair value by giving the highest priority to quoted prices (unadjusted) in ac- tive markets for identical assets and liabilities (level 1 inputs) and the lowest priority to unobservable in- puts (level 3 inputs). In some cases, the inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair val- ue hierarchy. In those cases, the fair value measure- ment is categorized in its entirety in the same level of the fair value hierarchy at the lowest level input that is significant to the entire measurement. Levels used in the hierarchy are as follows: • Level 1 inputs are quoted prices (unadjusted) in ac- tive markets for identical assets and liabilities that the Group can access at the measurement date. • Level 2 inputs are inputs other than quoted prices included within level 1 that are observable for the assets or liabilities, either directly or indirectly. • Level 3 inputs are unobservable inputs for the assets and liabilities. ASSETS AND LIABILITIES THAT ARE MEASURED AT FAIR VALUE ON A RECURRING BASIS The following table shows the fair value hierarchy for financial assets and liabilities that are measured at fair value on a recurring basis at De- cember 31, 2023 and 2022: Investments and other financial assets Current financial assets Total assets Other financial liabilities Total liabilities Investments and other financial assets Current financial assets Total assets Other financial liabilities Total liabilities Note Level 1 Level 2 Level 3 Total At December 31, 2023 (€ thousand) 16 19 19 11,982 — — 55,562 11,982 55,562 — — 13,539 13,539 — — — — — 11,982 55,562 67,544 13,539 13,539 Note Level 1 Level 2 Level 3 Total At December 31, 2022 (€ thousand) 16 19 19 9,954 — — 80,233 9,954 80,233 — — 19,993 19,993 — — — — — 9,954 80,233 90,187 19,993 19,993 There were no transfers between fair value hierar- chy levels for the periods presented. The fair value of current financial assets and oth- er financial liabilities relates to derivative financial instruments and is based on a standard accepted valuation model. The fair value of foreign currency forward, currency options and commodity swap is measured by taking into consideration primarily the 373 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSappropriate corroborated market-based currency forward rate, commodity price and currency im- plied volatility at the balance sheet date. The fair val- ue of interest rate derivative is measured by taking into consideration primarily the appropriate corrob- orated market-based interest rates curve at the bal- ance sheet date. The par value of cash and cash equivalents usu- ally approximates fair value due to the short matu- rity of these instruments, which consist primarily of current bank accounts. ASSETS AND LIABILITIES NOT MEASURED AT FAIR VALUE ON A RECURRING BASIS For financial instruments represented by short- term receivables and payables, for which the pres- ent value of future cash flows does not differ sig- nificantly from carrying value, the Group assumes that carrying value is a reasonable approximation of the fair value. In particular, the carrying amount of current receivables and other current assets and of trade payables and other liabilities approximates their fair value. The following table presents the carrying amount and fair value for the most relevant cate- gories of financial assets and financial liabilities not measured at fair value on a recurring basis: At December 31, 2023 2022 Note Carrying amount Fair value Carrying amount Fair value (€ thousand) Receivables from financing activities 18 1,451,158 1,451,158 1,399,997 1,399,997 Client financing Dealer financing Total Debt 1,451,158 1,451,158 1,390,956 1,390,956 — — 9,041 9,041 1,451,158 1,451,158 1,399,997 1,399,997 24 2,477,186 2,462,716 2,811,779 2,770,633 The Group has determined that the carrying amount of the majority of its debt approximates its fair val- ue since either (i) the interest payable on the debt is close to current market rates, and/or (ii) the debt is of a short-term nature. The only exception is the Group's debt that is publicly listed for which the fair value is based on quoted market prices. The Group carries out transactions with related par- ties on commercial terms that are normal in the re- spective markets, considering the characteristics of the goods or services involved. Transactions car- ried out by the Group with these related parties are primarily of a commercial nature and, in particular, these transactions relate to: (28) RELATED PARTY TRANSACTIONS Pursuant to IAS 24, the related parties of Ferrari in- clude Exor N.V., and together with its subsidiaries the Exor Group, as well as all entities and individuals capable of exercising control, joint control or signif- icant influence over the Group and its subsidiaries. Related parties also include companies over which the Exor Group is capable of exercising control, joint control or significant influence, including Stellantis N.V., and together with its subsidiaries the Stellantis Group, and CNH Industrial N.V. and its subsidiaries, as well as joint ventures and associates of Ferrari. In addition, members of the Ferrari Board of Directors and executives with strategic responsibilities and their families are also considered related parties. Transactions with Stellantis Group companies • the sale of engines to Maserati S.p.A. (“Maserati”); • the purchase of engine components for the use in the production of Maserati engines from FCA US LLC; • transactions with Stellantis Group companies, mainly relating to a technical cooperations agreement with the aim to enhance the quality and competitiveness of their respective prod- ucts while reducing costs and investments, to services provided by Stellantis Group compa- nies, including human resources, payroll, tax and the procurement of insurance coverage, as well as to sponsorship revenues received. Transactions with Stellantis Group companies for the periods presented include transactions with FCA Bank until April 1, 2023. Following the sale by the 374 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FStellantis Group of its 50 percent ownership interest in FCA Bank to Crédit Agricole Consumer Finance S.A., FCA Bank (which was renamed CA Auto Bank) is now fully owned by Crédit Agricole Consumer Fi- nance S.A. and is no longer a related party of Ferrari. Transactions with Exor Group companies (exclud- ing Stellantis Group companies) • the Group incurs rental costs from Iveco S.p.A., a company belonging to Iveco Group, related to the rental of trucks used by the Formula 1 racing team; • the Group earns sponsorship revenue from Ive- co S.p.A. Transactions with other related parties ing cars from COXA S.p.A.; • the purchase of components for Formula 1 rac- • consultancy services provided by HPE S.r.l.; • sponsorship agreement relating to Formula 1 • sale of cars to certain members of the Board of activities with Ferretti S.p.A.; Directors of Ferrari N.V. and Exor. In accordance with IAS 24, transactions with related parties also include compensation to Directors and managers with strategic responsibilities. The amounts of transactions with related par- ties recognized in the consolidated income state- ment are as follows: For the years ended December 31, 2023 2022 2021 Net Costs(1) Financial Net Costs(1) Financial Net Costs(1) Financial revenues expenses, revenues expenses, revenues expenses, net Stellantis Group companies Maserati 50,391 2,091 FCA US LLC — 6,803 net — — (€ thousand) 78,946 2,989 14 14,861 net — — 119,083 2,428 — 18,465 — — Other Stellantis 11,489 6,280 1,032 10,953 5,950 2,696 11,799 6,238 2,103 Group companies Total Stellantis 61,880 15,174 1,032 89,913 23,800 2,696 130,882 27,131 2,103 Group companies Exor Group companies (excluding the Stellantis Group) 281 1,615 3 282 1,611 — 281 1,014 Other related 2,237 15,000 — 3,088 14,121 1 795 15,143 parties 1 2 Total transactions 64,398 31,789 1,035 93,283 39,532 2,697 131,958 43,288 2,106 with related parties Total for the 5,970,146 3,477,355 15,015 5,095,254 3,098,475 49,616 4,270,894 2,434,198 33,257 Group (1) Costs include cost of sales, selling, general and administrative costs and other expenses, net. 375 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSNon-financial assets and liabilities originating from related party trans- actions are as follows: At December 31, 2023 2022 Trade Trade Other Other Trade Trade Other Other receivables payables current liabilities receivables payables current liabilities assets assets (€ thousand) Stellantis Group companies Maserati 19,681 3,696 FCA US LLC Other Stellantis Group companies 11 588 771 1,858 Total Stellantis 20,280 6,325 — — 6 6 — — 704 17,458 4,806 10 700 4,637 1,978 — — 2,246 — 111 1,063 704 18,168 11,421 111 3,309 Group companies Exor Group companies (excluding the Stellantis Group) Other related parties — 392 214 218 343 418 68 73 118 2,726 — 51 673 3,341 499 504 Total transactions 20,398 9,443 220 973 19,184 15,180 678 3,886 with related parties Total for the Group 261,380 930,560 130,228 1,022,967 232,414 902,968 153,183 952,025 At December 31, 2023 there were no financial assets or financial liabilities with related parties (current financial receivables of €4,364  thousand and other financial payables of €429 thousand at December 31, 2022). EMOLUMENTS TO DIRECTORS AND KEY MANAGEMENT The fees of the Directors of Ferrari N.V. are as follows: For the years ended December 31, 2023 2022 2021 (€ thousand) Directors of Ferrari N.V. 9,791 7,660 6,668 The aggregate compensation to Directors of Ferrari N.V. for year ended December 31, 2023 was €9,791 thousand (€7,660 thousand in 2022 and €6,668 thousand in 2021), inclusive of the following: • €6,688 thousand for salary and other short- term benefits, including short-term incentives (€5,650 thousand in 2022 and €5,445 thousand in 2021); • €230 thousand for pension benefits (€230 thou- sand in 2022 and there were no pension benefits in 2021), and • €2,873 thousand for share-based compensation awarded under the Company’s equity incentive plans and other share-based payments, (€1,780 thousand in 2022 and €1,223 thousand in 2021). 376 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F See Note 21 “Share-based compensation” for additional information related to the Company’s equity incentive plans. There was no equity-set- tled compensation for Non-Executive Directors for the years ended December 31, 2023, 2022 and 2021. The aggregate compensation for members of the FLT (excluding the CEO) in 2023 was €39,131 thou- sand (€33,935 thousand in 2022 and €18,728 thou- sand in 2021), inclusive of the following: • €34,107 thousand for salary and other short- term benefits, including short-term incentives (€28,084 thousand in 2022 and €14,088 thou- sand in 2021); • €4,479 thousand for share-based compensation awarded under the Company’s equity incentive plans (€5,176 thousand in 2022 and €4,241 thou- sand in 2021); and • €545 thousand for pension contributions (€675 thousand in 2022 and €399 thousand in 2021). (29) COMMITMENTS ARRANGEMENTS WITH KEY SUPPLIERS From time to time, in the ordinary course of busi- ness, the Group enters into various arrangements with key third party suppliers in order to establish strategic and technological advantages. A limited number of these arrangements contain uncondi- tional purchase obligations to purchase a fixed or minimum quantity of goods and/or services with fixed and determinable price provisions. ARRANGEMENTS WITH SPONSORS Certain of the Group’s sponsorship contracts in- clude terms whereby the Group is obligated to pur- chase a minimum quantity of goods and/or services from its sponsors. Future minimum purchase obligations under these supplier and sponsorship arrangements at December 31, 2023 were as follows: At December 31, 2023 Due within one Due between Due between Due beyond Total year one and three three and five five years years years (€ thousand) Minimum purchase obligations 24,071 9,031 3,000 — 36,102 LEASE AGREEMENTS For information relating to future aggregate mini- mum lease payments under lease contracts, which primarily relate to the lease of stores and industri- al buildings, see Note 24 “Debt—Contractual undis- counted cash flows”. (30) QUALITATIVE AND QUANTITATIVE INFORMATION ON FINANCIAL RISKS The Group is exposed to the following financial risks connected with its operations: • financial market risk (principally relating to foreign currency exchange rates and to a lesser extent, in- terest rates and commodity prices), as the Group operates internationally in different currencies; • liquidity risk, with particular reference to the availability of funds and access to the credit markets, should the Group require them, and to financial instruments in general; 377 • credit risk, arising from normal commercial re- lations with dealers, sponsors, licensees and fi- nal clients, as well as the Group’s financing activ- ities. These risks could significantly affect the Group’s financial position, results of operations and cash flows, and for this reason the Group identifies and monitors these risks, in order to detect potential neg- ative effects in advance and take the necessary ac- tion to mitigate them, primarily through the Group’s operating and financing activities and if required, through the use of derivative financial instruments. The following section provides qualitative and quantitative disclosures on the effect that these risks may have upon the Group. The quantitative data reported in the following section does not have any predictive value. In particular, the sensitivity analysis on financial market risks does not reflect the complexity of the market or the reaction which may result from any changes that are assumed to take place. FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSFINANCIAL MARKET RISKS Due to the nature of the Group’s business, the Group is exposed to a variety of market risks, including for- eign currency exchange rate risk and to a lesser ex- tent, interest rate risk and commodity price risk. The Group’s exposure to foreign currency ex- change rate risk arises from the geographic dis- tribution of the Group’s shipments, as the Group generally sells its models in the currencies of the various markets in which the Group operates, while the Group’s industrial activities are all based in Italy, and primarily denominated in Euro. The Group’s exposure to interest rate risk aris- es from the need to fund certain activities and the necessity to deploy surplus funds. Changes in mar- ket interest rates may have the effect of either in- creasing or decreasing the Group’s net profit/(loss), thereby indirectly affecting the costs and returns of financing and investing transactions. The Group has in place various risk management policies, which primarily relate to foreign exchange and commodity price, interest rate and liquidity risks. The Group’s risk management policies permit deriv- atives to be used for managing such risk exposures at risk. Counterparties to these agreements are ma- jor financial institutions. Derivative financial instru- ments can only be executed for hedging purposes. In particular, the Group used derivative financial instruments as cash flow hedges primarily for the purpose of limiting the negative impact of foreign currency exchange rate fluctuations on forecasted transactions denominated in foreign currencies. Ac- cordingly, as a result of applying risk management policies with respect to foreign currency exchange exposure, the Group’s results of operations have not been fully exposed to fluctuations in foreign curren- cy exchange rates. However, despite these risk man- agement policies and hedging transactions, sudden adverse movements in foreign currency exchange rates could have a significant effect on the Group’s earnings and cash flows. The Group also enters into interest rate caps as required by certain of its securitization agreements. Information on the fair value of derivative finan- cial instruments held is provided in Note 19. INFORMATION ON FOREIGN CURRENCY EXCHANGE RATE RISK The Group is exposed to risks resulting from chang- es in foreign currency exchange rates, which can af- fect its earnings and equity. In particular: • Where a Group company incurs costs in a cur- rency different from that of its revenues, any change in foreign currency exchange rates can affect the operating results of that company. In 2023, the total trade flows exposed to foreign currency exchange rate risk amounted to the equivalent of 60 percent of the Group’s net reve- nues (65 percent in 2022 and 58 percent in 2021). • The main foreign currency exchange rate to which the Group is exposed is the Euro/U.S. Dollar for sales in U.S. Dollar in the United States and oth- er markets where the U.S. Dollar is the reference currency. In 2023, the value of commercial activi- ties exposed to fluctuations in the Euro/U.S. Dollar exchange rate accounted for approximately 57 percent (52 percent in 2022 and 51 percent in 2021) of the total currency risk from commercial activi- ties. In 2023 the commercial activities exposed to the Euro/Chinese Renminbi exchange rate and the Euro/Japanese Yen exchange rate exceeded 10 percent (in 2022 and 2021 the Euro/Japanese Yen exchange rate and the Euro/Pound Sterling exchange rate exceeded 10 percent) of the total currency risk from commercial activities. Other significant exposures included the exchange rate between the Euro and the following currencies: Pound Sterling, Swiss Franc, Australian Dollar and Canadian Dollar. None of these exposures, taken individually, exceeded 10 percent of the Group’s total foreign currency exchange rate exposure for commercial activities in 2023, 2022 and 2021 (apart from Pound Sterling in 2022 and 2021). • Several subsidiaries are located in countries that are outside the Eurozone, in particular the United States, Japan, China, and Australia. As the Group’s reporting currency is the Euro, the in- come statements of those companies are trans- lated into Euro using the average exchange rate for the period and, even if revenues and margins are unchanged in local currency, changes in ex- change rates can impact the amount of reve- nues, costs and profit as translated into Euro. • The amount of assets and liabilities of consoli- dated companies that report in a currency oth- er than the Euro may vary from period to period as a result of changes in exchange rates. The ef- fects of these changes are recognized directly in equity as a component of other comprehensive income/(loss) under gains/(losses) from curren- cy translation differences. Exchange differences arising on the settlement of monetary items or on reporting monetary items at rates different from those at which they were initial- ly recorded during the period or in previous finan- cial statements, are recognized in the consolidated income statement within financial income or finan- cial expenses or as cost of sales for charges arising from financial services companies. It is the Group’s policy to use derivative financial instruments (primarily forward currency contracts and currency options) to hedge up to 90 percent of the principal exposures to foreign currency trans- action exchange risk, typically for a period of up to twelve months. The Group monitors its principal exposure to for- eign currency translation exchange risk, although the Group did not engage in any specific hedging ac- tivities in relation to translation exchange risk for the periods presented. 378 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FThe impact of foreign currency exchange rate dif- ferences recorded within financial income or fi- nancial expenses for the year ended December 31, 2023, including the costs of hedging foreign cur- rency exchange rate risk, amounted to net losses of €20,197 thousand (net losses of €25,923 thousand and €11,407 thousand for the years ended Decem- ber 31, 2022 and 2021, respectively). All of the Group’s financial services activities are conducted in the functional currencies of the relat- ed financial services companies, therefore the im- pact of foreign currency exchange rate differences arising from financial services activities was zero in all periods presented. Except as noted above, there have been no sub- stantial changes in 2023 in the nature or structure of exposure to foreign currency exchange rate risks or in the Group’s hedging policies. The potential decrease in fair value of deriv- ative financial instruments held by the Group at December 31, 2023 to hedge against foreign cur- rency exchange rate risks, which would arise in the case of a hypothetical, immediate and adverse change of 10 percent in the exchange rates of the major foreign currencies with the Euro, would be approximately €191,355 thousand (€174,550 thou- sand at December 31, 2022). Receivables, payables and future trade flows for which hedges have been put in place were not included in the analysis. It is reasonable to assume that changes in foreign cur- rency exchange rates will produce the opposite effect, of an equal or greater amount, on the un- derlying transactions that have been hedged. The sensitivity analysis is based on currency hedging in place at the end of the period, which can vary during the period and assumes unchanged mar- ket conditions other than exchange rates, such as volatility and interest rates. For this reason, it is purely indicative. INFORMATION ON INTEREST RATE RISK The Group’s exposure to interest rate risk, though less significant, arises from the need to fund finan- cial services activities and the necessity to deploy surplus funds. Changes in market interest rates may have the effect of either increasing or decreasing the Group’s net profit/(loss), thereby indirectly af- fecting the costs and returns of financing and in- vesting transactions. The Group’s most significant floating rate finan- cial assets at December 31, 2023 were cash and cash equivalents and certain receivables from client financing activities, while 58 percent of the Group’s gross debt bears floating rates of interest (42 per- cent at December 31, 2022). At December 31, 2023, an increase of 25 basis points in interest rates on floating rate financial assets and debt, with all oth- er variables held constant, would have resulted in a decrease in profit before taxes of €565 thousand on an annual basis (a decrease of €303 thousand at De- cember 31, 2022 for a decrease of 10 basis points in interest rates). The analysis is based on the assump- tion that floating rate financial assets and debt which expire during the projected 12-month period will be renewed or reinvested in similar instruments, bear- ing the hypothetical short-term interest rates. INFORMATION ON COMMODITY PRICE RISK The Group’s exposure to commodity price risk, though much less significant than foreign exchange rate risk and interest rate risk, arises from the need to use a variety of raw materials in the Group’s op- erations, including aluminum and precious metals such as palladium and rhodium. The Group monitors its exposure to commodity price risk and may hedge a portion of such exposure through derivative finan- cial instruments (primarily commodity swaps). LIQUIDITY RISK Liquidity risk arises if the Group is unable to obtain the funds needed to carry out its operations and meet its obligations. The main determinant of the Group’s liquidity position is the cash generated by or used in operating and investing activities. From an operating point of view, the Group manages liquidity risk by monitoring cash flows and keeping an adequate level of funds readily avail- able. The main funding operations and investments in cash and marketable securities of the Group are centrally managed or supervised by the treasury department with the aim of ensuring effective and efficient management of the Group’s liquidity. The Group has established various policies which are managed or supervised centrally by the treasury department with the purpose of optimizing the management of funds and reducing liquidity risk which include: quidity use of cash pooling arrangements • centralizing liquidity management through the • maintaining a conservative level of available li- • obtaining adequate credit lines and diversifying • maintaining a portfolio of high-quality liquid assets • monitoring future liquidity requirements on the sources of funding basis of business planning Intercompany financing between Group entities is not restricted other than through the application of covenants requiring that transactions with related parties be conducted at arm’s length terms. Details on the maturity profile of the Group’s financial assets and liabilities and on the structure of derivative financial instruments are provided in Notes 19 and 24. Details of the repayment of deriv- ative financial instruments are provided in Note 19. To preventively and prudently manage poten- tial liquidity or refinancing risks in the foreseeable future, the Group has secured available undrawn committed credit lines, which amounted to €600 379 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSmillion and €669 million at December 31, 2023 and 2022 respectively. The Group believes that its total available liquidity (defined as cash and cash equivalents plus undrawn committed credit lines), in addition to funds that will be generated from operating activities, will enable Ferrari to satisfy the requirements of its investing activities and working capital needs fulfill its obli- gations to repay its debt and ensure an appropriate level of operating and strategic flexibility. The Group therefore believes there is no significant risk of a lack of liquidity. CREDIT RISK Credit risk is the risk of economic loss arising from the failure to fully collect receivables. Credit risk encompasses the direct risk of default and the risk of a deterioration of the creditworthiness of the counterparty. The maximum credit risk to which the Group is theoretically exposed at December 31, 2023 is represented by the carrying amounts of the financial assets presented in the consolidated state- ment of financial position sheet and the nominal val- ue of the guarantees provided. Dealers, clients and, in general, Ferrari’s busi- ness partners are subject to a specific evaluation of their creditworthiness. Additionally, it is Group practice to obtain financial guarantees against risks associated with credit granted for the purchase of cars and parts, as well as certain sponsorships and licensees. These guarantees are further strength- ened, where possible, by retaining title on cars sub- ject to financing agreements. Credit positions of material significance are evaluated on an individual basis. Where objective evidence exists that they are uncollectible, in whole or in part, specific write-downs are recognized. The amount of the write-down is based on an estimate of the recoverable cash flows, the timing of those cash flows, the cost of recovery and the fair value of any guarantees received. Receivables from financing activities relate en- tirely to the financial services portfolio in the United States and such receivables are generally secured on the titles of cars or other guarantees. Receivables from financing activities amounting to €1,451,158 thousand at December 31, 2023 (€1,399,997 thou- sand at December 31, 2022) are shown net of the al- lowance for doubtful accounts amounting to €11,165 P-1 / A-1 / Aaa-mf / AAAm (1) P-2 / A-2 P-3 / A-3 / Not rated thousand (€9,950 thousand at December 31, 2022). After considering the allowance for doubtful ac- counts, €82,029 thousand of receivables were over- due (€62,779 thousand at December 31, 2022). There- fore, overdue receivables represent a minor portion of receivables from financing activities. Trade receivables amounting to €261,380 thou- sand at December 31, 2023 (€232,414 thousand at December 31, 2022) are shown net of the allowance for doubtful accounts amounting to €25,418 thou- sand (€25,800 thousand at December 31, 2022). After considering the allowance for doubtful ac- counts, €35,935 thousand of receivables were over- due (€45,657 thousand at December 31, 2022). The Group’s cash and cash equivalents are held on bank and deposit accounts with primary finan- cial institutions and highly rated money market funds. It is the Ferrari Group’s policy to continuous- ly monitor counterparty risk and limit concentra- tion of bank and deposit accounts to a maximum of 25% of the total with a single financial counterpart. With specific reference to Money Market Funds, instead, the invested amounts in any specific fund must not exceed 10% of the par value of such. The Group considers its credit risk with respect to its cash and cash equivalents to be low considering that they are held with primary financial institutions and the maximum exposure with any one counter- party is limited. Cash flow forecasting is performed by the Group on a recurring basis. The Group monitors a rolling forecast of its liquidity requirements to en- sure that there is sufficient cash to meet operation- al needs and maintain adequate headroom. Cash held by the businesses over and above balances re- quired for working capital management is loaned to the Group’centralized treasury department. Cash is invested in instant-access current accounts, short- term deposits and money market funds, choosing instruments with appropriate maturities to provide adequate headroom as determined by cash fore- casts. In accordance to Group liquidity risk man- agement policy, the Group controls counterparties’ credit risk and credit limit utilization. It adopts a con- servative approach to the investment of its cash which is deposited with financial institutions with high credit standing. The following table presents information relat- ing to the short term credit rating of the Group’s cash and cash equivalents: At December 31, 2023 6% 92% 2% 2022 1% 98% 1% (1) Aaa-mf (Moody’s) /AAAm (S&P Global Ratings) refer to institutions with whom the Group deposits cash in current money market funds. P-ratings (Moody’s) and A-ratings (S&P accounts or other short-term instruments. Global Ratings) refer to the short-term rating of the financial 380 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(31) ENTITY-WIDE DISCLOSURES The following table presents an analysis of net revenues by geograph- ic location of the Group’s customers for the years ended December 31, 2023 and 2021, including the effects of foreign currency hedge trans- actions. Revenues by geography presented for material individual coun- tries are not necessarily correlated to shipments of cars as certain countries include revenues from sponsorship and commercial activities relating to Ferrari’s participation in the Formula 1 World Championship. Italy Rest of EMEA of which UK of which Germany Americas (1) For the years ended December 31, 2023 2022 2021 (€ thousand) 442,760 379,898 409,992 2,428,783 2,045,888 1,869,864 625,930 493,930 536,280 430,380 457,060 367,087 1,762,530 1,407,790 1,097,904 of which United States of America 1,535,772 1,198,834 Mainland China, Hong Kong and Taiwan of which Mainland China Rest of APAC (2) Total net revenues 583,760 479,882 752,313 621,407 533,724 640,271 930,316 332,971 249,275 560,163 5,970,146 5,095,254 4,270,894 (1) Americas includes the United States of America, Canada, (2) Rest of APAC mainly includes Japan, Australia, Singapore, Mexico, the Caribbean and of Central and South America. Indonesia, South Korea, Thailand, India and Malaysia. Revenues in the Netherlands, the Company’s country of domicile, for the years ended December 31, 2023, 2022 and 2021 amounted to €68,605 thou- sand, €56,748 thousand and €41,892 thousand, respectively. The following table presents an analysis of non-current assets other than financial instruments and deferred tax assets by geographic location: At December 31, 2023 2022 Property, plant and equipment Goodwill Intangible assets Property, plant and equipment Goodwill Intangible assets (€ thousand) 1,532,516 785,182 1,419,447 1,418,846 785,182 1,307,127 5,388 29,701 3,100 4,495 — — — — — — — 4,830 27,233 4,598 252 2,318 — — — — — — — 261 1,575,200 785,182 1,419,699 1,457,825 785,182 1,307,388 Italy Rest of EMEA Americas (1) Mainland China, Hong Kong and Taiwan Rest of APAC (2) Total (1) Americas includes the United States of America, Canada, Mexico, the Caribbean and of Central and South America. (2) Rest of APAC mainly includes Japan, Australia, Singapore, Indonesia, South Korea, Thailand, India and Malaysia. 381 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS(32) CASH AND CASH EQUIVALENTS AND NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS CASH AND CASH EQUIVALENTS The following table presents cash and cash equivalents: Cash and bank balances Cash and cash equivalents At December 31, 2023 (€ thousand) 1,121,981 1,121,981 2022 1,388,901 1,388,901 At December 31, 2023, cash and cash equivalents in- cluded €50,000 thousand relating to a time deposit held with a recognized international financial insti- tution, which originated in November 2023 and ma- tures in February 2024 and an investment in money market funds of €50,069  thousand with an AAAm rating. At December 31, 2022, cash and cash equiva- lents included €100,000 thousand relating to a time deposit held with a recognized international finan- cial institution, which originated in December 2022 and matured in March 2023. At both December 31, 2023 and 2022, the remaining cash and bank balanc- es were held in bank current accounts. At December 31, 2023, 80 percent of our cash and cash equivalents were denominated in Euro (at De- cember 31, 2022, 85 percent). The Group’s cash and cash equivalents denominated in currencies other than the Euro are available mostly to Ferrari S.p.A. and certain subsidiaries which operate in areas oth- er than the Eurozone. The following table sets forth an analysis of the currencies in which the Group’s cash and cash equivalents were denominated at December 31, 2023 and 2022. Euro U.S. Dollar Chinese Yuan Pound Sterling Other currencies Total At December 31, 2023 (€ thousand) 2022 894,509 1,181,354 96,663 80,716 19,706 30,387 70,261 95,835 9,453 31,998 1,121,981 1,388,901 Cash held in some countries may be subject to trans- fer restrictions. In particular, cash held in China (in- cluding in currencies other than the Chinese Yuan), which amounted to €81,337 thousand at December 31, 2023 (€96,726 thousand at December 31, 2022), is subject to certain repatriation restrictions and may only be repatriated as a repayment of payables or debt, or as dividends or capital distributions. The Group does not believe that such transfer restric- tions have any adverse impacts on its ability to meet its liquidity requirements. Cash collected from the settlement of receivables under securitization programs is subject to certain restrictions regarding its use and is principally ap- plied to repay principal and interest of the related funding. Such cash amounted to €31,820 thousand at December 31, 2023 (€44,085 thousand at Decem- ber 31, 2022). For information relating to the credit risk with respect to cash and cash equivalents, see note 30 “Qualitative and Quantitative Information on Finan- cial Risks”.  