2010 Report Azimut Holding

2010 Report Azimut Holding Spa WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 2010 Report Azimut Holding Spa WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe G r u p p o A z i m u t Summary

Azimut Group Management Report 3

Consolidated financial statements at 31 December 2010 25

Notes to the consolidated accounts at 31 December 2010 39

Certification of the consolidated accounts pursuant 113 to article 154-bis of Legislative Decree n° 58/98

Azimut Holding Spa Management Report 115

Financial statements at 31 December 2010 135

Notes to the accounts at 31 December 2010 147

Attachments 199

Certification of the accounts pursuant 208 to article 154-bis of Legislative Decree n° 58/98 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 6 G r u p p o A z i m u t Consolidated financial statements at 31 December 2010 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 1 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 2 G r u p p o A z i m u t Management report

Azimut Group’s 2010 results were impressive, despite a financial market scenario of Group results continued volatility and with negative tendencies until at least the first few months of autumn.

In more detail, Azimut Group consolidated net profit amounted to 94,303 thousand euro (118,237 thousand euro at 31 December 2009), whereas consolidated operating profit stood at 110,263 thousand euro (123,464 thousand euro at 31 December 2009), down year-on-year following a generally mixed financial market trend with sharp price corrections leading to a reduction in variable management fees (-41,219 thousand euro on the 31 December 2009 figure).

Net assets under management amounted to roughly 14.6 billion euro at 31 Decem- ber 2010, up 5.3% on 31 December 2009 (13.9 billion euro).

Total assets, including assets under custody, totalled 16.5 billion euro at 31 December 2010, rising by about 4.6% from 15.8 billion euro at 31 December 2009.

Financial advisor recruitment continued to thrive in 2010: Azimut Group boasted 125 new recruits at 31 December 2010; the total number of financial advisors therefore stood at 1,380, up from 1,290 at the end of 2009. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 3 Management report

Total assets and net inflow Assets under management (Euro/million) AUM AUM Change 31/12/2010 31/12/2009 Absolute % Azimut Sgr funds 1.731 2.129 (398) (18.7%) AZ Fund funds 11.599 10,439 1,160 11.1% Discretionary portfolios 813 864 (51) (5.9%) AZ Life insurance 855 735 120 16.3% Hedge funds 957 1,053 (96) (9.1%) Double counting (1,342) (1,339) (3) n.a. Total AuM 14,613 13,881 732 5.3% Assets under custody 1,910 1,923 (13) (0.7%) Total assets under management and assets under custody 16.523 15.804 719 4.6%

Net inflows (Euro/million) 2010 2009 % change Azimut Sgr funds (418) (338) 23.7% AZ Fund funds 1,009 1,727 (41.6%) Discretionary portfolios (64) (643) (90.0%) AZ Life insurance (67) (52) 28.8% Hedge funds (92) (257) (64.2%) Double counting 163 193 (15.5%) Total net inflows 531 630 (15.7%) Assets under custody (80) 544 (114.7%) Total inflows: assets under management and assets under custody 451 1,174 (61.6%)

Consolidated net In regards to the methods used for the assessment of net financial debt, reference financial debt should be made to the recommendation issued by CESR (Committee of European Securities Regulators) dated 10 February 2005, and more specifically to the paragraph on “Capitalisation and indebtedness” in chapter II. Receivables and payables include those of a financial nature only, whereas trade receivables and payables have been excluded. Receivables in the form of fees and commissions for managed funds and discretionary portfolios are also included and, given that they are collected by the Group on the first working day of the following year, are considered as cash equivalents. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 4 G r u p p o A z i m u t Items 31/12/10 31/12/09 A Cash 11 8 B Cash equivalents: 262,858 207,181 Due from banks 215,079 156,577 Due from managed funds 44,267 50,597 Due from financial institutions 3,512 7 C Available-for-sale assets 11,379 6,526 D Total cash A+B+C 274,248 213,715 E Short term receivables F Short term bank loans - - G Current portion of long term debt (5,102) (5,435) Bonds (1,415) (1,769) Due to banks (lease-back) (3,189) (3,211) Due to banks (BPN loan) (498) (455) H Other short term payables I Short term financial debt F+G+H (5,102) (5,435) J Short term financial debt (net) I-E-D 269,146 208,280 K Long term bank loans: (99,400) (102,500) Due to banks (BPN loan) (90,000) (90,000) Due to banks (lease-back) (9,400) (12,500) L Bonds (67,623) (83,915) M Other long term debt - - N Long term financial debt K+L+M (167,023) (186,415) O Net (financial) debt J+N 102,123 21,865

Net financial position was at +102 million euro, an improvement of roughly 80 million euro (+367%) on the 31 December 2009 result (21.9 million euro). This amount includes 6.5 million euro of dividend payments and a 1.2 million euro payment to the charitable organisation Fondazione Azimut Onlus in accordance with the decision of the Annual General Meeting on 29 April 2010, in addition to the following transactions during the year: • on 7 July 2010, Azimut Holding acquired 100% of Apogeo Consulting Sim from Cattolica Assicurazioni Group with a payment of 3.2 million euro and acquisition of cash amounting to roughly 2.5 million euro; • on 19 July 210, as agreed by the parties on 8 July 2010 and in amendment of the previous agreements, Azimut Holding Spa settled the payable amount totalling 27.8 million euro included in the equity swap contracts for the 2007-2009 AZ Investimenti Sim Spa growth plan which expired on 30 June 2010, with the payment of 18.4 million euro and allocation of 1,372,218 Azimut Holding Spa shares. The agreements WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 5 Management report

were amended in light of the fact that some of the recipients of the payable amount expressed a desire to sell some of their shares. In light of this, in order to prevent a sale on the market and potential changes and instability in the normal performance of the stock, the original agreements were amended to include the possibility of a cash payment; • in October 2010, Azimut Holding Spa acquired 19.9% of Daxtor Srl by subscribing to a reserved capital increase with a total of 395 thousand euro in cash; • during 2010, Azimut Holding Spa bought 1,545,811 treasury shares for a total of 10.5 million euro.

Loans raised and repaid during the period

The changes in financial debt items during the year are shown in the following table:

Euro/thousand Interest rate Currency Nominal Effective Par Book Expiry value value Balance at 01/01/2010 Euro 189,214 Repayments: Euro (19,944) Convertible bond Euro 4% 4,94 (17,691) (16,844) Lease-Back instalments Euro Euribor+0.4% Euribor+0.4% (3,100) Balance at 31/12/2010 Euro 169,270

On 1 July 2010, Azimut Holding Spa paid the first interest instalment of 3,538 thousand euro on the convertible bond, and also made an advance partial redemption of the 2009-2016 subordinated bond (“Azimut 2009 - 2016 subordinato 4%”) totalling 17,691 thousand euro, or 20% of the par value.

Moreover, the instalments on Lines A and B of the loan granted by Banca Popolare di Novara which expired on 30 June 2010 and 30 June 2011 were paid in advance on 1 July 2009, in addition to the instalment on Line A expiring on 30 June 2012. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 6 G r u p p o A z i m u t Reconciliation of Azimut Holding Spa shareholders’ equity and net income to consolidated figures Total shareholders’ of which FY equity at 31/12/10 net income Holding opening balance 359,913 77,587 Adjustments due to changes in calendar year 2,106 Total Holding shareholders’ equity 362,019 77,587 Adjustments: Results of consolidated companies 169,411 169,411 Subsidiary consolidation effects 54,116 245 Azimut Holding Spa dividend cancellation (89,618) (89,618) Azimut Consulenza Sim Spa dividend cancellation (32,116) (32,116) AZ Investimenti Sim Spa dividend cancellation (30,831) (30,831) Equity accounted investments 109 5 Tax adjustments (1,222) (751) Other consolidation adjustments (39,258) 372 Total Group shareholders’ equity 392,609 94,303 Total Shareholders’ Equity 392,609 94,303

In order to provide a more effective representation of results, the profit and loss ac- Restated consolidated count has been restated and thus better reflects the content of the items according to profit and loss account operating criteria.

The main restatement activities involved the following: • other commissions reported under the item “Fee and commission income” in the balance sheet have been reclassified as “Other income” in the restated profit and loss account; • net premiums and the corresponding change in technical reserves, fees and commissions and expense recoveries relating to insurance and investment products issued by AZ Life Ltd, reported under the balance sheet items “Net premiums”, “Change in technical reserves” and “Fee and commission income”, have been reclassified as “Insurance income”; • commission expenses paid to the sales network, reported under the balance sheet item “Fee and commission expenses” are now classed as “Acquisition costs”; the Ena- sarco/Firr contributions related to these commission expenses and the other trade payables associated with the sales network, booked under the item “Administrative costs”, are now classed as “Acquisition costs”; the amount allocated to the supplementary indemnity reserve for agents (ISC) reported under the item “Provisions for liabilities and charges” has been reclassified as “Acquisition costs”; • admin cost recoveries, reported under the balance sheet item “Other operating in- WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 7 Management report

come and costs” have reduced the item “Overheads/admin costs”; • interest charges on loans have been reported under the specific item “Interest charges” in the restated profit and loss account.

Euro/thousand 2010 2009 Fixed management fees 274,031 225,390 Variable management fees 58,119 99,338 Other income 8,314 6,226 Insurance income 11,609 10,274 Total income 358,443 347,394 Acquisition costs (170,440) (152,432) No-load fees (16,457) (15,394) Overheads/administrative costs (50,587) (45,988) Amortisation / provisions (4,990) (3,762) Total costs (242,474) (217,576) EBIT 115,969 129,818 Net financial income 2,145 1,696 Net non-operating costs (1,266) (1,279) Interest charges (6,612) (6,739) Pre-tax profit (loss) 110,236 123,496 Income tax (10,370) (4,387) Deferred tax assets/liabilities (5,563) (872) Net profit (loss) 94,303 118,237 Group net profit (loss) 94,303 118,237

At 31 December 2010, consolidated EBIT and consolidated net profit amounted to 115,969 thousand euro (129,818 thousand euro at 31 December 2009) and 94,303 thousand euro (118,237 thousand euro at 31 December 2009) respectively, down by 10.7% and 20.2% on the previous year’s results. This deterioration was mainly due to a drop in variable management fees (-41,219 thousand euro on 31 December 2009), more than offset by an increase in fixed management fees (+48,641 thousand euro on 31 December 2009).

Financial markets and U.S. macroeconomic data for 2010 showed an improvement in the first quarter the global economy thanks to tax incentives. In the second half of the year, economic activity continued to expand on average albeit at different rates from area to area. In general, consumption was positive and consumers proved extremely sensitive to prices: this is also in line with figures given so far for sales and consumption. The real estate sector was sluggish once again while lending was flat. Sales prices were steady despite rising pro- WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 8 G r u p p o A z i m u t curement costs, particularly raw materials, agriculture and metals. The job market showed some signs of a turnaround in terms of recruitment and no pressure on wages. In the last few months of 2010, long term government bond yields of the main advanced economies increased. As for inter-banking markets, conditions remained flat overall; risk premiums on corporate bonds continued to worsen; equity markets improved. As of mid-October, long term government bond yields gradually rose in the main advanced countries, despite remaining at historically low levels. At the Group of Twenty (G-20) meeting held in Seoul in November, Heads of State and of government approved a plan of action to coordinate economic policy with the aim of achieving balanced global growth.

USA economy

Businesses enjoyed a marked rise in foreign demand and a gradual improvement in domestic demand. Industrial production increased in the first half of the year; the recovery continued in the second half, with steady progress in the manufacturing sector and a decline for utilities. Plant utilisation rates also rose, up from 72.0% to 74.8% in October; the recovery has now been going on for over a year. The stagnant job market was accompanied by continued weakness for the property market. In the last few months of 2010, housing sales slowed again, keeping up the high supply-demand imbalance: in November the time on the market required to shift the stock of new unsold homes was at roughly 8 months, against an average of 5 years in the decade prior to the crisis. In order to consolidate the recovery, the U.S. government approved a new 800 billion dollar (5.5 per cent of GDP) tax stimulus package in December, to be implemented in 2011-2012. This also includes an extension of both the tax breaks for mid-high earners introduced by the previous government and of special unemployment benefits to 99 weeks. The plan also includes new measures to boost earnings and investments, such as a 2 per cent reduction in social security contributions for employees in 2011 and the possibility for businesses to shorten amortisation periods, for an amount totalling investments to be made in 2011 and at 50% of those in 2012. According to some analysts, these measures will have a positive impact on GDP growth of 0.5 per cent in 2011; the strongest positive effects will involve consumption, with impacts on employment and inflation.

European economy

Inflation, measured by the harmonised index of consumer prices, was at 1.6% on average in the area in 2010 (0.3% in 2009). The growth rate climbed gradually during the year to 2.2% in December. This trend was mainly due to rising energy and food prices, in line with the gradual increase in basic raw material prices. In addition, in the second half of 2010, indirect taxes and regulated prices also climbed in some countries within the area. Calculated net of food and energy, inflation rose to a much WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 9 Management report

lesser extent (just over 1% in the last quarter of 2010, from 0.9% in the first), with internal pressures still at modest levels.

As the Greek crisis proved, a lack of adequate mechanisms able to resolve the serious difficulties of any euro zone country gives rise to uncertainty and drives up the cost and timing of any aid. In response to renewed tension in the markets that posed a threat to the financial stability of the entire area, and while also approving a bailout plan for Ireland, European Finance Ministers agreed on 28 November upon the guidelines for a permanent mechanism to be applied in the event that any member state is found to be in trouble (European Stability Mechanism, ESM). Operators registered in January by Consensus Economics showed a modest decline in product growth in the area in 2011, to 1.5% from 1.7% expected in 2010. Amongst the major economies, the GDP trend is much stronger in Germany (2.5%, from 3.6% in 2010), basically in line with the European average in France, below average in Italy (0.9%). Analyses by Eurosistema experts published in December forecast euro-zone growth at between 1.6% and 1.8% in 2010 and between 0.7% and 2.1% in 2011.

Japan and Emerging Countries

In Japan, GDP rose unexpectedly in the third quarter of 2010, to 4.5% on an an- nualised basis from 3.0% in the second quarter, reflecting the growth of household consumption, bolstered by largely temporary factors. Non-residential private investments and inventory also provided a positive contribution to this growth, with a drop in public investments and the absence of the important contribution of net exports. However, the most recent indicators show that GDP shrank in the fourth quarter. In- dustrial production fell in October, showing only a partial recovery in November; the volume of exports was down in the autumn and unemployment began to rise again (5.1% in October and November, from 5.0% in September). In China, GDP was up by 9.6% year-on-year in the third quarter, from 10.3% in the second. GDP grew by an average of 10.6% YoY in the first nine months of 2010, driven by rising internal demand, against a contribution from net exports of just 0.7 per cent. More recent indicators show that economic activity was robust again in the fourth quarter of 2010, again driven mainly by internal demand for consumption and investments, despite the gradually waning effects of the tax stimulus. In Brazil, where economic growth is slowing, the authorities left reference interest rates unchanged in the last few months (10.75%), partly due to fears of further en- couraging large inflows of capital. These inflows, attracted by solid growth forecasts and high returns, also create difficulties for the authorities of other emerging countries, concerned about the effects on the price of goods and financial assets, especially those attempting to limit exchange rate appreciation. Some of these countries therefore introduced limits on short term capital inflows, such as taxing foreign bond investors or limiting the foreign debt of residents. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 10 G r u p p o A z i m u t Bond markets

November was a particularly bad month for the entire bond market, especially in Europe. Fears that the financial crisis in Greece and Ireland would spread to Por- tugal, Spain and Italy increased considerably towards the end of the month. On 23 November, the European Union and International Monetary Fund approved a 100 billion dollar bail-out package for Ireland. The government bonds of periph- eral countries reacted particularly violently, with the spread between ten year Italian bonds and German Bunds widening by over 200 basis points, a new record. The ten-year Italian treasury bond yield hit 4.88%. The bond market suffered a sharp correction in December. Treasuries in particular were penalised by better-than-expected macro figures and repositioning of investors, who, following the announcement of a second round of quantitive easing, reduced their positioning in the segment. During the fourth quarter of 2010, the risk profile of the main international Euro- pean and United States banks began to rise. Credit default swap (CDS) premiums, which fell from the highs seen in the spring on account of the Greek crisis, began to rise again in November, hitting an average of 210 basis points in mid-January 2011 (50 higher than three months before). These increases mainly involved European banks, following rising concern about the sustainability of Irish sovereign debt. With a wide offer of liquidity from central banks, yields on interbanking markets remained flat on the whole.

Equity markets

The main developed markets such as the S&P 500 (+13% in 2010), Dax (+16%), the Stockholm market (+21% in local currency), far outperformed the emerging markets such as Brazil (+1.5% in local currency) and China (+4.9% in local currency, A shares -8%). As for the various individual sectors, in December and throughout the entire year, the cyclical sectors, such as industrials (+32.3%) and raw materials (30%) continued to outperform. The index of raw materials (Thomson Reuters/Jefferies CRB +17%) outperformed the global equity and bond markets. The financial sector and defensive stocks heavily underperformed the indexes. Equities continued to rise in the main industrial economies as of the autumn. Per- formances were strong in Japan and the United States (roughly 13% between early October and mid-January 2011). The United Kingdom (9%) and the euro-zone (7.5%) enjoyed less marked increases. Stock prices benefited from healthy corporate earnings. Despite some stronger fluctuations in December, the implicit volatility of stock prices in the United States and Eurozone continued to decline. After dete- riorating in November, financial market conditions in emerging countries began to improve again. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 11 Management report

Significant events Azimut Holding Spa during the period Apogeo Consulting Sim Spa Azimut Group and Cattolica Assicurazioni reached an agreement in February for the acquisition of 100% of Apogeo Consulting Sim capital, wholly owned by Cattol- ica Assicurazioni Group. After getting the green light from the Bank of Italy, on 7 July 2010 Azimut Holding completed the acquisition of 100% of Apogeo Consulting SIM capital from Cattolica Assicurazioni Group for roughly 3.2 million in cash.

Azimut Holding Annual General Shareholders’ Meeting of 29 April 2010 The Shareholders’ Meeting of 29 April 2010 approved the following:

2009 FY AGM The Annual General Meeting of Shareholders approved 2009 accounts which included a Parent Company net profit of 65.5 million euro. The Meeting alsoap- proved: • a pre-tax dividend of 0.05 euro per share; • with bonus share issue of 1 ordinary Azimut Holding Spa share per 60 ordinary shares held. The Shareholders’ Meeting also approved the payment of 1.2 million euro, or 1% of consolidated pre-tax profit, to the charitable organisation Fondazione Azimut.

Appointment of Board of Directors for 2010-2012 The Meeting renewed the Azimut Holding Spa Board of Directors, composed of 10 members, for the three years 2010-2012 and up until approval of the 2012 annual report. Shareholders also reappointed the Chairman.

Appointment of Board of Statutory Auditors for 2010-2012 The Meeting appointed the Board of Statutory Auditors for the three years 2010- 2012 and up until approval of the 2012 annual report. The Board is composed of 5 auditors, three of whom are permanent members.

Financial Advisor incentive scheme The Meeting approved an incentive scheme based on the purchase of Azimut Hold- ing Spa shares and reserved for financial advisors recruited by Azimut Group companies between 1 January and 31 December 2010; the Azimut Group investment firms (SIMs) may nevertheless propose other forms of incentives not based on shares or financial instruments to their financial advisors.

Proposal for purchase and allocation of treasury shares Shareholders authorised the purchase, pursuant to current regulations, of up to a maximum of 28,000,000 ordinary Azimut Holding shares, or 19.55% of current share capital in one or more instalments over an 18-month period. The shares must be purchased for an amount no lower than the implied book value of Azimut Hold- ing shares and a maximum unit price of no more than 20 euro subject to revocation, for the period yet to elapse, of authorisation granted at the Annual General Share- WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 12 G r u p p o A z i m u t holders’ Meeting of 29 April 2009. The Shareholders also resolved to free up the shares purchased on the back of the aforementioned resolution either for sale on the market or in execution of any stock option plans, or for use in the execution of the AZ Investimenti Sim Spa growth plans already approved at the Shareholders Meetings of 24 April 2009, 23 April 2008 and 29 April 2009. Shares are also to be made available in the event that, once certain conditions have been met, warrants are exercised by the holders of non-convertible subordinated bonds, the issue of which was approved by the Board of Directors on 8 April 2009, as well as for the bonus issue authorised by the Shareholder’s Meet- ing.

Azimut Holding Extraordinary Shareholders’ Meeting of 29 April 2010 Shareholders approved the amendments to the by-laws required to issue financial instruments to financial advisors, employees and managers of the Azimut Group identified by the Board of Directors as “top key people”. Recipients will therefore be awarded the right to part of year-end earnings based on the group’s consolidated net profit, upon the condition that: 1. The Shareholders’ Meeting approves a dividend for the year in question; 2. Consolidated profit for the year (net of any capital gains on the disposal of equity investments and tangible or intangible assets) amounts to over 88.3 million euro; 3.In the year in question, the recipient possesses all the prerequisites of “top key people”, as identified by the Board of Directors by 31 May of the same year in relation to each category of beneficiaries (financial advisors, employees and managers).

Azimut Holding Board of Directors’ Meeting of 29 April 2010 In order to complete the governance of the Group, following the decisions of the Shareholders’ Meeting of the same date, the Parent Company Board of Directors renewed the executive committee, the internal audit committee and remuneration committee for the years 2010-2012. The same Meeting also renewed the contracts of the Chief Executive Officer, Co-Chief Executive Office and Managing Director.

Redemption of 2009-2016 subordinated bond (“Azimut 2009 - 2016 subordinato 4%”) The Azimut Holding Spa. Board of Directors’ meeting of 24 June 2010 resolved to make an advance partial redemption of the “Azimut 2009 - 2016 subordinato 4%” Bonds, as established by article 9 of the Bond Terms. The said article awards the Azimut Holding Board the right to make an advance partial redemption as of 1 July 2010 (inclusive) and for each subsequent year that the Bond is valid, on the interest payment date (as established by the Bond Terms), amounting to no more than 20% of the par value of the Subordinated Bonds each year. In the event that in any given year the Board of Directors authorises the redemption of less than the limit of 20%, the residual part of the Subordinated Bond not subject to early redemption that year may be added to the 20% of the par value of the Sub- ordinated Bonds in subsequent years. On 1 July 2010, Azimut Holding Spa made an advance partial redemption of the 2009-2016 subordinated bond (“Azimut 2009 - 2016 subordinato 4%”) totalling 17.7 million euro, or 20% of the par value. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 13 Management report

AZ Investimenti Sim Spa growth plan On 19 July 2010, as agreed by the parties on 8 July 2010 and in amendment of the previous agreements, Azimut Holding Spa settled the payable amount of 27.8 million euro included in the equity swap contracts for the 2007-2009 AZ Investimenti Sim Spa growth plan which expired on 30 June 2010. The eligible parties received a total of 18.4 million euro and were allocated 1,372,218 Azimut Holding Spa shares. The agreements were amended in light of the fact that some of the recipients of the payable amount expressed a desire to sell some of their shares. In light of this, in order to prevent a sale on the market and potential alterations and instability in the normal performance of the stock, the original agreements were amended to include the possibility of a cash payment. As regards the 2008-2010 and 2009-2011 AZ In- vestimenti growth plans approved respectively at the Shareholders’ Meetings of 23 April 2008 and 29 April 2009, no Equity Swap contracts were entered into.

2001-2016 bond (“Azimut 2011-2016 - Senior 2.5%”) On 14 October 2010, the Azimut Holding Spa Board of Directors resolved to issue a bond with a duration of 5 years from the issue of the first tranche and a fixed coupon rate of 2.5% with a total par value of 200 million euro. The issuer will buy back the bonds at any time at a guaranteed price set in the offer document. Azimut Holding Spa obtained Consob authorisation for the issue on 29 December 2010.

Daxtor Srl During October 2010, the Azimut Holding Spa Board of Directors authorised the acquisition, through the subscription of a reserved capital increase, of a 19.9% stake in the IT outsourcer Daxtor Srl (already the Group’s provider) for 395,000 euro in cash.

AZ Industry & Innovation Srl On 28 October 2010, AZ Industry & Innovation Srl was founded and established under Italian law in joint venture with sector specialists to provide exclusive industrial and energy consulting services and assistance to Group companies for the upcoming launch of a renewable energy product aimed at institutional investors. Azimut Hold- ing Spa acquired 40% of share capital (4,000 euro).

AZ International Holdings Sa

On 15 December 2010, AZ International Holdings Sa was founded and established under Luxembourg law, and is wholly owned by Azimut Holding Spa. The purpose of the company is to acquire equity stakes in the companies created by Azimut Group as required with a view to further overseas expansion.

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 14 G r u p p o A z i m u t Azimut Sgr Spa

During the year, the Lombardy Regional Tax Authority - Monitoring, Litigation and Collection Unit - Large Taxpayer Office ordered a routine tax inspection for Azimut Sgr Spa covering the tax years 2005,2006, 2007 for direct tax, VAT and regional business tax purposes. Following the inspection the company received notice of an Official Tax Audit Re- port to establish extra tax payments totalling 18 million euro in terms of IRES (corporate income tax) and IRAP (regional business tax) and a 4.8 million euro penalty in terms of VAT. It should be noted that the proper conduct adopted by the company for the calculation of the “normal” value of intragroup transactions with overseas associates is corroborated by specific reports on transfer pricing commissioned by Studio Biscozzi Nobili, which are partly based on market analyses performed by primary consulting Companies as well as by a tax assessment published by the same firm. Meanwhile, Supreme Court rulings establish that the VAT is not applicable to Azimut Sgr Spa for the disputed transactions. Azimut Sgr Spa filed its requests and observations with the Tax Authority on 27 December 2010 in response to the comments contained in the Official Tax Audit Report, reiterating that all allegations are uncorrect and unfounded, reserving the right to demonstrate these inaccuracies under any jurisdiction. Regardless of the aforementioned issue, despite having yet to receive a tax demand and in the belief that it operated in line with current tax legislation, Azimut Sgr Spa has nevertheless set aside precautionary tax provisions of around 5 million euro, in addition to fees for legal and tax assistance.

AZ Fund Management Sa

Revising the product range The merger by acquisition of “Azimut Contofondo” into “Azimut Garanzia” took place on 1 February 2010.

Revising AZ Fund Management Sa product range The “Formula 1 - Alpha Plus Euro” sub-fund was merged into “Formula 1 - Alpha Plus” on 1 April 2010.

New AZ 1 Funds On 15 April, AZ Fund 1’s range of products was widened to include 5 new flexible funds: • “Formula 1 - Commodity Trading”: an entirely new investment product that mainly invests in derivative financial instruments on commodities indexes, as well as in equity instruments of issuers that operate in all commodities sectors; • “Active Strategy”: a sub-fund that mainly invests in UCITS units and/or other har- WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 15 Management report

monised UCITS, with similar management techniques and strategies to hedge funds; • “Dividend Premium”: a sub-fund that mainly invests in equity securities with at- tractive dividends, in convertible bonds, equity-based ETFs permitted by regulations and REITs. The sub-fund offers a new service that allows investors to cash in gains generated by the sub-fund during the reference period by means of a half-yearly redemption policy; • “Institutional Target”: a sub-fund aimed solely at institutional investors which aims to achieve a positive absolute return on calendar year basis and is indexed to both interest rates and to inflation and therefore mainly invests in bond market instruments with ratings at least in line with the investment grade; • “Corporate Premium”: a sub-fund aimed solely at institutional investors and designed for the new Internal Fund of the unit linked policy “Pleiadi” - whose strategy involves mainly investing in the bond instruments of issuers with credit ratings that are usually no lower than the investment grade.

Two new sub-funds of the Luxembourg umbrella fund AZ Fund 1 became effective in September 2010: • “Best Bond” and “Best Equity”: two funds of funds managed using a quantitative method and investing in the funds of majority owned, listed third parties.

AZ Life Ltd

On 1 May 2010, the unit linked policy Cassiopea was renamed “Pleiadi”. A new internal fund named Elettra was launched at the same time.

Azimut Consulenza Sim Spa

During the year, the Lombardy Regional Tax Authority - Monitoring, Litigation and Collection Unit - Large Taxpayer Office ordered a routine tax inspection for Azimut Consulenza Sim Spa covering the tax years 2005, 2006, 2007 for direct tax, VAT and regional business tax purposes. Following the inspection the company received notice of an Official Tax Audit Re- port to establish extra tax payments totalling 14 million euro in terms of IRES (corporate income tax) and IRAP (regional business tax). It should be noted that the proper conduct adopted by the company for the calculation of the “normal” value of intragroup transactions with overseas associates is corroborated by specific reports on transfer pricing commissioned by Studio Biscozzi Nobili, which are partly based on market analyses performed by primary consulting Companies as well as by a tax assessment published by the same firm. Therefore, following the notice on 20 December 2010 of the payment order for only the first year under assessment, Azimut Consulenza Sim Spa filed its objections relating to the transfer pricing with the Tax Authority, reiterating that the findings were unfounded and that any penalties were not applicable in this case. In light of this, Azimut Consulenza Sim Spa did not set aside any tax provisions in its 2010 accounts but only enough to cover fees for legal and tax assistance. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 16 G r u p p o A z i m u t AZ Investimenti Sim Spa

Apogeo Consulting Sim and AZ Investimenti Sim renewed the distribution agreement again for the year 2010 under the same conditions as in 2009.

Key Risks Azimut holding Spa and For the purpose of risk monitoring, the Group has identified the main risks as follows: group: key risks and uncertainties Strategic risk Strategic risk is defined as a current or potential risk of a reduction in earnings or capital as a result of changes in operations or of incorrect, inadequate decision- making and failure to respond to the competitive scenario, This risk depends firstly on the earnings profile generated by the sale of services and products by financial advisors, by the management of Funds and by incorrect or imprudent evaluation of market trends in terms of clients and products to be distributed. Sales activity is monitored through reports on the sales performance by geographic area and by financial products sold. Financial advisors and their respective Area Del- egates/Area Managers (financial advisors responsible for coordinating specific areas of the country) also meet regularly to keep track of the market situation and take the relevant steps to preserve the competitiveness of each geographic area. Finally, market research and analysis by the research and marketing department is used to compare results to those of Azimut’s competitors and monitor the performance of funds. Regular reports on results achieved, and particularly on the financial condition of the Group, are fundamental to monitoring the outcome of strategic decisions taken by the company’s Board of Directors and Internal Audit Committee, thus enabling them to identify any corrective measures to be taken.

Sales network risks The Group’s investment firms (Sim - società d’intermediazione mobiliare) mainly recruit financial advisors with years of experience in the field, gained while working for rival companies or in bank retail services. The process of recruiting individual advisors is strict and involves both local branches and the marketing departments of the subsidiary investment firms. Moreover, in addition to past experience, qualifications and references gained on the market are also considered. In Azimut Consulenza Sim’s case, its horizontal structure requires that financial advisors are able to perform their jobs autonomously: by focusing on this aspect during recruitment, the company tends to avoid choosing inexperienced candidates. As regards AZ Investimenti Sim and Apogeo Consulting Sim, their pyramid structures are organised to allow area managers to constantly monitor the individual advisors’ ability to manage their client portfolios. What’s more, in the cases of Azimut Consulenza Sim Spa, AZ Investimenti Sim Spa and Apogeo Consulting Sim Spa, in order to limit the risks arising from any fraudu- lent action taken by financial advisors in the performance of their duties, purposely created insurance policies have been taken out against loyalty risks and professional WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 17 Management report

liability insurance for the financial advisors themselves (with the maximum annual claims deemed adequate for the said advisors to operate). Finally, the marketing departments of each company work closely with the Internal Audit department to share the information required to monitor the conduct of individual financial advisors.

Operational risk Operational risk is related to potential losses due to inadequate or defective aspects of procedure, human resources, internal processes, or external events. As well as being generally evaluated in quantitative terms, monitored and mitigated in accordance with current regulations, this risk is also subject to qualitative assessment for the individual Group companies. Therefore, the Group uses a process to identify and evaluate the operational risks based on Risk Self Assessment methods, which take account of the frequency and severity of identified risk factors. This procedure allows the companies to establish appropriate control and monitoring techniques, i.e. measures to limit the negative effects of any adverse conditions to which the Group is exposed. Given the presence of this type of risk, the Group has established the following measures to monitor and limit the effects: • “mapping” of main company processes, by means of an analysis of existing procedure and interviews with the heads of the various departments; • identification of risks within the “mapped” procedures; • evaluation of control measures (primary or secondary level) in respect of risk areas, highlighting any unmonitored situations; • definition and implementation of a reporting system via the Internal Audit and Risk Management Committees, in order to report the final results on the unmonitored risks and any action taken.

Outsourcing risk Administrative and IT activities of the operating companies are outsourced to external companies. When the 5-year contracts with AMS BO Srl and Asset Management Service Spa were signed, establishing the method used in the performance of the outsourced services, purposely created service level agreements were also drawn up to guarantee the adequacy of the services provided and allow the company to take action against the supplier in the event of any economic losses arising from problems in the supply of these services. Another measure to ensure that services are performed correctly was the creation of an Operating Committee, whose members come from both the Group’s operating companies affected by the agreement and the supplier company, to establish the procedures, define the timescales, and monitor the correct execution of all services provided. The Committee meets at least once a month and the participants are provided with a copy of the minutes of the meeting afterwards. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 18 G r u p p o A z i m u t Reputational risk Reputational risk originates from risk factors such as compliance, strategy, outsourcing and other specific variables such as the public scenario, significance of the trademark and company image, exposure to external communication processes. In order to limit this type of risk, a series of procedures has been put in place aimed at mini- mising both their cause and effect, the most important aspects being: • complaints received by Group companies are monitored constantly, so as to analyse any problems caused by strategic decisions and operating errors and the effects that these may have on the company’s reputation; • a record of corporate risks of all subsidiary companies is constantly updated, in order to identify which departments, procedures and activities are most subject to reputational risks; • the Internal Audit and Risk Management Committee, where the presence of managers allows for top-down management of action to be taken to limit reputational risks or respond to any events caused by them; • the Marketing and Investor Relations departments, centralised at Group level, have sole responsibility for dealing with public relations/external communications and the company’s image; • an Internal Code of Conduct governs the treatment of any action that gives rise to conflicts of interest, cases of insider trading or market abuse and any penalties as a result of failure to comply with regulations. With the introduction of regulations for the treatment of privileged information pursuant to art. 115-b of Legislative Decree 58/98 (TUF - Financial Services Act), Azi- mut Holding Spa established a Register for itself and on the behalf of its subsidiaries, by creating a database with the technical/operating features required to guarantee that logical and physical security requirements are met, records cannot be changed and that information is easily accessible.

Compliance risk Compliance risk is related to legal and administrative sanctions, significant financial losses or damage to reputation as a result of non-compliance with laws and regulations or internal procedures (e.g. by-laws, codes of conduct, corporate governance codes). Given that all levels of the company are exposed to this risk, limiting its effects mainly involves ensuring that personnel take adequate responsibility in the performance of their work by complying with the internal code of conduct, code of ethics and procedure manual. The Compliance Committee, within Azimut Consulenza Sim Spa, ensures that internal procedures are in line with the objective to prevent any breaches of current regulation or internal standards. In more detail, the compliance committee: • proposes any organisational and procedural changes to ensure adequate protection against any identified risks of non-compliance; • supplies a report to all the relevant bodies, including the Italian Securities and Ex- change Commission (pursuant to Legislative Decree 231/2001), the Board of Statu- tory Auditors and the Internal Audit and Risk Management Committee. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 19 Management report

• controls the efficiency of organisational adaptations (structures, processes, procedures); • constantly monitors any changes to regulations governing the investment service sector, and circulates the relevant information to all parties concerned.

Financial risk As regards financial risks, proprietary trading by Group companies is exposed to market risks. Moreover, the financial instruments in question are easily liquidated and are monitored closely, most being money market and flexible mutual fund units managed by the Group companies. As for credit risk, there are no specific problems given the nature of the Group’s activity.

Liquidity risk Liquidity risk arises when the company is unable to gain access under reasonable economic conditions to the financial resources required to ensure its efficiency. The main factors that determine liquidity levels are the resources provided from or used by administrative and investment activities, as well as loan expiry and renewal or liquidity of investments and market conditions. The company has adopted a set of policies and procedures aimed at streamlining the management of financial resources, reducing this risk by means of: • cash flow management and payment based on Group-wide policy; • maintaining an adequate level of liquidity available thanks to constant cash flow generation; • monitoring prospective liquidity conditions during planning procedure.

Key uncertainties

The uncertainties to which the Group is exposed derive from the specific nature of its core business, particularly as far as the strict correlation is concerned between income and certain types of fee items, the performance of which is determined by the results generated by the financial management of listed products and the performance in terms of capital generation. The generation of these revenues and the relative amount are by nature highly volatile and heavily influenced by the returns offered by the funds and the risk appetite of the clients during the period considered, factors that are in turn affected by the performance of reference markets and, more generally, of the national and international economies. There is therefore a risk that Group revenues and operating results may be weakened by prolonged financial market crises, which may eventually lead to low yields, to weak, if not even negative, net inflows of capital and, consequently, a reduction, sometimes significant, in the aforementioned fees.

Organisational structure Azimut Holding Spa complies with corporate governance regulations in force in and corporate governance Italy. Moreover, the corporate governance structure partially reflects the recommen- WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 20 G r u p p o A z i m u t dations contained in the Code of Conduct. For more information on the subject, please refer to the attached report on corporate governance and ownership prepared pursuant to article 123-b of the Financial Services Act. Azimut has established a risk management and internal audit procedure for financial reporting, using as a reference the “COSO Report”, according to which the Internal Control in the broadest sense is “a process effected by an entity’s Board of Directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives”; specifically, the objective of reliable financial reporting. The key characteristics of the risk management and internal audit procedure for financial reporting are described in the Corporate Governance and Ownership Re- port.

Updating the Security Policy Document In line with the dispositions of attachment B “Technical specifications in relation to minimum security measures” of Legislative Decree n° 196 of 30 June 2003 “Protec- tion of privacy code”, the annual revision of the security policy document approved in 2005 by the Boards of Directors of Azimut Holding Spa and the Italian subsidiary companies will be performed pursuant to law by 31 March 2011.

Human resources At 31 December 20010, Group personnel amounted to 116, broken down as follows:

Position 2010 2009 Directors 26 23 Middle managers 36 38 Office staff 54 52 Total 116 113

The research and development activities undertaken by the Azimut group focus ex- Research and clusively on the “production” of investment instruments and services and on the sale development activities of these products: In particular, the research and development policies focus on the following: • research, development and realisation of investment instruments suited to clients’ needs; during 2010 these activities were focused on enhancing the range of products offered, as detailed in the “Significant events during the year” section of this report; • market analyses and surveys of current and potential client needs; • life insurance market analysis.

The Irish insurance company AZ Life Ltd. has been authorised by the Insurance Regional and branch Industry Supervisory Body (ISVAP) to engage in business activities in Italy as a per- offices manent establishment via a regional office in Milan. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 21 Management report

Treasury shares As at 31 December 2010 Azimut Holding Spa subsidiary companies did not hold nor did they hold during the year any treasury shares or shares of the Parent Company, either directly or via trust companies or third parties. During the year, Azimut Holding Spa performed the following transactions: • On 27 May 2010, Azimut Holding Spa launched a bonus issue of 1 ordinary Azimut Holding Spa for every 60 ordinary shares held, totalling 2,182,252 shares; • On 19 July 210, as agreed by the parties on 8 July 2010 and in amendment of the previous agreements, Azimut Holding Spa settled the payable amount totalling 27.8 million euro included in the equity swap contracts for the 2007-2009 AZ Investi- menti Sim Spa growth plan which expired on 30 June 2010, with the payment of 18.4 million euro and allocation of 1,372,218 Azimut Holding Spa shares; • moreover, during 2010 Treasury Shares were the subject of various transactions with an overall increase in the portfolio of 1,545,811 shares for a total of 10.5 million euro.