382 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FNOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS Other non-cash expenses, net primarily includes equity-settled share- based compensation, allowances for doubtful accounts of trade receiv- ables and provisions for slow moving and obsolete inventories. For information relating to the financing cash flows relating to debt, see Note 24 “Debt”. (33) SUBSEQUENT EVENTS The Group has evaluated subsequent events through February 22, 2024, which is the date the Consolidated Financial Statements were authorized for issuance, and identified the following matters: Under the common share repurchase program, from January 1, 2024 to February 16, 2024 the Company purchased an additional 187,642 com- mon shares for total consideration of €60.9 million. At February 16, 2024, the Company held in treasury an aggregate of 13,693,051 common shares. On February 22, 2024, the Board of Directors of Ferrari N.V. recom- mended to the Company’s shareholders that the Company declare a dividend of €2.443 per common share, totaling approximately €440 million. The proposal is subject to the approval of the Company’s shareholders at the Annual General Meet- ing to be held on April 17, 2024. 383 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSFINANCIAL STATEMENTS COMPANY FINANCIAL STATEMENT AT AND FOR THE YEAR ENDED DECEMBER 31 2023 386 Income Statement / Statement 388 Statement of Cash Flows 390 Notes to the Company Financial of Comprehensive Income Statements 387 Statement of Financial Position 389 Statement of Changes in Equity P. 385 00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum00 Lorem Ipsum FERRARI N.V. INCOME STATEMENT/ STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 Net revenues Other income Dividend income Cost of sales Selling, general and administrative costs Financial income Financial expenses Financial expenses, net Profit before taxes Income tax benefit Net profit Other comprehensive income Total comprehensive income For the years ended December 31, Note 2023 2022 3 3 4 5 6 6 6 7 (€ thousand) 2,144 18,747 474 15,830 500,000 700,000 1,781 45,214 11,092 131,040 119,948 1,550 35,391 594 36,311 35,717 353,948 643,646 28,811 4,786 382,759 648,432 27 — 382,786 648,432 The accompanying notes are an integral part of the Company Financial Statements. 386 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFERRARI N.V. STATEMENT OF FINANCIAL POSITION AT DECEMBER 31, 2023 AND 2022 Note 2023 2022 At December 31, (€ thousand) Assets Property, plant and equipment Investments in subsidiaries Financial receivables Deferred tax assets Total non-current assets Trade receivables Tax receivables Other current assets Cash and cash equivalents Total current assets Total assets Equity and liabilities Share capital Share premium Other reserves Retained earnings Total equity Debt (Non-Current) Employee benefits Total non-current liabilities Debt (Current) Trade payables Tax payables Other current liabilities Ferrari Group cash management pools Total current liabilities Total liabilities Total equity and liabilities 8 9 10 7 10 7 10 12 13 15 15 16 7 17 11 2,734 1,814 8,783,663 8,778,173 34,762 3,836 26,704 1,974 8,824,995 8,808,665 23,040 90,463 61,298 97,432 23,871 33,400 74,529 110,702 272,233 242,502 9,097,228 9,051,167 2,573 2,573 5,768,544 5,768,544 (1,573,121) (1,143,382) 737,962 683,834 4,935,958 5,311,569 1,029,572 1,097,142 5,797 2,639 1,035,369 1,099,781 3,016,746 2,553,992 1,743 69,597 35,051 2,764 7,533 36,661 36,233 5,398 3,125,901 2,639,817 4,161,270 3,739,598 9,097,228 9,051,167 The accompanying notes are an integral part of the Company Financial Statements. 387 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSFERRARI N.V. STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 Cash and cash equivalents at the beginning of the year 110,702 94,530 For the years ended December 31, Note 2023 2022 (€ thousand) Cash flows from operating activities: Net profit Income tax benefit Amortization and depreciation Financial income Financial expenses Other non-cash expenses, net Change in trade receivables Change in trade payables Change in other operating assets and liabilities Finance costs paid Total cash flows from operating activities Cash flows used in investing activities: Investments in property, plant and equipment Investments in subsidiaries Total cash flows used in investing activities Cash flows used in financing activities: Proceeds from financial liabilities with related parties Repayments of financial liabilities with related parties Proceeds from borrowings from banks and other financial institutions Repayments of borrowings from banks and other financial institutions Repayments of bonds and notes Repayments of lease liabilities Change in Ferrari Group cash management pools Dividends paid to owners Share repurchases Total cash flows used in financing activities Total change in cash and cash equivalents Cash and cash equivalents at the end of the year 7 8 6 6 19 10 16 8 9 15 15 15 15 15 15 11 13 13 19 382,759 (28,811) 703 (11,092) 131,040 (6,721) 1,025 (5,782) 37,053 (77,797) 422,377 (1,585) (9,000) (10,585) 648,432 (4,786) 477 (594) 36,311 4,790 (9,564) (3,954) (6,276) (23,103) 641,733 (55) (30) (85) 2,900,000 2,150,000 (2,159,120) (2,140,000) 250,000 (47,500) (575,702) (672) (2,808) — — — (348) 10,916 (328,631) (249,522) (460,629) (396,522) (425,062) (625,476) (13,270) 97,432 16,172 110,702 The accompanying notes are an integral part of the Company Financial Statements. 388 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFERRARI N.V. STATEMENT OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 Share capital Share premium Other reserves Retained earnings Total equity (€ thousand) At December 31, 2021 2,573 5,768,544 (767,646) 284,924 5,288,395 Net profit and total comprehensive income Dividends to owners Share repurchases Share-based compensation Other changes — — — — — — — — — — — — (396,522) 20,860 (74) 648,432 648,432 (249,522) (249,522) — — — (396,522) 20,860 (74) At December 31, 2022 2,573 5,768,544 (1,143,382) 683,834 5,311,569 Net profit Other comprehensive income Total comprehensive income Dividends to owners Share repurchases Share-based compensation — — — — — — — — — — — — — 27 27 — 382,759 382,759 — 27 382,759 382,786 (328,631) (328,631) (460,629) 30,863 — — (460,629) 30,863 At December 31, 2023 2,573 5,768,544 (1,573,121) 737,962 4,935,958 The accompanying notes are an integral part of the Company Financial Statements. 389 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS  (1) CORPORATE INFORMATION AND PRINCIPAL ACTIVITIES Ferrari N.V. (the “Company” or “Ferrari” and togeth- er with its subsidiaries the “Ferrari Group” or the “Group”) was incorporated as a public limited com- pany (naamloze vennootschap) under the laws of the Netherlands on September 4, 2015. The Com- pany was formed to ultimately act as a holding company for Ferrari S.p.A., which, together with its subsidiaries, is focused on the design, engineer- ing, production and sale of luxury performance sports cars. The Company is listed under the ticker symbol RACE on the New York Stock Exchange and on the Euronext Milan. The Company’s official seat (statutaire zetel) is in Amsterdam, the Netherlands and the Company’s corporate address is in Maranello, Italy at Via Abet- one Inferiore 4. The Company is registered with the Dutch trade register under number 64060977. (2) BASIS OF PREPARATION AND MATERIAL ACCOUNTING POLICIES DATE OF AUTHORIZATION FOR ISSUANCE The separate financial statements of the Company (the “Company Financial Statements”) as of and for the years ended December 31, 2023 and 2022 were authorized for issuance on February 22, 2024. BASIS OF PREPARATION The Company Financial Statements are prepared on a going concern basis using the historical cost method, modified as required for the measurement of certain financial instruments, which are generally measured at fair value. STATEMENT OF COMPLIANCE The Company Financial Statements have been pre- pared in accordance with International Financial Reporting Standards as adopted by the European Union (“EU IFRS”) and with Part 9 of Book 2 of the Dutch Civil Code. MEASUREMENT BASIS The Company Financial Statements were prepared using the same accounting policies as set out in the notes to the consolidated financial statements at December 31, 2023 (the “Consolidated Financial Statements”), except for the measurement of the investments as presented under “Investments in subsidiaries” in the Company Financial Statements, which are measured at cost, less impairment (if any). Management considers the primary focus of these Company Financial Statements to be the legal enti- ty perspective and considers that these Company Financial Statements should reflect the cost of the subsidiaries as well as the amounts that are eligi- ble for distribution to the Company’s shareholders. Management believes that the measurement of its subsidiaries at cost in the Company Financial State- ments, as permitted under EU IFRS, provides the best insight into the Company’s financial position and results, in addition to the information provided in the Consolidated Financial Statements. The accounting policies were consistently ap- plied to all periods presented herein with the excep- tion of the new standards and amendments effec- tive from January 1, 2023 as noted below. The amounts in the Company Financial State- ments are presented in thousands of Euro (€), ex- cept where otherwise indicated. FORMAT OF THE COMPANY FINANCIAL STATEMENTS The Company presents the income statement by function and uses a current/non-current classifi- cation for assets and liabilities in the statement of fi- nancial position. STATEMENT OF CASH FLOWS The statement of cash flows is prepared using the indirect method with a breakdown into cash flows from or used in operating, investing and financing activities. Cash inflows or outflows related to taxes are reported as changes in other operating assets and liabilities as they are primarily settled through transactions with related parties as a result of the Ferrari Group Italian tax consolidation. Dividends re- ceived are included as part of operating activities. NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS EFFECTIVE FROM JANUARY 1, 2023 The following new amendments were effective on or subsequent to January 1, 2023 and were adopted by the Company for the purpose of the preparation of the Company Financial Statements: • IFRS 17 — Insurance Contracts, Amendments to IFRS 17 — Insurance Contracts: Initial Application of IFRS 17 and IFRS 9 - Comparative Information and amendments to IFRS 4 — Insurance Con- tracts; • Amendments to IAS 1 — Presentation of Financial Statements and IFRS Practice Statement 2: Dis- closure of Accounting Policies; • Amendments to IAS 8 — Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates; • Amendments to IAS 12 — Income Taxes: Deferred 390 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FTax related to Assets and Liabilities Arising From a Single Transaction; • Amendments to IAS 12 — Income Taxes: Interna- tional Tax Reform – Pillar Two Model Rules. There was no effect from the adoption of these amendments. Further information relating to these amendments is provided in Note 2 of the Consolidat- ed Financial Statements. NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE Information relating to new standards, amend- ments and interpretations issued but not yet effec- tive is provided in Note 2 of the Consolidated Finan- cial Statements. MATERIAL ACCOUNTING STANDARDS INVESTMENTS IN SUBSIDIARIES Investments in subsidiaries, which primarily relate to the Company’s investment in Ferrari S.p.A., are measured at cost, less impairment (if any). Dividend income from the Company’s subsidiaries is recog- nized in the income statement when the right to re- ceive payment is established. IMPAIRMENT OF INVESTMENTS IN SUBSIDIARIES At each reporting date, the Company assesses whether there is an indication that investments in subsidiaries may be impaired. If any such indication exists, the Company makes an estimate of the as- set’s recoverable amount. The recoverable amount is defined as the higher of (i) the fair value of the in- vestment less costs of disposal and (ii) its value in use. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Any resulting impairment is recognized in the income statement. An assessment is made at each reporting date as to whether there is any indi- cation that previously recognized impairment losses may no longer exist or may have decreased. If such an indication exists, the Company makes an estimate of the recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the as- set’s recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount, up to a maximum of the carrying amount that would have been determined if no impairment loss had been recognized for the asset in prior pe- riods. Such a reversal is recognized in the income statement. There was no impairment of investments in subsidiaries or reversals of impairment of invest- ments for the periods presented in these Company Financial Statements. FOREIGN CURRENCY TRANSACTIONS The financial statements are prepared in Euro, which is the Company’s functional and presentation currency. Transactions in foreign currencies are re- corded at the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the foreign currency exchange rate prevailing at that date. Exchange differences arising on the settlement of monetary items or on report- ing monetary items at rates different from those at which they were initially recorded during the period or in previous financial statements are recognized in the income statement. FOREIGN CURRENCY TRANSLATION The Company has a branch in the United Kingdom (UK) that operates primarily in Pound Sterling. At each reporting period, the assets and liabilities within the UK branch are translated to Euro using the exchange rate at the balance sheet date and the income statement is translated using the average exchange rate for the period. Translation differ- ences resulting from the application of this meth- od are classified as translation differences within other comprehensive income/(loss) and will only be reclassified to the income statement if the branch is disposed of. The principal foreign currency ex- change rates used to translate other currencies into Euro were as follows: U.S. Dollar Pound Sterling 2023 2022 Average At December 31 Average At December 31 1.0814 0.8699 1.1050 0.8691 1.0530 0.8528 1.0666 0.8869 391 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSPROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is recognized at cost net of accumulated depreciation and, if applicable, impairment. Depreciation is calculated on a straight line basis over the useful lives of the assets as follows: Asset Category Buildings Office equipment Other assets Depreciation Rates 10% 20% - 22% 20% - 25% LEASES TRADE RECEIVABLES The Company recognizes a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use. Each lease pay- ment is allocated between the principal liability and finance costs. Finance costs are charged to the in- come statement over the lease period using the ef- fective interest rate method. The right-of-use asset is depreciated on a straight-line basis over the short- er of the lease term or the useful life of the asset. Right-of-use assets are measured at cost com- prising the following: (i) the amount of the initial mea- surement of related lease liability, (ii) any lease pay- ments made at or before the commencement date less any lease incentives received, (iii) any initial direct costs and, if applicable, (iv) restoration costs. Pay- ments associated with short-term leases and leases of low-value assets are recognized as an expense in the income statement on a straight-line basis. Lease liabilities are measured at the net present value of the following: (i) fixed lease payments, (ii) variable lease payments that are based on an index or a rate (if applicable), (iii) amounts expected to be payable by the lessee under residual value guaran- tees, and (iv) the exercise price of a purchase op- tion if the lessee is reasonably certain to exercise that option. Lease liabilities do not include any non- lease components that may be included in the relat- ed contracts. Lease payments are discounted using the inter- est rate implicit in the lease. If that rate cannot be determined, the Company’s incremental borrowing rate is used, being the rate that the Company would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic envi- ronment with similar terms and conditions. In determining the lease term, management con- siders all facts and circumstances that create an economic incentive to exercise an extension option or not exercise a termination option. Extension op- tions (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Trade receivables are amounts due for goods sold or services provided in the ordinary course of busi- ness. Trade receivables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest rate method, less any provision for allowances. CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash on hand, de- posits held at call with banks and other short-term, highly liquid investments with original maturities of three months or less. There are no liens, pledges, collateral or restrictions on cash and cash equiv- alents. Cash and cash equivalents do not include amounts in Ferrari Group cash management pools. DEBT Debt is measured at amortized cost using the effec- tive interest rate method. TRADE PAYABLES Trade payables primarily include amounts payable for services, legal and professional fees and other expenses incurred. Trade payables are all due with- in one year. DEFERRED INCOME Deferred income relates to amounts received in advance under certain agreements, primarily re- lating to marketing-related events hosted for third party dealers, which are reliant on the future per- formance of a service or other act of the Company. Deferred income is recognized as net revenues or other income when the Company has fulfilled its ob- ligations under the terms of the various agreements. Deferred income is recorded on the statement of fi- nancial position within “other liabilities”. NET REVENUES Net revenues are primarily generated from market- ing-related events, such as new car launches and oth- 392 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fer promotional events. Revenue is recognized when control over a product or service is transferred to the customer. Revenue is measured at the transaction price which is based on the amount of consideration that the Company expects to receive in exchange for transferring the promised goods or services to the customer and excludes any sales incentives as well as taxes collected from customers that are remitted to government authorities. The transaction price in- cludes estimates of variable consideration to the ex- tent it is probable that a significant reversal of reve- nue recognized will not occur. The Company enters into contracts that may include both products and services, which are generally capable of being dis- tinct and accounted for as separate performance ob- ligations where appropriate. The Company accounts for a contract with a customer when there is a legally enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has commercial substance, and collectabili- ty of the contract consideration is probable. OTHER INCOME Other income primarily relates to services per- formed by the Company on behalf of its subsidiaries for certain corporate services rendered and other recharge fees. INCOME TAXES Current and deferred taxes are recognized as in- come tax benefit or income tax expense and are included in the income statement for the period, ex- cept tax arising from a transaction or event which is recognized, in the same or a different period, either in other comprehensive income/(loss) or directly in equity. Tax uncertainties are accounted for in accor- dance with IFRIC 23. DIVIDENDS Dividends payable by the Company are reported as a change in equity in the period in which they are approved by the shareholders as applicable under local rules and regulations. Dividend income is rec- ognized in the income statement when the right to receive payment is established. SHARE-BASED COMPENSATION The Company has implemented equity incentive plans that provide for the granting of share-based compensation to the Chairman, the Chief Executive Officer, all other members of the Ferrari Leadership Team and other key employees of the Group. The Company also provides share-based compensa- tion as part of commercial agreements with certain suppliers. The share-based compensation arrange- ments are accounted for in accordance with IFRS 2 — Share-based Payments, which requires the Com- pany to recognize share-based compensation ex- pense based on fair value of awards granted. Com- pensation expense for the equity-settled awards containing market performance conditions is mea- sured at the grant date fair value of the award us- ing a Monte Carlo simulation model, which requires the input of subjective assumptions, including the expected volatility of the Company’s common stock, the dividend yield, interest rates and a correlation coefficient between the common stock and the relevant market index. The fair value of the awards which are conditional only on a recipient’s continued service to the Company is measured using the share price at the grant date adjusted for the present value of future distributions which employees will not re- ceive during the vesting period. Pursuant to an agreement between the Compa- ny and various subsidiaries of the Group, the Com- pany recharges subsidiaries for share-based com- pensation relating to equity instruments awarded to employees of the subsidiaries under the equity incentive plans. The Company’s portion of the share- based compensation expense relating to the equity incentive plans is recognized over the service peri- od within selling, general and administrative costs or cost of sales in the income statement depending on the function of the employee with an offsetting increase to equity, whilst share-based compensa- tion recharged to the subsidiaries of the Group is recognized as a financial receivable (until payment is received) with an offsetting amount recorded as an increase to equity. Share-based compensation expense relating to commercial agreements with certain suppliers is recognized over the period in which the supplier’s services are received and classified within the con- solidated income statement depending on the func- tion of the supplier’s services, with an offsetting in- crease to equity. SEGMENT REPORTING As disclosed in the Consolidated Financial State- ments, the Group has determined that it has one op- erating and one reportable segment based on the in- formation reviewed by its Chief Operating Decision Maker in making decisions regarding the allocation of resources and to assess performance. USE OF ESTIMATES The Company Financial Statements are prepared in accordance with EU IFRS, which requires the use of estimates, judgments, and assumptions that affect the carrying amount of assets and liabilities, the dis- closure of contingent assets and liabilities and the amounts of income and expenses recognized. The estimates and associated assumptions are based on elements that are known when the financial state- ments are prepared, on historical experience and on any other factors that are considered to be rel- evant. The estimates and underlying assumptions are reviewed periodically and continuously by the Company. If the items subject to estimates do not 393 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSperform as assumed, then the actual results could differ from the estimates, which would require ad- justment accordingly. The effects of any changes in estimate are recognized in the income statement in the period in which the adjustment is made, or pro- spectively in future periods. The estimates and as- sumptions that management considers most critical for the Company Financial Statements relate to in- vestments in subsidiaries and in particular, relating to impairment indicators. See Note 9 “Investments in subsidiaries” for further details. For disclosures relating to climate-related mat- ters, see Note 2 “Material Accounting Policies–Use of estimates–Climate-related matters” to the Consoli- dated Financial Statements. (3) NET REVENUES AND OTHER INCOME Net revenues for the year ended December 31, 2023 amounted to €2,144  thousand and primarily related to marketing-related and other promotional events (€474 thousand for the year ended Decem- ber 31, 2022). Other income for the year ended December 31, 2023 amounted to €18,747  thousand (€15,830  thousand for the year ended December 31, 2022) and primar- ily related to costs recharged to Ferrari S.p.A. for corporate services rendered and fees charged. (4) DIVIDEND INCOME Dividend income for the year ended December 31, 2023 amounted to €500,000 thousand and related entirely to a dividend from Ferrari S.p.A., approved in April 2023 and received in May 2023. Dividend income for the year ended December 31, 2022 amounted to €700,000 thousand and relat- ed entirely to a dividend from Ferrari S.p.A, approved in two tranches as follow: (i) €300,000 thousand ap- proved in April 2022, of which €70,000 thousand was received in April 2022 and €230,000 thou- sand was received in May 2022; and (ii) €400,000 thousand approved in September 2022, of which €100,000 thousand was received in October 2022 and €300,000 thousand was received in November 2022. (5) SELLING, GENERAL AND ADMINISTRATIVE COSTS Selling, general and administrative costs consisted of the following: For the years ended December 31, Personnel expenses Insurance Shared services provided by Ferrari S.p.A. Legal and professional services Other expenses Total selling, general and administrative costs 2023 (€ thousand) 17,278 14,662 5,561 5,487 2,226 45,214 2022 12,188 10,235 5,455 4,654 2,859 35,391 Personnel expenses include costs related to the Group’s equity incentive plans (see Note 14 “Share- Based Compensation”) and other compensation for Directors and employees. Detailed information re- lating to the compensation of the Board of Directors and senior management is included in the “Corpo- rate Governance” and “Remuneration of Directors” sections to the Annual Report. Branch (at December 31, 2022 the Company had 28 full time equivalent employees, 19 of which re- lated to the UK Branch and 9 of which related to the Italian Branch). All employees work outside of the Netherlands. Shared services provided by Ferrari S.p.A. main- ly relate to costs for human resources, payroll, tax, legal, accounting and treasury services. At December 31, 2023 the Company had 25 full time equivalent employees, 16 of which related to the UK Branch and 9 of which related to the Italian Legal and professional services mainly relate to expenses for legal, financial and other consulting services, as well as public company listing fees. 394 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(6) FINANCIAL EXPENSES AND FINANCIAL INCOME Financial expenses and financial income consisted of the following: Financial income Interest expenses of which interest on: Intercompany borrowings Bonds and notes Borrowings from banks Leases Other financial expenses Financial expenses Financial expenses, net For the years ended December 31, 2023 (€ thousand) (11,092) 125,088 98,143 17,889 8,949 107 5,952 131,040 119,948 2022 (594) 34,809 10,594 23,679 457 79 1,502 36,311 35,717 The increase in interest on intercompany borrowings in 2023 was driven by an increase in the benchmark interest rates in 2023. Financial income for 2023 primarily relates to gains of €7,940 thou- sand realized on the partial cash tender executed during the third quar- ter of 2023 on a bond due in 2025 as well as interest income on cash and cash equivalents. (7) INCOME TAXES Income taxes for the years ended December 31, 2023 and 2022 are sum- marized below: Current income tax benefit Deferred income tax (expense)/income Total income tax benefit For the years ended December 31, 2023 2022 (€ thousand) 26,951 1,860 28,811 5,335 (549) 4,786 395 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSThe table below provides a reconciliation between the theoretical in- come tax expense and the actual income tax benefit, calculated on the basis of the applicable corporate tax rate in effect in Italy, which was 24.0 percent for each of the years ended December 31, 2023 and 2022: Profit before tax Theoretical income tax rate Theoretical income tax expense Tax effect on: Non-taxable dividends Non-deductible costs Other permanent differences Total income tax benefit For the years ended December 31, 2023 (€ thousand) 353,948 24.0% (84,948) 114,000 (117) (124) 28,811 The following table provides a summary of tax receivables and tax pay- ables for the years ended December 31, 2023 and 2022: Tax receivables Tax payables Net tax payables At December 31, 2023 (€ thousand) 90,463 69,597 20,866 Tax receivables of €90,463 thousand at December 31, 2023 (€33,400 thousand at December 31, 2022) primarily relate to amounts due from related parties for the Group tax consolidation in Italy. Tax payables of €69,597 thousand at December 31, 2023 (€36,661 thousand at December 31, 2022) primarily relate to amounts due to the tax authorities for the Group tax consolidation in Italy. The following table summarizes deferred tax assets at December 31, 2023 and 2022: Deferred tax assets To be recovered after 12 months To be recovered within 12 months Total deferred tax assets At December 31, 2023 (€ thousand) 767 3,069 3,836 2022 643,646 24.0% (154,475) 159,600 (240) (99) 4,786 2022 33,400 36,661 (3,261) 2022 995 979 1,974 396 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(8) PROPERTY, PLANT AND EQUIPMENT Cost Accumulated depreciation Total property, plant and equipment At December 31, 2023 (€ thousand) 6,100 (3,366) 2,734 Property, plant and equipment primarily includes office furniture and equipment of the UK Branch, as well as buildings recognized as right-of- use assets in 2023 of €2,469  thousand (€1,528  thousand at December 31, 2022). Depreciation of which Cost of sales Selling, general and administrative costs of which right-of-use assets For year ended December 31, 2023 (€ thousand) 703 74 629 562 2022 4,422 (2,608) 1,814 2022 477 — 477 323 See Note 15 “Debt” for information related to the related lease liabilities. There are no liens, pledges, collateral or restrictions on use over proper- ty, plant and equipment. (9) INVESTMENTS IN SUBSIDIARIES Investment in subsidiaries amounted to €8,783,663 thousand at De- cember 31, 2023 (€8,778,173 thousand at December 31, 2022), and in- cluded investments in Ferrari S.p.A. amounting to €8,778,000 thousand (€8,778,000 thousand at December 31, 2022) and New Business 33 S.p.A. amounting to €5,663 thousand (€173  thousand at December 31, 2022). The increase in New Business 33 S.p.A. primarily related to a capital in- crease by the Company. IMPAIRMENT TESTING At December 31, 2023, the market capitalization of Ferrari N.V. amounted to approximately €55.1 billion (€36.4 billion at December 31, 2022). Con- sidering the share price of the Company at December 31, 2023 and at the date of authorization of the Company Financial Statements, no impair- ment indicators were identified. 397 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSTrade receivables Financial receivables Other current assets Total Related parties Third parties Total (10) TRADE RECEIVABLES, FINANCIAL RECEIVABLES AND OTHER CURRENT ASSETS At December 31 2023 (€ thousand) 23,040 34,762 61,298 119,100 TRADE RECEIVABLES The following table presents the split of trade receivables due from relat- ed parties and due from third parties: At December 31 2023 (€ thousand) 19,896 3,144 23,040 Trade receivables due from related parties primarily relate to corpo- rate services rendered and fees recharged to subsidiaries of the Ferrari Group (mainly Ferrari S.p.A.) and trade receivables due from third parties primarily relate to marketing-related events and other services provided. The carrying amount of trade receivables is deemed to approximate their fair value. There are no significant overdue balances and no allow- ance for expected credit losses has been recorded for trade receiv- ables. The following table sets forth a breakdown of trade receivables by currency: Trade receivables denominated in: Euro Pound Sterling Total At December 31 2023 (€ thousand) 18,474 4,566 23,040 398 2022 23,871 26,704 74,529 125,104 2022 21,899 1,972 23,871 2022 14,182 9,689 23,871 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL RECEIVABLES At December 31, 2023, non-current financial re- ceivables of €34,762 thousand (€26,704 thousand at December 31, 2022) related to receivables from subsidiaries, mainly Ferrari S.p.A., and primarily for recharges of share-based compensation relating to equity instruments awarded to employees of the subsidiaries of the Group under the Group’s equity incentive plans and under the broad-based employee share ownership plan, pursuant to an intercompany agreement. The carrying amount of financial receiv- ables is considered to approximate their fair value. OTHER CURRENT ASSETS Other current assets of €61,298 thousand at De- cember 31, 2023 (€74,529 thousand at December 31, 2022) primarily include VAT credits and to a less- er extent prepaid expenses. (11) FERRARI GROUP CASH MANAGEMENT POOLS Ferrari Group cash management pools relate to the Company’s partici- pation in a group-wide cash management system that is managed cen- trally by Ferrari S.p.A. and amounted to a net liability of €2,764 thousand at December 31, 2023 (a net liability of €5,398 thousand at December 31, 2022). Amounts in cash management pools at December 31, 2023 and 2022 were entirely denominated in Pound Sterling. At December 31, Proceeds Repayments Translation At December 31, 2022 differences 2023 5,398 18,740 (21,548) 174 2,764 (€ thousand) Ferrari Group cash management pools - Liability (12) CASH AND CASH EQUIVALENTS Cash and cash equivalents amounted to €97,432 thousand at December 31, 2023 (€110,702 thousand at December 31, 2022) and were primarily denomi- nated in Euro. The carrying amount of cash and cash equivalents is deemed to be in line with their fair val- ue. There was no restricted cash at December 31, 2023 and 2022. The Company’s cash and cash equivalents are held on bank and deposit accounts with primary fi- nancial institutions and highly rated money market funds. It is the Ferrari Group’s policy to continuously monitor counterparty risk and limit concentration of bank and deposit accounts to a maximum of 25% of the total with a single financial counterpart. With specific reference to Money Market Funds, instead, the invested amounts in any specific fund must not exceed 10% of the par value of such. The Company considers its credit risk with respect to its cash and cash equivalents to be low considering that they are held with primary financial institutions and the maxi- mum exposure with any one counterparty is limited. See Note 30 “Qualitative and quantitative informa- tion on financial risks” to the Consolidated Financial Statements for additional details. (13) EQUITY SHARE CAPITAL At December 31, 2023 and 2022 the fully paid up share capital of the Company was €2,573 thousand, consisting of 193,923,499 common shares and 63,349,112 special voting shares, all with a nominal value of €0.01. At December 31, 2023, the Company had 13,505,409 common shares and 16,240 spe- cial voting shares held in treasury, while at Decem- ber 31, 2022, the Company had 11,970,001 common shares and 5,199 special voting shares. Shares in treasury include shares repurchased under the Group’s share repurchase program, which are re- corded based on the transaction trade date. The in- crease in common shares held in treasury primarily reflects the repurchase of shares by the Company through its share repurchase program, partially offset by shares assigned under the Group’s equi- ty incentive plans. At December 31, 2023 and 2022 the Company held in treasury 5.26 percent and 4.65 percent of the total issued share capital of the Com- pany, respectively.(71) 399 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSThe following table summarizes the changes in the number of outstand- ing common shares and outstanding special voting shares of the Com- pany for the year ended December 31, 2023 and 2022: Common shares Special voting shares Total Outstanding shares at December 31, 2021 183,843,396 63,344,922 247,188,318 Common shares repurchased under share repurchase program(1) Common shares assigned under equity incentive plans(2) (1,966,816) 76,918 — — Other changes(3) — (1,009) (1,966,816) 76,918 (1,009) Outstanding shares at December 31, 2022 181,953,498 63,343,913 245,297,411 Common shares repurchased under share repurchase program(4) Common shares assigned under equity incentive plans(5) (1,630,171) 94,763 — — (1,630,171) 94,763 Other changes(3) — (11,041) (11,041) Outstanding shares at December 31, 2023 180,418,090 63,332,872 243,750,962 (1) Includes shares repurchased under the share repurchase cover the individual’s taxable income as is standard practice program between January 1, 2022 and December 31, 2022 (“Sell to Cover”) in a cross transaction. See Note 21 “Share- based on the transaction trade date, for a total consideration Based Compensation” for additional details relating to the of €384,869 thousand, including transaction costs. Group’s equity incentive plans. (2) On March 16, 2022, 122,125 common shares, which were (3) Relates to the deregistration of certain special voting shares previously held in treasury, were assigned to participants of under the Company’s special voting shares term and the equity incentive plans as a result of the vesting of certain performance share unit and retention restricted share conditions. Includes shares repurchased under the share repurchase (4) unit awards. On the same day, the Company purchased program between January 1, 2023 and December 31, 56,517 common shares, for a total consideration of 2023 based on the transaction trade date, for a total €10,365 thousand, from a group of those employees who consideration of €460,629 thousand (including Sell to Cover, were assigned shares in order to cover the individual’s described below), including transaction costs. taxable income as is standard practice (“Sell to Cover”) in a (5) On March 15, 2023, 80,305 common shares, which were cross transaction. On May 25, 2022, 6,643 common shares, previously held in treasury, were assigned to participants which were previously held in treasury, were assigned of the equity incentive plans as a result of the vesting of to certain employees. On the same day, the Company certain performance share unit and retention restricted purchased 3,185 common shares, for a total consideration share unit awards. On March 15, 2023, the Company of €562 thousand, from a group of those employees who purchased 34,671 common shares, for a total consideration were assigned shares in order to cover the individual’s of €8,448 thousand, from a group of those employees who taxable income as is standard practice (“Sell to Cover”) in a were assigned shares in order to cover the individual’s cross transaction. On December 2, 2022, 11,218 common taxable income as is standard practice (“Sell to Cover”) in a shares, which were previously held in treasury, were cross transaction. On July 17, 2023 the Company assigned assigned to participants of the equity incentive plans. On the 49,129 shares related to commercial agreements with same day, the Company purchased, 3,366 common shares, certain suppliers and other shares awards. See Note 21 for a total consideration of €726 thousand, from a group “Share-Based Compensation” for additional details elating to of those employees who were assigned shares in order to the Group’s equity incentive plans. THE LOYALTY VOTING STRUCTURE The purpose of the loyalty voting structure is to reward ownership of the Company’s common shares and to promote stability of the Company’s shareholder base by granting long-term share- holders of the Company with special voting shares. Following the separation of Ferrari from the Stel- lantis Group (previously referred to as Fiat Chrys- ler Automobiles N.V. or FCA prior to the merger be- tween FCA and Peugeot S.A. completed on January 16, 2021, which resulted in the creation of Stellan- tis N.V.) in 2016, Exor N.V. (“Exor”) and Piero Ferra- ri participate in the Company’s loyalty voting pro- gram and, therefore, effectively hold two votes for each of the common shares they hold. Investors who purchase common shares may elect to partic- ipate in the loyalty voting program by registering their common shares in the loyalty share register and holding them for three years. The loyalty voting program will be affected by means of the issue of special voting shares to eligible holders of common shares. Each special voting share entitles the hold- er to exercise one vote at the Company’s share- holder meetings. Only a minimal dividend accrues to the special voting shares allocated to a separate special dividend reserve, and the special voting shares do not carry any entitlement to any other re- serve of the Group. The special voting shares have only immaterial economic entitlements and, as a result, do not impact the Company’s earnings per share calculation. 400 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FSHARE PREMIUM The share premium reserve amounted to €5,768,544 thousand at both December 31, 2023 and December 31, 2022. RETAINED EARNINGS Following approval of the annual accounts by the shareholders at the Annual General Meeting of the Shareholders on April 14, 2023, a dividend distribu- tion of €1.810 per common share was approved, corresponding to a total distribution of €328,631 thousand. The distribution was made from the re- tained earnings reserve. Following approval of the annual accounts by the shareholders at the Annual General Meeting of the Shareholders on April 13, 2022, a dividend distri- bution of €1.362 per common share was approved, corresponding to a total distribution of €249,522 thousand. The distribution was made from the re- tained earnings reserve. OTHER RESERVES Other reserves includes, among others: • a treasury reserve of €1,704,673 thousand at De- cember 31, 2023 and €1,244,045 thousand at De- cember 31, 2022. • a share-based compensation reserve of €38,106 thousand at December 31, 2023 and €28,574 thousand at December 31, 2022. • a legal reserve of €46 thousand at December 31, 2023 and €19 thousand at December 31, 2022, determined in accordance with Dutch law. Pursuant to Dutch law, limitations exist relating to the distribution of shareholders’ equity up to at least the total amount of the legal reserve, as well as oth- er reserves mandated per the Company Articles of Association. At December 31, 2023, the legal and non-distributable reserves of the Company amount- ed to €46 thousand (€19 thousand at December 31, 2022) and included the following: • The UK Branch operates in the Pound Sterling. At each reporting period end, the assets and liabil- ities within the UK branch are translated to Euro and the respective foreign currency translation gain or loss is recorded in other comprehensive income. At December 31, 2023, the cumulative translation reserve amounted to €40  thousand (€13 thousand at December 31, 2022). • The Company records a statutory non-distrib- utable reserve equal to 1 percent of the nominal value of the special voting shares. At December 31, 2023 and 2022, this reserve amounted to €6 thousand. RECONCILIATION OF EQUITY AND NET PROFIT The reconciliation of equity as per the Consolidated Financial Statements to equity as per the Company Financial Statements is provided below: At December 31 2023 (€ thousand) 2022 Equity attributable to owners of the parent in the Consolidated 3,060,888 2,592,857 Financial Statements of Ferrari N.V. Intra-group restructuring Difference in OCI reserves Cumulative results of prior years of subsidiaries in the Consolidated Financial Statements 5,969,427 (64,868) (5,074,191) 5,969,427 (90,515) (4,090,009) Results of subsidiaries in the Consolidated Financial (1,369,289) (984,182) Statements Cumulative dividends in prior years Other changes Dividends Equity in the Company Financial Statements of Ferrari N.V 1,916,700 (2,709) 500,000 4,935,958 1,216,700 (2,709) 700,000 5,311,569 401 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSThe reconciliation of net profit as per the Consolidated Financial State- ments to net profit as per the Company Financial Statements is provided below: Net profit attributable to owners of the parent in the Consolidated Financial Statements of Ferrari N.V. At December 31 2023 (€ thousand) 2022 1,252,048 932,614 Results of subsidiaries in the Consolidated Financial (1,369,289) (984,182) Statements Dividends Net profit in the Company Financial Statements of Ferrari N.V. 500,000 382,759 700,000 648,432 (14) SHARE-BASED COMPENSATION 2021-2023 PSU awards EQUITY INCENTIVE PLANS The Group has several equity incentive plans un- der which a combination of performance share units (“PSUs”) and retention restricted share units (“RSUs”), which each represent the right to receive one Ferrari common share, have been awarded to the Executive Chairman, the Chief Executive Officer (“CEO”), members of the Ferrari Leadership Team (hereinafter also the “FLT”) and other key employees of the Group. EQUITY INCENTIVE PLAN 2020-2022 In the first quarter of 2023, 36,090 2020-2022 PSU awards vested (representing 95 percent of the target PSU awards) as a result of the achievement of the related performance conditions and 32,339 2020-2022 RSU awards vested upon achievement of the related service conditions. As a result, 68,429 common shares, which were previously held in trea- sury, were assigned to participants of the plan in the first quarter of 2023. There are no further awards outstanding for the Equity Incentive Plan 2020-2022. EQUITY INCENTIVE PLAN 2021-2023 Under the Equity Incentive Plan 2021-2023 approved in 2021, the Company awarded approximately 50 thousand 2021-2023 PSUs and approximately 41 thousand 2021-2023 RSUs to the Executive Chair- man, members of the FLT and other key employ- ees of the Group. These PSUs and RSUs cover the three-year performance and service periods from 2021 to 2023. The vesting of the awards is based on the achieve- ment of defined key performance indicators as fol- lows: (i) TSR Target - 50 percent of the awards vest based on the achievement of the TSR ranking of Ferrari compared to an industry specific Peer Group of eight; (ii) EBITDA Target - 30 percent of the awards vest based on the achievement of an EBITDA target determined by comparing Adjusted EBITDA to the Adjusted EBITDA targets derived from the Group’s business plan; (iii) Innovation Target - 20 percent of the awards vest based on the achievement of defined objec- tives for technological innovation and the devel- opment of the new model pipeline over the per- formance period. Each target is settled independently of the other tar- gets. The awards vest in 2024 and the total number of shares assigned upon vesting depends on the lev- el of achievement of the targets. In March 2024, 41,338 2021-2023 PSU awards are expected to vest (representing approximately 122 percent of the target PSU awards) as a result of the achievement of the related performance con- ditions (described above) and an equal number of common shares held in treasury will be assigned to participants of the plan, following which there will be no further 2021-2023 PSU awards outstanding. 2021-2023 RSU awards In March 2024, 29,550 2021-2023 RSU awards are expected to vest as a result of the achievement of the related service condition, which is the recipi- ent’s continued employment with the Company at the time of vesting, and an equal number of com- mon shares held in treasury will be assigned to par- 402 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fticipants of the plan, following which there will be no further 2021-2023 RSU awards outstanding. 2023-2025 PSU awards The vesting of the awards is based on the achieve- ment of defined key performance indicators as fol- lows: (i) TSR Target - 40 percent of the awards vest based on the achievement of the TSR ranking of Ferrari compared to an industry specific Peer Group of eleven; (ii) EBITDA Target - 40 percent of the awards vest based on the achievement of an EBITDA target determined by comparing Adjusted EBITDA to the Adjusted EBITDA targets derived from the Group’s business plan; (iii) ESG Target - 20 percent of the awards vest based on the achievement of defined objectives relating to environmental and social factors. In particular, 50 percent of the ESG Target is based on the reduction of CO2 carbon emissions and 50 percent is based on the maintenance of the equal salary certification. Each target is settled independently of the other targets. The awards vest in 2026 and the total num- ber of shares assigned upon vesting depends on the level of achievement of the targets. 2023-2025 RSU awards The awards vest in 2026, subject to the recipi- ent’s continued employment with the Company at the time of vesting. Supplemental information relating to the Equity Incentive Plan 2023-2025 is summarized below. EQUITY INCENTIVE PLAN 2022-2024 Under the Equity Incentive Plan 2022-2024 approved in 2022, the Company awarded approximately 72 thousand 2022-2024 PSUs to the Executive Chair- man, the CEO, the remaining members of the FLT and other employees of the Group, and approxi- mately 26  thousand 2022-2024 RSUs to members of the FLT and other employees of the Group. These PSUs and RSUs cover the three-year performance and service periods from 2022 to 2024. 2022-2024 PSU awards The vesting of the awards is based on the achieve- ment of defined key performance indicators as fol- lows: (i) TSR Target - 40 percent of the awards vest based on the achievement of the TSR ranking of Ferrari compared to an industry specific Peer Group of eleven; (ii) EBITDA Target - 40 percent of the awards vest based on the achievement of an EBITDA target determined by comparing Adjusted EBITDA to the Adjusted EBITDA targets derived from the Group’s business plan; (iii) ESG Target - 20 percent of the awards vest based on the achievement of defined objectives relating to environmental and social factors. In particular, 50 percent of the ESG Target is based on the reduction of CO2 carbon emissions and 50 percent is based on the maintenance of the equal salary certification. Each target is settled independently of the other tar- gets. The awards vest in 2025 and the total number of shares assigned upon vesting depends on the lev- el of achievement of the targets. 2022-2024 RSU awards The awards vest in 2025, subject to the recipient’s continued employment with the Company at the time of vesting. EQUITY INCENTIVE PLAN 2023-2025 Under the Equity Incentive Plan 2023-2025 approved in 2023, the Company awarded approximately 58 thousand 2023-2025 PSUs to the Executive Chair- man, the CEO, the remaining members of the FLT and other employees of the Group, and approxi- mately 22  thousand 2023-2025 RSUs to members of the FLT and other employees of the Group. These PSUs and RSUs cover the three-year performance and service periods from 2023 to 2025. 403 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSTSR TARGET The number of 2023-2025 PSUs with a TSR Target that vest under the Equity Incentive Plan 2023-2025 is based on the Company’s TSR perfor- mance over the relevant performance period compared to an indus- try-specific peer group as summarized below. Ferrari TSR Ranking % of Target Awards that Vest 1 2 3 4 5 6 >6 175% 150% 125% 100% 75% 50% 0% The defined peer group (including the Company) for the TSR Target is presented below. Ferrari Hermes Moncler Aston Martin Kering Prada Burberry LVMH Richemont Estee Lauder Mercedes Benz Group AG EBITDA TARGET The number of 2023-2025 PSUs with an EBITDA Target that vest under the Equity Incentive Plan 2023-2025 is determined by comparing Adjust- ed EBITDA to the Adjusted EBITDA targets derived from the Group’s busi- ness plan, as summarized below. Actual Adjusted EBITDA Compared to Business Plan % of Awards that Vest +15% +10% +5% Business Plan Target -5% <-5% 175% 150% 125% 100% 75% 0% FAIR VALUES AND KEY ASSUMPTIONS The fair value of the 2023-2025 PSU awards used for accounting purposes was measured at the grant date using a Monte Carlo Simulation model. The fair value of the 2023-2025 RSU awards was measured using the share price at the grant date adjusted for the present value of future distributions which the recipients will not receive during the vesting period. The fair value of the PSUs and RSUs that were award- ed under the Equity Incentive Plan 2023-2025, which is determined based on actuarial calculations that ap- ply certain assumptions and take into consideration the specific characteristics of the awards granted, is summarized in the following table. 404 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FPSUs RSUs Grant date share price Expected volatility Dividend yield Risk-free rate Equity Incentive Plan 2023-2025 €236.30 €253.76 The key assumptions utilized to calculate the grant-date fair values of the PSUs that were awarded under the Equity Incentive Plan 2023-2025 are summarized below: Equity Incentive Plan 2023-2025 €259.60 27.9% 0.75% 2.90% The expected volatility was based on the observed volatility of the defined peer group. The risk-free rate was based on the iBoxx sovereign Eurozone yield. BROAD-BASED EMPLOYEE SHARE OWNERSHIP PLAN In November 2023 the Company announced that it would launch a broad-based employee share own- ership plan in the early months of 2024 under which each employee will be given the option to become a shareholder of the Company, receiving a one-off grant of shares worth up to a maximum of approxi- mately €2 thousand. If the employee holds the shares for at least 36 months, the Company will grant them an additional tranche of shares worth up to 15 per- cent of the value of the first allocation. OTHER SHARE-BASED COMPENSATION During 2022, the Company awarded 15,271 share awards, which each represent the right to receive one Ferrari common share, to certain employees, of which 6,643 share awards vested immediately at the grant date. In 2023 6,838 share awards vested and 1,309 share awards were forfeited. At December 31, 2023, 481 share awards remained outstanding and will vest in 2024, subject to the recipient’s con- tinued employment with the Company at the time of vesting. The fair value of the awards was equal to €203, measured using the share price at the grant date adjusted for the present value of future distri- butions which the recipients will not receive during the vesting period. The Company also provides share-based pay- ments for services received as part of commercial agreements with certain suppliers. OUTSTANDING SHARE AWARDS The following table presents the changes to the out- standing share awards under the Group’s share- based payment arrangements: PSU Awards RSU Awards Other Awards Total Outstanding Balance at December 31, 2021 Granted Forfeited Vested Balance at December 31, 2022 Granted Forfeited Vested Balance at December 31, 2023 152,172 72,373 (16,327) (68,013) 140,205 58,381 (8,117) (36,090) 154,379 123,661 26,574 (8,934) (54,112) 87,189 21,939 (3,544) (32,339) 73,245 405 — 64,048 — (6,643) 57,405 63,217 (1,309) (55,614) 63,699 Awards 275,833 162,995 (25,261) (128,768) 284,799 143,537 (12,970) (124,043) 291,323 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSSHARE-BASED COMPENSATION EXPENSE The following table presents the share based compensation expense recognized for the years ended December 31, 2023, 2022 and 2021, as well as the unrecognized share-based compensation at December 31, 2023, 2022 and 2021. For the years ended December 31, 2023 2022 2021 Equity incentive plans and other share-based awards Broad-based employee share ownership plan Commercial agreements with suppliers (€ thousand) 16,172 — 4,688 15,154 10,222 4,563 Total share-based compensation expense 29,939 20,860 11,689 — 2,206 13,895 Unrecognized share-based compensation expense 12,954 16,069 11,082 At December 31, 2023 2022 2021 (€ thousand) For the years ended December 31, 2023, 2022 and 2021, the Group rec- ognized €15,154 thousand, €16,172 thousand and €11,689 thousand, respectively, as share-based compensation expense and an increase to other reserves in equity in relation to the PSU awards and RSU awards of the Group’s equity incentive plans and other share-based awards to the Group’s employees. For the year ended December 31, 2023 the Group recognized €10,222 thousand as share-based compensation expense in relation to the broad-based share ownership plan announced in November 2023. In 2023 and 2022 the Group also recognized share-based compensation expense of €4,563 thousand and €4,688 thousand, respectively, as part of commercial agreements with certain suppliers. Pursuant to an agreement between the Company and various subsid- iaries of the Group, the Company recharges subsidiaries for share-based compensation relating to equity instruments awarded to employees or suppliers of the subsidiaries under the equity incentive plans or other share-based payments. Of the share-based compensation recognized in 2023, €3,862 thousand was recognized as an expense in cost of sales and selling, general and administrative costs, and €26,077 thousand was recorded as financial receivables in relation to share-based compensa- tion recharged to subsidiaries (€4,943 thousand and €15,917 thousand respectively for the year ended December 31, 2022). 406 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(15) DEBT The following table provides a breakdown of debt by nature and split be- tween current and non-current. At December 31, 2023 2022 Current Non-current Total Current Non-current Total (€ thousand) Financial liabilities with related parties 2,934,848 — 2,934,848 2,159,120 — 2,159,120 Bonds and notes — 903,673 903,673 394,628 1,095,691 1,490,319 Borrowings from banks and other financial 81,097 124,167 205,264 — — — institutions Lease liabilities Total debt 801 1,732 2,533 244 1,451 1,695 3,016,746 1,029,572 4,046,318 2,553,992 1,097,142 3,651,134 The following tables present the change in debt, indicating separately fi- nancing cash flows and other movements. Financing cash flows At December Proceeds from Repayments of Interest At December 31, 2022 borrowings borrowings accrued/ (paid) and other (1)(2) 31, 2023 (€ thousand) Financial liabilities with related parties 2,159,120 2,900,000 (2,159,120) 34,848 2,934,848 Bonds and notes 1,490,319 — (575,702) (10,944) 903,673 Borrowings from banks and other financial — 250,000 (47,500) 2,764 205,264 institutions Lease liabilities Total 1,695 — (672) 1,510 2,533 3,651,134 3,150,000 (2,782,994) 28,178 4,046,318 Financing cash flows At December Proceeds from Repayments of Interest At December 31, 2021 borrowings borrowings accrued/ (paid) and other (1) 31, 2022 (€ thousand) Financial liabilities with related parties 2,140,341 2,150,000 (2,140,000) 8,779 2,159,120 Bonds and notes Lease liabilities Total 1,487,110 2,141 — — — (348) 3,209 1,490,319 (98) 1,695 3,629,592 2,150,000 (2,140,348) 11,890 3,651,134 (1) Other changes in lease liabilities relates entirely to non-cash movements for the recognition of additional lease liabilities (2) Includes gains of €7,940 thousand realized on the partial cash tender executed during the third quarter of 2023 on a in accordance with IFRS 16. bond due in 2025. 407 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSCONTRACTUAL UNDISCOUNTED CASH FLOWS The following tables present the contractual maturities (contractual un- discounted cash flows, including interest) of the Company’s debt based on relevant maturity groupings. Contractual cash flows at December 31, 2023 Less than 1 Between 1 Between 2 Over 5 Total As year and 2 years and 5 years years contractual reported at cash flows December 31, 2023 (*) (€ thousand) Financial liabilities with related parties 3,006,742 — — — 3,006,742 2,934,848 Bonds and notes 11,714 458,619 14,850 460,106 945,289 903,673 Borrowings from banks and other financial 86,780 83,047 46,813 — 216,640 205,264 institutions Lease liabilities Total debt 886 804 587 425 2,702 2,533 3,106,122 542,470 62,250 460,531 4,171,373 4,046,318 Contractual cash flows at December 31, 2022 Less than 1 Between 1 Between 2 Over 5 Total As year and 2 years and 5 years years contractual reported at cash flows December 31, 2022 (*) (€ thousand) Financial liabilities with related parties 2,188,623 — — — 2,188,623 2,159,120 Bonds and notes Lease liabilities Total debt 400,475 14,700 668,777 464,648 1,548,600 1,490,319 391 358 980 — 1,729 1,695 2,589,489 15,058 669,757 464,648 3,738,952 3,651,134 (*) As reported in the consolidated statement of financial position FINANCIAL LIABILITIES WITH RELATED PARTIES Financial liabilities with related parties at December 31, 2023 are broken down as follows: Counterparty Currency Ferrari S.p.A. Ferrari S.p.A. Ferrari S.p.A. Ferrari S.p.A. Ferrari S.p.A. Ferrari S.p.A. Ferrari S.p.A. Ferrari S.p.A. Total Euro Euro Euro Euro Euro Euro Euro Euro Total amount outstanding at December 31, 2023 (€ thousand) Due date Interest Rate 510,596 January 2024(*) EURIBOR + 60bps 506,915 357,689 70,988 March 2024 EURIBOR + 60bps July 2024 EURIBOR + 60bps July 2024 EURIBOR + 60bps 806,079 October 2024 EURIBOR + 31bps 80,489 July 2024 EURIBOR + 60bps 501,927 November 2024 EURIBOR + 31bps 100,165 December 2024 EURIBOR + 31bps 2,934,848 (*) The financial liabilities due in January 2024 were refinanced the EURIBOR plus spread of 31 basis point with Ferrari S.p.A. for €500 million due in January 2025 at 408 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFinancial liabilities with related parties at December 31, 2022 are broken down as follows: Counterparty Currency Ferrari S.p.A. Ferrari S.p.A. Ferrari S.p.A. Ferrari S.p.A. Ferrari S.p.A. Ferrari S.p.A. Ferrari S.p.A. Total Euro Euro Euro Euro Euro Euro Euro Total amount outstanding at December 31, 2022 (€ thousand) Due date Interest Rate 400,122 January 2023 (*) EURIBOR + 60bps 50,256 50,325 503,542 100,455 January 2023 (*) EURIBOR + 60bps January 2023 (*) EURIBOR + 60bps March 2023 EURIBOR + 60bps July 2023 EURIBOR + 60bps 803,745 October 2023 EURIBOR + 60bps 250,675 November 2023 EURIBOR + 60bps 2,159,120 (*) The financial liabilities due in January 2023 were refinanced with Ferrari S.p.A. for €500 million due in January 2024 at the same spread and base interest rate of the original liabilities. During 2023, certain debt agreements with Ferrari S.p.A. were renewed. Proceeds from financial liabil- ities with related parties amounted to €2,900,000 thousand in 2023 (€2,150,000 thousand in 2022). Repayments of financial liabilities with related par- ties amounted to €2,159,120 thousand in 2023 (€2,140,000 thousand in 2022). At December 31, 2023 a 25 basis point increase in interest rates on the floating rate financial liabili- ties, with all other variables held constant, would have resulted in a decrease in profit before tax of €7,843 thousand on an annualized basis (a decrease in profit before tax of €2,159 thousand at December 31, 2022 for an increase of 10 basis points). The carrying amount of the financial liabilities with related parties approximates fair value. Infor- mation on covenants of the notes, fair value mea- surement and qualitative and quantitative informa- tion on financial risks are provided in Note 24, Note 27 and Note 30, respectively, to the Consolidated Finan- cial Statements. Further information on the Group’s liquidity is provided in the “Liquidity and Capital Re- sources” section of this Annual Report. Based on this information the Company deems the going concern assumption adequate. of these notes for an aggregate nominal amount of €115,395  thousand. The amount outstanding at De- cember 31, 2022 was €388,947  thousand including accrued interest of €4,567 thousand. 2025 BOND On May 27, 2020 the Company issued 1.5 percent coupon notes due May 2025 (“2025 Bond”), having a principal of €650 million. The notes were issued at a discount for an issue price of 98.898 percent, re- sulting in net proceeds of €640,073 thousand, after related expenses, and a yield to maturity of 1.732 percent. Following a cash tender offer, in July 2023, the Group accepted for purchase valid tenders of the 2025 Bond for an aggregate nominal amount of €199,037 thousand and at a purchase price of €191,097 thousand, resulting in gains of €7,940 thousand, which were recognized within financial income. The repurchases were settled in July 2023. The amount outstanding of the 2025 Bond at Decem- ber 31, 2023 was €453,027  thousand, including ac- crued interest of €4,097  thousand (€650,923  thou- sand, including accrued interest of €5,818 thousand at December 31, 2022). BONDS AND NOTES 2029 AND 2031 NOTES 2023 BOND On March 16, 2023 the Company fully repaid the 2023 Bond for a total consideration of €390,374 thousand (including accrued interest). The bond was previous- ly issued on March 16, 2016, for a principal amount of €500  million at a coupon of 1.5 percent and due on March 2023. Following a cash tender offer, in July 2019 the Company executed the partial repurchase On July 31, 2019, the Company issued 1.12 percent senior notes due August 2029 (“2029 Notes”) and 1.27 percent senior notes due August 2031 (“2031 Notes”) through a private placement to certain US institutional investors, each having a principal of €150 million. The net proceeds from the issuances amounted to €298,316  thousand and the yields to maturity on an annual basis equal the nominal cou- pon rates of the Notes. The Notes are primarily used 409 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSfor general corporate purposes, including the fund- ing of capital expenditures. (€150,136  thousand, including accrued interest of €577 thousand at December 31, 2022). The amount outstanding of the 2029 Notes at De- cember 31, 2023 was €150,218 thousand, including accrued interest of €700 thousand (€150,135 thou- sand, including accrued interest of €700 thousand at December 31, 2021). The amount outstanding of the 2031 Notes at December 31, 2023 was €150,246 thou- sand, including accrued interest of €794  thousand (€150,178  thousand including accrued interest of €794 thousand at December 31, 2021). 2032 NOTES On July 29, 2021, the Company issued 0.91 per- cent senior notes due January 2032 (“2032 Notes”) through a private placement to certain US institu- tional investors having a principal of €150  million. The net proceeds from the issuance amounted to €149,495  thousand and the yield to maturity on an annual basis equals the nominal coupon rates of the Notes. The Notes are used for general corpo- rate purposes. The amount outstanding of the 2032 Notes at December 31, 2023 was €150,182  thou- sand, including accrued interest of €587  thousand The aforementioned bonds and notes impose covenants on Ferrari including: (i) negative pledge clauses which require that, in case any security interest upon assets of Ferrari is granted in con- nection with other notes or debt securities with the consent of Ferrari are, or are intended to be, listed, such security should be equally and ratably extended to the outstanding notes, subject to cer- tain permitted exceptions; (ii) pari passu clauses, under which the notes rank and will rank pari pas- su with all other present and future unsubordinat- ed and unsecured obligations of Ferrari; (iii) events of default for failure to pay principal or interest or comply with other obligations under the notes with specified cure periods or in the event of a payment default or acceleration of indebtedness or in the case of certain bankruptcy events; and (iv) other clauses that are customarily applicable to debt se- curities of issuers with a similar credit standing. A breach of these covenants may require the early repayment of the notes. At December 31, 2023 and 2022, Ferrari was in compliance with the covenants of the notes. BORROWING FROM BANK AND OTHER FINANCIAL INSTITUTION Borrowing Entity Currency 2023 2022 Maturity Date Amount Outstanding at December 31, Ferrari N.V. (1) Ferrari N.V. (1) Total borrowings from banks and other financial institutions (1) Amortized term loans bearing an average interest rate of 4.663 percent as of December 31, 2023. EUR EUR (€ thousand) 130,224 75,040 205,264 January 2026 March 2026 — — — LEASE LIABILITIES At December 31, 2023 lease liabilities amounted to €2,533 thousand (€1,695 thousand at December 31, 2022). COMMITTED CREDIT LINES At December 31, 2023, the Group had total committed credit lines avail- able and undrawn amounting to €600 million and with maturities rang- ing from 2024 to 2026 (€669 million at December 31, 2022). 