As at 31 December 2010, the Company’s treasury share portfolio was therefore composed of 10,263,040 shares, or 7.164% of share capital. In regards to activity after 31 December 2010 and up to the reporting date, 1,590,715 treasury shares have been purchased for a total of 11.6 million euro.

Business outlook At 28 February 2011, total assets under management stood at 14.8 billion euro. Given this figure and the results of the subsidiary companies in the early months of the year, consolidated net profit is expected to be positive this year. Nonetheless, it is important to note that this year’s economic, financial and operating performances will also be affected by financial market trends.

Milan, 10 March 2011

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 22 G r u p p o A z i m u t WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 23 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 24 G r u p p o A z i m u t Consolidated balance sheet at 31 December 2010 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 25 Consolidated balance sheet at 31 December 2010 Assets

Assets (000/Euro) 31/12/10 31/12/09 Cash and cash equivalents 11 8 Financial assets designated at fair value 854,077 745,645 Available-for-sale financial assets 12,024 6,776 Receivables 266,143 211,702 a) for portfolio management 44,267 50,597 b) other receivables 221,876 161,105 Equity Investments 233 256 Tangible assets 3,055 3,407 Intangible assets 318,721 316,819 Tax assets 40,218 41,915 a) current 9,317 9,510 b) deferred 30,901 32,405 Other assets 66,411 60,935 Total assets 1,560,893 1,387,463

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 26 G r u p p o A z i m u t Consolidated profit and loss account at 31 December 2010 Liabilities and shareholders’ equity

Liabilities and Shareholders’ Equity (000/Euro) 31/12/10 31/12/09 Payables 106,004 109,793 Outstanding securities 69,038 85,684 Technical reserves where the investment risk is borne by policyholders 435,914 462,428 Financial liabilities designated at fair value 416,431 281,837 Other technical provisions 350 350 Tax liabilities 44,022 35,935 a) current 5,536 1,207 b) deferred 38,486 34,728 Other liabilities 81,396 55,475 Staff severance pay (TFR) 2,097 2,014 Provisions for liabilities and charges 13,032 18,641 b) other provisions 13,032 18,641 Share capital 32,324 32,324 Treasury shares (-) (85,945) (100,976) Equity instruments 3,515 3,515 Share premium reserve 173,987 173,987 Reserves 174,498 108,137 Valuation reserve (73) 82 Net profit (loss) 94,303 118,237 Total liabilities and shareholders’ equity 1,560,893 1,387,463

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 27 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 28 G r u p p o A z i m u t Consolidated profit and loss account at 31 December 2010

Items (000/Euro) 2010 2009 Fee and commission income 341,157 341,435 Fee and commission expenses (163,512) (160,382) Net fee and commission income 177,645 181,053 Interest income and similar income 2,579 1,433 Interest charges and similar expenses (7,679) (6,873) Net premiums 5,651 2,551 Net income (loss) from financial assets at fair value through P&L 42,693 48,772 Change in technical reserves where the investment risk is borne by policyholders 26,514 33,919 Change in other technical reserves 0 153 Redemptions and claims (64,414) (76,150) Gains/losses on disposal or repurchase of: (827) 479 a) financial assets 21 479 b) financial liabilities (848) 0 Total income 182,162 185,337 Administrative costs (62,816) (57,160) a) personnel costs (26,641) (24,770) b) other admin costs (36,175) (32,390) Impairment of tangible assets (1,391) (1,655) Impairment of intangible assets (173) (91) Net provisions for liabilities and charges (7,428) (4,102) Other operating income / costs (91) 1,135 Operating profit 110,263 123,464 Profit (loss) from equity investments (27) 32 Pre-tax profit (loss) from continuing operations 110,236 123,496 Income tax on profit from continuing operations (15,933) (5,259) Net profit (loss) from continuing operations 94,303 118,237 Net profit (loss) 94,303 118,237 Parent Company net profit (loss) 94,303 118,237

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 29 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 30 G r u p p o A z i m u t Consolidated statement of comprehensive income

Items 2010 2009 Year-end profit (loss) 94,303 118,237 Available-for-sale financial assets (155) 101 Tangible assets Intangible assets Foreign investment hedges Cash-flow hedges Exchange differences Non-current assets and disposal groups held for sale Actuarial gains (losses) on defined benefit plans Share of valuation reserves of equity accounted investments Other comprehensive net income (155) 101 Comprehensive income 94,148 118,338 Consolidated comprehensive income attributable to parent company 94,148 118,338

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 31 Consolidated cash flow statement

Indirect method Amount 2010 2009 A. Operating activites 1. Operations 117,055 125,201 profit for the year (+/-) 94,303 118,237 gains/losses on financial assets/liabilities held for trading and financial assets/liabilities designated at fair value through P&L (-/+) 0 0 gains/losses on hedging activities (-/+) 0 0 net impairment loss (+/-) 0 0 depreciation and impairment of fixed tangible and intangible assets (+/-) 1,564 1,746 net provisions for liabilities and charges and other expenses/income (+/-) 7,829 4,102 tax and duties 13,665 2,015 net impairment and depreciation of disposal groups held for sale net of tax (+/-) 0 0 other changes (+/-) (306) (899) 2. Cash provided from or used by financial assets (112,766) (30,749) financial assets held for trading 0 0 financial assets designated at fair value (108,432) (26,788) financial assets available for sale 0 0 due from banks 1,137 (559) due from financial institutions (395) (1,433) due from clients 493 477 other assets (5,569) (2,446) 3. Cash provided from or used by financial liabilities 96,755 7,825 due to banks (3,519) (112,915) due to financial institutions (230) 878 due to clients (61) (473) outstanding securities (16,292) 83,915 financial liabilities held for trading 0 0 financial liabilities designated at fair value 134,594 60,562 technical reserves (26,514) (34,072) other liabilities 8,777 9,930 Cash provided from or used by operating activities 101,044 102,277

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 32 G r u p p o A z i m u t Amount 2010 2009 B. Investing activities 1. Cash provided from: 0 0 disposal of equity investments 0 0 dividends on equity investments 0 0 disposal of financial assets held to maturity 0 0 disposal of tangible assets 0 0 disposal of intangible assets 0 0 disposal of subsidiaries and businesses 0 0 2. Cash used by: (3,513) (1,280) purchase of equity investments (2,326) 0 purchase of financial assets held to maturity 0 0 purchase of tangible assets (1,039) (578) purchase of intangible assets (148) (702) purchase of subsidiaries and businesses 0 0 Cash provided from or used by investing activities (3,513) (1,280) C. Financing activities issue/purchase of treasury shares (10,496) 6,935 change in other reserves (18,721) 101 issue/purchase of equity instruments 0 3,515 dividends and other distributions (7,781) (13,050) Cash provided from or used by financing activities (36,998) (2.499) Net cash provided or used during the year 60,533 98,498

Reconciliation Opening cash and cash equivalents 213,715 115,217 Total net cash provided/used during the year 60,533 98,498 Closing cash and cash equivalents 274,248 213,715

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 33 Consolidated statement of changes in shareholders’ equity for the year ended 31 December 2010

Allocation of retained earnings Changes during the year Shareholders’ equity transactions Items Balance Changes Balance Reserves Dividends Changes Issue of Treasury Extraordinary Changes Other Consolidated Group shareholders’ at 31/12/09 in opening at 01/01/10 and other in reserves new shares share purchases dividend in equity changes comprehensive equity balance distributions payments instruments income at 31/12/10 at 31/12/10 group minority group minority group minority group minority group minority group minority group minority group minority interest interest interest interest interest interest interest interest Share capital 32,324 32,324 32,324 Share premium 173,987 173,987 173,987 Other reserves: a) earnings 97,345 97,345 94,561 (28,200) 163,706 b) other 10,792 10,792 10,792 Valuation reserves: a) available for sale 82 82 (155) (173) Equity instruments 3,515 3,515 3,515 Treasury shares (100,976) (100,976) 15,893 (10,496) 9.634 (85,945) Retained earnings Profit (loss) for the year 118,237 118,237 (94,561) (23,676) 94,303 94,303

Shareholders’ equity 335,306 335,306 - (7,783) (10,496) - (18,566) 94,148 392,609 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 34 G r u p p o A z i m u t Allocation of retained earnings Changes during the year Shareholders’ equity transactions Items Balance Changes Balance Reserves Dividends Changes Issue of Treasury Extraordinary Changes Other Consolidated Group shareholders’ at 31/12/09 in opening at 01/01/10 and other in reserves new shares share purchases dividend in equity changes comprehensive equity balance distributions payments instruments income at 31/12/10 at 31/12/10 group minority group minority group minority group minority group minority group minority group minority group minority interest interest interest interest interest interest interest interest Share capital 32,324 32,324 32,324 Share premium 173,987 173,987 173,987 Other reserves: a) earnings 97,345 97,345 94,561 (28,200) 163,706 b) other 10,792 10,792 10,792 Valuation reserves: a) available for sale 82 82 (155) (173) Equity instruments 3,515 3,515 3,515 Treasury shares (100,976) (100,976) 15,893 (10,496) 9.634 (85,945) Retained earnings Profit (loss) for the year 118,237 118,237 (94,561) (23,676) 94,303 94,303

Shareholders’ equity 335,306 335,306 - (7,783) (10,496) - (18,566) 94,148 392,609

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 35 Consolidated statement of changes in shareholders’ equity for the year ended 31 December 2009

Allocation of retained earnings Changes during the year Shareholders’ equity transactions Items Balance Changes Balance Reserves Dividends Changes Issue of Treasury Extraordinary Changes Other Consolidated Group shareholders’ at 31/12/08 in opening at 01/01/09 and other in reserves new shares share purchases dividend in equity changes comprehensive equity balance distributions payments instruments income at 31/12/09 at 31/12/09 group minority group minority group minority group minority group minority group minority group minority group minority interest interest interest interest interest interest interest interest Share capital 32,224 32,224 100 32,324 Share premium 173,251 173,251 736 173,987 Other reserves: a) earnings 68,412 68,412 28,931 2 97,345 b) other 10,792 10,792 10,792 Valuation reserves: a) available for sale (19) (19) 101 82 Equity instruments - - 3,515 3,515 Treasury shares (107,075) (107,075) 6,099 (100,976) Profit (loss) for the year 41,981 41,981 (28,931) (13,050) 118,237 118,237

Shareholders’ equity 219,566 219,566 - (13,050) 836 3,515 6,101 118,338 - 335,306 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 36 G r u p p o A z i m u t Allocation of retained earnings Changes during the year Shareholders’ equity transactions Items Balance Changes Balance Reserves Dividends Changes Issue of Treasury Extraordinary Changes Other Consolidated Group shareholders’ at 31/12/08 in opening at 01/01/09 and other in reserves new shares share purchases dividend in equity changes comprehensive equity balance distributions payments instruments income at 31/12/09 at 31/12/09 group minority group minority group minority group minority group minority group minority group minority group minority interest interest interest interest interest interest interest interest Share capital 32,224 32,224 100 32,324 Share premium 173,251 173,251 736 173,987 Other reserves: a) earnings 68,412 68,412 28,931 2 97,345 b) other 10,792 10,792 10,792 Valuation reserves: a) available for sale (19) (19) 101 82 Equity instruments - - 3,515 3,515 Treasury shares (107,075) (107,075) 6,099 (100,976) Profit (loss) for the year 41,981 41,981 (28,931) (13,050) 118,237 118,237

Shareholders’ equity 219,566 219,566 - (13,050) 836 3,515 6,101 118,338 - 335,306

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 37 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 38 G r u p p o A z i m u t Notes to the consolidated accounts at 31 December 2010 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 39 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 40 G r u p p o A z i m u t Notes to the consolidated accounts

Part A - Accounting policies

A.1 General information

The consolidated financial statements comply with the International Accounting Stand- Section 1 ards (IAS)/International Financial Reporting Standards (IFRS) endorsed by the European Statement of compliance Commission, pursuant to Regulation (EC) No. 1606/2002 issued by the European with IAS/IFRS Parliament and Council and effective at the date the consolidated financial statements are approved, as well as with every relevant applicable interpretation, and the provisions issued to implement Article 9 of Legislative Decree no. 38/2005.

The consolidated financial statements were drawn up in accordance with the instruc- Section 2 tions issued by the Bank of Italy set out in the Regulations dated 16 December 2009, General reporting criteria with particular reference to the statements and information to be provided in the Notes to the financial statements for asset management companies, deemed to be the most appropriate to reflect the Group’s overall financial condition. Circular n° 0146317/11 issued by the Bank of Italy on 17 February 2011 describes the correct methods to be applied by financial intermediaries for the reporting and classification of some transactions in their accounts; these replace the previous instructions stipulated by the Bank of Italy Regulation dated 16 December 2009. For comparison purposes, 2009 figures have been reclassified accordingly and/or reported in accordance with the instructions contained in the circular. In addition, since the scope of consolidation encompasses the Irish insurance company AZ Life Ltd, the balance sheet and profit and loss account include the items which are typical of the insurance business, taking as a reference the requirements set forth in ISVAP Provision No. 2404 dated 22 December 2005 concerning the provisions disciplining the technical aspects of the consolidated financial statements of insurance companies drawn up on the basis of International Accounting Standards. In accordance with the provisions set forth in Article 5, paragraph 2 of Legislative Decree No. 38 dated 28 February 2005, the consolidated financial statements have been drawn up by adopting the euro as the reporting currency. The amounts are reported in thousands of euro, unless otherwise specified. The consolidated financial statements comprise the Balance Sheet, the Profit and Loss Account, the consolidated Statement of comprehensive income, the Cash Flow Statement (prepared using the indirect method), the Statement of changes in shareholders’ equity and the Notes to the accounts.

The notes to the accounts are composed of: Part A - Accounting policies Part B - Notes to the Balance Sheet Part C - Notes to the Profit and Loss Account Part D - Other information WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 41 Notes to the consolidated accounts

These consolidated financial statements have been prepared based on the going concern assumption. Financial, operating and other indicators1 have been considered which, as also shown in the document issued on 6 February 2009 by the supervisory authorities Bank of Italy, Consob and ISVAP, may highlight problems that could compromise the stability and continuity of the company if not taken into proper consideration.

Although the economic outlook is uncertain, an overall valuation of the past and current financial condition of the Group, its operating guidelines, business model and the risks to which business activity is exposed2, which reveals no abnormalities, leads us to believe that there is no doubt that the Group can continue to operate successfully for the foreseeable future.

The consolidated financial statements are a true and accurate representation of the company’s financial condition. Transactions and other events have been described in detail and not purely in their legal form. The consolidated financial statements have been prepared according to the accrual accounting method, as well as based on the going concern assumption, as mentioned earlier. Assets and liabilities, costs and income have not been offset against each other unless required or permitted by principle or interpretation.

Accounting standards and interpretations applied as of 1 January 2010 with no impact on the Group After gaining European Union approval, the new IFRS as well as amendments to the existing standards and new IFRIC interpretations came into force as of 1 Janu- ary 2010, but had no impact on the Group on the reporting date of the consolidated financial statements. The changes are as follows: Amendments to IAS 27 - Consolidated and separate financial statements Amendments to IFRS 5 - Non-current assets held for sale and discontinued operations IFRS 1 (Restructured in 2008) - First-time adoption of international financial reporting standards IFRS 3- (Revised in 2008) - Business combinations IFRIC 16 - Hedges of a net investment in a foreign operation IFRIC 17 - Distribution of non-cash assets to owners IFRIC 18 - Transfers of assets from customers Amendments to IAS 28 - Investments in associates and IAS 31 - Interests in joint-ventures, following amendments to IAS 27 Amendments to IAS 39 - Financial instruments: recognition and measurement - Exposures qualifying for hedge accounting Amendments to IFRS 2 - Share-based payment - Group cash-settled share based payment transactions (withdrawal of IFRIC 8 and IFRIC 11) Improvement 2009 IAS/IFRS

1 Examples of which are shown in ISA 200, Document n° 570 on “Going Concerns” 2 As described in the Management Report WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 42 G r u p p o A z i m u t Agreements were signed on 10 January 2011 for the creation of a newco in Hong Section 3 Kong which will directly control the operating companies for the promotion, man- Significant events after the agement and distribution of asset management products on Asian markets. The de- reporting date velopment of this area will take place in joint venture with local partners and marks the first step towards further penetration of other markets in the region. The investment in the newco is held by AZ International Holdings Sa, which will acquire stakes in the companies founded by the Group outside the Italian market as required. On 26 January 2011, the newco An Zhong (AZ) Investment Management Limited was created and is 65% owned by AZ International Holdings Sa and 35% by CMT Holdings Limited and on 9 February 2011 the newly created An Zhong (AZ) Invest- ment Management Limited acquired 100% of the share capital of An Zhong (AZ) Investment Management Hong Kong Limited, an asset management company currently awaiting authorisation from the competent authorities. On 9 February 2011, Azimut Sgr Spa’s Board of Directors approved the merger by acquisition of the fund “Formula 1 High Risk” (terminating fund) into “Formula 1 Risk” (continuing fund), while at the same time renaming the fund resulting from the merger “Formula 1 Absolute”. The Board also resolved to change the investment policy of the funds “Formula 1 Low Risk” and “Formula 1 Alpha Plus 20”, renaming them “Formula Target 2013” and “Formula Target 2014” respectively, particularly the regulatory changes relating to point 1 (investment in the fund) of section C of the Regulation. The decision will become effective as of 1 June 2011.

On 15 February 2011, Azimut Group and Banca Tercas signed a binding letter of intent for a collaboration in the asset management sector. Based on this agreement, Azimut will be the reference partner of the entire Banca Tercas Group for investment products such as mutual funds and discretionary portfolios. By the end of March 2011 Tercas Lux, the Luxembourg SICAV of the Tercas Group, will be merged into the Luxembourg umbrella fund AZFUND1. Meanwhile, as a long term investment, Azimut Holding Spa will buy 2% of the share capital of Banca Caripe Spa, controlled by Banca Tercas following the recent acquisition. The value of the deal, to be settled in cash, is roughly 5 million euro.

During February 2011, the new prospectus of the Luxembourg fund AZFUND1 entered into effect, including a change in the management policies of half of the single manager sub-funds. The most significant changes are as follows: • Subscriptions re-opened for Formula 1 - Alpha Plus; • Restructuring of Formula 1 - Alpha 20 which, from balanced fund has now become the group’s first target based fund. With the name Formula Target 2014 and subscriptions until April 2011 (divestment permitted at any time), the fund will mainly invest in bonds, both corporate and government, with residual life usually correlated to a target date; • Fund previously reserved for institutional clients now only available to retail investors: Long Term Value (formerly Long Term Equity). The fund will pick stocks using a value approach and a minimum of 90% of invested in securities. • Changes also for sub-funds that use hedging strategies: Dynamic Trading will focus on macro strategies (global equity indexes, currencies, commodities), eliminating the WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 43 Notes to the consolidated accounts

portfolio’s micro strategy with the aim of shifting focus from a calendar year to mid- long term basis. The time horizon of Commodity Trading will also undergo the same change, increasing direct exposure to the reference asset class, while Active Selection and Active Strategy, UCITS III funds, will move even closer to the segment of hedge funds.

The consolidated financial statements were authorised for publication by Azimut Holding Spa’s Board of Directors on 10 March 2011.

Section 4 Use of estimates Other information The consolidated financial statements have been prepared using estimates and assumptions which have an effect on the income, costs, assets and liabilities in the balance sheet and corresponding notes. These estimates and assumptions, based on the best possible measurement by management, are revised periodically and the effects of any changes have a direct impact on the profit and loss account. There is no other relevant information to be disclosed for reporting purposes.

Section 5 The Azimut Group scope of consolidation has been established in accordance with Consolidation scope IAS 27. and methods The following have been added to the scope of consolidation since last year: • Apogeo Consulting Sim Spa, acquired on 7 July 2010 and wholly owned by Azimut Holding Spa; • AZ International Holdings Sa, founded on 15 December 2010 and wholly owned by Azimut Holding Spa (as at 31 December 2010 the company was not yet operative and will publish its first annual report on 31 December 2011).

Graphical representation of the group as at 31 December 2010 is as follows: WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 44 G r u p p o A z i m u t Azimut Holding Spa Parent Company

Azimut AZ Fund AZ Life Ltd Azimut Azimut AZ AZ Capital Management Consulenza Fiduciaria International Industry & Management Sa (*) Sim Spa Spa Holdings Sa Innovation

Sgr Spa (100%) Srl (100%) (100%) (100%) (100%) (100%) (40%)

AZ Capital Azimut AZ Management Sgr Spa (*) Investimenti Ltd Sim Spa

(100%) (100%) (100%)

In Alternative Apogeo Sgr Spa Consulting Sim Spa

(20%) (100%)

(*) 51% owned directly by Azimut Holding Spa, 25% owned indirectly by Azimut Consulenza Sim Spa and 24% by and AZ Investimenti Sim Spa. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 45 Notes to the consolidated accounts

Wholly and jointly-owned subsidiaries

Company name Registered Type of Shareholder % stake % of voting office ownership rights (*) A. Fully consolidated, wholly-owned companies 1. Azimut Sgr Spa Milan 1 Azimut Holding Spa 51 51 Azimut Consulenza Sim Spa 25 25 Azimut Investimenti Sim Spa 24 24 2. Azimut Consulenza Sim Spa Milan 1 Azimut Holding Spa 100 100 3. AZ Fund Management Sa Luxembourg 1 Azimut Holding Spa 51 51 Azimut Consulenza Sim Spa 25 25 Azimut Investimenti Sim Spa 24 24 4. AZ Life Ltd Dublin 1 Azimut Holding Spa 100 100 5. Azimut Capital Management Sgr Spa Milan 1 Azimut Holding Spa 100 100 6. AZ Investimenti Sim Spa Milan 1 Azimut Holding Spa 100 100 7. AZ Capital Management Ltd Dublin 1 Azimut Holding Spa 100 100 8. Azimut Fiduciaria Spa Milan 1 Azimut Holding Spa 100 100 9. Apogeo Consulting Sim Spa Milan 1 Azimut Holding Spa 100 100 10. AZ International Holdings Sa Luxembourg 1 Azimut Holding Spa 100 100

(*) Type of ownership: (1) majority of voting rights at the AGM.

Equity accounted investments in associates Company Registered Shareholder % stake % of voting office voti% rights Equity accounted associates 1. In Alternative Sgr Spa Milan Azimut Holding Spa 20 20 2. AZ Industry & Innovation Srl Milan Azimut Holding Spa 40 40

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 46 G r u p p o A z i m u t 2. Other information

The financial statements of the Parent Company and the subsidiary companies have been consolidated on a line by line basis; the scope of consolidation considers all the subsidiary companies, including those that operate in unrelated business sectors to other group companies, as stipulated by International Accounting Standards, reporting the full amount of assets, liabilities, costs and income of the individual subsidiary companies. The assets, liabilities, costs and income generated by intra-group transactions have been eliminated in full, as have the profits and losses generated by intra-group transactions which do not involve third parties. The book value of the fully consolidated investments has been eliminated against the equity value on 31 December 2001, with the exception of companies founded after this date: AZ Life Ltd (6 February 2003), Azimut Capital Management Sgr Spa (14 December 2004), AZ Capital Management Ltd (26 March 2007), Azimut Fiduciaria Spa (21 May 2007) and AZ International Holdings Sa (15 December 2010). The book value of the stake in AZ Investimenti Sim Spa has been written-off against the equity values on 7 July 2005 (date of acquisition), i.e. referring to the financial condition on the same date. For the consolidation of Apogeo Consulting Sim Spa, the book value of the investment has been written off against the relative equity value on 30 June 2010 (date nearest to the acquisition on 7 July 2010), i.e. referring to the financial condition on the same date. The differences between the book value of the fully consolidated investments and the related equity value have been treated as goodwill on consolidation and subjected to impairment tests to verify the fairness of the value reported. The investment in the associate company In Alternative Sgr Spa and AZ Industry & Innovation Srl has been as consolidated using the equity method, as stipulated by IAS 28 Investments in Associates. The most recently approved financial statements (31/12/2009) have been taken as the basis for the consolidation process for In Al- ternative Sgr Spa, whereas no changes have been made to the book value for AZ Industry & Innovation Srl given that the company will publish its first annual report on 31 December 2011.

A.2 Key balance sheet items

This section describes the main accounting principles and valuation criteria adopted for the preparation of the consolidated financial statements. The said principles and criteria have been applied consistently throughout the years presented.

This category includes investments relating to insurance contracts (unit-linked poli- Financial assets cies) issued by the subsidiary company AZ Life Ltd where the investment risk is borne designated at fair value by policyholders and comprise units of UCITS. (through profit and loss) These financial assets are reported at the market price corresponding to the price on WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 47 Notes to the consolidated accounts

the last day of trading during the reference period. The differences compared to the book values, corresponding to the purchase cost, are charged to the profit and loss account. Financial assets are derecognised when the contractual rights to the cash flows generated by the assets in question expire or when the financial asset is sold and all the related risks and benefits are transferred.

Available-for-sale Financial assets held by the Group companies are classified in this category in the financial assets context of their individual liquidity management policies. This category also includes the assets which do not qualify as subsidiaries, associates or joint-ventures. Upon initial recognition, available-for-sale financial assets are reported in the balance sheet at their fair value, corresponding to the consideration paid for their purchase, plus any transaction costs in the event that they are tangible and definable. Available-for-sale assets are subsequently charged at their fair value, reporting any capital gains or capital losses in the specific shareholders’ equity reserve until the financial asset is disposed of or any long-term impairment has been established. The gain or loss generated is charged to the profit and loss account at the date of disposal or at the date the foregoing impairment is established. The fair value of the available-for-sale assets is established based on the prices reported on the respective markets on the last day of trading in the reference period. Assets which do not qualify as subsidiaries, associates or joint-ventures, are not listed on active markets and for which the fair value cannot be measured reliably are valued at cost. At the end of each year, impairment tests are carried out to establish which financial assets are to be derecognised. Valuations are performed for each individual financial instrument, considering the impairment effects in accordance with IAS 39. Financial assets are removed from the balance sheet when the contractual rights to the cash flows generated by the assets in question expire or when the asset is sold and all the risks and benefits of ownership have been transferred. When testing for any reduction in the fair value as compared to the amount at which the asset was initially reported (impairment), the Company employs a specific policy that establishes the limits to the loss of value in absolute terms (severity) and in terms of the extent of the loss (durability), both ordered according to the type of financial instrument. In more detail, the benchmarks in terms of severity are as follows:

1. for “debt instruments3” loss of 20% 2. for “other financial instruments4” loss of 30%

Durability is assessed based on a timescale of 18 months for “debt instruments” and 24 months for “other financial instruments”: in more detail, the fair value of each

3 Money market instruments, bonds, monetary mutual funds and bond funds. 4 Securities, equity, balanced and flexible funds, private equity and hedge funds. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 48 G r u p p o A z i m u t financial instrument is measured to establish if it is consistently lower than the corresponding initial cost over the last 18 or 24 months. For “other financial instruments”, in the event that the benchmarks are reached, the impairment is reported in the Profit and Loss Account, except in exceptional cases. “Debt financial instruments” selected on the basis of having exceeded the relative benchmarks, are subject to further qualitative assessment in order to establish the durability and severity of the losses, so as to confirm or refute any impairment decision.

Receivables include the amounts due from banks, from financial institutions, from Receivables clients and managed funds, or all receivables involving fixed payments or in any case payments which are definable and are not listed on an active market. As this mainly involves trade receivables, they are valued at the presumed net realisable value understood as the best possible estimate of their fair value. Receivables are removed from the balance sheet after payment.

Equity investments include stakes held in associate companies reported using the Equity investments equity method. Companies are classed as associates pursuant to Article 2359 of the Italian Civil Code, i.e. companies in which the Group has at least 20% of voting rights and thus exerts significant influence, but not control, over financial and operating policies. The equity method stipulates that the investment is initially accounted for at cost and is subsequently adjusted to reflect the share of the profit (or loss) generated by the associate after the date of acquisition. The differences between the value of the equity investment and the associate company’s shareholders’ equity are included in the associate company’s book value, whereas the share of the profits generated during the financial year by the associate company in question is reported in the consolidated profit and loss account. Minority interest does not include any potential voting rights. Since the goodwill included in the book value of a given investment in an associate company is not reported separately, this value is not subjected to a separate assessment of any reduction in value, in line with the provisions set forth in IAS 36 Impair- ment of assets. On the other hand, the investment’s full book value is subjected to an impairment test, pursuant to the foregoing IAS 36, by comparing its salvage value and its corresponding book value, whenever the application of the provisions set forth in IAS 39 indicate a potential reduction in value of the asset; the latter value is reported in the profit and loss account.

Tangible assets include business properties, plant, furniture and fixtures, machines Tangible assets and equipment of any kind and renovation costs for any rented properties. With reference to business properties, IAS 16 establishes that land is to be reported separately from buildings since only the latter is subject to amortisation as the useful life is not indefinite. This separation is only applicable in the event of full ownership of the entire building: no separation is necessary if the asset consists of a stake in the WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 49 Notes to the consolidated accounts

building (for example: an apartment), since in this case, the company does not own the surrounding land or land beneath. It is important to note for this purpose that Azimut Group owns portions of property and therefore no separation was adopted for the valuations. Tangible fixed assets are initially reported at cost, including the extra costs directly attributable to the acquisition and start-up of the asset in question. The foregoing assets are subsequently valued at cost, minus any amortisation and depreciation. These assets are amortised on a straight-line basis each financial year in relation to their remaining useful life. The cost of renovating rented properties is reported as an asset in consideration of the fact that the tenant essentially has control over the assets and may receive economic benefits therefrom. Therefore, the cost is amortised over a period corresponding to the remaining duration of the lease contract. Tangible assets are eliminated from the balance sheet upon the date of disposal or when the asset has been retired and future benefits are not expected from its disposal.

Intangible assets Intangible assets include goodwill, goodwill on consolidation, the “Azimut” trademark (under lease-back) and application software for long-term use. Goodwill refers to the amount paid by Azimut Holding Spa (formerly Tumiza Spa) to purchase the group in 2002 by acquiring the entire share capital of Azimut Hold- ing Spa incorporated in December of the same year and corresponding to the part of merger deficit that, as shown by a survey conducted by the independent company PricewaterhouseCoopers Finance Srl, was not allocated as an increase in the value of the investments. Goodwill on consolidation is determined based on the difference between the subsidiary companies’ shareholders’ equity and the value of the investments reported in the financial statements. Goodwill and goodwill on consolidation are not subject to a systematic amortisation process, but to an annual evaluation (impairment test) to establish the adequacy of the book value, in accordance with IAS 36 Impairment of assets. The amount of the impairment, determined on the basis of the difference between the book value and its salvage value, if lower, is reported in the Profit and Loss Ac- count. Please refer to the specific paragraph on “Finance Leasing” as regards the “Azimut” trademark, acquired under finance leasing via a ‘sale and leaseback’ agreement. Intangible assets in the form of software are reported at cost, net of amortisation and impairment. Such assets are amortised based on the estimate of their remaining useful life. Intangible fixed assets are eliminated from the accounts at the date of disposal and if no future economic benefits are expected.

Finance Leasing For the purposes of reporting the ‘sale and leaseback’ agreement for the trademark, which can be classified as a finance leasing transaction, reference has been made to the requirements set out in IAS 17 - Leasing. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 50 G r u p p o A z i m u t This accounting standard stipulates: • that the leased asset must be entered under assets and the amount payable to the Leasing company reported under liabilities at the fair value of the leased asset; • that the finance leasing instalments are booked along the duration of the contract thus reducing the initial debt reported. The related interest charges are reported in the profit and loss account; • that leased asset amortisation rates must be reported in line with those adopted for owned amortisable assets; • entry of any loss as a result of the impairment of the asset, established in application of IAS 36 Impairment of assets. In the case of the “sale and leaseback” agreement, if the selling price is higher than the book value the excess is reported along the duration of the agreement. However, in this specific case, considering the economic motives for the transaction and the related contractual terms and conditions, which include the payment of an initial deposit, the transaction involves an advance payment equal to the counter value of the trademark minus the deposit. Consequently, the trademark is reported under assets at the pre-disposal book value and the amount payable for the advance payment, reported initially for the amount as determined above, is gradually reduced as the lease instalments are paid. Since the trademark has an indefinite useful life, it does not undergo amortisation but is subject to an impairment test, in line with IAS 36 Impairment of assets. The amount of impairment, determined on the basis of the difference between the book value and the salvage value, if lower, is reported in the Profit and Loss Account.

Income taxes are calculated on the basis of conservative estimates of the taxable in- Tax assets and liabilities come, in accordance with the tax regulations in force and by taking into account the effects generated by the Italian Group companies’ adoption of the tax consolidation regime. As for foreign Group companies, taxes are calculated based on the regulations in force in the individual countries of residence. Taxes are computed by applying the tax rates in force. Deferred tax assets and liabilities are computed in respect of the timing differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements, applying the tax rates in force in the years in which the aforementioned differences are expected to reverse. Deferred tax assets are recorded when there is reasonable certainty they will be recovered, i.e. to the extent that the company is expected to generate sufficient taxable income in the future to be able to recover the taxes paid. Deferred tax liabilities are recognised even when there is little or remote possibility that a related tax expense will materialise in the future, in accordance with IAS 12.

Deferred tax assets for IRES, in line with current and deferred tax assets for IRAP are offset against each other, as assets and liabilities, in accordance with IAS 12. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 51 Notes to the consolidated accounts

Other assets This item includes assets which are not ascribable to other balance sheet asset items. More specifically, the item includes the receivables relating to the loans granted to financial advisors working for the Group. Such receivables, initially reported on the basis of their fair value equal to the amount granted, are subsequently valued at the amortised cost that coincides with the initial value, since no additional transaction costs are expected and since such loans are granted at market rates (Euribor plus spread). This item also includes deferred charges on the fee and commission expenses payable to the sales network for the sale of “no load” products. These funds do not charge an entry fee but are able to break even by charging an exit fee for a specific amount of time. Therefore, these fees are reported in the profit and loss account spread over the foregoing period in accordance with the (cost/income) matching principle. In addition, the item “other assets” includes the deferred charges generated via the deferral of commission expenses incurred for the purchase of unit-linked policies classified as investment contracts.

Payables Short-term trade payables (due within 12 months) are reported at their par value. Payables in the form of mid/long-term loans, reported initially at the amount raised, are subsequently reported at amortised cost using the effective interest rate method. The amortised cost corresponds to the initial value reported, since no transaction costs are applicable and since the nominal interest rate of such liabilities is in line with market rates. Payables are removed from the balance sheet after settlement.

Outstanding shares As a financial instrument composed of a debt component and an embedded derivative (on equity instruments), the subordinated bond with warrant issued by Azimut Holding Spa on 1 July 2009 is reported as a financial liability and an equity instrument of Azimut Holding Spa. Upon initial recognition, the fair value of the entire financial instrument is equal to the issue price, while the fair value of the equity component is determined based on the fair value of the bonus warrants assigned to subordinated bondholders at the same time as bonds are issued. The debt component, calculated as the difference between the fair value of the instrument in its entirety and the fair value of the equity component, is reported under the item Outstanding securities, while the aforementioned equity component is reported under the shareholders’ equity item, Equity instruments. The costs borne by Azimut Holding Spa for the bond issue are allocated proportionally to the debt component and to the component reported under shareholders’ equity. Following initial recognition, the debt component is reported at amortised cost, with interest charges established according to effective interest rates. The equity component is reported under reserves and transferred to retained earnings when warrants are exercised, or reach maturity without being exercised. In the event that warrants are exercised, at the strike price set by the relevant regulation, given that Azimut Holding Spa will issue a set number of treasury shares, the WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 52 G r u p p o A z i m u t transfer of the treasury share reserve will be offset against the cash-in corresponding to the strike price.

Commitments to holders of unit linked policies issued by AZ Life Ltd, classified Technical reserves where as insurance contracts since they include a considerable insurance risk, are valued the investment risk is based on actuarial criteria, by taking account of the value of the financial assets to borne by the policyholder which the benefits are linked.

This item includes the commitments towards policyholders arising from the unit Financial liabilities at fair linked policies issued by AZ Life Ltd, classed as investment contracts where the in- value (through profit or vestment risk is borne by policyholders. The financial liabilities are derecognised loss) after settlement.

This item includes liabilities that are not ascribable to other items reported under Other liabilities liabilities in the balance sheet. Short-term liabilities (due within 12 months) and trade liabilities are reported at their par value. Liabilities in the form of the contractual commitments relating to fees and commissions, including retention fees, to be paid to financial advisors in the medium/long- term (over 12 months), are calculated on the basis of actuarial criteria and represent the best estimate of the expense required to settle the foregoing liabilities. In addition, this item also includes the deferred income arising from the deferral of fee and commission income on the premiums of unit-linked policies classified as investment contracts. The other liabilities are derecognised from the balance sheet after settlement.

Following the application of Law no. 296 of 27/12/2006 (2007 Budget) and taking Staff Severance Pay (TFR) account of the methodology published on the Actuarial Society of Italy website, the calculation method has been changed for staff severance pay liabilities which, in accordance with IAS 19, are treated as defined benefits and are accounted for based on the actuarial value established using the projected unit credit method. This amendment entails that the projected unit cost method is not applied for those employees who have chosen to invest 100% of their TFR in private pension funds or those who, despite having expressly requested to keep their TFR in the company cof- fers, are employed by group companies with at least 50 employees, which are obligat- ed by law to transfer TFR to the Italian National Institute for Social Security (INPS).

As regards the valuation of liabilities associated with staff severance pay at 31 De- cember 2010, provision was made: • to estimate the remaining duration of the employee’s employment contract within the company subject to valuation; • to estimate the future wage/salary and inflationary trends, in the case that the pro- WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 53 Notes to the consolidated accounts

jected unit credit method is applied; • to take into account any advances requested by employees, any portions which may be assigned to private pension schemes, as well as the 11% substitute tax on the staff severance pay (TFR) revaluation; • to assess the already accrued amount payable by the Company (Staff severance pay - TFR) including the future annual provisions, to estimate the amount to be paid upon termination of employment, for whatever reason (resignation, retirement, death, disability); • to discount back the previously estimated amount payable by the Company, and to bring it in line with the level of seniority acquired upon the valuation date, in the event that the projected unit credit method has been applied.

The calculation is performed ad personam as outlined in IAS 19, and requires that specific technical, demographic and financial factors are adopted. To discount back the amount payable by the Company to its employees, the (zero coupon) spot rate curve on 30 June 2008 was applied, given that the same curve on 31 December 2010 was heavily influenced by the financial and lending market crisis that began in the second part of 2008 and which, therefore, does not reflect normal market conditions. Given that the reference date used was prior to the deterioration of the crisis, the distortive effects that would have arisen by applying the 31 Decem- ber 2010 curve do not appear. The costs arising from the plan are reported under personnel costs. The costs relating to the increase in the value of staff severance pay (TFR), in parallel to the approach of the payment date, are reported under the item Interest charges.