410 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(16) TRADE PAYABLES At December 31 2023 (€ thousand) 475 1,268 1,743 Payables due to related parties Payables due to third parties Total trade payables Payables due to related parties primarily relate to amounts payable to Ferrari S.p.A. for corporate services rendered and costs recharged. Payables due to third parties primarily relate to costs for marketing-re- lated events and legal and professional services. The following sets for a breakdown of trade payables by currency: Euro Pound Sterling Total trade payables At December 31 2023 (€ thousand) 982 761 1,743 2022 6,171 1,362 7,533 2022 7,140 393 7,533 Trade payables are due within one year and their carrying amount at the reporting date is deemed to approximate their fair value. (17) OTHER CURRENT LIABILITIES Other current liabilities amounted to €35,051 thousand at December 31, 2023 (€36,233 thousand at December 31, 2022) and primarily relate to indirect tax payables, payables to personnel and dividends. (18) EARNINGS PER SHARE Earnings per share information is provided in Note 12 to the Consolidat- ed Financial Statements. 411 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS(19) NOTE TO THE STATEMENT OF CASH FLOWS OPERATING ACTIVITIES Other non-cash income and expenses for 2023 and 2022 primarily relate to share-based compensation expense and for 2023 also include gains of €7,940 thousand realized on the partial cash tender executed during the third quarter of 2023 on a bond due in 2025 as well as interest income on cash and cash equivalents.(€4,790 thousand in 2022). (20) AUDIT FEES Ernst & Young Accountants LLP ceased to be the independent auditor of the Company upon the completion of their 2022 financial year audits due to mandatory audit firm rotation rules. At the April 13, 2022 Annu- al General Meeting of the Shareholders, Deloitte Accountants B.V., was appointed the Company’s independent auditor for the nine-year period from 2023 to 2031. The fees for services provided by the Company’s independent regis- tered public accounting firm, and its member firms and/or affiliates, to the Company and its subsidiaries that in 2023 and 2022 referred to De- loitte Accountants B.V. and Ernst & Young Accountants LLP, respectively, are broken down as follows: Audit fees Tax fees Audit-related fees All other fees Total At December 31 2023 (€ thousand) 1,254 9 265 60 1,588 2022 1,280 — 278 375 1,933 In 2023, audit fees and audit-related fees of Deloitte Accountants B.V. amounted to €88 thousand and €50 thousand, respectively, and are in- cluded in the table above. In 2022, audit fees and audit-related fees of Ernst & Young Accoun- tants LLP amounted to €80 thousand and €63 thousand, respectively, and are included in the table above. (21) REMUNERATION Detailed information on the remuneration of the Board of Directors and senior management is included in the “Corporate Governance” and “Re- muneration of Directors” sections to the Annual Report. 412 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(22) COMMITMENTS AND CONTINGENCIES At December 31, 2023 and 2022, the Company provided guarantees over certain debt of its subsidiary Ferrari Financial Services Inc. The book val- ue of the related debt at December 31, 2023 and 2022 was €73,153 thou- sand and €75,665 thousand, respectively. For intercompany financial guarantees issued by the Company there is no significant expected default and therefore the financial guarantees are not recognized. (23) RELATED PARTY TRANSACTIONS Pursuant to IAS 24, the related parties with which the Company has transactions are Ferrari S.p.A. and other companies within the Ferrari Group. The Group carries out transactions with related parties on com- mercial terms that are normal in their respective markets, consider- ing the characteristics of the goods or services involved. Related party transactions include: • Dividends received from Ferrari S.p.A. (Note 4); • Corporate services and recharge of expenses to Ferrari S.p.A. (Note 5); • Share services received from Ferrari S.p.A. mainly related to human • Participation in a Ferrari Group-wide cash management system resources, payroll, tax, legal, accounting and treasury. (Note 5); where the operating cash management, main funding operations and liquidity investment of the Ferrari Group are centrally coordinat- ed by Ferrari S.p.A. Amounts recorded as Ferrari Group cash man- agement pools represented the Company’s participation in such pools. (Note 11); • Financial liabilities and receivables with Ferrari S.p.A. or other subsid- • Key management compensation. (Note 21). iaries of the Group. (Note 15 and Note 16); The impact of transactions with related parties on the Company Finan- cial Statements is disclosed separately in the relevant notes. 413 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS(24) ORGANIZATIONAL STRUCTURE The following table sets forth the Company’s subsidiaries and associates at December 31, 2023. Name Country Nature of business Shares held by the Group Subsidiaries directly held Ferrari S.p.A. New Business 33 S.p.A. Subsidiaries indirectly held through Ferrari S.p.A. Ferrari North America, Inc. Ferrari Japan KK Italy Italy USA Japan Engineering, manufacturing and sales Engineering, manufacturing and sales Importer and distributor Importer and distributor Ferrari Australasia Pty Limited Australia Importer and distributor Ferrari International Cars Trading China Importer and distributor (Shanghai) Co. L.t.d. Ferrari (HK) Limited Hong Kong Importer and distributor Ferrari Far East Pte Limited Singapore Service company Ferrari Management Consulting China Service company (Shanghai) Co. L.t.d. Ferrari South West Europe S.a.r.l. France Service company Ferrari Central Europe GmbH Germany Service company G.S.A. S.A. in liquidation Switzerland Service company Mugello Circuit S.p.A. Ferrari Financial Services, Inc. Subsidiaries indirectly held through other Group entities Ferrari Auto Securitization Transaction, LLC(1) Ferrari Auto Securitization Transaction - Lease, LLC(1) Ferrari Auto Securitization Transaction - Select, LLC(1) Italy USA USA USA USA Racetrack management Financial services Financial services Financial services Financial services Ferrari Financial Services Titling Trust(1) USA Financial services Ferrari Lifestyle North America, Inc.(2)(3) USA Retail Associates directly held Fondazione Casa di Enzo Ferrari Italy Service company Branches UK Branch UK Sales and after sales support 100% 100% 100% 100% 100% 80% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 25% (1) Shareholding held by Ferrari Financial Services, Inc. name from 410 Park Display, Inc to Ferrari Lifestyle North (2) Shareholding held by Ferrari North America, Inc. (3) Effective as of January 12, 2024, the company changed its America, Inc. 414 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F(25) SUBSEQUENT EVENTS The Company has evaluated subsequent events through February 22, 2024, which is the date the Company Financial Statements were autho- rized for issuance, and identified the following matters: Under the common share repurchase program, from January 1, 2024 to February 16, 2024 the Company purchased an additional 187,642 com- mon shares for total consideration of €60.9 million. At February 16, 2024, the Company held in treasury an aggregate of 13,693,051 common shares. On February 22, 2024, the Board of Directors of Ferrari N.V. recom- mended to the Company’s shareholders that the Company declare a dividend of €2.443 per common share, totaling approximately €440 million. The proposal is subject to the approval of the Company’s shareholders at the Annual General Meet- ing to be held on April 17, 2024. February 22, 2024 [Board of Directors] John Elkann Piero Ferrari Benedetto Vigna Delphine Arnault Francesca Bellettini Eddy Cue Sergio Duca John Galantic Maria Patrizia Grieco Adam Keswick Mike Volpi 415 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSFINANCIAL STATEMENTS OTHER INFORMATION 418 Additional Information for 419 Additional Information Form Netherlands Corporate Governance 417 OTHER INFORMATION ADDITIONAL INFORMATION FOR NETHERLANDS CORPORATE GOVERNANCE INDEPENDENT AUDITOR’S REPORT The report of the Company’s independent auditor, Deloitte Accountants B.V., the Netherlands, is set forth at the end of this Annual Report. DIVIDENDS Dividends will be determined in accordance with ar- ticle 23 of the Articles of Association of Ferrari N.V. The relevant provisions of the Articles of Associa- tion read as follows: 1 The Company shall maintain a special capital re- serve to be credited against the share premium exclusively for the purpose of facilitating any is- suance or cancellation of special voting shares. The special voting shares shall not carry any entitlement to the balance of the special capi- tal reserve. The Board of Directors shall be au- thorized to resolve upon (i) any distribution out of the special capital reserve to pay up special voting shares or (ii) re-allocation of amounts to credit or debit the special capital reserve against or in favor of the share premium reserve. 2 The Company shall maintain a separate divi- dend reserve for the special voting shares. The special voting shares shall not carry any enti- tlement to any other reserve of the Company. Any distribution out of the special voting rights dividend reserve or the partial or full release of such reserve will require a prior proposal from the Board of Directors and a subsequent resolution of the meeting of holders of special voting shares. 3 From the profits, shown in the annual accounts, as adopted, such amounts shall be reserved as the Board of Directors may determine. 4 The profits remaining thereafter shall first be applied to allocate and add to the special voting shares dividend reserve an amount equal to one percent (1%) of the aggregate nominal value of all outstanding special voting shares. The calcu- lation of the amount to be allocated and added to the special voting shares dividend reserve shall occur on a time-proportionate basis. If special voting shares are issued during the financial year to which the allocation and addition per- tains, then the amount to be allocated and add- ed to the special voting shares dividend reserve in respect of these newly issued special voting shares shall be calculated as from the date on which such special voting shares were issued until the last day of the financial year concerned. The special voting shares shall not carry any oth- er entitlement to the profits. 5 Any profits remaining thereafter shall be at the disposal of the general meeting of Shareholders for distribution of profits on the common shares only, subject to the provision of paragraph 8 of this article. 6 Subject to a prior proposal of the Board of Di- rectors, the general meeting of Shareholders may declare and pay distribution of profits and other distributions in United States Dollars. Fur- thermore, subject to the approval of the general meeting of Shareholders and the Board of Direc- tors having been designated as the body com- petent to pass a resolution for the issuance of shares in accordance with Article 6, the Board of Directors may decide that a distribution shall be made in the form of shares or that Shareholders shall be given the option to receive a distribution either in cash or in the form of shares. 7 The Company shall only have power to make dis- tributions to Shareholders and other persons entitled to distributable profits to the extent the Company’s equity exceeds the sum of the paid in and called up part of the share capital and the re- serves that must be maintained pursuant to Dutch law and the Company’s Articles of Association. No distribution of profits or other distributions may be made to the Company itself for shares that the Company holds in its own share capital. 8 The distribution of profits shall be made after the adoption of the annual accounts, from which it appears that the same is permitted. 9 The Board of Directors shall have power to de- clare one or more interim distributions of prof- its, provided that the requirements of paragraph 7 hereof are duly observed as evidenced by an interim statement of assets and liabilities as re- ferred to in Section 2:105 paragraph 4 of the Dutch Civil Code and provided further that the policy of the Company on additions to reserves and distributions of profits is duly observed. The provisions of paragraphs 2 and 3 hereof shall apply mutatis mutandis. 10 The Board of Directors may determine that dis- tributions are made from the Company’s share premium reserve or from any other reserve, provided that payments from reserves may only be made to the Shareholders that are enti- tled to the relevant reserve upon the dissolution of the Company. 11 Distributions of profits and other distributions shall be made payable in the manner and at such date(s) - within four (4) weeks after declaration thereof - and notice thereof shall be given, as the general meeting of Shareholders, or in the case of interim distributions of profits, the Board of Directors shall determine. 12 Distributions of profits and other distributions, which have not been collected within five (5) years and one (1) day after the same have become pay- able, shall become the property of the Company. 418 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FBRANCH OFFICES Please refer to Note 24 to the Company Financial Statements included in this Annual Report. ADDITIONAL INFORMATION OFFER AND LISTING DETAILS In the United States, our common shares are listed and traded on the NYSE (trading symbol “RACE”). Our common shares are also listed and traded on the Euronext Milan (trading symbol “RACE”). DIVIDEND POLICY Subject to the approval by the Shareholders at the 2024 Annual General Meeting, the Company intends to make a dividend distribution to the holders of common shares of Euro 2.433 per common share, corresponding to a total dividend distribution to shareholders of approximately Euro 440 million. We intend to return capital to holders of com- mon shares over time through a sustainable divi- dend policy designed toprovide adequate returns to shareholders, while supporting growth and pro- tecting our creditworthiness in order to facilitate access to external funding. We intend to pay 35 per- cent of our annual net profit by way of dividend in the coming years; however, the actual level of divi- dends will be subject to our earnings, cash balanc- es, commitments, strategic plans and other factors that our Board of Directors may deem relevant at the time of the dividend, including adjustments for income or costs that are significant in nature but expected to occur infrequently. For additional infor- mation on distribution of profits, refer to “Corporate Governance—Memorandum and Articles of Associa- tion”. Our dividend policy is subject to change in the Audit fees Tax fees Audit-related fees All other fees Total future based on changes in statutory requirements, market trends, strategic developments, capital re- quirements and a number of other factors. All issued and outstanding common shares will rank equally and will be eligible for any profit or oth- er payment that may be declared on the common shares. Pursuant to our Articles of Association, holders of special voting shares are entitled to a minimum dividend, which is allocated to the special dividend reserve. A distribution from the special div- idend reserve or the (partial) release of the special dividend reserve will require a prior proposal from the Board of Directors and a subsequent resolution of the meeting of holders of special voting shares. Ferrari does not intend to propose any distribution from the special dividend reserve. For additional information on distribution of profits, refer to “Corporate Governance—Memoran- dum and Articles of Association”. In addition, we are carrying out a share repurchase program. For ad- ditional information please refer to “Other Informa- tion—Additional Information—Purchases of Equity Securities by the Issuer and Affiliated Purchasers”. PRINCIPAL ACCOUNTANT FEES AND SERVICES Deloitte & Touche S.p.A., the member firms of De- loitte and their respective affiliates (collectively, the “Deloitte Entities”) served as our independent reg- istered public accounting firm for the year ended December 31, 2023. EY S.p.A., the member firms of Ernst & Young and their respective affiliates (col- lectively, the “Ernst & Young Entities”) served as our independent registered public accounting firm for the years ended December  31, 2022. We incurred the following fees for professional services that for the years ended December  31, 2023 and 2022 re- ferred to the Deloitte Entities and the Ernst & Young Entities, respectively: For the years ended December 31, 2023 (€ thousands) 1,254 9 265 60 1,588 2022 1,280 — 278 375 1,933 “Audit fees” are the aggregate fees earned by the Principal Accountant Entities for the audit of our consolidated annual financial statements, reviews of interim financial statements and attestation ser- vices that are provided in connection with statuto- ry and regulatory filings or engagements. “Tax fees” are the aggregate fees charged by the Principal Accountant for professional services rendered for tax compliance activities. “Audit-related fees” are fees charged by the Ernst & Young Entities for as- surance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported un- der “Audit fees”. This category comprises fees for 419 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSagreed-upon procedures engagements and other attestation services subject to regulatory require- ments. “All other fees” are fees earned by the Prin- cipal Accountant for non-audit services rendered in connection with market research and benchmark- ing analyses. AUDIT COMMITTEE’S PRE-APPROVAL POLICIES AND PROCEDURES Our Audit Committee nominates and engages our independent registered public accounting firm to audit our consolidated financial statements. Our Au- dit Committee has a policy requiring management to obtain the Audit Committee’s approval before en- gaging our independent registered public account- ing firm to provide any other audit or permitted non-audit services to us or our subsidiaries. Pursu- ant to this policy, which is designed to ensure that such engagements do not impair the independence of our independent registered public accounting firm, the Audit Committee reviews and pre-ap- proves (if appropriate) specific audit and non- audit services in the categories Audit Services, Audit-Re- lated Services, Tax Services, and any other services that may be performed by our independent regis- tered public accounting firm. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT The disclosure called for by this section was previ- ously reported in our annual report for the year end- ed on December 31, 2022. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS A multi-year share repurchase program of up to Euro 1.5 billion executed between 2019 and 2022 was announced by the Company at the 2018 Capital Markets Day. Completing in May 2022, this program consisted of six tranches of common shares repur- chases, in addition to purchases in relation to the Sell-to-Cover program, and reached a total amount of Euro 960 million. A new multi-year share repurchase program of approximately Euro 2 billion expected to be execut- ed by 2026 was announced by the Company at the Capital Markets Day held on June 16, 2022 and re- placed the previous share repurchase program. On June 30, 2022, Ferrari announced the launch of a first tranche of up to Euro 150 million in common share repurchases (the “First Tranche of Second Program”) under the abovementioned new multi- year share repurchase program. The First Tranche of Second Program started on July 1, 2022 and was completed on November 30, 2022. On December 1, 2022, Ferrari announced the launch of a second tranche of up to Euro 200 mil- lion in common share repurchases (the “Second Tranche of Second Program”) under the abovemen- tioned new multi-year repurchase program. The Second Tranche of Second Program started on De- cember 2, 2022 and was completed on June 26, 2023. On June 30, 2023 Ferrari announced the launch of a third tranche of up to Euro 200 million in com- 420 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fmon share repurchases (the “Third Tranche of Sec- ond Program”) under the abovementioned new multi-year repurchase program. The Third Tranche of Second Program started on July 3, 2023 and was completed on October 20, 2023. On November 7, 2023, Ferrari announced the launch of a fourth tranche of up to Euro 350 million in common share repurchases (the “Fourth Tranche of Second Program”). The Fourth Tranche of Sec- ond Program started on November 8, 2023 and is expected to end no later than June 26, 2024. The First Tranche of Second Program and the Second Tranche of Second Program implemented the resolutions adopted by the Shareholders’ Meet- ing (held on April 13, 2022), the Third Tranche and the Fourth Tranche of the Second Program imple- mented the resolutions adopted by the Sharehold- ers’ Meeting held on April 14, 2023. Both resolutions were duly communicated to the market, which au- thorized the purchase of up to 10% of the Company’s common shares during the eighteen-month period following such Shareholders’ Meeting, with the re- purchase authority granted in the 2023 meeting currently set to expire on October 13, 2024 unless extended or renewed before such date. As of December 31, 2023, Ferrari’s common shares held in treasury amounted to 13,505,409 and special voting shares held in treasury amount- ed to 16,240. The following table reports purchases of Ferra- ri equity securities by the Company during the year ended December 31, 2023, which were made un- der the Second Tranche, the Third Tranche and the Fourth Tranche under the aforementioned second multi-year share repurchase program announced on June 16, 2022. Period Total Number of Average Price Total Number of Approximate Value of Shares Purchased Paid per Share (€)(1)(2) Shares Purchased Shares that May Yet Be as Part of Publicly Purchased under the Announced Plans or Plans or Programs Programs (€) Jan 1 to Jan 31, 2023 123,760 Feb 1 to Feb 28, 2023 103,171 March 1 to March 31, 2023 144,915 April 1 to April 30, 2023 85,321 May 1 to May 31, 2023 142,500 June 1 to June 30, 2023 81,201 July 1 to July 31, 2023 264,792 Aug 1 to Aug 31, 202 71,951 Sept 1 to Sept 30, 2023 347,936 Oct 1 to Oct 31, 2023 17,957 Nov 1 to Nov 30, 2023 113,971 Dec 1 to Dec 31, 2023 132,696 Total 1,630,171 217.7809 245.0181 247.5868 252.6258 268.5634 278.8770 290.1469 290.2921 278.8622 286.9733 328.5944 331.5859 277.1061 123,760 1,793,561,585 103,171 1,768,292,913 144,915 1,732,434,329 85,321 1,710,878,441 142,500 1,672,639,164 81,201 1,649,977,101 264,792 1,573,107,328 71,951 1,552,274,113 347,936 1,455,129,571 17,957 1,449,977,595 113,971 1,412,489,170 132,696 1,368,593,637 1,630,171 (1) Repurchases made under the Second, Third and Fourth Second Program commenced on November 8, 2023. Tranche of the abovementioned second multi-year (2) Share repurchases made on the NYSE have been share repurchase program announced at the Capital converted into Euro from U.S. Dollars at the exchange rate Markets Day held on June 16, 2022. The Second Tranche reported by the European Central Bank on the respective was completed on June 26, 2023, the Third Tranche was transaction dates. completed on October 20, 2023. The Fourth Tranche of viduals’ taxable income in line with market prac- tice (Sell to Cover) at the average price of Euro 243.6708 per share. In addition to the above, in the context of the Group’s employee equity incentive plans: • on March 15, 2023 the Company assigned a to- tal of 80,305 common shares, previously held in treasury, to certain employees of the Group. On the same day, Ferrari purchased, in a “cross or- der” transaction executed on the Euronext Milan, a total of 34,671 common shares from a group of those employees in order to cover such indi- 421 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSTAXATION MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES Ferrari N.V. is a public limited company organized in the Netherlands that is classified as a foreign corpo- ration for U.S. federal income tax purposes. This section describes the material U.S. federal income tax consequences of owning Ferrari com- mon shares and special voting shares. It applies solely to “U.S. holders” (as defined below) that hold common shares or special voting shares of Ferrari as capital assets. For purposes of this discussion, a “U.S. holder” is a beneficial owner of common shares of Ferrari that is: • an individual that is a citizen or tax resident of the • a corporation, or other entity taxable as a corpo- United States; ration, created or organized under the laws of the United States; • an estate whose income is subject to U.S. federal • a trust if (i) a U.S. court can exercise primary su- income tax, regardless of the income’s source; or pervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust or (ii) the trust has made a valid election under applicable Trea- sury Regulations to be treated as a U.S. person. This section does not apply to holders that are U.S. persons that are generally subject to special income tax rules, including: • a dealer in securities or foreign currencies, • a regulated investment company, • a trader in securities that elects to use a mark- to-market method of accounting for securities holdings, • a tax-exempt organization, • a bank, financial institution, or insurance company, • a person liable for the alternative minimum tax, a person that actually or constructively owns 10 percent or more, by vote or value, of Ferrari, • a person that holds common shares or special voting shares of Ferrari as part of a straddle or a hedging, conversion, or other risk reduction transaction for U.S. federal income tax purposes, • a person that acquired common shares or spe- cial voting shares of Ferrari pursuant to the ex- ercise of employee stock options or otherwise as compensation, or • a person whose functional currency is not the U.S. Dollar. This section is based on the Internal Revenue Code of 1986, as amended (the “Code”), its legislative his- tory, existing and proposed regulations, published rulings and court decisions, as well as on applicable tax treaties, all as of the date hereof. These laws are subject to change, possibly on a retroactive basis. 422 If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds shares, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in an entity treated as a partnership for U.S. feder- al income tax purposes holding shares should con- sult its tax advisors with regard to the U.S. federal income tax treatment of the ownership of Ferrari common shares. All holders of Ferrari common shares and spe- cial voting shares should consult their own tax advi- sors regarding the U.S. federal, state and local and foreign and other tax consequences of owning and disposing of Ferrari common shares in their partic- ular circumstances. TAXATION OF DIVIDENDS Under the U.S. federal income tax laws, and subject to the discussion of the taxation of a passive for- eign income company ("PFIC") below, a U.S. holder must include in its gross income the gross amount of any dividend paid by Ferrari to the extent of its current or accumulated earnings and profits (as determined under U.S. federal income tax princi- ples). Dividends will be taxed as ordinary income to the extent that they are paid out of Ferrari’s current or accumulated earnings and profits. Dividends paid to a non-corporate U.S. holder by certain “qual- ified foreign corporations” that constitute qualified dividend income may be taxable to the holder at the preferential rates applicable to long-term cap- ital gains provided that the holder holds the shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and the U.S. holder meets other holding period and tax treaty eligibility requirements. For this purpose, common shares of Ferrari are treated as stock of a “qualified foreign corporation” if Ferrari is eligible for the benefits of an applicable comprehensive income tax treaty with the United States or if such stock is readily tradable on an es- tablished securities market in the United States. The common shares of Ferrari are listed on the New York Stock Exchange and Ferrari expects to be eli- gible for the benefits of such a treaty. Accordingly, subject to the discussion of PFIC taxation below, div- idends Ferrari pays with respect to the shares are expected to constitute qualified dividend income, assuming the holding period requirements are met. However, no assurance can be given that the com- mon shares of Ferrari will be treated as readily trad- able on an established securities market in the Unit- ed States or that Ferrari will qualify for the benefits of a comprehensive income tax treaty with the Unit- ed States. Further, no assurance can be given that the U.S. holder receiving such dividend will be eligi- ble for the benefits of such a treaty. If non-U.S. withholding tax is withheld from the dividend payment, a U.S. holder must include such amounting gross amount even though the holder FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fdoes not in fact receive the amount withheld. The div- idend is taxable to a U.S. holder when the U.S. holder receives the dividend, actually or constructively. The dividend will not be eligible for the divi- dends-received deduction allowed to U.S. corpora- tions in respect of dividends received from other U.S. corporations. However, subject to limitation, certain U.S. holders that are U.S. corporations may be eligible for a dividend received deduction. Distributions in excess of current and accumu- lated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as a non-taxable return of capital to the extent of the U.S. holder’s basis in Ferrari common shares, causing a reduction in the U.S. holder’s adjusted basis in Fer- rari common shares. Any distribution thereafter will likely be considered a capital gain. Subject to certain limitations, any non-U.S. tax withheld and paid over to a non-U.S. taxing authority is eligible for credit against a U.S. holder’s U.S. feder- al income tax liability except to the extent a refund of the tax withheld is available to the U.S. holder under non-U.S. tax law or under an applicable tax treaty. The amount allowed to a U.S. holder as a credit is lim- ited to the amount of the U.S. holder’s U.S. federal in- come tax liability that is attributable to income from sources outside the U.S. and is computed separate- ly with respect to different types of income that the U.S. holder receives from non-U.S. sources. Subject to the discussion below regarding Section  904(h) of the Code, dividends paid by Ferrari will be for- eign source income and will generally be “passive” income for purposes of computing the foreign tax credit allowable to a U.S. holder. Under Section  904(h) of the Code, dividends paid by a foreign corporation that is 50 percent or more owned, by vote or value, by U.S. persons may be treated as U.S. source income (rather than for- eign source income) for foreign tax credit purpos- es, to the extent the foreign corporation earns U.S. source income, unless such corporation has less than 10 percent of applicable earnings and prof- its attributable to sources within the U.S. In certain circumstances, U.S. holders may be able to choose the benefits of Section  904(h)(10) of the Code and elect to treat dividends that would otherwise be U.S. source dividends as foreign source dividends, but in such a case the foreign tax credit limitations would be separately determined with respect to such “resourced” income. In general, therefore, the application of Section  904(h) of the Code may ad- versely affect a U.S. holder’s ability to use foreign tax credits. Ferrari does not believe that it is 50 per- cent or more owned by U.S. persons. In addition, Ferrari believes that its earnings and profits attrib- utable to sources within the U.S. will not exceed 10 percent of applicable earnings and profits. Howev- er, these conclusions are factual determinations and are subject to change; no assurance can there- fore be given that Ferrari may not be treated as 50 percent or more owned by U.S. persons for purpos- es of Section 904(h) of the Code or that less than 10 percent of Ferrari’s earnings and profits will be at- tributable to sources within the U.S. U.S. holders are strongly urged to consult their own tax advisors re- garding the possible impact if Section 904(h) of the Code should apply. TAXATION OF CAPITAL GAINS Subject to the discussion of PFIC taxation and ex- pected tax consequences of the Separation below, a U.S. holder that sells or otherwise disposes of its Ferrari common shares will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference between the U.S.  Dollar value of the amount that the U.S. holder realizes and the U.S. holder’s tax basis in those shares. Capital gain of a noncorporate U.S. holder may be taxed at preferen- tial rates where the property is held for more than one year. For foreign tax credit limitation purposes, the source of such income will be U.S. source. The deduction of capital losses is subject to limitations. Nonresident alien individual(s) present in the United States for a period or periods aggregating 183 days or more during the taxable year may be subject to U.S. income taxation upon the disposition of capital property. LOYALTY VOTING PROGRAM NO STATUTORY, JUDICIAL OR ADMINISTRATIVE AU- THORITY DIRECTLY DISCUSSES HOW THE RECEIPT, OWNERSHIP OR DISPOSITION OF SPECIAL VOTING SHARES SHOULD BE TREATED FOR U.S. FEDERAL INCOME TAX PURPOSES AND AS A RESULT, THE U.S. FEDERAL INCOME TAX CONSEQUENCES ARE UN- CERTAIN. ACCORDINGLY, WE URGE U.S. HOLDERS TO CONSULT THEIR TAX ADVISOR AS TO THE TAX CONSEQUENCES OF THE RECEIPT, OWNERSHIP AND DISPOSITION OF SPECIAL VOTING SHARES. Receipt of special voting shares If a U.S. holder receives special voting shares, the tax consequences of the receipt of special voting shares is unclear. While distributions of stock are tax-free in certain circumstances, it is possible that the distribution of special voting shares could be treated as a distribution subject to tax as described above in “—Taxation of Dividends” if such distribu- tion were considered to result in a “disproportion- ate distribution”. If the distribution of special voting shares were so treated, the amount of the distribu- tion should equal the fair market value of the spe- cial voting shares received. Ferrari believes and intends to take the position that the value of each special voting share is minimal. However, because the fair market value of the special voting shares is factual and is not governed by any guidance that di- rectly addresses such a situation, the IRS could as- serts that the value of the special voting shares (and thus the amount of the distribution) as determined by Ferrari is incorrect. 