Provisions for liabilities Provisions for liabilities and charges are reported in accordance with the require- and charges ments set forth in IAS 37, namely when: • there is a present obligation (legal or constructive) as a result of past transactions or events; • it is probable that an outflow of resources will be required to generate economic benefits; • a reliable estimate can be made of the amount of the obligation. In the event that the effect of the present value of money becomes significant, the amount of provisions is represented by the present value of the expenses expected to be borne in order to settle the obligation. Provisions for liabilities and charges are discounted back based on the settlement of the litigation, on a case by case basis, expected by the Group’s legal office, or based on actuarial assumptions, in reference to the supplementary indemnity reserve for agents. These actuarial assumptions, as well as the IRS curve used to discount “theoretical” amounts (also applicable to severance pay - TFR), have been not changed since last year, as this was deemed unnecessary. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 54 G r u p p o A z i m u t Costs and income are reported on an accrual accounting basis and according to the Costs and income matching principle. Fees, commissions and other income from services offered to clients are included in the profit and loss account at the time the services are provided. Interest income and charges are reported on an accruals accounting basis based on the accrued interest, and applying the effective interest rate method.

In accordance with the instructions contained in IFRS 7, the Group companies clas- Fair value hierarchy sify fair value measurement of financial assets and liabilities based on a hierarchy that conveys the nature of inputs used. The levels are as follows: • Level 1: unadjusted quoted prices in active markets for assets and liabilities identical to those subject to valuation; • Level 2: inputs other than unadjusted quoted prices that are directly (as in the case of prices) or indirectly (deriving from prices) observable market data; • Level 3: inputs based unobservable market data. In more detail, the fair value of a financial instrument measured at Level 1 corresponds to the unadjusted price, to which the instrument - or an identical instrument - is sold on an active market on the reference date of the valuation. For classification at Level 1, prices are measured together with all other characteristics of the financial asset or liability: if the quoted price is adjusted in order to take account of specific conditions that require adjustment, the financial instrument is classified under a level other than Level 1. Analyses for classification at other levels within the fair value hierarchy are performed analytically for each individual asset or liability held/issued; these analyses and valuation criteria are applied consistently over time. Amongst the main criteria used by the Group, in reference to financial instruments held in the context of liquidity management policies and financial liabilities issued, government securities and open-end investment funds are designated as Level 1, investments relating to unit linked policies issued (where the investment risk is borne by policyholders), the associated financial liabilities and the unquoted subordinated bonds issued (measured using observable market data) are classed as Level 2, and securities reported as “available-for-sale financial assets” and measured at cost are classed as Level 3.

According to IFRS 2 Share-based payments, the fair value of share-based payments, Share-based payments i.e. the fair value of Azimut Holding Spa stock options, is reported in the balance sheet on the date that the options are granted to employees and financial advisors and spreading the cost over the vesting period. The related costs are shown in the profit and loss account under “Equity investments” relating to subsidiary companies in terms of options awarded to employees and financial advisors of these same companies, with the contra entry as a shareholders’ equity reserve, given that the plans involve the use of company shares. The calculation method adopted to determine the fair value in the case of stock option schemes with a set strike price takes into ac- WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 55 Notes to the consolidated accounts

count all the features of the options (duration, price and exercise conditions), as well as the volatility of the stock (Azimut Holding Spa ordinary share). Regarding stock option plans for which the strike price is not established on the grant date, the fair value is calculated based on the estimated theoretical value of Azimut Holding Spa ordinary shares at the time the discounted option is expected to be exercised, taking account of the interest rate curve. The cost charged to the profit and loss account under the item “Fee and commission expenses” for options granted to financial advisors represents the best possible estimate in relation to the number of options that will vest when the pre-established conditions are met. Failure to exercise the options does not mean that the cumulative cost is written off, but rather the equity component reported as a contra entry in the profit and loss account is made available during the vesting period. The same accounting criteria are used for the equity swap agreements drawn up for the purpose of the AZ Investimenti Sim Spa growth plan, following the decision of the Ordinary Shareholders’ Meeting of 24 April 2007. The agreements involve the shares of the subsidiary company, which may be exchanged for Azimut Holding Spa shares upon expiry. Although these types of plans in particular are not considered as benefits from a legal/statutory point of view, in accounting terms they fall under IFRS 2, in light of the counterparties with whom the equity swap agreements are signed (financial advisors, directors, and employees of Azimut Group). Considering the formula used to establish the payable amount and in light of the fact that the initial reference value of the agreements themselves is, on the start date, equal to the economic value of AZ Investimenti Sim (calculated by an independent third party), the fair value of these agreements, established on the start date and booked in the profit and loss account in proportion to the fraction of the 3-year period elapsed, is nil.

Treasury shares Treasury shares are reported at purchase cost under a specific item within Group Shareholders’ Equity as a negative and are therefore not subject to valuation. In the event that the shares are subsequently sold, the difference between the book value and the selling price is charged under Shareholders’ Equity. In the case of cancellation, the item charged to Shareholders’ Equity is reduced accordingly upon acquisition.

A.3. Fair value disclosure

A.3.1. The Group did not reclassify/transfer any financial assets between portfolios during Transfers between the course of the year. portfolios WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 56 G r u p p o A z i m u t A.3.2.1 Accounting portfolios: breakdown by fair value level A.3.2 Fair value hierarchy

Financial assets/liabilities measured at fair value Level 1 Level 2 Level 3 Total 1. Financial assets held for trading 2. Financial assets designated at fair value 17,835 836,242 854,077 3. Financial assets available for sale 11,379 645 12,024 4. Hedging derivatives Total 29,214 836,242 645 866,101 1. Financial liabilities held for trading 2. Financial liabilities designated at fair value 416,431 416,431 3. Hedging derivatives Total 416,431 416,431

A.3.2.2 Annual changes in financial assets designated at Level 3 fair value The item “Financial assets available for sale” includes the following investments: • the stake, corresponding to the purchase cost, in Genesi ULN Sim Spa (formerly Genesi Sim Spa, merged by acquisition into Genesi ULN Sim Spa on 13/07/2010), amounting to 5.56% as at 31 December 2010; • the stake, corresponding to the purchase cost, in Daxtor Srl acquired through the subscription of a reserved capital increase. The percentage owned as at 31 Decem- ber 2010 amounted to 19.9%.

Operating segment disclosure (IFRS 8)

Despite being performed via various companies, each specialising in the sale, marketing, and management of financial and insurance products (essentially unit-linked), the activity of the Azimut Group falls within a single operating segment. As a matter of fact, the nature of the various products and services offered, the structure of the management and operating processes, the type of customer, as well as the methods adopted for the sale of products and services are sufficiently similar as to ensure that the risks and benefits do not differ to any great extent, and conversely, have many comparable features. Furthermore, the Group’s business model is distinguished by interaction between the management and distribution activities. The distribution network is able to steer clients towards products that enable the management team to best exploit the market time and, on the other hand, the excellent track record of the management enables the distribution network to further penetrate the market. Therefore, the Group operates as a single structure, dedicated in its entirety to asset management and the sale of investment instruments, in which the contributions made by the individual companies appear to be indistinguishable and whose operating results are revised periodically by management for the purpose of decisions WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 57 Notes to the consolidated accounts

regarding allocation of resources and measurement of results and company performance. Consequently, the accounting information is identical in form for all operating segments, in line with the internal reporting system used by management and based on IAS consolidated financial statement figures. Similarly, no information is provided on revenue per client and non-current assets by geographical area, or information on each individual client’s relationship with the company as management believes this is of little relevance in terms of disclosure. Given that there is only one operating segment subject to reporting, as regards disclosure of income from clients by product/service, please see details on fee income and net premiums reported with the information on the profit and loss account included in these notes.

Earnings per share Basic earnings per share are calculated by dividing the net profit for the financial year (entirely attributable to ordinary shares) by the average number of outstanding ordinary shares. There were no earnings dilutive transactions to be disclosed at 31 December 2010.

2010 2009 Basic earnings per share 0.710 0.906 Average number of outstanding shares 132,849,814 130,504,733 Diluted earnings per share 0.710 0.906 Average number of outstanding shares 132,849,814 130,504,733

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 58 G r u p p o A z i m u t Part B - Notes to the balance sheet Assets

Cash and cash equivalents amounted to 11 thousand euro and refer to cash on hand. Section 1 Cash and cash equivalents

Financial assets at fair value amounted to 854,077 thousand euro (745,645 thousand Section 3 euro at 31 December 2009). Financial assets at fair value

3.1 Breakdown of financial assets at fair value

Assets/Amounts Total 31/12/2010 Total 31/12/2009 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 1. Debt securities of which: government securities 2. Equity securities and UCITS units 0 836,242 0 731,160 3. Other assets 17,835 0 14,485 0 Total 17,835 836,242 14,485 731,160

The item “UCITS units” refers solely to investments, designated at fair value, relating to unit-linked policies issued by AZ Life Ltd where the investment risk is borne by policyholders. The item “Other assets” refers to cash available for investment.

3.2 Financial assets at fair value: breakdown by issuer Assets/Issuer Total Total 31/12/2010 31/12/2009 1. Financial assets a) Governments and Central Banks - - b) Other public bodies - - c) Banks 17,835 14,485 d) Financial institutions - - e) Other issuers 836,242 731,160 Total 854,077 745,645 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 59 Notes to the consolidated accounts

3.3 Financial assets at fair value: annual changes Change/type Debt securities Equity securities Loans Total and UCITS units A. Opening balance - 745,645 - 745,645 B. Increases - 210,960 - 210,960 B1. Purchases - 180,676 - 180,676 B2. Increases in fair value - 30,284 - 30,284 B3. Other changes - - - - C. Reductions - 102,528 - 102,528 C1. Sales - 92,482 - 92,482 C2. Redemptions - - - - C3. Decreases in fair value - - - - C4. Other changes - 10,046 - 10,046 D. Closing balance - 854,077 - 854,077

Available-for-sale financial assets amounted to 12,024 thousand euro (6,776 thou- Section 4 Available-for-sale financial sand euro at December 2009). The breakdown is as follows: assets 4.1 Breakdown of “Available-for-sale financial assets”

Assets/Amounts Total 31/12/2010 Total 31/12/2009 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 1. Debt securities of which: government securities 348 453 2. Equity securities and UCITS units 11,031 645 6,073 250 3. Other assets Total 11,379 645 6,526 250

The item “Equity securities and UCITS units” Level 1 essentially refers to the units in investment funds managed by the Azimut Group, within the framework of the Group’s liquidity management policies. The item “Equity securities and UCITS Units” Level 3 refers to: • the equity investment reported at purchase cost in Genesi ULN Spa (formerly Gen- esi Sim Spa, merged by acquisition into Genesi ULN Sim Spa on 13/07/2010), amounting 5.56% at 31 December 2010. During 2005, the company accepted the binding offer from the other Genesi shareholders for the shares held by the company in the Sim (Investment Firm). In addition, Azimut Holding Spa gave confirmation to Genesi’s shareholders that it would only proceed with the disposal upon receipt of the related payment by the aforementioned shareholders; • the equity investment, reported at purchase cost, in Daxtor Srl, acquired through WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 60 G r u p p o A z i m u t the subscription of a reserved capital increase. The percentage of capital held at 31 December 2010 was 19.9% and the value of the transaction 395 thousand euro, paid in cash.

4.2 Available-for-sale financial assets: breakdown by issuer Assets/amounts Total Total 31/12/2010 31/12/2009 1. Financial assets a) Governments and Central Banks 348 453 b) Other public bodies - - c) Banks - - d) Financial institutions 250 250 e) Other issuers 11,426 6,073 Total 12,024 6,776

4.3 Available-for-sale financial assets: annual changes Change/type Debt securities Equity securities Other assets Total and UCITS units Government securities A. Opening balance - 453 6,323 0 6,776 B. Increases - 0 6,435 - 6,435 B1. Purchases - 6,425 0 6,425 B2. Increases in fair value - 10 10 B3. Write-backs - - - - - charged to profit and loss - - - - - charged to shareholders’ equity - - - - - B4. Transfers from other portfolios - - - - - B5. Other changes - - 0 - - C. Reductions - 105 1,082 - 1,187 C1. Sales - - - - - C2. Redemptions - - 1,032 - 1,032 C3. Decreases in fair value - 105 50 - 155 C4. Write-downs - - - - - C5. Transfers to other portfolios - - - - - C6. Other changes - - - - - D. Closing balance - 348 11,676 - 12,024

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 61 Notes to the consolidated accounts

Changes related to the purchase and sale of UCITS units in the item “Equity securities and UCITS units” fall within the framework of the Group’s liquidity management policies.

Sezione 6 Receivables amounted to 266,143 thousand euro (211,702 thousand euro at 31 De- Receivables cember 2009).

6.1 Breakdown of “Receivables” Details/Amounts 31/12/2010 31/12/2009 1. Receivables for portfolio management services: 1.1 UCITS management 43,322 48,864 1.2 individual portfolio management 388 409 1.3 pension fund management 557 1,325 2. Receivables for other services: 2.1 advisory - - 2.2 outsourced corporate functions - 160 2.3 others 3,283 3,679 3. Other receivables: - - 3.1 repurchase agreement - - of which: for government securities - - of which: for other debt securities - - of which: for equity securities and units - - 3.3 deposits and current accounts 218,590 156,584 3.4 other 3 681 4. Debt securities Total 266,143 211,702 Total fair value 266,143 211,702

The item “Receivables for portfolio management services” mainly includes receivables in the form of fee and commission income on mutual funds accrued during December 2010 and collected the following month. The item “Receivables for other services” mainly includes receivables in the form of fees and commissions from the sale of products of third-party banks and receivables in the form of fee income to be collected for the sale of insurance products of third- party companies.

The Group’s liquidity at 31 December 2010 was mainly composed of cash deposited in the current accounts of the operating companies, with interest in line with that applied to term deposits. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 62 G r u p p o A z i m u t 6.2 Receivables: breakdown by counterparty Breakdown/Counterparty Banks Financial institutions Clients of which: of which: of which: Group Group Group 1. Receivables for portfolio management services: 1.1 UCITS management. - - - - 43,322 - 1.2 individual portfolio management - - - - 388 - 1.3 pension fund management - - - - 557 - 2. Receivables for other services: 2.1 advisory - - - - 2.2 outsourced corporate functions - - - - - 2.3 others 832 - 2,144 - 3. Other receivables 3.1 repurchase agreements ------of which: for government securities - - - - - of which: for other debt securities ------of which: for equity securities and units ------3.2 deposits and current accounts 218,590 - - - - - 3.3 other 3 1 306 - Total 31/12/10 219,425 - 2,145 - 44,573 - Total 31/12/09 158,555 - 1,750 - 51,397 -

9.1 “Equity investments”: information Section 9 Equity investments amounted to 233 thousand euro (256 thousand euro at 31 De- Equity investments cember 2009). WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 63 Notes to the consolidated accounts

9.2 Equity investments: annual change Total A. Opening balance 256 B. Increases 4 B.1 Purchases B.2 Write-backs - B.3 Revaluations - B.4 Other changes 4 C. Reductions 27 C.1 Sales - C.2 Write-downs 27 C.3 Other changes - D. Closing balance 233

The increase refers to the investment in the subsidiary AZ Industry & Innovation S.r.l., created on 28 October 2010, 40% of which is owned by the parent company. The decrease refers to the equity investment in In Alternative Sgr Spa; the book value has been reduced by 27 thousand euro in order to adjust the book value of the investment to reflect the losses as reported in the last approved financial statements.

Sezione 10 Tangible assets amounted to 3,055 thousand euro (3,407 thousand euro at 31 De- Tangible assets cember 2009).

10.1 Breakdown of “Tangible assets” Total 31/12/2010 Total 31/12/2009 Asset/Value Assets Assets Assets Assets at cost at fair value at cost at fair value or revalued or revalued 1. Group-owned a) land - - - - b) buildings 365 - 381 - c) furniture & fixtures 1,165 1,084 - d) plant - - - e) others 1,525 1,942 - 2. Under lease a) land - - - b) buildings - - - c) furniture & fixtures - - - d) plant - - - e) others - - - Total 3,055 3,407 - WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 64 G r u p p o A z i m u t 10.2 Tangible assets: annual change Land Buildings Furniture Plant Other Total & fixtures A. Opening balance - 381 1,084 - 1,942 3,407 B. Increases - 0 342 - 697 1,039 B.1 Purchases - 0 342 - 697 1.039 B.2 Write-ups ------B.3 Increases in fair value charged to: ------a) shareholders’ equity ------b) profit and loss ------B.4 Other changes - - - - C. Reductions - 16 261 - 1,114 1,391 C.1 Sales ------C.2 Amortisation - 16 261 - 1,114 1,391 C.3 Impairment write-downs charged to: ------a) shareholders’ equity ------b) profit and loss ------C.4 Decreases in fair value charged to: ------a) shareholders’ equity ------b) profit and loss ------C.4 Other changes - - - - - D. Closing balance - 365 1,165 0 1,525 3,055

The amortisation rates are as follows:

Asset % rate Buildings 3% Furniture & fixtures 12%-15%-20% Other: Plant 15%-20-25%-30% Motor vehicles 25% Electronic office equipment 20% Expenses for renovation of third party assets Based on remaining duration of rental contract WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 65 Notes to the consolidated accounts

Sezione 11 Intangible assets amounted to 318,721 thousand euro (316,819 thousand euro at 31 Intangible assets December 2009).

11.1 Breakdown of “Intangible assets” 31/12/10 31/12/09 Assets Assets Assets Assets at cost at fair value at cost at fair value 1. Goodwill and goodwill on consolidation 283,251 - 281,324 - 2. Other intangible assets: 2.1 Generated internally - - - - 2.2 Other 35,470 - 35,495 - Total 318,721 - 316,819 -

Assets measured at cost include: • Goodwill and goodwill on consolidation arising from: • the acquisition of the incorporated company Azimut Holding Spa by Azimut Hold- ing Spa (formerly Tumiza Spa), completed on 12 February 2002. This company owned 100% (directly or indirectly) of all the companies of the Azimut Group. This item arose as the difference between the initial cost of the investment, on the date of acquisition, and the shareholders’ equity of the subsidiary companies at 31 December 2001. Following the merger by acquisition of Azimut Holding Spa into Tumiza Spa with accounting effect as of 1 July 2002, a portion of the goodwill on consolidation, amounting to 176.3 million euro (established based on an assessment by the independent company PricewaterhouseCoopers Corporate Finance Srl), was reported under “Goodwill”; • the acquisition by Azimut Holding Spa of AZ Investimenti Sim Spa on 7 July 2005. This item was established as the difference between the purchase cost of the investment and the shareholders’ equity of the subsidiary company on the date of acquisition. •The acquisition by Azimut Holding Spa of Apogeo Consulting Sim Spa on 7 July 2010. This item was established as the difference between the purchase cost of the investment and the shareholders’ equity of the subsidiary company as at 30 June 2010. • The “Azimut” trademark. Azimut Holding Spa entered into a “sale and leaseback” agreement with Banca Italease Spa for the Azimut trademark in October 2006. As described in Part A “Accounting policies” of these Notes, the trademark is reported in the Financial Statements at its original value (35,338 thousand euro) and the amount payable to the leasing company reported under liabilities in the balance sheet. The details of the foregoing transaction are described in item 10 “payables” reported under liabilities. Azimut Holding Spa has exclusive rights to the use of the trademark and holds a purchase option to buy back the asset at the end of the lease term (2 November 2015) for a repurchase price of 100 thousand euro (plus VAT). • software totalling 132 thousand euro. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 66 G r u p p o A z i m u t 11.2 Intangible assets: annual change Total A. Opening balance 316,819 B. Increases 2,075 B.1 Purchases 2,075 B.2 Write-ups - B.3 Increases in fair value charged to: - shareholders’ equity - profit & loss - B.4 Other changes - C. Reductions 173 C.1 Sales - C.2 Amortisation 173 C.3 Impairment write-downs charged to: - shareholders’ equity - profit & loss - C.4 Decreases in fair value charged to: - shareholders’ equity - profit & loss - C.5 Other changes - D. Closing balance 318,721

The amortisation rates for intangible assets with a finite useful life are as follows:

Assets Rate Application software 33%

Impairment test Pursuant to Legislative Decree 38/2005, Azimut Group prepares the financial statements in accordance with the International Accounting Standards (IAS)/Interna- tional Financial Reporting Standards (IFRS) endorsed by the European Commis- sion, pursuant to Regulation (EC) No. 1606/2002 issued by the European Parliament and Council. As regards disclosure of equity investments, goodwill on consolidation and trademarks (asset with indefinite useful life), international accounting standards, specifically IAS 36 “Impairment of assets”, stipulate that the company must perform annual tests on accounting balances in order to compare the reported items during the preparation of both statutory and consolidated financial statements. This impairment test is used to identify any loss of value of Intangible Assets. More specifically: WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 67 Notes to the consolidated accounts

• Goodwill on consolidation • Trademark

Where the test shows that the value of an asset has been overestimated, the company reports the impairment in its accounts. Given that the Group operates as a single structure, dedicated in its entirety to asset management and the sale of investment instruments, in which the contributions made by the individual companies appear to be indistinguishable, impairment tests on goodwill and goodwill on consolidation are performed by considering the Group as a single cash generating unit. The Group’s financial condition is also analysed based on the same assumption in the Management Report. The Group is again considered as a single cash generating unit when referring to the trademark, from which Azimut expects to obtain a positive contribution to cash flow for an indefinite period of time.