423 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS  Ownership of special voting shares Ferrari believes that U.S. holders holding special vot- ing shares should not have to recognize income in respect of amounts transferred to the special voting shares dividend reserve that are not paid out as div- idends. Section  305 of the Code may, in certain cir- cumstances, require a holder of preferred shares to recognize income even if no dividends are actu- ally received on such shares if the preferred shares are redeemable at a premium and the redemption premium results in a “constructive distribution”. Pre- ferred shares for this purpose refer to shares that do not participate in corporate growth to any signif- icant extent. Ferrari believes that Section 305 of the Code should not apply to any amounts transferred to the special voting shares dividend reserve that are not paid out as dividends so as to require current income inclusion by U.S. holders because, among other things, (i) the special voting shares are not re- deemable on a specific date and a U.S. holder is only entitled to receive amounts in respect of the special voting shares upon liquidation, (ii) Section 305 of the Code does not require the recognition of income in respect of a redemption premium if the redemption premium does not exceed a de minimis amount and, even if the amounts transferred to the special vot- ing shares dividend reserve that are not paid out as dividends are considered redemption premium, the amount of the redemption premium is likely to be “de minimis” as such term is used in the applicable Trea- sury Regulations. Ferrari therefore intends to take the position that the transfer of amounts to the spe- cial voting shares dividend reserve that are not paid out as dividends does not result in a “constructive distribution,” and this determination is binding on all U.S. holders of special voting shares other than a U.S. holder that explicitly discloses its contrary determi- nation in the manner prescribed by the applicable regulations. However, because the tax treatment of the loyalty voting program is unclear and because Ferrari’s determination is not binding on the IRS, it is possible that the IRS could disagree with Ferrari’s determination and require current income inclusion in respect of such amounts transferred to the spe- cial voting shares dividend reserve that are not paid out as dividends. Disposition of special voting shares The tax treatment of a U.S. holder that has its spe- cial voting shares redeemed for zero consideration after removing its common shares from the Loyal- ty Register is unclear. It is possible that a U.S. hold- er would recognize a loss to the extent of the U.S. holder’s basis in its special voting shares. Such loss would be a capital loss and would be a long-term capital loss if a U.S. holder has held its special voting shares for more than one year. It is also possible that a U.S. holder would not be allowed to recognize a loss upon the redemption of its special voting shares and instead a U.S. holder should increase the basis in its Ferrari common shares by an amount equal to the basis in its special voting shares. Such basis increase in a U.S. holder’s Ferrari common shares would decrease the gain, or increase the loss, that a U.S. holder would recognize upon the sale or other taxable disposition of its Ferrari common shares. THE U.S. FEDERAL INCOME TAX TREATMENT OF THE LOYALTY VOTING PROGRAM IS UNCLEAR AND U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS IN RESPECT OF THE CONSEQUENCES OF ACQUIRING, OWNING, AND DISPOSING OF SPECIAL VOTING SHARES. PFIC CONSIDERATIONS Ferrari believes that shares of its stock are not con- sidered stock of a PFIC for U.S. federal income tax purposes, but this conclusion must be factually de- termined annually, and thus is subject to change. The PFIC regime of taxation is onerous and complex, and can be mitigated through certain through U.S. tax elections. However, because of the administrative burdens involved, Ferrari does not intend to provide information to its holders that would be required to make such election(s) effective. Because the determination whether a foreign corporation is a PFIC is primarily factual and there is little administrative or judicial authority on which to rely to make a determination, the IRS might not agree that Ferrari is not a PFIC. Moreover, no assur- ance can be given that Ferrari would not become a PFIC for any future taxable year if there were to be changes in Ferrari’s assets, income or operations. Ferrari would be a PFIC with respect to a U.S. holder if for any taxable year in which the U.S. holder held shares of Ferrari stock, after the application of applicable “look-through rules”: • 75 percent or more of Ferrari’s gross income for the taxable year consists of “passive income” (in- cluding dividends, interest, gains from the sale or exchange of investment property and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business, as defined in applicable Treasury Regulations); or • at least 50 percent of its assets for the taxable year (averaged over the year and determined based upon value) produce or are held for the production of passive income. As discussed in greater detail below, if shares of Fer- rari stock were to be treated as stock of a PFIC, gain realized (subject to the discussion below regarding a mark-to-market election) on the sale or other dispo- sition of shares of Ferrari stock would not be treated as capital gain. Rather, a U.S. holder would be treated as if such U.S. holder had realized such gain and cer- tain “excess distributions” ratably over the U.S. hold- er’s holding period for its shares of Ferrari stock, and such gain would be taxed at the highest tax rate in effect for each such year to which the gain was al- 424 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Flocated, together with an interest charge in respect of the tax attributable to each such year. With certain exceptions, a U.S. holder’s shares of Ferrari stock would be treated as stock in a PFIC if Ferrari were a PFIC at any time during such U.S. holder’s holding period in the shares. Dividends received from Ferra- ri would not be eligible for the special tax rates ap- plicable to qualified dividend income if Ferrari were treated as a PFIC in the taxable years in which the dividends are paid or in the preceding taxable year (regardless of whether the U.S. holder held shares of Ferrari stock in such year) but instead would be tax- able at rates applicable to ordinary income. If Ferrari were to be treated as a PFIC for any taxable year included in whole or in part in a U.S. holder’s holding period of Ferrari and such U.S. holder is treated as owning shares of Ferrari stock for purposes of the PFIC rules (and regardless of whether Ferrari remains a PFIC for subsequent taxable years), the U.S. holder (i)  would be liable to pay U.S. federal income tax at the highest applica- ble income tax rates on (a)  ordinary income upon the receipt of excess distributions (the portion of any distributions received by the U.S. holder on shares of Ferrari stock in a taxable year in excess of 125 percent of the average annual distributions received by the U.S. holder in the three preceding taxable years or, if shorter, the U.S. holder’s holding period for the Ferrari common shares) and (b)  on any gain from the disposition of shares of Ferra- ri stock, plus interest on such amounts, as if such excess distributions or gain had been recognized ratably over the U.S. holder’s holding period of the shares of Ferrari stock, and (ii) may be required to annually file Form 8621 with the IRS reporting infor- mation concerning Ferrari. If Ferrari were to be treated as a PFIC for any tax- able year and provided that Ferrari common shares are treated as “marketable stock” within the mean- ing of applicable Treasury Regulations, which Ferra- ri believes will be the case, a U.S. holder may make a mark-to-market election with respect to such U.S. holder’s common shares. Under a mark-to-market election, any excess of the fair market value of the Ferrari common shares at the close of any taxable year over the U.S. holder’s adjusted tax basis in the Ferrari common shares is included in the U.S. hold- er’s income as ordinary income. These amounts of ordinary income would not be eligible for the fa- vorable tax rates applicable to qualified dividend in- come or long-term capital gains. In addition, the ex- cess, if any, of the U.S. holder’s adjusted tax basis at the close of any taxable year over the fair market val- ue of the Ferrari common shares is deductible in an amount equal to the lesser of the amount of the ex- cess or the amount of the net mark-to-market gains that the U.S. holder included in income in prior years. A U.S. holder’s tax basis in Ferrari common shares would be adjusted to reflect any such income or loss. Gain realized on the sale, exchange or other disposi- tion of Ferrari common shares would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of Ferrari common shares would be treated as ordinary loss to the ex- tent that such loss does not exceed the net mark-to- market gains previously included by the U.S. holder. 425 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSThe adverse consequences of owning stock in a PFIC could also be mitigated if a U.S. holder makes a valid “qualified electing fund” election (“QEF elec- tion”), which, among other things, would require a U.S. holder to include currently in income its pro rata share of the PFIC’s net capital gain and ordi- nary earnings, based on earnings and profits as determined for U.S. federal income tax purposes. Because of the administrative burdens involved, Ferrari does not intend to provide information to its holders that would be required to make such elec- tion effective. A U.S. holder that holds shares of Ferrari stock during a period when Ferrari is a PFIC will be sub- ject to the foregoing rules for that taxable year and all subsequent taxable years with respect to that U.S. holder’s holding of Ferrari common shares, even if Ferrari ceases to be a PFIC, subject to certain excep- tions for U.S. holders that made a mark-to-market or QEF election. U.S. holders are strongly urged to con- sult their tax advisors regarding the PFIC rules, and the potential tax consequences to them if Ferrari were determined to be a PFIC. MATERIAL NETHERLANDS TAX CONSEQUENCES This section describes solely the principal Dutch tax consequences of the acquisition, ownership and disposal of Ferrari common shares and, if applica- ble, Ferrari special voting shares by non-resident holders of such shares (as defined below). It does not purport to describe every aspect of Dutch tax- ation that may be relevant to a particular holder of Ferrari common shares and, if applicable, Ferrari special voting shares. Tax matters are complex, and the tax consequences to a particular holder of Fer- rari common shares and, if applicable, Ferrari spe- cial voting shares will depend in part on such hold- er’s circumstances. Shareholders and any potential investor should consult their own tax advisors re- garding the Dutch tax consequences of acquiring, owning and disposing of Ferrari common shares and, if applicable, Ferrari special voting shares in their particular circumstances. Where in this section English terms and expres- sions are used to refer to Dutch concepts, the mean- ing to be attributed to such terms and expressions shall be the meaning to be attributed to the equiva- lent Dutch concepts under Dutch tax law. Where in this section the terms “the Netherlands” and “Dutch” are used, these refer solely to the European part of the Kingdom of the Netherlands. This section also assumes that the board shall control the conduct of the affairs of Ferrari and shall procure that Ferrari is organized such that Ferrari should be treated as solely resident of Italy for the application of the tax treaty as concluded between Italy and the Netherlands. A change in facts and cir- cumstances based upon which Ferrari is no longer considered to be solely resident of Italy for the ap- plication of the mentioned treaty may invalidate the contents of this section, which will not be updated to reflect any such change. This section is based on the tax law of the Neth- erlands (unpublished case law not included) as it stands at the date of this Form. The tax law upon which this description is based is subject to chang- es, possibly with retroactive effect. Any such chang- es may invalidate the contents of this description, which will not be updated to reflect such changes. SCOPE OF THE SUMMARY. The summary of Dutch taxes set out in this section “Material Dutch tax consequences” only applies to a holder of Ferrari common shares and, if applicable Ferrari special voting shares who is a non-resident holder of such shares. For the purpose of this sum- mary a holder of Ferrari common shares and, if ap- plicable Ferrari special voting shares is a non-resi- dent holder of such shares if such holder is neither a resident nor deemed to be resident in The Nether- lands for purposes of Dutch income tax or corpora- tion tax as the case may be. This Dutch taxation section does not address the Dutch tax consequences for a holder of Ferra- ri common shares and, if applicable, Ferrari special voting shares who: (i) is a person who may be deemed an owner of Ferrari common shares and, if applicable, Ferra- ri special voting shares for Dutch tax purposes pursuant to specific statutory attribution rules in Dutch tax law; (ii) owns Ferrari common shares and, if applicable, Ferrari special voting shares in connection with a membership of a management board or a su- pervisory board, an employment relationship, a deemed employment relationship or manage- ment role; or (iii) is for Dutch tax purposes taxable as a corporate entity and resident of Aruba, Curaçao or Sint Maarten. NON-RESIDENT HOLDERS OF FERRARI COMMON SHARES AND, IF APPLICABLE, FERRARI SPECIAL VOTING SHARES Individuals If a non-resident holder of Ferrari common shares and, if applicable, Ferrari special voting shares is an individual, he will not be subject to Dutch income tax in respect of any benefits derived or deemed to be derived from or in connection with Ferrari com- mon shares and, if applicable, Ferrari special voting shares, except if: (i) he derives profits from an enterprise, whether as an entrepreneur or pursuant to a co-entitle- ment to the net value of such enterprise, other than as a shareholder, and such enterprise is carried on, in whole or in part, through a perma- 426 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fnent establishment or a permanent representa- tive in the Netherlands, and his Ferrari common shares and, if applicable, Ferrari special voting shares are attributable to such permanent es- tablishment or permanent representative; (ii) he derives benefits or is deemed to derive ben- efits from or in connection with Ferrari com- mon shares and, if applicable, Ferrari special voting shares that are taxable as benefits from miscellaneous activities performed in the Neth- erlands; or (iii) he derives profits pursuant to the entitlement to a share in the profits of an enterprise, other than as a holder of securities, which is effectively man- aged in the Netherlands and to which enterprise his Ferrari common shares and, if applicable, Fer- rari special voting shares are attributable. Corporate entities If a non-resident holder of Ferrari common shares and, if applicable, Ferrari special voting shares is a corporate entity, or an entity including an associa- tion, a partnership and a mutual fund, taxable as a corporate entity, it will not be subject to Dutch cor- poration tax in respect of any benefits derived or deemed to be derived from or in connection with Ferrari common shares and, if applicable, Ferrari special voting shares, except if: (i) it derives profits from an enterprise directly which is carried on, in whole or in part, through a permanent establishment or a permanent representative in the Netherlands, and to which permanent establishment or permanent repre- (ii) sentative its Ferrari common shares and, if ap- plicable, Ferrari special voting shares are attrib- utable; or it derives profits pursuant to a co-entitlement to the net value of an enterprise which is managed in the Netherlands, other than as a holder of se- curities, and to which enterprise its Ferrari com- mon shares and, if applicable, Ferrari special voting shares are attributable. General be deemed to carry on an enterprise, in whole or in part, through a permanent establishment or a per- manent representative in the Netherlands by rea- son only of the execution and/or enforcement of the documents relating to the issue of Ferrari com- mon shares and, if applicable, Ferrari special voting shares or the performance by Ferrari of its obliga- tions under such documents or under the Ferrari common shares and, if applicable, Ferrari special voting shares. DIVIDEND WITHHOLDING TAX If a holder of Ferrari common shares and, if applica- ble, Ferrari special voting shares is neither resident nor deemed to be resident in the Netherlands, such holder will for Dutch tax purposes not carry on or Ferrari is generally required to withhold Dutch div- idend withholding tax at a rate of 15 percent from dividends distributed by it. As an exception to this 427 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSrule, Ferrari may not be required to withhold Dutch dividend withholding tax from non-Resident holders of shares (as defined above) if it is considered to be a tax resident of both the Netherlands and Italy, in accordance with the domestic tax residency provi- sions applied by each of these jurisdictions, while the double tax treaty between the Netherlands and Italy attributes the tax residency exclusively to Italy. GIFT AND INHERITANCE TAXES No Dutch gift tax or Dutch inheritance tax will arise with respect to an acquisition or deemed acquisition of Ferrari common shares and, if applicable, Ferrari special voting shares by way of gift by, or upon the death of, a holder of Ferrari common shares and, if applicable, Ferrari special voting shares who is nei- ther resident nor deemed to be resident in the Neth- erlands for purposes of Dutch gift tax or Dutch inheri- tance tax except if, in the event of a gift whilst not being a resident nor being a deemed resident in the Nether- lands for purposes of Dutch gift tax or Dutch inheri- tance tax, the holder of Ferrari common shares and, if applicable, Ferrari special voting shares becomes a resident or a deemed resident in the Netherlands and dies within 180 days after the date of the gift. For purposes of Dutch gift tax and Dutch inheri- tance tax, a gift of Ferrari common shares and, if ap- plicable, Ferrari special voting shares made under a condition precedent is deemed to be made at the time the condition precedent is satisfied. VALUE ADDED TAX No Dutch value added tax will arise in respect of any payment in consideration for the issue of Ferrari common shares and, if applicable, Ferrari special voting shares. REGISTRATION TAXES AND DUTIES No Dutch registration tax, transfer tax, stamp duty or any other similar documentary tax or duty, other than court fees, is payable in the Netherlands in re- spect of or in connection with the execution and/or enforcement (including by legal proceedings and including the enforcement of any foreign judgment in the courts of the Netherlands) of the documents relating to the issue of Ferrari common shares and, if applicable, Ferrari special voting shares, the performance by Ferrari of its obligations under such documents, or the transfer of Ferrari com- mon shares and, if applicable, Ferrari special vot- ing shares. MATERIAL ITALIAN INCOME TAX CONSEQUENCES This section describes solely the material Italian tax consequences of acquiring, holding, and disposing of Ferrari common shares and, if applicable, Ferra- ri special voting shares. It does not consider every 428 aspect of Italian taxation that may be relevant to a particular holder of Ferrari common shares and, if applicable, Ferrari special voting shares in special circumstances or who is subject to special treatment under applicable law, and it is not intended to be ap- plicable in all respects to all classes of investors. Shareholders and any potential prospective in- vestors should consult their own tax advisors re- garding the Italian tax consequences of acquiring, holding, and disposing of Ferrari common shares and, if applicable, Ferrari special voting shares in their particular circumstances and should inves- tigate the nature and the origin of the amounts re- ceived as distributions in connection with the Ferrari common shares (dividends or reserves). Where in this section English terms and expres- sions are used to refer to Italian concepts, the mean- ing to be given to these terms and expressions shall be the meaning to be given to the equivalent Italian concepts under Italian tax law. This summary as- sumes that Ferrari common shares will be listed on a regulated market. This summary also assumes that Ferrari is organized, and that the business will be conducted, in the manner outlined in this report. A change to the organizational structure or to the manner in which Ferrari conducts its business may invalidate the contents of this section, which will not be updated to reflect any such change. Law No. 111 of August 9, 2023 delegated the Ital- ian Government to enact, within the next twenty-four months, one or more legislative decrees to reform the Italian tax system (the “Tax Reform”). According to this Law, the Tax Reform could significantly change the taxation of financial income and capital gains and introduce several amendments in the Italian tax system at different levels. The precise nature, extent, and impact of these amendments cannot be quan- tified or foreseen with any certainty at this stage. Therefore, the information provided in this Prospec- tus may not reflect the future tax framework. This summary is based on the tax laws of the Re- public of Italy and case law / practice (unpublished case law / practice is not included) as it stands at the date of this summary. The law upon which this description is based is subject to change, potentially with retroactive effect. Any such change may invali- date the contents of this description, which will not be updated to reflect this change. DEFINITIONS In this section, the following terms have the meaning defined below: ber 22, 1986 (the Consolidated Income Tax Act); • “CITA”: Presidential Decree No.  917 of Decem- • “EEA State”: a State that is party to the European • “Finance Act 2017”: Law No. 232 of December 11, • “Finance Act 2018”: Law No. 205 of December 27, Economic Area Agreement; 2016; 2017; FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F2019; 2018; 2020; • “Finance Act 2019”: Law No. 145 of December 30, • “Finance Act 2020”: Law No. 160 of December 27, • “Finance Act 2021”: Law No. 178 of December 30, • “Finance Act 2023”: Law No. 197 of December 29, • “Finance Act 2024”: Law No. 213 of December 30, • “IRES”: Italian corporate income tax; • “Italian White List”: the list of countries and ter- 2022; 2023; ritories allowing a satisfactory exchange of in- formation with Italy (i) currently included in the Italian Ministerial Decree of September 4, 1996, as subsequently amended and supplemented, or (ii) once effective in any other decree or reg- ulation that will be issued in the future to provide the list of such countries and territories (and that will replace the Ministerial Decree of September 4, 1996), including any country or territory that will be deemed listed therein for the purpose of any interim rule; • “Non-Qualified Holdings”: holdings of common shares in Ferrari, including rights or securities through which Ferrari common shares may be acquired, other than Qualified Holdings; • “Qualified Holdings”: holdings of common shares in Ferrari, including rights or securities through which Ferrari common shares may be acquired, that represent, in case of shares listed on regu- lated markets, either (i)  more than two percent of the overall voting rights exercisable at ordi- nary shareholders’ meetings or (ii)  an interest in Ferrari’s issued and outstanding capital in ex- cess of 5 percent; and • “Transfer of Qualified Holdings”: transfers of common shares in Ferrari, including rights or se- curities through which Ferrari common shares may be acquired, that exceed, over a period of 12 (twelve) months, the threshold for qualifying as Qualified Holdings. The twelve-month period starts from the date when the shares, securities and the rights owned represent a percentage of voting rights or interest in Ferrari’s capital that exceeds the aforesaid thresholds. In case of rights or securities through which Ferrari com- mon shares may be acquired, the percentage of voting rights or interest in Ferrari’s capital po- tentially attributable to the holding of such rights and securities is taken into account. TAXATION OF DIVIDENDS The tax regime summarized in this subsection “Tax- ation of Dividends” applies only to classes of holders of Ferrari common shares and, if applicable, Ferrari special voting shares that are described here below. Dividends paid by Ferrari are subject to the tax regime generally applicable to dividends paid by companies that are resident for tax purposes in the Republic of Italy. The tax regime may vary as follows. 429 (A) ITALIAN RESIDENT PERSONS  (i) Individuals not engaged in business activity Under Decree No.  600 of September  29, 1973 (“De- cree 600”), dividends paid to Italian resident individ- uals who hold the Ferrari common shares neither in connection with a business activity nor in the context of the discretionary investment portfolio regime (“ris- parmio gestito”) as defined in subparagraph (A)(ii) be- low are subject to 26 percent tax withheld at source in Italy. In this case, the holders are not required to re- port the dividends in their income tax returns. Subject to certain conditions (including mini- mum holding period requirement) and limitations, dividends paid by Ferrari may be exempt from any income taxation (including from the 26 percent tax withheld at source) if the common shares do not represent a Qualified Holding and are included in a long-term savings account (piano di risparmio a lun- go termine) that meets all the requirements set forth under Italian tax law. (ii) Individuals not engaged in business activity and holding the Ferrari common shares under the “risparmio gestito” regime Dividends paid to Italian resident individuals who do not hold the Ferrari common shares in connec- tion with a business activity are not subject to any tax withheld at source in Italy if (a) the holder has entrusted the management of the shares to an au- thorized intermediary under a discretionary asset management contract, and (b) the holder has elect- ed for the discretionary investment portfolio regime (“risparmio gestito”) under Article 7 of Legislative De- cree No.  461 of November  21, 1997 (“Decree 461”). In this case, the dividends are included in the annual accrued management result (risultato maturato an- nuo di gestione), which is subjected to a 26 percent substitute tax. (iii) Sole Proprietors Dividends paid to Italian resident individuals who hold the Ferrari common shares in connection with a business activity (“Sole Proprietors”) are not sub- ject to any tax withheld at source in Italy, provided that, in this case, the holders declare at the time of receipt that the profits collected are from holdings connected with their business activity. In this case, dividends must be reported in the income tax re- turn, but only 58.14 percent of such dividends are included in the holder’s overall business income tax- able in Italy. FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS  (iv) Partnerships (Italian “società in nome collettivo”, “società in accomandita semplice”, “società semplici” and similar Italian partnerships as referred to in Article 5 CITA), as well as companies and other business entities referred to in Article 73(1)(a)-(b) CITA No Italian tax is withheld at source on dividends paid to Italian business partnerships (such as Italian “so- cietà in nome collettivo”, “società in accomandita semplice” and similar partnerships as referred to in Article 5 CITA). Only 58.14 percent of such dividends are included in the overall business income to be reported by the partnership if the partnership is a business partnership. If the partnership is instead a non-business partnership (“società semplice” and similar partnerships as referred to in Article 5 CITA), based on Article 32-quater of Law Decree No. 124 of October 26, 2019, as subsequently amended and supplemented, dividends are deemed to be received on a tax transparency basis by the partners and are subject to tax under the tax regime applicable to the relevant partner (i.e., as if they were directly paid to each partner). No Italian tax is withheld at source on dividends paid to Italian resident companies and other Italian resident business entities as referred to in Article 73(1)(a)-(b)  CITA, including, among others, corpora- tions (“società per azioni”), partnerships limited by shares (“società in accomandita per azioni”), limited liability companies (“società a responsabilità limita- ta”) and public and private entities whose sole or primary purpose is to carry out business activities. Only 5 percent of the dividends are included in the overall business income subject to IRES, unless the common shares in Ferrari are financial assets held for trading by holders that apply IAS / IFRS inter- national accounting standards under Regulation No.  1606/2002 of the European Parliament and Council of July  19, 2002. In this latter case, the full amount of the dividends is included in the holder’s overall business income subject to IRES. IRES is cur- rently levied at 24 percent, but a higher rate may apply for companies operating in specific sectors (chief among them is the 27.5 percent IRES rate for banks and other regulated financial intermediaries) or meeting certain conditions. For some types of companies and under certain conditions, dividends are also partially included in the net value of production, which is subject to the regional tax on productive activities (“IRAP”). (v) Non-business entities referred to in Article 73(1)(c) CITA No Italian tax is withheld at source on dividends paid to Italian resident non-business entities referred to in Article 73(1)(c) CITA (including Italian resident trusts that do not carry out a business activity), ex- cept for Italian undertakings for collective invest- ment (“OICR”). The dividends are fully included in the holder’s overall income subject to IRES (only 77.74 percent of the dividend would instead be included in the holder’s overall income if it were paid out of profits formed until the fiscal year that was current on December 31, 2016). For social security entities pursuant to Legislative Decree No. 509 of June 30, 1994 and Legislative Decree No. 103 of February 10, 1996, subject to certain conditions (including min- imum holding period requirement) and limitations, dividends and other income from the common shares that do not represent a Qualified Holding may be excluded from the taxable base if the social security entity earmarks the common shares as el- igible investment under Article 1(89) of Finance Act 2017 (as subsequently amended) to the extent, how- ever, that investment in the common shares (and other qualifying shares or units in undertakings for collective investment investing mainly in qualifying shares) represent no more than 10 percent of the gross asset value of the social security entity of the previous year. As of the fiscal year current on January 1, 2021, according to Article 1(44 - 46) of Finance Act 2021, 50 percent of the dividends paid to non-business entities referred to in Article 73(1)(c) CITA will be ex- cluded from their IRES taxable base provided that they: (i) exclusively or mainly carry out any of the qualifying non-profit activities listed in Article 1(45) of Finance Act 2021 and (ii) earmark the related tax savings to a non-distributable reserve and use these resources to finance these non-profit activities. (vi) Persons exempt from IRES and persons outside the scope of IRES Dividends paid to Italian resident persons that are exempt from IRES are generally subject to 26 per- cent tax withheld at source. No Italian tax is instead withheld at source on div- idends paid to persons that are outside the scope of IRES (“esclusi”) under Article 74(1) CITA. (vii) Pension funds and OICR (other than Real Estate AIF) No Italian tax is withheld at source on dividends paid to (a)  Italian pension funds governed by Legislative Decree No. 252 of December 5, 2005 (“Decree 252”) and (b) Italian OICR, other than real estate investment funds and Italian real estate SICAFs (real estate alter- native investment funds, “Real Estate AIF”). Dividends received by Italian pension funds are taken into account to compute the pension fund’s net annual accrued yield, which is subject to a 20 percent flat tax (imposta sostitutiva). Subject to cer- tain conditions (including minimum holding period requirement) and limitations, dividends and other income from the common shares may be excluded from the taxable base of the 20 percent flat tax if the 430 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F  pension fund earmarks the common shares as eli- gible investment under Article 1(89)-(92) of Finance Act 2017 (as subsequently amended) to the extent, however, that investment in the common shares (and other qualifying shares or units in undertakings for collective investment investing mainly in qualify- ing shares) represent no more than 10 percent of the gross asset value of the pension fund of the pre- vious year. Dividends received by OICR that are set up in, and organized under the laws of, Italy and that are subject to regulatory supervision (other than Real Estate AIF) are not subject to taxation at the level of the OICR. (viii) Real Estate AIF No Italian tax is withheld at source on dividends paid to Italian Real Estate AIF. Moreover, dividends are not subject to either IRES or IRAP at the level of the Real Estate AIF. However, income realized by Italian Real Estate AIF is attributed pro rata to Italian resi- dent unitholders / shareholders, irrespective of any actual distribution, on a tax transparency basis if the Italian resident unitholders / shareholders are not institutional investors and