The value in use of these assets is calculated using the Discounted Cash Flow method, based on the following assumptions: 1) Discount rate: Unlevered cost of capital, CAPM method: • Risk free: 10-year Italian government bonds at 31 December 2010; • Beta: calculated on a 5-year timescale with daily readings (source: Bloomberg) • Market risk premium: extra yield required for investments in shares rather than risk free securities, calculated based on the 20-year historical average (source: Credit Su- isse Datastream). 2) Cash flows To calculate Cash Flow an approximate estimate is made based on net profit for the period.

Earnings are established for the first 5 years, using the “2011 Budget” and “2011- 2015 Business Plan” prepared in accordance with the following assumptions: 1) Assets under management at 27 billion euro in 2014 (confirming the assumptions included in the “2010-2014 Business Plan”) and 30 billion euro in 2015. External sources are unable to provide reliable figures on the future growth of total AuM within the sector. 2) Profitability at the average of the past 5 years External sources are unable to provide reliable information on the pricing trend and therefore historical profitability levels have been used considering the value added of the advisory service offered to clients. 3) Increase in overheads in line with forecast growth of personnel and structure. Cash flow growth beyond 2015 (covered by the business plan) has been maintained at 2%, using the average profits reported in the Business Plan as the estimated profit for the first year after the plan. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 68 G r u p p o A z i m u t Sensitivity Enterprise Value WACC 6.60% 7.20% 7.80% 8.40% 9.00% 9.60% 10.20% 10.80% 11.40% 12.00% 0.00% 2,847.0 2,607.3 2,404.4 2,230.3 2,079.3 1,947.2 1,830.5 1,726,7 1,633.8 1,550.2 0.50% 3,028.8 2,755.6 2,527.2 2,333.4 2,166.8 2,022.1 1,895.3 1,783.1 1,683.2 1,593.7 1.00% 3,243.0 2,927.8 2,668.2 2,450.5 2,265.3 2,105.8 1,967.0 1,845.2 1,737.3 1,641.1 1.50% 3,499.1 3,130.3 2,831.5 2,584.5 2,376.8 2,199.8 2,047.1 1,914.0 1,796.9 1,693.1 G 2.00% 3,811.0 3,371.7 3,023.0 2,739.4 2,504.3 2,306.2 2,136.9 1,990.6 1,862.8 1,750.3 2.50% 4,199.0 3,664.4 3,250.6 2,920.7 2,651.4 2,427.5 2,238.4 2,076.4 1,936.2 1,813.5 3.00% 4,694.7 4,026.8 3,525.6 3,135.4 2,823.1 2,567.3 2,353.9 2,173.2 2,018,2 1,883.8 3.50% 5,350.4 4,487.2 3,864.6 3,394.0 3,025.9 2,729.9 2,486.7 2,283.3 2,110.7 1,962.2 4.00% 6,258.2 5,091.5 4,292.8 3,711.4 3,269.3 2,921.6 2,641.0 2,409.6 2,215.6 2,050.6

Enterprise Value - Intangible Asset WACC 6.60% 7.20% 7.80% 8.40% 9.00% 9.60% 10.20% 10.80% 11.40% 12.00% 0.00% 2,528.9 2,289.2 2,086.2 1,912.2 1,761.2 1,629.1 1,512.4 1,408.6 1,315.7 1,232.0 0.50% 2,710.6 2,437.5 2,209.1 2,015.3 1,848.7 1,704.0 1,577.1 1,465.0 1,365.1 1,275.6 1.00% 2,924.8 2,609.7 2,350.0 2,132.3 1,947.1 1,787.7 1,648.9 1,527.1 1,419.2 1,323.0 1.50% 3,181.0 2,812.2 2.513.4 2,266.3 2,058.7 1,881.7 1,729.0 1,595.8 1,478.8 1,375.0 G 2.00% 3,492.9 3,053.5 2,704.8 2,421.3 2,186.2 1,988.0 1,818.8 1,672.4 1,544.7 1,432.2 2.50% 3,880.9 3,346.3 2,932.4 2,602.5 2,333.3 2,109.4 1,920.2 1,758.3 1,618.0 1,495.4 3.00% 4,376.6 3,708.7 3,207.5 2,817.3 2,504.9 2,249.1 2,035.8 1,855.1 1,700.1 1,565.6 3.50% 5,032.2 4,169.1 3,546.4 3,075.9 2,707.8 2,411.8 2,168.6 1,965.2 1,792.5 1,644.1 4.00% 5,940.0 4,773.4 3,974.6 3,393.3 2,951.2 2,603.5 2,322.8 2,091.5 1,897.5 1,732.4

By applying key value variables (WACC and G), the difference between Enterprise Value (Fair value) and Book Value is positive. Discounting cash flows by 80%, using the most penalising WACC and G levels shown by the stress test, the difference between the Enterprise Value and Book Value is still positive.

Cash flow discount 10% 20% 30% 40% 50% 60% 70% 80% 170 151 132 113 94 76 57 38 EV-BV 1,563 1,304 992 702 484 353 292 271 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 69 Notes to the consolidated accounts

Conclusions By applying the key value variables (WACC and G), the difference between Enter- prise Value (Fair Value) and Book Value is positive. The Market cap has not fallen below the Net Book Value once since the company was listed.

At current prices with Azimut Holding Spa’s Shareholders’ Equity at 360 million euro, the market values the company at 971 million euro. At the height of the economic crisis, when the stock price hit a low of € 3.02, the market cap was nevertheless three times Shareholders’ Equity. The Enterprise Value calculated using a DCF method based on the “Business Plan” is higher than the market price even with cash flow discounted by 50%.

Diminuzione Flussi di Cassa 10% 20% 30% 40% 50% 170 151 132 113 94 EV-IA 1,178 1,016 855 693 531

Sezione 12 Tax assets Tax assets and tax liabilities Tax assets amounted to 40,218 thousand euro (41,915 thousand euro at 31 Decem- ber 2009). The breakdown is as follows:

12.1 Breakdown of “Tax assets: current and deferred” 31/12/10 31/12/09 Current 9,317 9,510 Deferred 30,901 32,405 Total 40,218 41,915

The item “Current tax assets” mainly refers to income on consolidation to the amount of 7,890 thousand euro, non-reimbursed IRAP credits for the year 2010 amounting to 655 thousand euro, as well as bank interest income totalling 223 thousand euro.

The item “Deferred tax assets” refers to: • 12,509 thousand euro of tax assets arising from the value of the leasing instalments deductible in future financial years by virtue of the “sale and lease back” agreement for the Azimut trademark; • 9,253 thousand euro of tax assets relating to carry forward tax losses; • 1,693 thousand euro of tax assets relating the adjustment of the “statutory reporting value” and “tax value” (IRAP) of the trademark and goodwill pursuant to article 1, paragraph 51 of Law 244/2007 (2008 Budget) and offset against future tax liabilities arising from amortisation and other negative items deducted off the balance sheet (as WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 70 G r u p p o A z i m u t indicated in EC section of the Modello Unico tax return statement) up until the tax year underway at 31 December 2007; • 7,446 thousand euro as timing differences resulting from the different timing criteria of IRES and IRAP tax deductibility for some cost items compared to that reported in the Profit and Loss Account.

As regards deferred tax assets previously reported by the Group on tax losses in accordance with IAS 12, adjustments have been made in order to establish the prob- ability of these losses being recovered in subsequent tax years. In light of the results assumed in the 2011-2015 business plan, these deferred tax assets have been reduced by 2,500 thousand euro.

Tax liabilities

Tax liabilities stood at 44,022 thousand euro (35,935 thousand euro at 31 December 2009). The breakdown is as follows:

12.2 Breakdown of “Tax liabilities: current and deferred” Breakdown 31/12/10 31/12/09 Current 5,536 1,207 Deferred 38,486 34,728 Total 44,022 35,935

The item “Current tax liabilities” includes a provision for the Regional Business Tax (IRAP) of the companies Azimut Holding Spa, Azimut Sgr Spa Azimut Consulenza Sim Spa and Azimut Capital Management Sgr Spa, as well as tax payables for the Group’s Irish subsidiaries net of tax advances paid during 2010. During the year, the Lombardy Regional Tax Authority - Monitoring, Litigation and Collection Unit - Large Taxpayer Office ordered a routine tax inspection for Azimut Consulenza Sim Spa and Azimut Sgr Spa covering the tax years 2005,2006, 2007 for direct tax, VAT and regional business tax purposes. Following the inspection both companies received notice of an Official Tax Audit Report to establish extra tax payments totalling 14 million euro of IRES (corporate income tax) and IRAP (regional business tax) for Azimut Consulenza Sim Spa and a total of 18 million euro of IRES and IRAP and 4.8 million of VAT for Azimut Sgr Spa. It should be noted that the proper conduct adopted by both companies for the calculation of the “normal” value of intragroup transactions with overseas associates is corroborated by specific reports on transfer pricing commissioned by Studio Biscozzi Nobili, which are partly based on market analyses performed by primary consulting Companies as well as by a tax assessment published by the same firm. Meanwhile, Supreme Court rulings establish that the VAT is not applicable to Azimut Sgr Spa for the disputed transactions. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 71 Notes to the consolidated accounts

Therefore, following the notice on 20 December 2010 of the payment order for only the first year under assessment, Azimut Consulenza Sim Spa filed its objections relating to the transfer pricing with the Tax Authority, reiterating that the findings were unfounded and that any penalties were not applicable in this case. In light of this, Azimut Consulenza Sim Spa did not set aside any tax provisions in its 2010 accounts but only enough to cover fees for legal and tax assistance. Azimut Sgr Spa filed its requests and observations with the Tax Authority on 27 December 2010 in response to the comments contained in the Official Tax Audit Report, reiterating that all allegations are uncorrect and unfounded, reserving the right to demonstrate these inaccuracies under any jurisdiction. Regardless of the aforementioned issue, despite having yet to receive a tax demand and in the belief that it operated in line with current tax legislation, Azimut Sgr Spa has nevertheless set aside precautionary tax provisions of around 5 million euro, in addition to fees for legal and tax assistance. The item “Deferred tax liabilities” mainly includes provisions for deferred tax liabilities relating to the difference between the book value and tax value of the trademark amounting to 11,422 thousand euro and the provisions for deferred tax liabilities recognised on the timing difference between the book value and tax value of goodwill of 23,563 thousand euro. These tax liabilities, stated in the accounts in accordance with IAS 12, are not reasonably expected to become actual costs given that the aforementioned timing differences will only be reduced following a negative impairment test result that leads to a write-down of goodwill and the trademark and in the case of disposal. Moreover, this item includes deferred IRES and IRAP on retained earnings of the subsidiary companies, amounting to 2,968 thousand euro at 31 December 2010. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 72 G r u p p o A z i m u t 12.3 Changes in deferred tax assets (contra entry in profit and loss account) Total Total 31/12/2010 31/12/2009 1. Opening balance 32,405 29,063 2. Increases 4,034 6,635 2.1 Deferred tax assets recognised during the year: - - a) from previous years - 846 b) due to changes in accounting standards - - c) write-backs - - d) other 3,748 5,788 2.2 New taxes or increases in tax rates - - 2.3 Other increases 286 - 3. Reductions 5,538 3,293 3.1 Deferred tax assets derecognised during the year 5,538 3,283 a) reversals 2,159 2,529 b) write-off of irrecoverable tax 2,500 - c) due to changes in accounting standards - - d) other 879 754 3.2 Decreases in tax rates - - 3.3 Other reductions 0 10 4. Closing balance 30,901 32,405

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 73 Notes to the consolidated accounts

12.4 Changes in deferred tax liabilities (contra entry in profit and loss account) Total Total 31/12/2010 31/12/2009 1. Opening balance 30,874 26,660 2. Increases 6,103 5,373 2.1 Deferred tax liabilities recognised during the year - - a) from previous years - - b) due to changes in accounting standards - - c) other 6,103 5,373 2.2 New taxes or increases in tax rates - - 2.3 Other increases - - 3. Reductions 2,331 1,159 3.1 Deferred tax liabilities derecognised during the year 2,331 1,159 a) reversals 2,331 1,159 b) due to changes in accounting standards - - c) other - - 3.2 Decreases in tax rates 0 - 3.3 Other reductions 0 - 4. Closing balance 34,646 30,874

12.6 Changes in deferred tax liabilities (contra entry in shareholders’ equity) Total Total 31/12/2010 31/12/2009 1. Opening balance 3,854 3,827 2. Increases 0 27 2.1 Deferred tax liabilities recognised during the year - - a) from previous years - - b) due to changes in accounting standards - - 2.2 New taxes or increases in tax rates - - 2.3 Other increases 0 27 3. Reductions 14 - 3.1 Deferred tax liabilities derecognised during the year - - a) reversals - - b) due to changes in accounting standards - - c) other - - 3.2 Decreases in tax rates - - 3.3 Other reductions 14 - 4. Closing balance 3,840 3,854

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 74 G r u p p o A z i m u t Other assets stood at 66,411 thousand euro (60,935 thousand euro at 31 December Sezione 14 2009). Other assets

14.1 Breakdown of “Other assets” Total Total 31/12/2010 31/12/2009 Due from Inland Revenue 16,479 13,080 Due from financial advisors 18,191 17,693 Other receivables 3,019 4,063 Deferred charges 28,722 26,099 Total 66,411 60,935

“Due from financial advisors” mainly includes loans granted to financial advisors amounting to 7,641 thousand euro, which generate interest income in line with the Euribor plus spread, in addition to advance commissions paid to financial advisors to the amount of 8,653 thousand euro. The item “Deferred charges” includes commission expenses, which do not pertain to the current financial year, for the sale of No Load products. These funds do not charge an entry fee but break even within 36 months in the case of mutual funds and the Star and Pleiadi insurance products and 18 months in the case of hedge funds. “Deferred charges” also includes the assets generated via the deferral of acquisition costs for the unit-linked policies issued by the Group’s Irish insurance company, classified as investment contracts. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 75 Notes to the consolidated accounts

Liabilities

Section 1 Payables stood at 106,004 thousand euro (109,793 thousand euro at 31 December Payables 2009). The breakdown is as follows:

1.1 Breakdown of “Payables” Payable/Amount Total Total 31/12/2010 31/12/2009 1. Due to sales network: 1.1 for UCITS sales 2,359 2,239 1.2 for individual portfolio sales 1.3 for pension fund sales 2. Payables for asset management services: 2.1 proprietary portfolio management 71 1,039 2.2 discretionary portfolio management 2.3 other 36 33 3. Payables for other services: 3.1 advisory 3.2 outsourced corporate functions 3.3 other 451 316 4. Other payables: 4.1 repurchase agreements of which for government securities of which for other debt securities of which for other equity securities and units 4.2 other 103,087 106,166 Total 106,004 109,793 Total fair value 106,004 109,793

The item “Due to sales networks” mainly includes commissions accrued and to be settled for the sale of fund units, whereas the item “Payables for other services: other”, includes mainly sundry payables for admin cost recoveries. The item “Other payables: other” refers to: a) financial debt, amounting to 12,500 thousand euro, arising from the lease-back agreement signed by Banca Italease Spa and Azimut Holding Spa in 2006 for the disposal of the Azimut trademark for 55,000 thousand euro plus VAT. The item also includes interest charges accrued at 31 December 2010 on the amount due to the lessor, or 89 thousand euro, to be paid at a pre-established date (31 Octo- ber 2011). The lease-back agreement, which is not subject to covenants or restrictions, has a WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 76 G r u p p o A z i m u t duration of 9 years and entails an initial deposit of 27,000 thousand euro in addition to 9 advance annual instalments of 3,100 thousand euro each, due on 31 October of every year through 2014. The deposit and first instalment were paid on the contract start date. The interest is calculated based on the 12-month Euribor plus 40 basis points. b) a loan of 90,000 thousand euro granted by Banca Popolare di Novara on 22 April 2008 and divided into two lines, A and B, each originally amounting to 100 million euro. The credit lines are repayable in instalments and expire on 30 June 2013 and 30 June 2018 respectively, with the interest rate calculated based on the Euribor plus 115 basis points for Line A and 125 basis points for Line B. The loan is not subject to covenants or restrictions. On 1 July 2009, Azimut Holding Spa made an advance partial repayment amounting to 80,000 thousand euro (of which 60,000 thousand euro for Line A and 20,000 thousand euro for Line B). The item also includes interest charges accrued as at 31 December 2010 on this loan, amounting to 498 thousand euro, paid in full on the pre-established date (1 January 2011).

1.2 “Payables”: breakdown by counterparty Breakdown/Counterparty Banks Financial institutions Clients of which of which of which Group Group Group 1. Payable to sales network: 1.1 for UCITS sales 1,415 - 944 - 1.2 for individual portfolio management sales ------1.3 for pension fund sales ------2. Payables for asset management services: 2.1 for proprietary portfolio management - - 71 - - - 2.2 for discretionary portfolio management ------2.3 for other - - 36 - - - 3. Payables for other services: 3.1 advisory services received ------3.2 outsourced corporate functions ------3.3 other - - - - 451 - 4. Other payables 4.1 Repurchase agreements ------of which for government securities ------of which for debt securities ------of which for equity securities and units ------4.2 other 103,087 - - - Total 31/12/10 104,502 - 1,051 - 451 - Total 31/12/09 107,595 2,159 39 - WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 77 Notes to the consolidated accounts

Section 2 2.1 Breakdown of Outstanding securities Outstanding securities

Items/Amounts Total 31/12/2010 Total 31/12/2009 Book Value Book Value Fair Value Fair Value Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 1. Securities bonds 69,038 69,038 85,684 85,684 other Total 69,038 69,038 85,684 - 85,684

“Outstanding securities” stood at 69,038 thousand euro and refer to an non-convertible subordinated bond originally of 88,457 bonds amounting to 1,000 each, with a duration of 7 years and possibility for advance redemption (partial or full) and yield at a fixed annual nominal rate of 4% before tax. A bonus warrant was attached to the bond for holders of no less than 10,000 euro of bonds (10 subordinated bonds), at 100 warrants for every 5 bonds held. The warrants, which are not transferable, may be exercised at any time during the vesting period, between 1 July 2009 and 30 June 2016 inclusive, allowing the bond holder to acquire Azimut Holding shares already held by the issuer (treasury shares) at a price of 12 euro per share (strike price or exercise price), at a ratio of one share per warrant. Warrants that have not been exercised by 30 July 2016 will be considered null and void. In accordance with IAS 32, the value of the debt component of this financial instrument is 83,614 thousand euro upon issue, whereas the equity component amounts to 3,515 thousand euro. On 1 July 2010, Azimut Holding Spa made an advance partial redemption of the 2009-2016 subordinated bond (“Azimut 2009 - 2016 subordinato 4%”) totalling 17,691 thousand euro, or 20% of the par value. The difference between this amount and the book value, established using the amortised cost method, was reported in the profit and loss account on the redemption date (16,844 thousand euro) under the item “Gains/losses on disposal or repurchase: d) financial liabilities” at 848 thousand euro. The item also includes interest charges amounting to 1,415 thousand accrued by 31 December 2010 euro, which will be paid on a pre-established date (1 July 2011).