hold units / shares in the Real Estate AIF representing more than 5 percent of the Real Estate AIF’s net asset value. (B) NON-ITALIAN RESIDENT PERSONS  (i) Non-resident persons holding the commonshares in Ferrari through a permanent establishment in Italy No Italian tax is withheld at source on dividends paid to non-resident persons that hold the common shares in Ferrari through a permanent establishment in Ita- ly to which the common shares in Ferrari are effec- tively connected. Only 5 percent of the dividends are included in the overall income subject to IRES, unless the common shares in Ferrari are financial assets held for trading by holders that apply IAS / IFRS in- ternational accounting standards under Regulation No.  1606/2002 of the European Parliament and the Council of July  19, 2002. In this latter case, the full amount of the dividends is included in the overall busi- ness income subject to IRES. IRES is currently levied at 24 percent, but a higher rate may apply for companies operating in specific sectors (chief among them is the 27.5 percent IRES rate for banks and other regulated fi- nancial intermediaries) or meeting certain conditions. If the common shares are held by a non-resident Sole Proprietor through a permanent establishment in Italy to which the common shares are effectively connect- ed, only 58.14 percent of the dividends is included in the overall income subject to personal income tax. For some types of businesses and under certain conditions, dividends are also partially included in the net value of production, which is subject to IRAP. If dividends are paid with respect to common shares in Ferrari that are not connected with a permanent establishment in Italy of a non-resident person, please see subparagraph (B)(ii) below. (ii) Non-resident persons that do not hold the common shares in Ferrari through a permanent establishment in Italy A 26 percent tax withheld at source generally applies on dividends paid to non-resident persons that do not have a permanent establishment in Italy to which the common shares in Ferrari are effectively connected. Subject to a specific application that must be submitted to the Italian tax authorities under the terms and conditions provided by law, non-res- ident holders are entitled to relief (in the form of a refund), which cannot be greater than 11/26 (elev- en twenty-sixths) of the tax levied in Italy, if they can demonstrate that they have paid final tax abroad on the same profits. Holders who may be eligible for the relief should consult with their own independent tax advisors to determine whether they are eligible for, and how to obtain, the tax refund. As an alternative to the relief described above, persons resident in countries that have a double tax treaty in force with Italy may request that the tax withheld at source on dividends be levied at the (re- duced) rate provided under the applicable tax trea- ty, provided that the non-resident person promptly submits proper documentation (including tax resi- dent certificates released or stamped by the foreign tax authority). The domestic withholding tax rate on dividends is 1.2 percent (and not 26 percent) if the recipients and beneficial owners of the dividends on Ferrari common shares are companies or entities that are (a) resident for tax purposes in an EU Member State or in an EEA State that is included in the Italian White List and (b) subject to corporate income tax in such State. These companies and entities are not entitled to the 11/26 relief described above. The domestic withholding tax rate on dividends is 11 percent (and not 26 percent) if the recipients and beneficial owners of the dividends on Ferrari common shares are pension funds that are set up in an EU Member States or an EEA State included in the Italian White List. These pension funds are not entitled to the 11/26 relief described above. More- over, Article 1(95) of Finance Act 2017 (as amend- ed by Finance Act 2019) provides for an exemption from withholding taxation on dividends if a pension fund set up in an EU Member State or an EEA State holds shares in an Italian resident corporation (such as Ferrari) for at least 5 years and only to the extent of dividends from investments in qualifying shares (or units in undertakings for collective investment investing mainly in qualifying shares) that represent no more than 10 percent of the gross asset value of the pension fund of the previous year. To benefit from this exemption, the EU (or “white listed” EEA) 431 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS432 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fpension fund that is the beneficial owner of the div- idends must submit an affidavit to the withholding agent whereby it declares that it meets the condi- tions for the exemption and that it undertakes to hold the shares for the required holding period. Other documentary obligations apply to such EU (or “white listed” EEA) pension funds to benefit from this exemption. Pursuant to Article 1(631) of Finance Act 2021, no Italian tax is withheld at source on dividends paid to (i) foreign undertakings for collective investment that comply with Directive 2009/65/EC, or (ii) foreign un- dertakings for collective investment that do not fall within the scope of Directive 2009/65/EC but whose asset manager is subject to regulatory supervision according to Directive 2011/61/EU, provided that in both case (i) and (ii) the foreign undertaking for col- lective investment is organized under the laws of an EU Member State or an EEA State that is included in the White List. Under Article 27-bis of Decree 600, which imple- mented in Italy the Directive 435/90/EEC of July  23, 1990, then recast in EU Directive 2011/96 of Novem- ber  30, 2011 (the “Parent Subsidiary Directive”), a company is entitled to a full refund of the tax with- held at source on the dividends if it (a)  has one of the legal forms provided for in the appendix to the Parent Subsidiary Directive, (b)  is resident for tax purposes in an EU Member State without being con- sidered to be resident outside the EU according to a double tax treaty signed with a non-EU country, (c) is subject in the country of residence to one of the taxes indicated in the appendix to the Parent Subsid- iary Directive with no possibility of benefiting from optional or exemption regimes that have no terri- torial or time limitations, and (d) directly holds com- mon shares in Ferrari that represent an interest in the issued and outstanding capital of Ferrari of no less than 10 percent for an uninterrupted period of at least one year. If these conditions are met, and as an alternative to submitting a refund request after the dividend distribution, the non-resident compa- ny may request that no tax be levied at the time the dividends are paid, provided that (x) the 1-year hold- ing period under condition (d) above has already run and (y) the non-resident company promptly submits proper documentation. The withholding exemption under Article 27-bis of Decree 600 may be denied by the Italian tax authorities in abusive situations pur- suant to the Italian statutory general anti-abuse rule (Article 10-bis of Law No. 212 of July 27, 2000). Under the Agreement between the European Community and the Swiss Confederation providing for measures equivalent to those laid down in Coun- cil Directive 2003/48/EC on taxation of savings in- come in the form of interest payments, the withhold- ing tax refund / exemption regime described above also applies to dividends paid to a company that (a) is resident for tax purposes in Switzerland without being considered to be resident outside Switzerland according to a double tax treaty signed with a non- EU country, (b) is a limited company, (c) is subject to Swiss corporate tax without being exempted or ben- efiting from preferential tax regimes, and (d) direct- ly holds common shares in Ferrari that represent an interest in Ferrari’s issued and outstanding capital of no less than 25 percent for an uninterrupted period of at least two years. Dividends distributed to international entities or bodies that benefit from exemption from taxation in Italy pursuant to international rules or treaties entered into force in Italy will not be subject to with- holding tax. (iii) U.S. holders (without permanent establishment in Italy) of Ferrari common shares and, if applicable, Ferrari special voting shares If Ferrari is considered to be a tax resident of both Italy and the Netherlands, in accordance with the domestic tax residency provisions applied by each of these jurisdictions, while the double tax treaty be- tween Italy and the Netherlands attributes the tax residency exclusively to Italy, Ferrari will be required to apply Italian dividend withholding tax on dividends distributed to U.S. holders of Ferrari common shares and, if applicable, Ferrari special voting shares. How- ever, certain U.S. holders of Ferrari common shares and, if applicable, Ferrari special voting shares may qualify for full or partial relief from the Italian divi- dend withholding tax under the Convention between the Government of the United States of America and the Government of the Italian Republic for the avoid- ance of double taxation with respect to taxes on in- come and the prevention of fraud or fiscal evasion signed in Washington, D.C. on August  25, 1999 (the “Italy-U.S. Treaty”). On the basis of Article 10 of the Italy-U.S. Treaty,  qualifying U.S. individuals are en- titled to a reduced Italian dividend withholding tax rate (i.e., 15 percent) and  qualifying U.S. companies are entitled, under certain conditions, to a reduced Italian dividend withholding tax rate (either 5 percent or 15 percent depending on the circumstances). On the basis of Article 10(8) of the Italy-U.S. Treaty, qual- ified U.S. governmental entities are entitled, under certain conditions, to a full exemption from Italian dividend withholding tax. TAXATION OF DISTRIBUTIONS OF EQUITY RESERVES The tax regime summarized in this subsection “Tax- ation of distributions of Equity Reserves” applies only to classes of holders of Ferrari common shares and, if applicable, Ferrari special voting shares that are described here below. The information provided in this subsection sum- marizes the Italian tax regime applicable to the distri- butions by Ferrari - other than in case of reduction of excess capital, withdrawal, exclusion, redemption or liquidation - of equity reserves as referred to un- der Article 47(5) CITA, such as, for instance, reserves or other funds formed with share premiums, equal- 433 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSizing interests (interessi di conguaglio) paid in by the subscribers, equity (other than share capital) contri- butions (versamenti a fondo perduto) or share capi- tal account payments (versamenti in conto capitale) made by shareholders and tax-exempt revaluation reserves (the “Equity Reserves”). (A) ITALIAN RESIDENT PERSONS  (i) Individuals not engaged in business activity Regardless of what holders have resolved upon in the shareholders’ meeting, the amounts received as distribution out of Equity Reserves of Ferrari by Italian resident individuals who do not hold the Fer- rari common shares in connection with a business activity are deemed to be, and treated as, profits for the recipients to the extent that Ferrari has current year profits or retained profits (except for any por- tion thereof earmarked to a tax-deferred reserve or non-distributable reserves). Amounts treated as profits are subject to the same tax regime de- scribed above for dividends. Amounts received as distributions out of Equity Reserves, net of any amount already treated as profits as per the above, reduce the holder’s tax basis in Ferrari common shares correspondingly. Distributions out of Eq- uity Reserves that are in excess of the holders’ tax basis in the Ferrari common shares are treated as dividends for tax purposes. Special rules may apply if the individual holders have elected with regard to the common shares in Ferrari into the discretionary investment portfolio regime (regime del risparmio gestito) described in subparagraph (A)(i) of the sub- section “Taxation of Capital Gains” below. (ii) Sole Proprietors, business partnerships (Italian “società in nome collettivo,” “società in accomandita semplice” and similar Italian partnerships as referred to in Article 5 CITA), as well as companies and other business entities referred to in Article 73(1)(a)-(b) CITA Regardless of what holders have resolved upon in the shareholders’ meeting, the amounts received as distribution out of Equity Reserves of Ferrari by Ital- ian Sole Proprietors, Italian business partnerships (Italian “società in nome collettivo,” “società in acco- mandita semplice” and similar Italian partnerships as referred to in Article 5 CITA), and Italian resident com- panies and other business entities referred to in Arti- cle 73(1)(a)-(b) CITA are deemed to be, and are treated as, profits for the recipients to the extent that Ferrari has current year profits or retained profits (except for any portion thereof earmarked to a tax-deferred reserve or non-distributable reserves). Amounts treated as profits should be subject to the same tax regime described above for dividends. Amounts re- ceived as distributions out of Equity Reserves, net of any amount already treated as profits as per the above, reduce the holder’s tax basis in the Ferrari common shares correspondingly. Distributions out of Equity Reserves that are in excess of the holders’ tax basis in the common shares in Ferrari are treated as capital gains for tax purposes and should be sub- ject to the same regime described in the subsection “Taxation of Capital Gains” below. (iii) Non-business entities referred to in Article 73(1)(c) CITA and non-business partnerships referred to in Article 5 CITA Amounts received by Italian resident non-business entities referred to in Article 73(1)(c) CITA as distri- butions out of Equity Reserves, net of any amount al- ready treated as profits as per the rules described in subparagraph (A)(i) above that apply here as well, reduce the holder’s tax basis in the Ferrari common shares correspondingly. Distributions out of Equity Reserves that are in excess of the holders’ tax basis in the common shares in Ferrari not held in connec- tion with a business activity are treated as dividends for tax purposes. For a short description of a favor- able regime available to certain social security enti- ties, see subparagraph (A)(v) of the subsection “Tax- ation of Dividends” above. In case of amounts received by Italian non-busi- ness partnerships referred to in Article 5 CITA, the tax regime depends on the specific circumstanc- es of the case. Shareholders and any potential pro- spective investors that are Italian non-business part- nerships should consult their own tax advisors in this respect. (iv) Persons exempt from IRES Amounts received by Italian resident persons ex- empt from IRES as distributions out of Equity Re- serves, net of any amount already treated as profits as per the rules described in subparagraph (A)(i) above that apply here as well, reduce the holder’s tax basis in the Ferrari common shares corresponding- ly. Distributions out of Equity Reserves that are in ex- cess of the holders’ tax basis in the common shares in Ferrari not held in connection with a business ac- tivity are treated as dividends for tax purposes. (v) Pension funds and OICR (other than Real Estate AIF) Amounts received by Italian pension funds gov- erned by Article 17 of Decree 252 as distributions out of Equity Reserves should be taken into account to compute the pension fund’s net annual accrued yield, which is subject to a 20 percent flat tax (impos- ta sostitutiva). The value of the common shares in Ferrari at the end of the same tax year should also be included in the net annual accrued yield. For a short 434 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fdescription of a favorable regime available to pen- sion funds, see subparagraph (A)(vii) of the subsec- tion “Taxation of Dividends” above. Conversely, any amounts received by OICR that are set up in, and organized under the laws of, Italy and that are subject to regulatory supervision (oth- er than Real Estate AIF) as distributions out of Equity Reserves are not subject to taxation at the level of the OICR. (vi) Real Estate AIF Amounts received by Italian Real Estate AIF as dis- tributions out of Equity Reserves are not subject to IRES or IRAP at the level of the Real Estate AIF. How- ever, income realized by Italian Real Estate AIF is at- tributed pro rata to the Italian resident unitholders / shareholders, irrespective of any actual distribution, on a tax transparency basis if the Italian resident unitholders / shareholders are not institutional in- vestors and hold units / shares in the Real Estate AIF representing more than 5 percent of the Real Estate AIF’s net asset value. (B) NON-ITALIAN RESIDENT PERSONS  (i) Non-resident persons that do not hold the common shares in Ferrari through a permanent establishment in Italy For non-Italian resident persons (whether indi- viduals or corporations) without a permanent es- tablishment in Italy to which the common shares in Ferrari are effectively connected, the amounts received as distributions out of Equity Reserves are subject to the same tax regime as applicable to Italian resident individuals not engaged in business activity described in paragraph A(i) of this subsec- tion “Taxation of distributions of Equity Reserves”. Therefore, the amounts received as distributions out of Equity Reserves, net of any amount that has already been treated as profits as per the rules de- scribed in subparagraph (A)(i) above, reduce the holder’s tax basis in the Ferrari common shares correspondingly. Distributions out of Equity Re- serves that are in excess of the holders’ tax basis in the common shares in Ferrari are treated as div- idends for tax purposes. (ii) Non-resident persons holding the common shares in Ferrari through a permanent establishment in Italy For non-Italian resident persons that hold the com- mon shares in Ferrari through a permanent estab- lishment in Italy to which the Ferrari common shares are effectively connected, the amounts received as distributions out of Equity Reserves are subject to the same tax regime as applicable to Italian resident companies and other business entities referred to in Article 73(1)(a)-(b)  CITA as described in subpara- graph (A)(ii) above. If the Equity Reserves distribu- tion relates to common shares in Ferrari that are not connected to a permanent establishment in Italy of the non-resident recipient, reference must be made to subparagraph (B)(i) above. TAXATION OF CAPITAL GAINS The tax regime summarized in this subsection “Taxa- tion of Capital Gains” applies only to classes of holders of Ferrari common shares and, if applicable, Ferrari special voting shares that are described here below. (A) ITALIAN RESIDENT PERSONS  (i) Italian resident individuals not engaged in business activity Capital gains realized by Italian resident individu- als upon transfer for consideration of the common shares (as well as of securities or rights whereby common shares may be acquired), other than capi- tal gains realized in connection with a business activ- ity, are subject to a 26 percent substitute tax (“CGT”). The taxpayer may opt for any of the following three tax regimes: • Tax return regime (regime della dichiarazione). Under this regime, capital gains and capital loss- es realized during the tax year must be report- ed in the income tax return. CGT is computed on capital gains net of capital losses of the same na- ture and must be paid by the term for paying the balance of the annual income tax. Capital losses in excess of capital gains may be carried forward and offset against capital gains realized in any of the four following tax years. This regime is the default regime if the taxpayer does not elect into any of the two alternative regimes described in (b) and (c) below. • Non-discretionary investment portfolio re- gime (risparmio amministrato) (optional). Un- der this regime, CGT is applied separately on capital gains realized on each transfer of com- mon shares in Ferrari. This regime is allowed subject to (x)  the Ferrari common shares be- ing managed or in custody with Italian banks, broker-dealers (società di intermediazione mo- biliare) or certain authorized financial inter- mediaries; and (y)  an express election for the non-discretionary investment portfolio regime being made in writing in due time by the rele- vant holder. Under this regime, the financial in- termediary is responsible for accounting for and paying (on behalf of the taxpayer) CGT in re- spect of capital gains realized on each transfer of the common shares in Ferrari (as well as in 435 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS  respect of capital gains realized at revocation of the intermediary’s mandate), net of any relevant capital losses. Capital losses may be carried for- ward and offset against capital gains realized within the same relationship of deposit in the same tax year or in the following tax years up to the fourth. Under this regime, the holder is not required to report capital gains in the annual in- come tax return. • Discretionary investment portfolio regime (ris- parmio gestito) (optional). This regime is allowed for holders who have entrusted the manage- ment of their financial assets, including the Fer- rari common shares, to an authorized interme- diary and have elected in writing into this regime. Under this regime, capital gains accrued on the Ferrari common shares are included in the com- putation of the annual increase in value of the managed assets accrued (even if not realized) at year end, which is subject to CGT. The manag- ing authorized intermediary applies the tax on behalf of the taxpayer. Any decrease in value of the managed assets accrued at year end may be carried forward and offset against any increase in value of the managed assets accrued in any of the four following tax years. Under this regime, the holder is not required to report capital gains in the annual income tax return. Subject to certain conditions (including minimum holding period requirement) and limitations, capital gains on the common shares in Ferrari may be ex- empt from any income taxation (including from the 26 percent CGT) if the common shares in Ferrari do not represent a Qualified Holding and are included in a long-term savings account (piano di risparmio a lungo termine) that meets all the requirements set forth under Italian tax law. Under the Finance Act 2024, for CGT purposes only, Italian individuals may increase the tax basis of the shares in Ferrari held on January 1, 2024 up to their fair market value by paying a 16 percent sub- stitute tax on such fair market value by June 30, 2024 (either in full or the first of three instalments). For these purposes, the fair market value is the simple average trading price of the Ferrari shares in De- cember 2023. (ii) Sole Proprietors and business partnerships (Italian “società in nome collettivo,” “società in accomandita semplice” and similar Italian partnerships as referred to in Article 5 CITA) Capital gains realized by Italian Sole Proprietors and Italian business partnerships (Italian “società in nome collettivo,” “società in accomandita semplice” and similar Italian partnerships as referred to in Ar- ticle 5 CITA) upon transfer for consideration of the common shares in Ferrari must be fully included in the overall business income and reported in the an- nual income tax return. Capital losses (or other neg- ative items of income) derived by this class of hold- ers upon transfer for consideration of the common shares in Ferrari would be fully deductible from the holder’s income. However, if the conditions under a. and b. of sub- paragraph (A)(iii) below are met, only 49.72 percent (58.14 percent in case of Sole Proprietors) of the capital gain should be included in the overall busi- ness income (based on a different interpretation, a 58.14 percent inclusion of the capital gains that meet the abovementioned conditions should apply also to business partnerships). Capital losses realized on common shares in Ferrari that meet the conditions under a. and b. of subparagraph (A)(iii) below are only partially deductible (similarly to what is provid- ed for the taxation of capital gains). For the purpose of determining capital gains and capital losses, the holder’s tax basis in the Ferrari common shares is reduced by any write-down that the holder has deducted in previous tax years. (iii) Companies and other business entities referred to in Article 73(1)(a)-(b) CITA Capital gains realized by Italian resident companies and other business entities as referred to in Article 73(1)(a)-(b)  CITA (including partnerships limited by shares and public and private entities whose sole or primary purpose is carrying out business activi- ty) upon transfer for consideration of the common shares in Ferrari must be fully included in the over- all taxable business income subject to IRES in the tax year in which the capital gains are realized or, upon election, may be spread in equal installments over a maximum of five tax years (including the tax year when the capital gain is realized). The election for the installment computation is only available if the com- mon shares in Ferrari have been held for no less than three years and booked as non-current finan- cial assets (immobilizzazioni finanziarie) in the last three financial statements. However, under Article 87 CITA (participation exemption), capital gains realized upon transfer of common shares in Ferrari are 95 percent exempt if both the following requirements are met: • The common shares in Ferrari have been unin- terruptedly held as of the first day of the twelfth month prior to the transfer, treating the Ferra- ri common shares acquired on the most recent date as being transferred first (on a “last in first out” basis); and • The common shares in Ferrari have been booked as non-current financial assets in the first finan- cial statements closed during the holding period. In case of holders that draft their financial state- ments according to IAS / IFRS international ac- counting standards, the common shares in Fer- rari are deemed as non-current financial assets if they are not accounted as financial assets held for trading. 436 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F437 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSThe Italian law lays down certain additional condi- tions for the exemption to be available. Based on the assumption that Ferrari is a holding company, that its shares are listed on a regulated market, and that pursuant to Article 87(5) CITA its assets are predominantly composed of shareholdings in companies which satisfy the additional conditions set forth by Article 87 CITA in order to enjoy the participation exemption regime (i.e., the compa- nies are not resident in a State with a preferential tax system pursuant to Article 47-bis CITA and car- ry on a business activity), these additional condi- tions should be met. The transfer of shares booked as fixed finan- cial assets and shares booked as inventory must be considered separately with reference to each class. If the requirements for the participation exemption are met, any capital loss realized on the common shares in Ferrari cannot be deducted. For the purpose of determining capital gains and capital losses, the holder’s tax basis in the Ferrari common shares is reduced by any write-down that the holder has deducted in previous tax years. Capital losses (as well as negative differences between revenues and costs) relating to shares that do not meet the participation exemption require- ments are not relevant (and cannot be deducted) to the extent of the non-taxable amount of dividends (or advance dividend) received by the holder in the 36 (thirty-six) months prior to the transfer (dividend washing rule). This anti-avoidance rule applies to shares acquired in the 36-month period preceding the realization of the capital loss (or the negative dif- ference), provided that requirements under Article 87(1)(c)-(d) CITA (i.e., the company is not resident in a State with a preferential tax system pursuant to Arti- cle 47-bis CITA and carries on a business activity) are met. The anti-avoidance rule does not apply to hold- ers that draft their financial statements according to IAS / IFRS international accounting standards under Regulation (EC) No. 1606/2002 of the European Par- liament and the Council of July  19, 2002. When the amount of the aforesaid capital losses (and negative differences) deriving from a transaction (or a series of transactions) on shares traded on regulated mar- kets is greater than €50,000.00, the taxpayer must, under certain circumstances report the data and the information regarding the transaction to the Ital- ian tax authorities. Moreover, in case of capital losses greater than €5,000,000.00 deriving from the transfer (or a se- ries of transfers) of shares booked as non-current financial assets, the holder must report the data and the information to the Italian tax authorities. Holders that draft their financial statements according to IAS / IFRS international accounting standards are under no such obligation. For some types of companies and under certain conditions, capital gains on common shares in Fer- rari are also included in the net value of production that is subject to IRAP. (iv) Non-business entities referred to in Article 73(1) (c) CITA and non-business partnerships (società semplici) referred to in Article 5 CITA Capital gains realized, outside the scope of a business activity, by Italian resident non-business entities re- ferred to in Article 73(1)(c) CITA (other than OICR) and Italian non-business partnerships as referred to in Article 5 CITA are subject to tax under the same rules as provided for capital gains realized by Italian resi- dent individuals who do not hold the Ferrari common shares in connection with a business activity. For a short description of a favorable regime available to certain social security entities (see subparagraph (A) (v) of the subsection “Taxation of Dividends” above). Italian resident non-business entities referred to in Article 73(1)(c) CITA (holding the Ferrari shares outside the scope of a business activity) and Italian non-business partnerships as referred to in Article 5 CITA may also elect for the temporary tax basis step-up regime enacted by the Finance Act 2024 in relation to Ferrari shares held on January 1, 2024 (see subparagraph (A)(i) of this subsection “Taxation of Capital Gains” above). (v) Pension funds and OICR (other than Real Estate AIF) Capital gains on common shares in Ferrari held by Italian pension funds governed by Decree 252 must be taken into account to compute the pension fund’s net annual accrued yield, which is subject to a 20 percent flat tax (imposta sostitutiva). For a short de- scription of a favorable regime available to pension funds, see subparagraph (A)(vii) of the subsection “Taxation of Dividends” above. Capital gains on common shares in Ferrari held by OICRs that are set up in, and organized under the laws of, Italy and that are subject to regulatory su- pervision (other than Real Estate AIF) are not subject to tax at the level of the OICR. (vi) Real Estate AIF Capital gains on common shares in Ferrari held by Italian Real Estate AIF are not subject to IRES or IRAP at the level of the Real Estate AIF. (B) NON-ITALIAN RESIDENT PERSONS (i) Non-resident persons holding the common shares in Ferrari through a permanent establishment in Italy If non-Italian resident persons hold the common shares in Ferrari through a permanent establish- ment in Italy to which the common shares in Ferra- 438 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fri are effectively connected, capital gains realized upon disposal of the common shares in Ferrari must be included in the permanent establishment’s income taxable in Italy according to the tax regime as provided for the capital gains realized by Italian resident companies and other business entities as referred to in Article 73(1)(a)-(b) CITA, which is sum- marized under subparagraph (A)(iii) above. If the common shares in Ferrari are not connected to a permanent establishment in Italy of the non-resident person, reference must be made to subparagraph (B)(ii) below. If the common shares are held by a non-resident Sole Proprietor through a permanent establishment in Italy to which the common shares are effective- ly connected, capital gains realized upon disposal of the common shares must be included in the per- manent establishment’s income taxable in Italy ac- cording to the tax regime as provided for the capital gains realized by Italian Sole Proprietors, which is summarized under subparagraph (A)(ii) above. (ii) Non-resident persons that do not hold the common shares in Ferrari through a permanent establishment in Italy NON-QUALIFIED HOLDINGS. Based on the fact that Ferrari common shares are listed on a regulated market, no tax applies in Italy on capital gains realized by non-Italian resident holders without a permanent establishment in Italy upon transfer for consider- ation of common shares in Ferrari that do not qualify as Transfers of Qualified Holdings, even if the Ferrari common shares are held in Italy and regardless of the provisions set forth in any applicable double tax treaty. In such case, in order to benefit from this ex- emption, non-Italian resident holders who hold the Ferrari common shares with an Italian authorized financial intermediary and either are subject to the nondiscretionary investment portfolio regime or have elected for the discretionary investment port- folio regime may be required to timely submit to the Italian authorized financial intermediary an affidavit whereby they state that they are not resident in Italy for tax purposes. QUALIFIED HOLDINGS. Capital gains realized by non-Italian resident holders without a permanent es- tablishment in Italy upon Transfers of Qualified Hold- ings are subject to tax under the rules as provided for capital gains realized by Italian resident individ- uals who do not hold the Ferrari common shares in connection with a business activity. However, (a) under Article 1(633) of Finance Act 2021, no tax applies in Italy on capital gains realized by (i) foreign undertakings for collective investment that comply with Directive 2009/65/EC, or (ii) foreign undertakings for collective investment that do not fall within the scope of Directive 2009/65/EC but whose asset manager is sub- ject to regulatory supervision according to Di- rective 2011/61/EU, provided that in both case (i) and (ii) the foreign undertaking for collective investment is organized under the laws of an EU Member State or an EEA State that is included in the White List. In any case, the provisions of dou- ble tax treaties entered into by Italy may apply if more favorable; (b) under Article 1 (59) of Finance Act 2024, capital gains realized on the common shares in Fer- rari by companies or entities that are resident for tax purposes in an EU Member State or in an EEA State that is included in the Italian White List are 95 percent exempt provided that the con- ditions under a. and b. of subparagraph (A)(iii) above are met. Non-resident persons that do not hold the common shares in Ferrari through a permanent establishment in Italy and that may be exposed to Italian source tax- ation on capital gains may also consider electing for the temporary tax basis step-up regime enacted by the Finance Act 2024 in relation to Ferrari shares held on January 1, 2024 (see subparagraph (A)(i) of this subsection “Taxation of Capital Gains” above). SPECIAL VOTING SHARES  No statutory, judicial or administrative authority directly discusses how the receipt, ownership or disposal of special voting shares should be treat- ed for Italian income tax purposes and as a result, the Italian tax consequences are uncertain. Ac- cordingly, we urge Ferrari shareholders to consult their tax advisors as to the tax consequences of the receipt, ownership and disposal of special vot- ing shares. Receipt of special voting shares A shareholder that receives special voting shares issued by Ferrari should in principle not recognize any taxable income upon the receipt of special vot- ing shares. Under a possible interpretation, the is- sue of special voting shares can be treated as the issue of bonus shares free of charge to the share- holders out of existing available reserves of Ferra- ri. Such issue should not have any material effect on the allocation of the tax basis of a shareholder between its Ferrari common shares and its Ferra- ri special voting shares. Because the special vot- ing shares are not transferable and their limited economic rights can be enjoyed only at the time of the liquidation of Ferrari, we believe and intend to take the position that the fair market value of each special voting share is minimal. However, because the determination of the fair market value of the special voting shares is not governed by any guid- ance that directly addresses such a situation and is unclear, the Italian tax authorities could assert that the value of the special voting shares as deter- mined by us is incorrect. 