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 78 G r u p p o A z i m u t 2.2 Subordinated securities Please see previous paragraph.

Technical reserves where the investment risk is borne by policyholders amounted to Technical reserves where 435,914 thousand euro (462,428 thousand euro at 31 December 2009) and refer to the investment risk is the commitments arising from the unit-linked policies issued by the subsidiary com- borne by policyholders pany AZ Life Ltd, classified as insurance contracts.

“Financial liabilities at fair value” amounted to 416,431 thousand euro (281,837 Section 4 thousand euro at 31 December 2009) and include the commitments arising from Financial liabilities at fair the unit-linked policies issued by the subsidiary company AZ Life Ltd, classified as value through profit and loss investment contracts.

4.1 Breakdown of “Financial liabilities at fair value through profit and loss”

Assets/Amounts Total 31/12/2010 Total 31/12/2009 Fair Value Par Value Fair Value Par Value Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 1. Payables 416,431 416,431 281,837 281,837 2. Debt securities bonds other 3. Derivatives Total 416,431 416,431 281,837 281,837

The item “Tax liabilities” is described in detail in section 12 of these Notes. Section 7 Tax liabilities

“Other liabilities” amounted to 81,396 thousand euro (55,475 thousand euro at 31 Section 9 December 2009). The breakdown is as follows: Other liabilities Total Total 31/12/2010 31/12/2009 Due to suppliers 2,768 2,232 Due to Inland Revenue 2,529 2,498 Social security contributions 1,753 2,728 Due to employees 2,728 2,538 Other payables 70,581 44,415 Deferred income 1,037 1,064 Total 81,396 55,475 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 79 Notes to the consolidated accounts

The item “Other payables” mainly includes amounts owed to financial advisors (48,418 thousand euro) by Azimut Consulenza Sim Spa, AZ Investimenti Sim Spa and Apogeo Consulting Sim Spa for commissions accrued in December 2010 and paid the following January, as well as other compensation accrued in the 2010 financial year to be paid in 2011 and other contractual commitments relating to commissions, including retention fees, to be paid to financial advisors in the medium/ long-term. “Other payables” also includes amounts due to eligible financial advisors of the Azi- mut Consulenza Sim and AZ Investimenti Sim networks for advance payments of supplementary indemnity reserves for clients amounting to 12,253 thousand euro, to be made in 2011. The item “Deferred income” includes liabilities arising from the deferral of commission income on the premiums of unit-linked policies issued by the Irish insurance company AZ Life Ltd, classified as investment contracts.

Section 10 The item Staff severance pay amounted to 2,097 thousand euro (2,014 thousand Staff severance pay (TFR) euro at 31 December 2009) and refers to TFR accrued by personnel employed by the Group companies at 31 December 2010.

10.1 TFR: annual change 31/12/10 31/12/09 A. Opening balance 2,014 2,131 B. Increases 202 399 B1. Provisions for the year 50 92 B2. Other increases 152 307 C. Reductions 119 516 C1. Payments made 103 289 C2. Other reductions 16 227 D. Closing balance 2,097 2,014

10.2 Other information There is no other information to report.

Section 11 Provisions for liabilities and charges amounted to 13,032 thousand euro (18,641 Provisions for liabilities and thousand euro at December 2009). charges 11.1 Breakdown of “Provisions for liabilities and charges” • Supplementary indemnity reserve for agents established based on actuarial criteria, in accordance with IAS, totalling 5,869 thousand euro. The reduction in supplementary indemnity reserve for agents is attributable to advance payments of this item to financial advisors; WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 80 G r u p p o A z i m u t • Other provisions (7,163 thousand euro) for potential legal disputes with clients i.e. the present value of the estimated expense to settle the obligations. Other provisions also include provisions made by Azimut Consulenza Sim Spa and Azimut Sgr Spa for legal and tax assistance that the companies will presumably bear, as already described in Section 12 - Current tax liabilities.

11.2 “Provisions for liabilities and charges”: annual change 31/12/2010 Opening balance 18,641 Increases during the year 10,155 Decreases during the year 15,764 Closing balance 13,032

12.1 Breakdown of “Share Capital” Section 12 Type of shares Total Shareholders’ Equity 1. Share capital 32,324 1.1 Ordinary shares 32,324 1.2 Other shares -

At 31 December 2010, fully paid up Share Capital was composed of 143,254,497 ordinary shares, for a total value of 32,324 thousand euro.

12.2 Breakdown of “Treasury Shares” Type of shares Amount 1. Treasury shares 85,945 1.1 Ordinary shares 85,945 1.2 Other shares -

On 27 May 2010, Azimut Holding Spa launched a bonus issue of 1 ordinary Azi- mut Holding Spa share per 60 ordinary shares held, totalling 2,182,252 shares and 15,894 thousand euro. On 19 July 210, as agreed by the parties on 8 July 2010 and in amendment of the previous agreements, Azimut Holding Spa settled the payable amount totalling 27.8 million euro included in the equity swap contracts for the 2007-2009 AZ Investimenti Sim Spa growth plan which expired on 30 June 2010, with the payment of 18.4 million euro and allocation of 1,372,218 Azimut Holding Spa shares. The agreements were amended in light of the fact that some of the recipients of the payable amount expressed a desire to sell some of their shares. In light of this, in order to prevent a sale on the market and potential alterations and instability in the normal performance of the stock, the original agreements were amended to include the possibility of a cash payment. As regards the 2008-2010 and 2009-2011 AZ Investimenti growth WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 81 Notes to the consolidated accounts

plans approved respectively at the Shareholders’ Meetings of 23 April 2008 and 29 April 2009, no Equity Swap contracts were entered into. During the year treasury share transactions led to a total increase in the portfolio of 1,545,811, shares for a total of 10,497 thousand euro. At 31 December 2010, Azimut Holding Spa held 10,263,040 treasury shares at an average book value of 8.374 euro per share.

12.3 Breakdown of “Equity instruments” At 31 December 2010, the item “Equity instruments” amounted to 3,515 thousand euro and refers to the equity component of the convertible bond, corresponding to the fair value of the warrants issued.

12.4 Breakdown of “Share premium reserve” The item “Share premium reserve” amounted to 173,987 thousand euro at 31 De- cember 2010.

12.5 Other information Breakdown and changes in “Reserves”

Legal Share Other Total reserve capital reserves transactions A. Opening balance 6,445 10,792 90,900 108,137 B. Increases 20 94,541 94,561 B.1 Profit appropriations 20 94,541 94,561 B.2 Other changes 0 C. Reductions 28,200 28,200 C.1 Allocations 0 loss account reserve 0 dividends 0 transfers to share capital 0 C.2 Other changes 28,200 28,200 D. Closing balance 6,465 10,792 157,241 174,498 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 82 G r u p p o A z i m u t Breakdown and changes in “Valuation reserves”

Available Tangible Intangible Cash Legally Other Total for sale assets assets flow required financial hedge revaluations assets A. Opening balance 82 - - - - - 82 B. Increases 11 - - - - - 11 B1. Increases in fair value 11 - - - - - 11 B2. Other changes ------C. Reductions 166 - - - - - 166 C1 Decreases in fair value 142 - - - - - 142 C2 Other changes 24 - - - - - 24 D. Closing balance (73) - - - - - (73)

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 83 Notes to the consolidated accounts

Part C - Notes to the profit and loss account

1.1 Fee and commission income and expenses Section 1 Fee and commission income The breakdown is as follows: and expenses

Services Total 2010 Total 2009 Fee Fee Net Fee Fee Nette income expenses fees income expenses fees A. Asset management 1. Proprietary portfolio management 1.1 Mutual funds Management fees 256,496 (203) 256,293 221,910 (224) 222,134 Incentive fees 57,952 (2) 57,950 96,792 96,792 Entry/redemption fees 7,570 (21) 7,549 7,591 7,591 Switch fees 2,351 2,351 1,980 1,980 Other fees 105 105 131 131 Total mutual fund fees 324,474 (226) 324,248 328,404 (224) 328,628 1.2 Individual portfolio management Management fees 2,441 2,441 2,352 2,352 Incentive fees 167 167 561 561 Entry/redemption fees 3 3 1 1 Other fees 100 100 252 252 Total individual portfolio management fees 2,711 - 2,711 3,166 - 3,166 1.3 Open pension funds Management fees 1,917 1,917 1,295 1,295 Incentive fees - - 1,008 1,008 Entry/redemption fees - - Other fees 601 601 27 27 Total open pension fund fees 2,518 - 2,518 2,330 - 2,330 2. Discretionary portfolio management Management fees 531 - 531 774 - 774 Incentive fees ------Other fees ------Total discretionary portfolio management fees 531 - 531 774 - 774 Total asset management fees (a) 330,234 (226) 330,008 334,674 (224) 334,898 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 84 G r u p p o A z i m u t Services Total 2010 Total 2009 Fee Fee Net Fee Fee Nette income expenses fees income expenses fees B. Other services Advisory ------Other services: ------Sales and distribution 9,994 9,994 5,984 5,984 Order intake 929 - 929 777 - 777 Total fees for other services 10,923 - 10,923 6,761 - 6,761 Fee expenses for sales and order intake (163,286) (160,158) Total fees 341,157 (163,512) 177,645 341,435 (160,382) 181,053 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 85 Notes to the consolidated accounts

1.2 “Fee and commission expenses”: breakdown by type and counterparty

Type/Counterparty Banks Financial institutions Other of which of which of which Group Group Group A. Asset management ------1. Proprietary portfolio management ------1.1 Sales commissions ------UCITS ------Individual portfolio management ------Pension funds ------1.2 Maintenance fees ------UCITS ------Individual portfolio management ------Pension funds ------1.3 Incentive fees ------UCITS ------Individual portfolio management ------Pension funds ------2. Discretionary portfolio management ------UCITS ------Individual portfolio management ------Pension funds ------Total asset management fees ------B. Other services ------Advisory ------Other services : ------Sales and distribution ------Order intake ------Total fees for other services ------Fee expenses for sales, distribution and order intake 7,165 - 2,824 - 153,523 - Total fees 7,165 - 2,824 - 153,523 - WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 86 G r u p p o A z i m u t 3.1 Breakdown of “Interest and similar income” Section 3 Interest and similar income amounted to 2,579 thousand euro (1,433 thousand euro Interest at 31 December 2009).

Assets/income source Debt Repurchase Deposits Other Total Total securities agreements and current 31/12/2010 31/12/2009 accounts 1. Held-for-trading financial assets ------2. Financial assets at fair value ------3. Available-for-sale financial assets - - - 38 38 22 4. Financial assets held to maturity ------5. Receivables - 1,923 - 1,923 669 6. Other assets - - - 618 618 742 7. Hedging derivatives ------Total - - 1,923 656 2,579 1,433

“Other assets” includes interest accrued on loans granted to financial advisors.

3.2 Breakdown of “Interest charges and other expenses” Interest charges and other expenses amounted to 7,679 thousand euro (6,873 thousand euro at 31 December 2009).

Liabilities/Expense source Loans Repurchase Securities Other Total Total agreements 31/12/2010 31/12/2009 1. Payables 2,029 - - 10 2,039 4,686 2. Outstanding securities - - 3,735 - 3,735 2,070 3. Trading liabilities ------4. Liabilities at fair value ------5. Other liabilities - - - 1,905 1,905 117 6. Hedging derivatives ------Total 2,029 - 3,735 1,915 7,679 6,873

The item “Payables: loans” is mainly composed of interest charges arising from the loans raised by the Parent Company. The item “Other liabilities” includes interest expenses on the advance payments of supplementary indemnity provisions for agents to be issued by Azimut Consulenza Sim Spa and AZ Investimenti Sim Spa, calculated as the difference between the amount actually paid in advance and the amount reported, based on IAS 37, according to actuarial estimates. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 87 Notes to the consolidated accounts

Net Premiums The item “Net premiums” amounted to 5,651 thousand euro (2,551 thousand euro at 31 December 2009) for premiums relating to unit-linked policies issued by the Irish insurance company AZ Life Ltd, classified as insurance contracts.

Net gains (losses) The item stood at 42,693 thousand euro (48,772 thousand euro at 31 December on financial assets 2009) and is composed of realised gains and losses and changes in the value of finan- designated at fair value cial assets and liabilities, relating to unit-linked policies, and designated at fair value. through profit and loss

Section 7 Gains (losses) on disposal or repurchase amounted to 827 thousand euro (479 thou- Gains (losses) on disposal sand euro at 31 December 2009). and repurchase 7.1 Breakdown of “Gains (losses) on disposal and repurchase

Total 31/12/2010 Total 31/12/2009 Assets / Earnings Gain Loss Net result Gain Loss Net result 1. Financial assets 1.1 Available-for-sale assets 22 - 22 483 - 483 1.2 Held-to-maturity assets ------1.3 Other financial assets - (1) (1) - (4) (4 ) Total (1) 22 (1) 21 483 (4) 479 2. Financial liabilities 2.1 Payables ------2.2 Outstanding securities - (848) (848) - - - Total (2) - (848) (848) - - - Total (1+2) 22 (849) (827) 483 (4) 479

Section 9 9.1 Breakdown of “Personnel costs” Administrative costs Personnel costs amounted to 26,641 thousand euro (24,770 thousand euro at 31 De- cember 2009). The breakdown is as follows: WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 88 G r u p p o A z i m u t Items Total 31/12/2010 Total 31/12/2009 1. Salaried personnel 14,395 14,052 a) wages and salaries and similar costs 9,967 9,786 b) social security 3,122 2,843 c) staff severance pay (TFR) 0 0 d) pension contributions 0 0 e) TFR provisions 448 507 f) retirement funds and similar reserves: 0 0 defined contribution 0 0 defined benefit 0 0 g) private pension plans: 38 43 defined contribution 38 43 defined benefit 0 0 h) other expenses 820 873 2. Other personnel 677 1,326 3. Directors and Auditors 11,569 9,392 4. Early retirement costs 0 0 5. Cost recoveries for employees redeployed to other companies 0 0 6. Reimbursed costs for employees redeployed to the company 0 0 Total 26,641 24,770

In light of the changes introduced by the Bank of Italy circular of 17 February 2011, any costs related to personnel (cost of insurance policies taken out for employees, cost of lunch vouchers, training courses, food and accommodation for employees on business trips) have been classified as “other expenses”. For comparison purposes, the corresponding amount in 2009 has been moved from “other administrative costs” to “Insurance premiums” and “Other administrative costs”.

9.2 Average number of employees per category 2010 2009 Directors 24,75 24,58 Middle managers 36,83 40,83 Other employees 53,92 53,50

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 89 Notes to the consolidated accounts

9.3 Breakdown of “Other admin costs” “Other admin costs” stood at 36,175 thousand euro (32,390 thousand euro at 31 December 2009). The breakdown is as follows:

Total Total 31/12/2010 31/12/2009 Professional services 3,103 1,834 Advertising, promotion and marketing expenses 1,845 1,802 Telephone and fax 1,751 1,394 Enasarco/Firr contributions 4,238 3,934 Lease and rent 3,373 3,346 Insurance premiums 508 437 Tax liabilities 123 121 Lease and hire 1,211 1,385 Outsourcing and EDP Services 13,274 12,665 Maintenance costs 173 160 Other admin costs 6,576 5,312 Total 36,175 32,390

Advertising, promotion and marketing costs include VAT on royalties paid by the subsidiary companies Azimut Consulenza Sim Spa and Azimut Sgr Spa, amounting to 400 thousand euro.

Section 10 Impairment of tangible assets based on amortisation at 31 December 2010 is broken Value adjustments: tangible down as follows: assets 10.1 Breakdown of “Value adjustments: tangible assets”

Assets/Value Amortisation Impairment Write-ups Net result adjustments write-downs 1. Group-owned - - - - business purposes 1,391 - - 1,391 investment purposes - - - - 2. Under lease - - - - business purposes - - - - investment purposes - - - - Total 1,391 - - 1,391 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 90 G r u p p o A z i m u t Impairment of intangible assets based on amortisation at 31 December 2010 is bro- Section 11 ken down as follows: Value adjustments: intangible assets 11.1 Breakdown of item “Value adjustments: intangible assets”

Assets/Value Amortisation Impairment Write-ups Net result adjustments write-downs 1. Goodwill - - - - 2. Other intangible assets - - - - 2.1 Group-owned - - - - generated internally - - - - other 173 - - 173 2.2 Under lease - - - - Total 173 - - 173

13.1 Breakdown of “Provisions for liabilities and charges” Section 13 “Provisions for liabilities and charges” amounted to 7,428 thousand euro (4,102 Provisions for liabilities thousand euro at 31 December 2009) and include 4,389 thousand euro of supple- and charges mentary indemnity reserves for agents and 3,441 thousand euro of provisions for other liabilities and charges.

14.1 Breakdown of “Other operating income and costs” Section 14 “Other operating income and costs” stood at 91 thousand euro (1,135 thousand Other operating income euro at 31 December 2009) and are mainly composed of trade expenses and current and costs account bank charges, in addition to charge-backs made to financial advisors and income for “soft commissions” received thanks to specific agreements.

15.1 Breakdown of “Gains (Losses) on equity investments” Sezione 15 Gains (losses) on equity investments stood at 27 thousand euro (32 thousand euro at Gains (losses) on equity 31 December 2009) and refer to the stake in the associate company In Alternative investments Sgr Spa, whose book value has been reduced by 27 thousand euro in order to adjust the book value of the investment, reflecting the losses in the last approved financial statements. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 91 Notes to the consolidated accounts

Items 2010 2009 1. Income - 32 1.1 Revaluations - 32 1.2 Gains on disposal - - 1.3 Write-backs - 32 1.4 Other increases - - 2. Costs 27 - 2.1 Depreciation 27 - 2.2 Losses on disposal - - 2.3 Impairment write-downs - - 2.4 Other costs - - Net result 27 32

Section 17 17.1 Breakdown of “Income tax on profit from continuing operations” Income tax on profit from Total 2010 Total 2009 continuing operations 1. Current tax assets 10,370 4,387 2. Changes in current taxes of previous years - - 3. Decrease in current taxes for the financial year - - 4. Change in deferred tax assets 1,790 (3,342) 5. Change in deferred tax liabilities 3,773 4,214 Taxes for the financial year 15,933 5,259)

Income tax for the year mainly refers to IRAP paid by the Group’s Italian companies, taxes payable by the Irish companies as well as the income from tax consolidation amounting to the taxes on taxable income ceded to the parent company by the Group’s Italian subsidiary companies that have adopted the “tax consolidation regime” pursuant to article 117 of Presidential Decree 917/86. Taxes for the Group’s foreign subsidiaries are calculated in accordance with the tax regulations in force in the individual countries of residence. Current tax assets also include provisions amounting to roughly 5 million euro that Azimut Sgr Spa has set aside, despite not having received any tax demand and maintaining that it has acted in accordance with regulations. For further details, please see Section 12 - Tax assets and liabilities. The item “Change in deferred tax assets” includes the release of deferred tax assets arising from the value of the leasing contract deductible during the period, the cancellation of the share of deferred tax assets booked as a tax loss carry forward, as explained in Section 12 - Tax assets and liabilities, as well as the release of deferred tax assets arising from timing differences resulting from the different timing criteria of IRES (corporate income tax) tax deductibility. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 92 G r u p p o A z i m u t The item “Change in deferred tax liabilities” mainly includes deferred tax liabilities, in line with IAS 12, related to the timing differences between the book value and the tax value of goodwill. These tax liabilities are not reasonably expected to become actual costs given that the aforementioned timing differences will only be reduced following a negative impairment test result that leads to a write-down of goodwill and the trademark or in the case of disposal. The same item also includes the change in deferred tax liabilities on dividends to be paid by the subsidiary companies within the scope of consolidation. During September 2010, Azimut Holding filed a supplementary unified tax return for 2009 as well as a supplementary “Modello Consolidato Nazionale” for tax year 2008, in order to declare a higher tax loss after deducting the cost of the advance redemption of the Azimut 2004-2009 convertible bond into ordinary shares.