439 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSOwnership of special voting shares High-frequency trading Shareholders of special voting shares should not have to recognize income in respect of any amount transferred to the special voting shares dividend re- serve, but not paid out as dividends, in respect of the special voting shares. Disposition of special voting shares The tax treatment of a Ferrari shareholder that has its special voting shares redeemed for no consid- eration after removing its shares from the Loyalty Register is unclear. It is possible that a shareholder should recognize a loss to the extent of the share- holder’s tax basis (if any). The deductibility of such loss depends on individual circumstances and con- ditions generally required by Italian law. It is also pos- sible that a Ferrari shareholder would not be allowed to recognize a loss upon the redemption of its spe- cial voting shares and instead should increase its ba- sis in its Ferrari common shares by an amount equal to the tax basis (if any) in its special voting shares. TRANSFER TAX Contracts or other legal instruments relating to the transfer of securities (including the transfer of the Ferrari common shares) are subject to registration tax as follows: (i) notary deeds (atti pubblici) and pri- vate deeds with notarized signatures (scritture pri- vate authenticate) executed in Italy must mandato- rily be registered with the Italian tax authorities and are subject to €200.00 registration tax; and (ii)  pri- vate deeds (scritture private) are subject to €200.00 registration tax only if they are voluntary filed for registration with the Italian tax authorities or if the so-called “caso d’uso” or “enunciazione” occurs. FINANCIAL TRANSACTION TAX Transfer of Ownership of the Shares Article 1(491-500) of Law No.  228 of December  24, 2012 introduced a financial transaction tax (“FTT”) applicable, among others, to the transfers of the ownership of (i)  shares issued by Italian resident corporations, (ii) participating financial instruments (as defined under Article 2346(6) of the Italian Civ- il Code) issued by Italian resident corporations, and (iii)  securities representing equity investments in Italian resident corporations such as American De- positary Receipts and Global Depositary Receipts, regardless of the place of residence of the issuer of such securities and of the place where the contract has been concluded. The residence of the issuer for the purposes of FTT is the place where the issuer has its registered office (intended as its corporate seat). Since the corporate seat of Ferrari is not in Italy, transfers of ownership of the shares in Ferrari will not be subject to FTT. Transactions carried out on the Italian financial mar- kets and concerning the Ferrari shares may in lim- ited circumstances be subject to a tax on high-fre- investors quency trading. Potential prospective engaged in high-frequency trading should there- fore consult their own tax advisors regarding the Italian tax consequences of high-frequency trading on the Ferrari shares. TRANSFER OF THE FERRARI SHARES UPON DEATH OR BY GIFT Subject to certain exceptions, Italian inheritance and gift tax is generally payable on transfers of as- sets and rights (including the common shares and the special voting shares in Ferrari) (i)  by reason of death or gift by Italian resident persons (or other transfers for no consideration and the creation of liens on such assets for a specific purpose), even if the transferred assets are held outside Italy, and (ii) by reason of death or gift by non-Italian resident persons, but limited to transferred assets held in It- aly. Shares in corporations that are resident in Italy for tax purposes (because they have their corporate address or their place of effective management or their main business purpose in Italy for the greater part of the tax year) are deemed to be held in Italy. Subject to certain exceptions, transfers of as- sets and rights (including the common shares and the special voting shares in Ferrari) on death or by gift are generally subject to inheritance and gift tax as follows: • At a rate of 4 percent in case of transfers made to the spouse or relatives in direct line, on the portion of the global net value of the transferred assets, if any, exceeding, for each beneficiary, €1,000,000.00. • At a rate of 6 percent in case of transfers made to relatives up to the fourth degree or rela- tives-in-law up to the third degree on the entire value of the transferred assets (in the case of transfers to brothers or sisters, the six percent rate is applicable only on the portion of the glob- al net value of the transferred assets, if any, ex- ceeding, for each beneficiary, €100,000.00). • At a rate of 8 percent in any other case. If the transfer is made in favor of persons with se- vere disabilities, the tax applies on the value exceed- ing €1,500,000.00 at the rates illustrated above, de- pending on the type of relationship existing between the deceased or donor and the beneficiary. Assets and rights (i) segregated in a trust, or (ii) allocated to special funds by entering into a fiducia- ry contract, or (iii) encumbered by special purpose liens under Article 2645-ter of the Italian Civil Code, in favor of persons with severe disabilities are exempt from the Italian inheritance and gift tax, provided that all the conditions set out in Article 6 of Law No. 440 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F112 of June 22, 2016 are met. The exemption from Italian inheritance and gift tax also applies to the re-transfer of assets and rights if the death of the beneficiary occurs before the death of the settlor. No inheritance tax applies if the common shares in Ferrari are included in a long-term savings ac- count (piano di risparmio a lungo termine) that meets all the requirements set forth by the Italian tax law. STAMP DUTY Under Article 13(2bis-2ter) of Decree No.  642 of Oc- tober 26, 1972, a 0.20 percent stamp duty generally applies on communications and reports that Italian financial intermediaries periodically send to their cli- ents in relation to the financial products that are de- posited with such intermediaries. Shares are includ- ed in the definition of financial products for these purposes. Communications and reports are deemed to be sent at least once a year even if the Italian fi- nancial intermediary is under no obligation to either draft or send such communications and reports. The stamp duty cannot exceed €14,000.00 per year for investors other than individuals. Based on the wording of the law and the imple- menting decree issued by the Italian Ministry of Fi- nance on May 24, 2012, the 0.20 percent stamp duty does not apply to communications and reports that the Italian financial intermediaries send to investors who do not qualify as “clients” according to the reg- ulations issued by the Bank of Italy. Communications and reports sent to this type of investors are subject to the ordinary €2.00 stamp duty for each copy. The taxable base of the stamp duty is the market value or - in the lack thereof - the nominal value or the redemp- tion amount of any financial product. WEALTH TAX ON FINANCIAL PRODUCTS HELD ABROAD Under Article 19 of Decree No.  201 of Decem- ber  6, 2011, individuals, non-business entities and non-business partnerships resident for tax pur- poses in Italy, which hold certain financial products outside of Italian territory (including shares) are re- quired to pay a wealth tax at the rate of 0.20 percent (the rate is 0.40 percent if the financial products are held in one of the States or territories includ- ed in the Italian Ministerial Decree May 4, 1999). The wealth tax applies on the market value at the end of the relevant year or - in the lack thereof - on the nominal value or the redemption value of such fi- nancial products held outside of Italian territory. The wealth tax cannot exceed €14,000 per year for investors other than individuals. Taxpayers may deduct from the Italian wealth tax a tax credit equal to any wealth tax paid in the country where the financial products are held (up to the amount of the Italian wealth tax due). CERTAIN REPORTING OBLIGATIONS FOR ITALIAN RESIDENT HOLDERS Under Law Decree No. 167 of June 28, 1990, individu- als, non-business entities and non-business partner- ships that are resident in Italy for tax purposes and, 441 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSduring the fiscal year, hold financial assets abroad (including possibly the common shares and the spe- cial voting shares in Ferrari) must, in certain circum- stances, disclose these financial assets to the Italian tax authorities in their income tax return (or if the income tax return is not due, in a proper form that must be filed within the same term as prescribed for the annual income tax return), regardless of the value of such assets (save for deposits or bank ac- counts having an aggregate value not exceeding €15,000.00 throughout the year). The requirement applies also if the persons above, being not the di- rect holder of the financial assets, are the benefi- cial owners thereof for the purposes of anti-money laundering legislation. No disclosure requirements exist for financial assets (including the common shares and the spe- cial voting shares in Ferrari) under management or administration entrusted to Italian resident interme- diaries (Italian banks, broker-dealers (SIM), fiduciary companies or other professional intermediaries as indicated under Article 1 of Law Decree No.  167 of June 28, 1990) and for contracts concluded through their intervention, provided that the cash flows and the income derived from such assets and contracts have been subjected to Italian withholding tax or substitute tax by such intermediaries. INDEPENDENT AUDITOR’S REPORT To: the shareholders and audit committee of Ferrari N.V. REPORT ON THE AUDIT OF THE ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2023 INCLUDED IN THE ANNUAL REPORT OUR OPINION We have audited the financial statements for the year ended 31 December 2023 of Ferrari N.V., based in Amsterdam, the Netherlands. The financial state- ments comprise the consolidated financial state- ments and the company financial statements. In our opinion: • The accompanying consolidated financial state- ments give a true and fair view of the financial position of Ferrari N.V. as at 31 December 2023, and of its result and its cash flows for the year ended 2023 in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code. • The accompanying company financial state- ments give a true and fair view of the financial position of Ferrari N.V. as at 31 December 2023, and of its result for the year ended 2023 in accor- dance in accordance with International Financial Reporting Standards as adopted by the Europe- 442 an Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code. The consolidated financial statements comprise: 1 The consolidated statement of financial position as at 31 December 2023. 2 The following statements for 2023: the consoli- dated income statement, statements of compre- hensive income, the consolidated statements of cash flows and the consolidated statements of changes in equity. 3 The notes comprising material accounting policy information and other explanatory information. The company financial statements comprise: 1 The company statement of financial position as at 31 December 2023. 2 The following company statements for 2023: the company income statement, statements of com- prehensive income, the company statements of cash flow and the company statements of changes in equity. 3 The notes comprising a summary of the ac- counting policies and other explanatory infor- mation. BASIS FOR OUR OPINION We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the 'Our responsibilities for the audit of the financial statements' section of our report. We are independent of Ferrari N.V. in accordance with the EU Regulation on specific requirements re- garding statutory audit of public-interest entities, the Wet toezicht accountantsorganisaties (Wta, Au- dit firms supervision act), the Verordening inzake de onafhankelijkheid van accountants bij assur- ance-opdrachten (ViO, Code of Ethics for Profession- al Accountants, a regulation with respect to indepen- dence) and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the Verordening gedrags- en beroepsregels ac- countants (VGBA, Dutch Code of Ethics). We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. INFORMATION IN SUPPORT OF OUR OPINION We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming our opinion thereon. The following infor- mation in support of our opinion was addressed in this context, and we do not provide a separate opin- ion or conclusion on these matters. FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FMATERIALITY Based on our professional judgement we deter- mined the final materiality for the consolidated fi- nancial statements as a whole at € 80 million, based upon Profit before Tax. We have also taken into account misstatements and/or possible misstate- ments that in our opinion are material for the users of the financial statements for qualitative reasons. We agreed with the audit committee that mis- statements in excess of € 4 million, which are identi- fied during the audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds. SCOPE OF THE GROUP AUDIT Ferrari N.V. is at the head of a group of entities. The financial information of this group is included in the consolidated financial statements of Ferrari N.V. Our group audit mainly focused on significant group entities. Our assessment of entities that are significant to the group was done as part of our au- dit planning and was aimed to obtain sufficient cov- erage of the risks of a material misstatement for the significant account balances, classes of transac- tions and disclosures that we have identified. In ad- dition, we considered qualitative factors as part of our assessment. For the selected component audit teams, the group audit team provided detailed written instruc- tions, which, in addition to communicating our re- quirements of component audit teams, also detailed significant audit areas, including awareness for risks related to management override of controls and revenue recognition. Furthermore, we devel- oped a plan for overseeing component audit teams based on its relative significance and specific risk characteristics. Our oversight procedures includ- ed a combination of live and virtual meetings with the component auditor, including working paper re- views. We also reviewed component audit team de- liverables to gain a sufficient understanding of the work performed based on our instructions. The na- ture, timing and extent of our oversight procedures varied based on both quantitative and qualitative considerations. By performing the procedures mentioned above at group entities, together with additional pro- cedures at group level, we have been able to obtain sufficient and appropriate audit evidence about the group's financial information to provide an opinion on the consolidated financial statements. AUDIT APPROACH FRAUD RISKS We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an understand- ing of the entity and its environment and the com- ponents of the system of internal control, including the risk assessment process and management's process for responding to the risks of fraud and monitoring the system of internal control and how the supervisory board exercises oversight, as well as the outcomes. We evaluated the design and rel- evant aspects of the system of internal control and in particular the fraud risk assessment, as well as among others the code of conduct, whistle blower procedures and incident registration. We evaluat- ed the design and the implementation and, where considered appropriate, tested the operating ef- fectiveness, of internal controls designed to miti- gate fraud risks. As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to fi- nancial reporting fraud, misappropriation of assets and bribery and corruption in close co-operation with our forensic specialists. We evaluated wheth- er these factors indicate that a risk of material mis- statement due fraud is present. In accordance with our standards, we identified management override of controls as a presumed fraud risk. Our audit procedures to respond to these fraud risks include, amongst others, detailed testing of journal entries and top-side adjustments based on supporting documentation. We have used da- ta-analytics to perform a selection of journal entries based on risk-based characteristics to address the identified fraud risk. Additionally, we performed, amongst others the following procedures: • We incorporated elements of unpredictability in our audit. We also considered the outcome of our other audit procedures and evaluated whether any findings were indicative of fraud or non-compliance. • We considered available information and made enquiries of relevant personal, including (non) executive directors, lower management, ac- counting personnel, general counsel, director of internal audit, compliance and corporate affairs officer and others. • We tested the appropriateness of journal entries recorded in the general ledger and other adjust- ments made in the preparation of the financial statements. • We evaluated whether the selection and applica- tion of accounting policies by the entity, particu- larly those related to subjective measurements and complex transactions, may be indicative of fraudulent financial reporting. • We evaluated whether the judgments and de- cisions made by management in making the accounting estimates included in the financial statements indicate a possible bias that may represent a risk of material misstatement due to fraud. Management insights, estimates and assumptions that might have a major impact on the financial statements are disclosed in note 2 use of estimates of the financial statements. We performed a retrospective review of manage- ment judgments and assumptions related to sig- 443 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSnificant accounting estimates reflected in prior year financial statements. • For significant transactions during the year we evaluated whether the business rationale of the transactions suggests that they may have been entered into to engage in fraudulent financial re- porting or to conceal misappropriation of assets. • For manual journal entries affecting revenue recognition, which is a presumed fraud risk in accordance with our standards, we performed specific journal entry tests. • We have involved forensic specialists, who as- sisted us in the procedures explained above. Our procedures did not lead to indications for fraud potentially resulting in material misstatements. AUDIT APPROACH COMPLIANCE WITH LAWS AND REGULATIONS We assessed the laws and regulations relevant to the entity through discussion with, amongst others, management, group legal counsel, internal audit and those charged with governance, reading minutes and reports of internal audit. We involved our forensic specialists in this evalua- tion. Please refer to our audit approach on fraud risks related for more information about this evaluation. As a result of our risk assessment procedures, and while realizing that the effects from non-com- pliance could considerably vary, we considered the following laws and regulations: (corporate) tax law, the requirements under the International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and Part 9 of Book 2 of the Dutch Civil Code with a direct effect on the financial state- ments as an integrated part of our audit procedures, to the extent material for the financial statements. We obtained sufficient appropriate audit evi- dence regarding provisions of those laws and reg- ulations generally recognized to have a direct effect on the financial statements. Apart from these, Ferrari N.V. is subject to oth- er laws and regulations where the consequences of non-compliance could have a material effect on amounts and/or disclosures in the financial state- ments, for instance, through imposing fines or liti- gation. Given the nature of the entity's business and the complexity of these other laws and regulations, there is a risk of non-compliance with the require- ments of such laws and regulations. In addition, we considered major laws and regulations applicable to listed companies. Our procedures are more limited with respect to these laws and regulations that do not have a di- rect effect on the determination of the amounts and disclosures in the financial statements. Compliance with these laws and regulations may be fundamen- tal to the operating aspects of the business, to the entity's ability to continue its business, or to avoid material penalties (e.g., compliance with the terms of operating licenses and permits or compliance with environmental regulations) and therefore non-com- pliance with such laws and regulations may have a material effect on the financial statements. Our re- sponsibility is limited to undertaking specified audit procedures to help identify non-compliance with those laws and regulations that may have a material effect on the financial statements. Our procedures are limited to (i) inquiry of the board of directors and others within the entity as to whether the enti- ty is in compliance with such laws and regulations and (ii) inspecting correspondence, if any, with the relevant licensing or regulatory authorities to help identify non-compliance with those laws and regu- lations that may have a material effect on the finan- cial statements. Naturally, we remained alert to indications of (suspected) non-compliance throughout the audit. Finally, we obtained written representations that all known instances of (suspected) fraud or non-compliance with laws and regulations have been disclosed to us. AUDIT APPROACH GOING CONCERN Our responsibilities, as well as the responsibilities of the board of directors, related to going concern un- der the prevailing standards are outlined in the “De- scription of responsibilities regarding the financial statements” section below. In fulfilling our responsi- bilities, we performed procedures including evalu- ating management’s assessment of the Company’s ability to continue as a going concern and consid- ering the impact of financial, operational, and other conditions. Based on these procedures, we did not identify any reportable findings related to the enti- ty’s ability to continue as a going concern. OUR KEY AUDIT MATTERS Key audit matters are those matters that, in our pro- fessional judgement, were of most significance in our audit of the financial statements. We have com- municated the key audit matters to the audit com- mittee. The key audit matters are not a comprehen- sive reflection of all matters discussed. INTANGIBLE FIXED ASSETS – DEVELOPMENT COSTS DESCRIPTION The financial statements as of December 31, 2023, include Intangible assets – development costs (“De- velopment costs”) with a net carrying amount of Euro 1,369.9 million. Development costs for car production and re- lated components, engines and systems, are recog- nized as an asset if the conditions under IAS 38 - In- tangible Assets are met, including, among others: (i) development costs can be measured reliably, (ii) the technical feasibility of the product, estimated vol- umes and expected pricing all support the view that 444 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fthe development expenditure will generate future economic benefits, and (iii) the company has the in- tention to complete the development and the ability to use the intangible asset. All other research and de- velopment costs are expensed as incurred. We identified Development costs as a critical au- dit matter because of the significant estimates and judgements management makes when determining if a project has met the IAS 38 conditions related to assessing the technical feasibility of the project, in- cluding the intention to complete the development and the ability to use the intangible asset, and the realization of an expected future economic benefit. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of man- agement’s assessment of the classification of capi- talization or expense of Development costs. HOW THE KEY AUDIT MATTER WAS ADDRESSED IN THE AUDIT Our audit procedures related to management’s judgments regarding the capitalization or expense of Development costs included the following, among others: • We evaluated management’s policies and pro- cedures for identifying the Development costs to be capitalized and the criteria used for capital- ization including the consistency to those adopt- ed in previous years. • We tested the effectiveness of controls over the capitalized Development costs process, includ- ing those related to the verification of capitaliza- tion requirements, product initiatives approval and spending allocation, and costs monitoring. • We obtained and analyzed the details of the capi- talized costs by project, on a sample basis, for the 2023 additions and reclassifications from costs in progress to additions that occurred in the year. For additions, we verified that capitalized projects to meet IAS 38 criteria for capitalization and remained commercially viable, through: • Analysis of project details including evidence • Testing supporting evidence including in- of external costs and internal costs. voices and time sheets for the Development costs capitalized. • In addition, for the selected new capitalized projects we performed specific inquiry with management and inspected supporting docu- mentation to assess the nature of the project. We verified to the supporting evidence that reclas- sifications from development costs in progress to development costs amortized were appropriate. • We evaluated, on a sample basis, the reason- ableness of management’s estimates, including management’s basis and approach for consid- ering the impacts of changes in the regulatory environment, by: • Inquiring of the Company's executives to un- derstand the business initiatives supporting the assumptions related to tested develop- ment projects. • Comparing Group’s forecast revenue, EBIT- DA, Operaring Profit (EBIT) and Industrial Free Cash Flow to actual results for the last three years. • Retrospectively analyzing the trend in actual revenue and the associated costs of produc- tion and of Development costs amortization. We verified, on a sample basis, that the costs re- corded as research expense through profit and loss were not eligible for capitalization, and therefore not included in capitalized Development costs. OBSERVATIONS The scope and nature of the procedures performed were appropriate and sufficient to address the key audit matter. Our procedures did not result in any re- portable matters. DIRECTION, SUPERVISION AND REVIEW OF THE WORK PERFORMED BY DELOITTE & TOUCHE S.P.A DESCRIPTION Ferrari N.V. is an international group of companies and is statutory seated in The Netherlands. As a result, the Company is required to issue financial statements prepared in accordance with Interna- tional Financial Reporting Standards as adopted by the European Union (EU-IFRS) and Part 9 of Book 2 of the Dutch Civil Code. Deloitte Accountants B.V. has been appointed as the Company’s auditor for fiscal year 2023. As part of our audit of these financial statements, we have engaged Deloitte & Touche S.p.A. to audit the Company’s financials in accordance with EU-IFRS. Following the NV structure of the group we, as Deloitte Accountants B.V., are required by Interna- tional Standard on Auditing 600 to direct, supervise and review the work that was performed by Deloitte & Touche S.p.A. Since this forms a significant part of our audit, we have identified this as a key audit matter. HOW THE KEY AUDIT MATTER WAS ADDRESSED IN THE AUDIT We have performed the following audit procedures: • For projects capitalized in previous years we verified, on sample basis, that capitalization cri- teria are still valid. • We issued written instructions to the audit team of Deloitte & Touche S.p.A. We reviewed and dis- cussed the audit team’s deliverables to ensure 445 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS446 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fthe work was performed in accordance with our instructions; rectors Report in accordance with Part 9 of Book 2 of the Dutch Civil Code. • In addition, we exercised direction, supervision and review on the work performed by the audit team of Deloitte & Touche S.p.A. throughout all stages of the audit by means of remote meet- ings, site visits as well as physical and remote file reviews. During these interactions, we were involved in the direction, supervision and review of audit procedures, such as but not limited to risk assessment, evaluating the company’s in- ternal control environment, (fraud) risk assess- ment, substantive audit procedures on signifi- cant and higher risk areas and concluding audit procedures; and We have joined several meetings between the audit team of Deloitte & Touche S.p.A.and management of Ferrari N.V. on significant accounting and audit mat- ters, including audit committee meetings. OBSERVATIONS The scope and nature of the procedures performed were appropriate and sufficient to address the key audit matter. Our procedures did not result in any re- portable matters. REPORT ON THE OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT The annual report contains other information, in ad- dition to the financial statements and our auditor's report thereon. The other information consists of: • Board of Directors Report. • Other Information as required by Part 9 of Book • Other information included in the Annual Report 2 of the Dutch Civil Code. Based on the following procedures performed, we conclude that the other information: • Is consistent with the financial statements and • Contains all the information regarding the man- does not contain material misstatements. agement report and the other information as re- quired by Part 9 of Book 2 of the Dutch Civil Code. We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements. By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of those performed in our audit of the financial statements. Management is responsible for the preparation of the other information, including the Board of Di- 447 REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS AND ESEF ENGAGEMENT We were engaged by the annual meeting of share- holders as auditor of Ferrari N.V. in April 13, 2022, as of the audit for the year 2023 and have operated as statutory auditor ever since. NO PROHIBITED NON-AUDIT SERVICES We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific requirements regarding statutory audit of public-interest entities. European Single Electronic Format (ESEF) Ferrari N.V. has prepared its annual report in ESEF. The requirements for this are set out in the Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specification of a single electronic reporting format (hereinafter: the RTS on ESEF). In our opinion, the annual report, prepared in XHTML format, including the (partly) marked-up consolidated financial statements, as included in the reporting package by Ferrari N.V. complies in all ma- terial respects with the RTS on ESEF. Management is responsible for preparing the annual report including the financial statements in accordance with the RTS on ESEF, whereby man- agement combines the various components into one single reporting package. Our responsibility is to obtain reasonable assur- ance for our opinion whether the annual report in this reporting package complies with the RTS on ESEF. We performed our examination in accordance with Dutch law, including Dutch Standard 3950N 'As- surance-opdrachten inzake het voldoen aan de cri- teria voor het opstellen van een digitaal verantwoor- dingsdocument' (assurance engagements relating to compliance with criteria for digital reporting). Our examination included amongst others: • Obtaining an understanding of the company's fi- nancial reporting process, including the prepa- ration of the reporting package. • Identifying and assessing the risks that the an- nual report does not comply in all material re- spects with the RTS on ESEF and designing and performing further assurance procedures re- sponsive to those risks to provide a basis for our opinion, including: • obtaining the reporting package and per- forming validations to determine whether the reporting package containing the Inline XBRL instance and the XBRL extension taxon- omy files has been prepared in accordance FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSwith the technical specifications as included in the RTS on ESEF; • examining the information related to the consolidated financial statements in the re- porting package to determine whether all required mark-ups have been applied and whether these are in accordance with the RTS on ESEF. DESCRIPTION OF RESPONSIBILITIES REGARDING THE FINANCIAL STATEMENTS RESPONSIBILITIES OF THE BOARD OF DIRECTORS FOR THE FINANCIAL STATEMENTS The board of directors is responsible for the prepa- ration and fair presentation of the financial state- ments in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the board is responsible for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. As part of the preparation of the financial state- ments, management is responsible for assessing the company's ability to continue as a going concern. Based on the financial reporting frameworks men- tioned, the board should prepare the financial state- ments using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. The board should disclose events and circum- stances that may cast significant doubt on the com- pany's ability to continue as a going concern in the financial statements. The audit committee is responsible for oversee- ing the company's financial reporting process. OUR RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objective is to plan and perform the audit as- signment in a manner that allows us to obtain suffi- cient and appropriate audit evidence for our opinion. Our audit has been performed with a high, but not ab- solute, level of assurance, which means we may not detect all material errors and fraud during our audit. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to in- fluence the economic decisions of users taken on the basis of these financial statements. The material- ity affects the nature, timing and extent of our audit procedures and the evaluation of the effect of iden- tified misstatements on our opinion. We have exercised professional judgement and have maintained professional scepticism through- out the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included among others: • Identifying and assessing the risks of material misstatement of the financial statements, wheth- er due to fraud or error, designing and perform- ing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opin- ion. The risk of not detecting a material misstate- ment resulting from fraud is higher than for one resulting from error, as fraud may involve col- lusion, forgery, intentional omissions, misrepre- sentations, or the override of internal control. • Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circum- stances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. • Evaluating the appropriateness of account- ing policies used and the reasonableness of accounting estimates and related disclosures made by management. • Concluding on the appropriateness of man- agement's 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 sig- nificant doubt on the company's ability to con- tinue 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 re- lated disclosures in the financial statements or, if such disclosures are inadequate, to modify 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. • Evaluating the overall presentation, structure and content of the financial statements, includ- ing the disclosures. • Evaluating whether the financial statements rep- resent the underlying transactions and events in a manner that achieves fair presentation. Because we are ultimately responsible for the opin- ion, we are also responsible for directing, supervis- ing and performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group enti- ties. Decisive were the size and/or the risk profile of the group entities or operations. On this basis, we selected group entities for which an audit or review had to be carried out on the complete set of financial information or specific items. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant findings in in- ternal control that we identified during our audit. In this respect we also submit an additional report to the audit committee in accordance with Article 11 of the EU Regulation on specific requirements regard- 448 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fing statutory audit of public-interest entities. The in- formation included in this additional report is con- sistent with our audit opinion in this auditor's report. We provide the audit committee with a statement that we have complied with relevant ethical require- ments regarding independence, and to communi- cate with them all relationships and other matters that may reasonably be thought to bear on our inde- pendence, and where applicable, related safeguards. From the matters communicated with the au- dit committee, we determine the key audit matters: those matters that were of most significance in the audit of the financial statements. We describe these matters in our auditor's report unless law or regu- lation precludes public disclosure about the matter or when, in extremely rare circumstances, not com- municating the matter is in the public interest. Amsterdam, February 22, 2024 Deloitte Accountants B.V. M.R. van Leeuwen 449 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSINDEPENDENT AUDITOR’S REPORT ON THE NON FINANCIAL STATEMENT TO THE BOARD OF DIRECTORS OF FERRARI N.V. We have carried out a limited assurance engage- ment on the Non Financial Statement of Ferrari N.V. and its subsidiaries (hereinafter also “Ferrari Group” or “Group”) as of December 31, 2023. Our limited assurance engagement does not ex- tend to the compliance of the Non Financial State- ment with the Dutch Decree on Non-Financial In- formation (Besluit bekendmaking niet-financiële informatie) and to the information required by art. 8 of the European Regulation 2020/852 included in the chapter “EU Taxonomy”. RESPONSIBILITY OF THE DIRECTORS FOR THE NON FINANCIAL STATEMENT The Directors of Ferrari N.V. are responsible for the preparation of the Non Financial Statement in ac- cordance with the “Global Reporting Initiative Sus- tainability Reporting Standards” established by GRI - Global Reporting Initiative (hereinafter “GRI Stan- dards”), as stated in the paragraph “Methodology and Scope” of the Non Financial Statement. The Directors are also responsible, for such in- ternal control as they determine is necessary to en- able the preparation of the Non Financial Statement that is free from material misstatement, whether due to fraud or error. The Directors are also responsible for the defi- nition of the Ferrari Group’s objectives in relation to the sustainability performance, for the identifica- tion of the stakeholders and the significant aspects to report. AUDITOR’S INDEPENDENCE AND QUALITY CONTROL We have complied with the independence and other ethical requirements of the Code of Ethics for Pro- fessional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, ob- jectivity, professional competence and due care, confidentiality, and professional behaviour. Our auditing firm applies International Standard on Quality Management 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures re- garding compliance with ethical requirements, pro- fessional standards, and applicable legal and regula- tory requirements. AUDITOR’S RESPONSIBILITY Our responsibility is to express our conclusion based on the procedures performed about the compliance of the Non Financial Statement with the GRI Standards. We conducted our work in accor- dance with the criteria established in the “Interna- tional Standard on Assurance Engagements ISAE 3000 (Revised) - Assurance Engagements Other than Audits or Reviews of Historical Financial Infor- mation” (hereinafter “ISAE 3000 Revised”), issued by the International Auditing and Assurance Standards Board (IAASB) for limited assurance engagements. The standard requires that we plan and per- form the engagement to obtain limited assurance whether the Non Financial Statement is free from material misstatement. Therefore, the procedures performed in a limit- ed assurance engagement are less than those per- formed in a reasonable assurance engagement in accordance with ISAE 3000 Revised (“reasonable assurance engagement”), and, therefore, do not en- able us to obtain assurance that we would become aware of all significant matters and events that might be identified in a reasonable assurance engagement. The procedures performed on the Non Financial Statement are based on our professional judgement and included inquiries, primarily with Company per- sonnel responsible for the preparation of informa- tion included in the Non Financial Statement, analysis of documents, recalculations and other procedures aimed to obtain evidence as appropriate. Specifically, we carried out the following proce- dures: 1 analysis of the process relating to the definition of material aspects disclosed in the Non Finan- cial Statement, with reference to the methods used for the identification and prioritization of material aspects for stakeholders and to the in- ternal validation of the process results; 2 comparison between the economic and finan- cial data and information included in the Non Financial Statement with those included in the Group’s Financial Statements; 3 understanding of the processes underlying the origination, recording and management of qual- itative and quantitative material information in- cluded in the Non Financial Statement. In particular, we carried out interviews and discus- sions with the management of Ferrari N.V. and with the personnel of Ferrari S.p.A. and we carried out limited documentary verifications, in order to gather information about the processes and procedures, which support the collection, aggregation, elabora- tion and transmittal of non-financial data and infor- mation to the department responsible for the prepa- ration of the Non Financial Statement. In addition, for material information, taking into con- sideration the Group’s activities and characteristics: • at the parent company’s and subsidiaries’ level: • with regards to qualitative information in- cluded in the Non Financial Statement, we carried out interviews and gathered sup- 450 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fporting documentation in order to verify its consistency with the available evidence; • with regards to quantitative information, we carried out both analytical procedures and limited verifications in order to ensure, on a sample basis, the correct aggregation of data; • for the Ferrari S.p.A.’s site located in Maranello (Modena, Italy), which we selected based on its activities, its contribution to the performance indicators at the consolidated level and its loca- tion, we carried out site visits, during which we have met the management and have gathered supporting documentation on a sample basis with reference to the correct application of pro- cedures and calculation methods used for the indicators. CONCLUSION Based on the work performed, nothing has come to our attention that causes us to believe that the Non Financial Statement of Ferrari Group as of Decem- ber 31, 2023, is not prepared, in all material aspects, in accordance with the GRI Standards as stated in the paragraph “Methodology and Scope” of the Non Financial Statement. Our conclusion on the Non Financial Statement of Ferrari Group does not extend to the compliance of the Non Financial Statement with the Dutch Decree on Non-Financial Information (Besluit bekendmaking niet-financiële informatie) and to the information re- quired by art. 8 of the European Regulation 2020/852 included in the paragraph “EU Taxonomy”. DELOITTE & TOUCHE S.p.A. Silvia Dallai Partner Bologna, Italy February 22, 2024 451 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSFINANCIAL STATEMENTS FORM 20-F CROSS REFERENCE 454 Form 20-F Cross Reference 453 FORM 20-F CROSS REFERENCE The table below sets out the location within the document of the informa- tion required by the SEC for annual reports on Form 20-F. The exact loca- tion is included in the column “Cross Reference”. The column “Page” re- fers to the starting page of the section (or sub-section) for reference only. Section Cross Reference Page Item Part I Item 1. Item 2. Item 3. Identity of Directors, Senior Management Not applicable and Advisers Offer Statistics and Expected Timetable Not Applicable Key Information B. Capitalization and Indebtedness Not Applicable C. Reasons for the Offer and Use of Not Applicable Proceeds D. Risk Factors Risk Factors Item 4. Information on the Company A. History and Development of the Company Overview — History of the Company B. Business Overview Overview Industry Overview Overview of Our Business C. Organizational Structure Note 3 “Scope of consolidation” to the Consolidated Financial Statements D. Property, Plants and Equipment Overview of Our Business — Properties Item 4A. Unresolved Staff Comments None Item 5. Operating and Financial Review and Overview Prospects A. Operating Results Results of Operations B. Liquidity and Capital Resources Liquidity and Capital Resources Financial Overview C. Research and Development, Patents and Financial Overview — Trends, Uncertainties Licenses, etc. and Opportunities — Research, Development and Product Lifecycle Financial Overview — Result of Operations — Research and development costs D. Trend Information Financial Overview — Trends, Uncertainties and Opportunities E. Critical Accounting Estimates Note 2 “Material Accounting Policies — Use of estimates” to the Consolidated Financial Statements Item 6. Directors, Senior Management and Employees A. Directors and Senior Management Corporate Governance — Board of Directors Corporate Governance — Ferrari Leadership Team B. Compensation Remuneration of Directors 454 21 47 46 48 51 332 78 46 92 100 108 92 100 92 329 123 153 279 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FItem Section Cross Reference Note 28 “Related party transactions — Emoluments to Directors and Key Management” to the Consolidated Financial Statements C. Board Practices The Audit Committee The Compensation Committee The ESG Committee D. Employees Overview of Our Business — Employees E. Share Ownership Share Ownership F. Disclosure of a Registrant’s Action Not applicable to Recover Erroneously Awarded Compensation Item 7. Major Shareholders and Related Party Transactions A. Major Shareholders Major Shareholders B. Related Party Transactions Note 28 “Related party transactions” to the Consolidated Financial Statements C. Interests of Experts and Counsel Not applicable Item 8. Financial Information A. Consolidated Statements and Other Consolidated Financial Statements Financial Information Financial Overview Note 23 “Provisions” to the Consolidated Financial Statements Dividend Policy B. Significant Changes Note on Presentation Item 9. The Offer and Listing A. Offer and Listing Details Offer and Listing Details B. Plan of Distribution Not applicable C. Markets Offer and Listing Details D. Selling Shareholders Not applicable E. Dilution Not applicable F. Expenses of the Issue Not applicable Item 10. Additional Information A. Share Capital Not applicable B. Memorandum and Articles of Association Memorandum and Articles of Association C. Material Contracts Remuneration of Directors D. Exchange Controls Exchange Controls E. Taxation Taxation F. Dividends and Paying Agents Not applicable G. Statements By Experts Not applicable H. Documents on Display Documents on Display I. Subsidiary Information Not applicable J. Annual Report to Security Holders Not applicable Item 11. Quantitative and Qualitative Disclosures Note 30 “Qualitative and Quantitative About Market Risk Information on Financial Risks” to the Consolidated Financial Statements 455 Page 374 131 132 132 81 131 120 374 311 92 367 419 18 419 419 128 279 164 422 18 377 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSItem Section Cross Reference Page Item 12. Description of Securities Other than Equity Securities A. Debt Securities Not applicable B. Warrants and Rights Not applicable C. Other Securities Not applicable D. American Depositary Shares Not applicable Part II Item 13. Defaults, Dividend Arrearages and None Delinquencies Item 14. Material Modifications to the Rights of None Security Holders and Use of Proceeds Item 15. Controls and Procedures Controls and Procedures Item 16A. Audit Committee Financial Expert The Audit Committee Item 16B. Code of Ethics Code of Conduct Item 16C. Principal Accountant Fees and Services Principal Accountant Fees and Services Item 16D. Exemptions from the Listing Standards for None Audit Committees Item 16E. Purchases of Equity Securities by the Issuer Purchases of Equity Securities by the Issuer and Affiliated Purchasers and Affiliated Purchasers Item 16F. Change in the Registrant’s Certifying Change in Registrant’s Certifying Accountant Accountant Item 16H. Mine Safety Disclosure Not applicable Item 16I. Disclosure Regarding Foreign Jurisdictions Not applicable that Prevent Inspections Item 16K. Cybersecurity Cybersecurity Part III Item 17. Item 18. Financial Statements Consolidated Financial Statements Financial Statements Consolidated Financial Statements 304 131 158 419 420 420 158 311 311 456 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F457 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS458 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F459 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTSNOTES 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 00 Lorem Ipsum 461 NOTES Financial Statement. For more detail on how it was determined, please refer to the Independent Auditor’s Report in this Report. (14) The figures provided refer to all employees and external staff of Ferrari S.p.A. (1) Drive Sustainability is an automotive partnership between leading automotive companies. The mission of the partnership is to work together to improve the social, ethical and environmental performance of automotive supply chains. (2) In 2023, 100% of Ferrari S.p.A. new suppliers were evaluated with this screening methodology. (3) As of the date of publication of this Report, the double materiality guidelines are still in draft: "Draft EFRAG IG 1: Materiality assessment implementation guidance". (4) The potentially relevant impacts are identified by taking into consideration sector benchmarking analyses, UN Sustainable Development Goals (SDGs), and relevant international studies and publications. (8) Strategic risks: risks which affect or are created by Ferrari’s business strategy and could affect Ferrari’s long-term positioning and performance. (9) Operational risks: risks which impact the internal processes, people, systems and/or external resources of the organization and affect Ferrari’s ability to execute its business plan. (10) Health, Safety and Environmental risks: risks which affect health and safety and the environment. (11) Compliance risks: risks of non- compliance with laws, regulations, local standards, code of conduct, internal policies and procedures. (5) We identify our clients as Ferraristi. (12) Capital expenditures (Capex) include (6) Incident: an event that negatively affects the confidentiality, integrity, and/or availability (CIA) at an organization in a way that could significantly impact the business, as consequences of, for example, of viruses, hackers, insiders, human errors, software and hardware failures. All incidents have been solved with no impact on business activities in each year. (7) We define as significant the judgements and the fines that are above the financial materiality threshold considered for the right-of-use assets recognized in accordance with IFRS 16 – Leases within PP&E, for approx. € 42 million in 2023, for approx. € 19 million in 2022, for approx. € 13 million in 2021, and for approx. € 25 million in 2020. R&D expensed to the P&L refers to research and development costs expensed during the year, as indicated in note 7 “Research and Development costs”. (13) One Ferrari Performance and Feedback process refers to our performance management process. 462 (15) For more information, please refer to “Ferrari & Education”. (16) Managerial positions refer to “Managers and Senior Managers” and “Middle Managers”. (17) In this section, we refer to Ferrari S.p.A., which operates primarily in the Maranello and Modena plants and to Mugello Circuit S.p.A., which operates the Mugello racing circuit. (18) Ferrari S.p.A. and Mugello Circuit S.p.A. include 93.3% of all Ferrari Group employees. (19) The figures provided refer to all employees and external staff of Ferrari S.p.A. and Mugello Circuit S.p.A. (20) The figures provided are referred to all the employees of Ferrari S.p.A. and Mugello Circuit S.p.A., with the exception of Managers and Senior Managers; this category of employees did not incur any injuries in 2023. All data does not include first aid medical treatments. (21) Injuries that must be reported to INAIL (Italian National Institute for Insurance against Accidents at Work), according to Italian legislation. (22) The injury rate is the ratio of the number of injuries reported to the number of hours worked (including FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-Fovertime), multiplied by 1,000,000, and data assumptions are exactly excluding commuting accidents. the same. The methodology has been updated compared to the (23) Injuries that must be reported to INAIL one applied in 2021, with the 2022 (Italian National Institute for Insurance methodology the 2021 GHG emissions against Accidents at Work), according are distributed differently among the to Italian legislation. ISO 14064 categories, leading to an increase from 622 ktCO2eq to 751 (24) In this chapter, the "Group” refers ktCO2eq of the total GHG emissions. to all the legal entities indicated as Raw materials and manufacturing consolidated line by line by Ferrari N.V. equipment for road cars include in 2023 Annual Report. categories 1, 2 and 3 of the GHG Protocol; Inbound logistics, business (25) All of our managers are covered by travel and other materials include collective bargaining agreements categories 1 (services), 4, 6 and 7 of signed by the Italian trade union, the GHG Protocol; Our facilities and Federmanager, on April 28, 2023. manufacturing include Scope 1 and 2; Outbound logistics and dealerships (26) Includes €1,994,433 and €1,009,045 include categories 9 and 14 of the recognized as share-based GHG Protocol; Use phase includes compensation expense during the category 11 of the GHG Protocol. years ended December 31, 2023, 2022, respectively, for equity awards (31) Maranello production facility is granted under the Group’s Equity composed of the main offices, Incentive Plan 2023-2025 and the Equity production buildings, and the Incentive Plan 2022-2024 that will vest adjacent Fiorano track (of in 2026 and 2025, respectively, subject approximately 3 thousand meters). to certain performance and service conditions. See also “Remuneration of (32) Thanks to our photovoltaic system Directors—Directors’ Compensation” and the purchase of Guarantee of and “Remuneration of Directors— Origin certificates. Directors' Compensation—Share- Based Compensation of Executive (33) Data include trucks and power (39) The carbon ratios are based on the sum of the GHG emissions from Scope 1 and Scope 2 market-based method. (40) 2023 and 2022 data include waste generated by Ferrari S.p.A. in the plants of Maranello and Modena and warehouses and Mugello Circuit S.p.A. (41) Water stress analysis performed with 2023 Aqueduct Water Risk Atlas (World Resources Institute). 2023 and 2022 data includes water withdrawal by Ferrari S.p.A. in the plants of Maranello and Modena and warehouses and Mugello Circuit S.p.A. (42) 2023 data refers to Mugello racing circuit. (43) 2022 data refers to Mugello racing circuit. (44) Total water withdrawal refers to freshwater (≤1,000 mg/L Total Dissolved Solids). (45) 2023 and 2022 data includes water discharged by Ferrari S.p.A. in the plants of Maranello and Modena and warehouses and Mugello Circuit S.p.A. Directors”. generator related to F1 activities, and car fleet managed by Ferrari. (46) 2023 data refers to Mugello racing circuit. (27) The data refers to the percentage increase of the median annual total (34) From photovoltaic. compensation for all employees (47) 2022 data refers to Mugello racing circuit. (excluding the highest-paid individual) (35) 2022 data has been restated to align from the previous reporting period to the methodology we applied to the (48) As defined in the GHG protocol. the next reporting period. ISO 14064 certification. In 2022, 2020 and 2021 data were restated (49) As defined in the GHG protocol. (28) Annual total compensation includes to include all Group facilities (stores, base salary, short-term incentives, museums, subsidiaries’ offices competitiveness bonuses, long- and other facilities) and to align the term incentives, one-time bonuses methodology we applied to the ISO or other bonuses paid during the 14064 certification. year, cash allowances and annual retention bonuses provided to (36) Direct greenhouse gas emissions, the organization’s highest-paid individual and to all employees measured in tons of CO2eq, were calculated using emission factors over the course of a year. For the indicated in “Ecoinvent 3.8” database, purpose of calculating the annual total and “Sixth Assessment Report” compensation, full-time equivalent published by the IPCC. Gases included (FTE) pay rates are used for each part-time employee and total target amounts of bonuses and incentives were considered. For further details in the calculation of the Scope 1 GHG emissions: CO2, CH4, N2O, HFCs and other refrigerant gases. on remuneration, please refer to the (37) Market-based indirect greenhouse chapter “Remuneration of Directors”. (29) The absenteeism rate is calculated as a ratio of hours lost for sickness gas emissions, measured in tons of CO2eq, were calculated using the Residual Mix emission factors indicated in “2022 European Residual (50) The GHG emissions of this category were calculated using the Extended Environmental Input-Output (EEIO) factors indicated in “Consumption based accounting tool: 2022”, published by Eurostat. (51) The GHG emissions of this category were calculated using the emission factors the Ecovinvent database (v3.8) through the Simapro tool. (52) The GHG emissions of this category were calculated using the emission factors indicated in “ghg-conversion- factors-2022-full-set; v2.0”, published by the Department for Environment Food & Rural Affairs (DEFRA) of the UK government. divided the number of hours to be Mixes, V.1.0”, published by AIB, and worked. The perimeter considered “Emissions Factors 2023”, published relates only to Ferrari N.V., Ferrari by International Energy Agency (IEA). S.p.A. and Mugello Circuit S.p.A. The Group purchases Guarantee of (53) The GHG emissions of this category were calculated using the emission factors the WLTP homologation in the European Union. employees. (30) The emissions reported for 2022 were certified by a third-party in Origin (GO) certificates in order to reduce the impact of CO2eq emissions in the atmosphere. (54) The GHG emissions of this category were calculated using the emission compliance with ISO 14064-1. This (38) Location-based indirect greenhouse standard allows for judgment calls resulting in a range of possible outcomes. Therefore, no comparison gas emissions, measured in tons of CO2eq, were calculated using the emission factor indicated in of the disclosed data is possible with “Emissions Factors 2023”, published other studies unless methodology by International Energy Agency (IEA). 463 factors indicated in “Fattori di emissione per la produzione e il consumo di energia elettrica in Italia”, published in 2023 by ISPRA, “Emission Factors for Greenhouse Gas Inventories” published in 2023 by EPA, and “Confronti internazionali: 2019”, published by Terna. FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS(55) CO2 emissions in g/km. (56) Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088. (57) Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives. In June 2023, the Commission approved new criteria for economic activities contributing to the remaining 4 environmental objectives (in addition to the first two objectives of climate change mitigation and adaptation to climate change) and amendments to delegated climate acts. With reference to this reporting exercise, only the verification of applicability (c.d. eligibility) is required for these remaining 4 objectives. Commission Delegated Regulation (EU) 2023/2485 of June 27, 2023 amending Delegated Regulation (EU) 2021/2139 establishing additional technical screening criteria for determining the conditions under which certain economic activities qualify as contributing substantially to climate change mitigation or climate change adaptation and for determining whether those activities cause no significant harm to any of the other environmental objectives. Commission Delegated Regulation (EU) 2023/2486 of June 27,2023 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control, or to the protection and restoration of biodiversity and ecosystems and for determining whether that economic activity causes no significant harm to any of the other environmental objectives and amending Commission Delegated Regulation (EU) 2021/2178 as regards specific public disclosures for those economic activities. (58) Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by specifying the content and presentation of Taxonomy-non-eligible activity for the information to be disclosed by relevant environmental objective undertakings subject to Articles The “code” constitutes the 19a or 29a of Directive 2013/34/ abbreviation of the relevant objective EU concerning environmentally to which the economic activity sustainable economic activities, is eligible to make a substantial and specifying the methodology contribution, as well as the section to comply with that disclosure number of the activity in the relevant obligation. Annex covering the objective, i.e.: Climate Change Mitigation: CCM; (59) The financial data included in these Climate Change Adaptation: CCA; KPIs are a portion of group net Water and Marine Resources: WTR; revenues included in the Consolidated Circular Economy: CE; Pollution Financial Statements, Note 4 and Prevention and Control: PPC; “Financial Overview—Results of Biodiversity and ecosystems: BIO. Operations” sections. (60) EL – Eligible, Taxonomy-eligible activity for-profit private foundation that will for the relevant environmental be primarily focused on education. (66) The Ferrari Foundation is a U.S. not- objective; N/EL – Not eligible, Taxonomy-non-eligible activity for the (67) N/A non applicable. We do not take relevant environmental objective. part to NCAP (New Car Assessment Program) programs. (61) The “code” constitutes the abbreviation of the relevant objective (68) The total annual remuneration of to which the economic activity is eligible to make a substantial the CEO includes all remuneration components (such as fixed contribution, as well as the section remuneration, variable remuneration number of the activity in the relevant in cash (bonus), the share-based Annex covering the objective, i.e.: portion of the remuneration (value Climate Change Mitigation: CCM; of the share-based payment is Climate Change Adaptation: CCA; determined at the time of allocation Water and Marine Resources: WTR; in line with the applicable regulations Circular Economy: CE; Pollution under IFRS), social premiums, Prevention and Control: PPC; pension, expense allowance, Biodiversity and ecosystems: BIO. et cetera), as included in the (consolidated) financial statements on (62) The financial data included in an IFRS basis. these KPIs are a portion of group Capital Expenditures included in the Consolidated Financial Statements, (69) The average annual remuneration of the employees is determined by notes 14 and 15. dividing the total wage costs in the EL – Eligible, Taxonomy-eligible activity financial year (as included in the for the relevant environmental (consolidated) financial statements objective; N/EL – Not eligible, on an IFRS basis) by the average Taxonomy-non-eligible activity for the number of FTEs during the financial relevant environmental objective. year. Hiring of external employees is The “code” constitutes the taken into account on a pro rata basis, abbreviation of the relevant objective insofar as these are hired for at least to which the economic activity is eligible to make a substantial three months during the financial year. contribution, as well as the section (70) The percentage of shares held in number of the activity in the relevant treasury compared to total issued Annex covering the objective, i.e.: share capital remains substantially Climate Change Mitigation: CCM; the same if calculated considering Climate Change Adaptation: CCA; only common shares held in treasury Water and Marine Resources: WTR; or if calculated considering common Circular Economy: CE; Pollution shares and special voting shares held Prevention and Control: PPC; in treasury. Biodiversity and ecosystems: BIO. (71) The percentage of shares held in (63) Drive Sustainability is an automotive treasury compared to total issued partnership between leading share capital remains substantially automotive companies. The mission the same if calculated considering of the partnership is to work together only common shares held in treasury to improve the social, ethical and or if calculated considering common environmental performance of shares and special voting shares held automotive supply chains. in treasury. (64) The financial data included in these KPIs are a portion of group Operating Expenditures included in the Consolidated Financial Statements. (65) EL – Eligible, Taxonomy-eligible activity for the relevant environmental objective; N/EL – Not eligible, 464 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F465 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS466 FINANCIAL STATEMENTSFERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-F467 FERRARI N.V. 2023 ANNUAL REPORT AND FORM 20-FFINANCIAL STATEMENTS

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