Part D - other information

1.1 1 Information on commitments, guarantees and third party assets Sezione 1 Specific references to 1.1.1 Commitments and guarantees issued to third parties business activities Guarantees were as follows at 31 December 2010:

Guarantees issued 31/12/2010 31/12/2009 Real and personal guarantees 17,241 18,547 Total 17,241 18,547

As regards the business activities of AZ Life Ltd, for as long as there is no change in the shareholder structure, Azimut Holding Spa has made a commitment to the IFSRA (Irish Financial Services Regulatory Authority) to provide the insurance company with the necessary capital in the event that it is unable to meet an adequate solvency margin, in accordance with the relevant regulations.

1.1.2 Commitments relating to guaranteed pension funds Azimut Sgr Spa has created a guaranteed pension fund. The management of this fund product has been delegated to a leading insurance company. This Azimut Previ- denza pension fund guarantees the policyholder at least the amount of capital invested (net of all charges to be paid by the policyholder, as well as any advances and redemptions) in addition to a guaranteed minimum return of 2% per annum once certain requirements have been met. The guaranteed minimum return is paid by the aforementioned insurance company.

1.1.3 Commitments and guarantees from third parties The group has not received guarantees from third parties WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 93 Notes to the consolidated accounts

1.1.4 Own securities deposited with third parties Own securities in custody of third parties 2010 2009 UCITS units deposited with Banca Popolare di Novara 1,024 6,073 UCITS units deposited with BNP Paribas 10,007 - Government securities and bonds deposited with other credit institutions 348 453 Azimut Holding Spa treasury shares deposited with Banca Popolare di Novara 69,584 115,470 Total 80,963 121,996

1.1.5 Third party assets under custody Third-party assets and securities entrusted by clients using individual and collective portfolio management services are deposited at the custodian bank Banca Popolare. Third-party assets and securities entrusted by clients and invested in hedge funds are deposited with the custodian bank Banca Popolare. Third-party assets and securities entrusted by clients and invested in Luxembourg funds are deposited with the custodian bank BNP Paribas. Third party assets and securities entrusted by clients invested in the Irish fund Aliseo Europe are deposited with the custodian bank BNY Mellon Global Investment Serv- icing (International) Limited.

1.2 Information on Assets under Management

1.2.1 Total net value of UCITS

The net value of funds managed by Azimut Sgr Spa, AZ Fund Management Sa, Azimut Capital Management Sgr Spa and AZ Capital Management Ltd at 31 De- cember 2010:

UCITS Total 2010 Total 2009 1. Proprietary portfolio management Italian mutual funds Azimut Bilanciato 243,322 289,116 Azimut Reddito Euro 33,971 47,643 Azimut Garanzia 60,361 95,377 Azimut Trend 273,909 305,388 Azimut Solidity 39,010 37,023 Azimut Trend Italia 77,900 121,432 Azimut Trend Tassi 30,004 43,460 Azimut Scudo 141,801 149,575 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 94 G r u p p o A z i m u t Azimut Trend Europa 54,401 73,913 Azimut Trend America 58,534 49,571 Azimut Trend Pacifico 43,827 51,772 Formula 1 - Low Risk 179,311 238,621 Formula 1 - Conservative 78,452 147,635 Formula 1 – Alpha Plus 20 99,839 156,483 Formula 1 - Risk 63,396 77,923 Formula 1 - High Risk 42,171 62,838 Azimut Reddito Usa 18,643 19,847 Azimut Strategic Trend 42,903 48,739 Azimut Contofondo 0 6,110 Luxembourg funds: Reserve S.T. 365,243 598,033 Italian Trend 204,499 27,791 European Trend 118,732 327,764 American Trend 127,931 129,059 Pacific Trend 65,160 88,482 US Income 58,386 149,589 Emerging M. Asia 475,793 54,461 Conservative 309,584 137,213 Long Term Bond 112,185 181,980 Long Term Equity 113,235 154,422 Trend 919,078 882,215 Strategic Trend 140,313 120,792 Alpha Manager High Volatility 95,479 15,059 Alpha Manager Credit 274,536 57,469 Solidity 191,461 101,899 Alpha Manager Thematic 114,058 14,087 Opportunities 128,996 34,721 AZ Fund Emerging Market Europe 154,621 55,694 AZ Fund Emerging Market Latin America 310,939 119,629 F1 Conservative 635,067 1,381,201 F1 Apha Plus 20 524,619 1,065,378 F1 Absolute 395,960 479,436 Bond Trend 180,635 279,550 Income 325,051 365,219 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 95 Notes to the consolidated accounts

European Dynamic 366,933 377,469 QProtection 436,074 821,084 AZ Q Bond 158,222 449,384 AZ Q Trend 280,755 293,758 AZ Bot Plus 31,145 6,706 AZ Asset Power 539,066 21,351 AZ Asset Plus 1,176,934 59,039 AZ Fund Formula 1 Alpha Plus 568,184 556,946 AZ Fund Formula 1 Alpha Plus Euro 0 47,184 AZ Fund Formula 1 Dynamic Trading 253,067 563,515 Active Selection 317,710 421,199 F1 Commodity Trading 127,965 0 Active Strategy 75,681 0 Dividend Premium 220,244 0 Corporate Premium 42,506 0 Institutional Target 55,041 0 Best Equity 280,031 0 Best Bond 328,326 0 Hedge funds: Aliseo 615,448 666,278 Aliseocinque 192,252 221,219 Aliseo Europe 54,223 66,130 Total proprietary portfolio management 14,043,123 13,414,871 2. Discretionary portfolio management: UCITS: Open-end UCITS - - Closed-end UCITS - - Total discretionary portfolio management - - 3. Portfolio management delegated to third parties: UCITS: Open-end UCITS 90,788 99,488 Aliseo Multistrategy 90,788 99,488 Closed-end UCITS Total portfolio management delegated to third parties 90,788 99,488

(°) merged into Azimut Garanzia on 1 February 2010 (°°) merged into Formula 1 - Alpha Plus on 1 April 2010 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 96 G r u p p o A z i m u t 1.2.2 Total value of portfolio management activity 2010 2009 of which of which invested in AM invested in AM company funds company funds 1. Proprietary portfolio management 586,507 123,198 481,888 581 2. Discretionary portfolio management 60,137 59,879 382,098 - 3. Portfolio management delegated to third parties - - - -

1.2.3 Total net value of pension funds Net value of pension funds managed by Azimut Sgr Spa at 31 December 2010:

2010 2009 1. Proprietary portfolio management Open pension funds Azimut Previdenza Comparto Protetto (conservative fund) 15,669 10,714 Azimut previdenza Comparto Equilibrato (balanced fund) 52,182 36,505 Azimut Previdenza Comparto Crescita (growth fund) 73,009 55,513 Total proprietary portfolio management 140,860 102,731 2. Discretionary portfolio management Pension funds open - - closed - - other forms of pension funds - - Total discretionary portfolio management - - 3. Portfolio management delegated to third parties Pension funds open Azimut Previdenza Comparto Garantito (guaranteed fund) 7,684 3,930 closed - - other forms of pension funds - - Total portfolio management delegated to third parties 7,684 3,930 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 97 Notes to the consolidated accounts

1.2.4 Commitments for subscriptions to be settled Commitments for subscriptions to be settled were as follows at 31 December 2010:

UCITS and pension funds Azimut Bilanciato 246 Azimut Reddito Euro 69 Azimut Garanzia 102 Azimut Trend 399 Azimut Solidity 10 Azimut Trend Italia 127 Azimut Scudo 80 Azimut Trend Europa 102 Azimut Trend America 94 Azimut Trend Pacifico 46 Formula 1 Low risk 7 Formula 1 High Risk 1 Azimut Reddito Usa 1 Azimut Strategic Trend 34 Total UCITS 1,318 Azimut Previdenza Comparto Protetto 21 Azimut Previdenza Comparto Equilibrato 115 Azimut Previdenza Comparto Crescita 167 Azimut Previdenza Comparto Garantito 13 Total pension funds 316 Total UCITS and pension funds 1,634 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 98 G r u p p o A z i m u t 1.3 Sales & distribution, trading & brokerage, custody & administration of financial instruments 1.3.2 Sales and distribution. Products and services sold off premises (value) Total 2010 Total 2009 Group Third Group Third company party company party products products products products and services and services and services and services 1. Debt securities - - 88,367 - structured securities - - - - other securities 88,367 - 2. Equity securities - - - - 3. UCITS units 2,582,455 436,816 3,083,143 63,763 4. Other financial instruments - - - - 5. Insurance products 188,193 41,129 99,790 - 6. Loans - - - - of which leasing - - - - of which factoring - - - - of which consumer credit - - - - of which other - - - - 7. Portfolio management 286,935 - 189,844 - 8. Other (mortgages) Total 3,057,583 477,945 3,461,144 63,763 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 99 Notes to the consolidated accounts

1.3.3 Trading & brokerage Intra-group Transactions transactions with third parties A. Buy orders during the year 236,469 A.1 Debt securities 165,859 A.2 Equity securities 56,432 A.3 UCITS units - 13,685 A.4 Derivative instruments - - financial derivatives loan derivatives 23 A.5 Other - 470 B. Sell orders during the year 369,812 B.1 Debt securities 290,878 B.2 Equity securities 63,127 B.3 UCITS units - B.4 Derivative instruments - financial derivatives 7,743 loan derivatives - - B.5 Other - 8,064

1.3.4 Custody and administration of financial instruments In regards to order intake activity, the Group’s investment firms have deposited the following client-owned assets with third parties: 932,122,143 euro (market value which does not include accruals on the reporting date).

Section 2 2.1 Financial risks Information on risk The proprietary trading portfolios of the Azimut Group companies contain finan- management and hedging cial instruments subject to financial risk exclusively composed of mutual funds man- policies aged by Azimut Group companies and government securities, in the context of the Group’s liquidity management policies. Details on the reporting date: WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 100 G r u p p o A z i m u t Product Issuer Company Balance at Type 31/12/10 (Euro/000) Azimut Garanzia Azimut SGR Azimut SGR 1,024 Open mutual fund Reserve Short Term AZ Fund Management Sa Azimut SGR 4,997 Open mutual fund Institutional Target AZ Fund Management Sa AZ Fund Management Sa 5,010 Open mutual fund Irish Government Stock 4.5% 2020 Irish government AZ Life Ltd 348 Government security Total 11,379 (1)

(1): charged under “Available for sale financial assets” in the consolidated financial statements at 31 December 2010

The financial risks associated with use of liquidity are therefore limited in light of the investment policies which generally focus on government securities and money market mutual funds as well as flexible funds, characterised by the low volatility of mark to market accounting and low exposure to liquidity, exchange and credit risks. As for financial assets designated at fair value through profit and loss at 31 December 2010, totalling 836 million euro, considering the fact that this refers to investments relating to unit-linked policies issued by AZ Life Ltd, where the investment risk is borne by policyholders, the financial risk for the Group is not expected to be significant. As regards the assessment procedure for the management of financial assets on behalf of third parties, the Risk Management Service plays a significant role. This service involves both performing ex post evaluations of the risk profiles of the various managed portfolios and providing the Investment Department with an ex ante market risk evaluation procedure. In more detail, the assessment is performed by analys- ing the portfolios of the individual Funds and on-going monitoring of the significant risk factors identified, such as the average financial duration, equity exposure and its distribution in geographical areas and economic segments, currency exposure and the credit rating of the issuers. The assessment of the Fund’s risk profile is performed ex-post both in absolute terms (volatility understood as the standard annual deviation) and in relative terms compared to the benchmark (tracking error volatility). These latter factors represent the basis for the establishment of the limits within which the manager may accept the risk. The Risk Management service uses external providers to calculate the Value at Risk (VaR) of all the portfolios managed with regard to the ex-ante evaluation of the market risk, particularly for flexible funds. This indicator is supplemented by analyses obtained via a multi-factor valuation system in the case of equity portfolios. In addition, the Risk Management service monitors the development of the risk models adopted and the return of the funds in relation to peers and the benchmark. The interest rate risk arises from the loan granted to Azimut Holding Spa by Banca Popolare di Novara as well as the financial debt arising from the lease-back agreement for the “Azimut” trademark. Interest on debt arising from the lease-back agreement is in line with the 12-month Euribor plus 40 basis points. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 101 Notes to the consolidated accounts

The interest on the loan granted by Banca Popolare di Novara on 22 April 2008, initially amounting to 200 million euro and composed of two Lines, A and B, each amounting to 100 million euro, is in line with the Euribor plus 115 basis points for Line A and 125 basis points for Line B. Moreover, the subordinated loan issued by Azimut Holding Spa during 2009 is not subject to interest rate risks as the rate is fixed at 4%.

2.2 Operational risks This form of risk includes those that are typical of the various business operating procedures. The Risk Management function “maps out” the risks in the broader framework of its own activities, preparing and constantly maintaining an up-to-date database of the risks identified. This is then discussed by the Internal Audit and Risk Management Committee, which analyses the risks at group level. Activities which show significant risk values are analysed and assessed by this Com- mittee and, if required, the necessary action is subsequently taken. For more information, please see the section “Key risks and uncertainties” in the Management Report.

Section 3 Information on Net Equity 3.1.1 Qualitative information As regards the individual consolidated shareholders’ equity items, please see section B of these Notes. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 102 G r u p p o A z i m u t 3.1.2 Quantitative information

3.1.2.1 Group Shareholders’ Equity: breakdown Items/Amounts 31/12/2010 31/12/2009 1. Share capital 32,324 32,324 2. Share premium reserve 173,987 173,987 3. Reserves 174,498 108,137 earnings a) legal 6,465 6,445 b) statutory c) treasury shares d) other 157,241 90,900 other 10,792 10,792 4. (Treasury shares) (85,945) (100,976) 5. Valuation reserves (73) 82 Available for sale financial assets (73) 82 Tangible assets Intangible assets Foreign investment hedge Cash flow hedge Foreign exchange differences Non-current assets and disposal groups for sale Legally required revaluations Actuarial gains/losses on defined benefit plans Share of valuation reserves of equity accounted investments 6. Equity instruments 3,515 3,515 7. Profit (loss) for the year 94,303 118,237 Total 392,609 335,306 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 103 Notes to the consolidated accounts

3.1.2.3 Valuation reserves for available for sale assets: breakdown Assets/Amounts Total 31/12/2010 Total 31/12/2009 Positive Negative Positive Negative reserve reserve reserve reserve Debt securities 0 (100) 5 - Equity securities - - - - UCITS units 27 - 77 0 Loans - - - - Total 27 (100) 82 0

3.1.2.3 Valuation reserves for available for sale assets: annual change Debt Equity UCITS Loans securities securities units 1. Opening balance 5 - 77 - 2. Increases - - 11 - 2.1 Increases in fair value - - 11 - 2.2 Reclassification through P&L of negative reserves: - - - - due to impairment - - - - following disposal - - - - 2.3 Other changes - - - - 3. Reductions 105 - 61 - 3.1 Decreases in fair value 105 - 37 - 3.2 Impairment write-downs - - - - 3.3 Reclassification through P&L of positive reserves: following disposal - - - - 3.4 Other changes - - 24 - 4. Closing balance (100) - 27 -

3.2 Regulatory capital and capital ratios Regulatory capital was prepared pursuant to the Bank of Italy regulation of 24 Oc- tober 2007. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 104 G r u p p o A z i m u t 3.2.1. Regulatory capital 3.2.1.2 Quantitative information

Total Tier I capital - positive items Subscribed share capital 32,324 Reserves 173,987 Retained earnings 174,497 Hybrid tier I instrument Other positive Tier I capital items (Group + SIM net profit + equity instruments) 97,818 Tier I capital - negative items Share settlement Treasury shares (85,945) Goodwill (259,689) Other intangible assets (24,049) Retained losses Relevant losses: current year Negative AFS reserves Net capital gains on tangible assets Other negative Tier I capital items Total tier I capital 108,944 Tier II capital Positive AFS reserves (included) 14 Positive valuation reserves: other items included Hybrid instruments not included in tier I capital Tier II subordinated debt and hybrid capitalisation instruments 54,472 Net capital gains on tangible assets (included) Other positive Tier II capital items Surplus Total tier II capital 54,486 Tier III capital Trading income/losses Net capital gains/losses Tier III subordinated debt (150 per cent) Tier III subordinated debt (250 per cent) Tax effect, estimated dividends and other foreseeable costs Total tier II capital -

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 105 Notes to the consolidated accounts

Items to be deducted Equity investments, subordinated assets and hybrid capitalisation instruments (14,984) Non trading assets and other items to be deducted (9,976) Other items to be deducted Total items to be deducted (24,960) Regulatory capital 138,470

Capital requirements Total Capital requirements for credit risks 573 Capital requirements for operational risks 21,691 Total capital requirements 22,264

Information on capital adequacy, risk exposure and the general characteristics of the procedure followed to identify, measure and manage these risks is available on the company website at www.azimut/it/gruppo, in accordance with the Bank of Italy regulation. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 106 G r u p p o A z i m u t Detailed statement of comprehensive income Sezione 4 Other details Items Pre-tax profit Income tax Net profit 10. Profit (loss) for the year 110,236 (15,933) 94,303 Other comprehensive pre-tax income 20. Available for sale financial assets: (178) 23 (155) a) changes in fair value (146) 14 (132) b) reclassification through P&L - - - impairment write-downs - - - gains/losses on disposal (32) 9 (23) c) other changes - - - 30. Tangible assets - - - 40. Intangible assets - - - 50. Foreign investment hedge: - - - a) changes in fair value - - - b) reclassification through P&L - - - c) other changes - - - 60. Cash flow hedge: - - - a) changes in fair value - - - b) reclassification through P&L - - - c) other changes - - - 70. Foreign exchange differences: - - - a) changes in rates - - - b) reclassification through P&L - - - c) other changes - - - 80. Non-current assets held for sale: - - - a) changes in fair value - - - b) reclassification through P&L - - - c) other changes - - - 90. Actuarial gains (losses) on defined benefit plans - - - 100. Valuation reserves of equity accounted investments - - - a) changes in fair value - - - b) reclassification through P&L - - - impairment write-downs - - - gains/losses on disposal - - - c) other changes - - - 110. Other net income (178) 23 (155) 120. Comprehensive consolidated income (Item10+110) 110,058 (15,910) 94,148 130. Comprehensive consolidated income attributable to third parties 140. Comprehensive consolidated income attributable to parent company 110,058 (15,910) 94,148 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 107 Notes to the consolidated accounts

Section 5 5.1 Information on key management fees Related-party transactions Director compensation amounted to 10,766 thousand euro in 2010. Compensation for members of the Board of Statutory Auditors, calculated based on the parameters in force, amounted to 766 thousand euro.

5.2 Information on related-party transactions The business dealings engaged in by Azimut Holding Spa with its subsidiary and associate companies, as well as the transactions between the subsidiary companies and/or associate companies themselves during the year 2010, were conducted on an arm’s length basis. Moreover: • Azimut Sgr Spa and Azimut Consulenza Sim Spa pay royalties to Azimut Holding Spa annually for use of the Azimut trademark totalling 10% of net fees and commissions, excluding supplementary, variable management fees and commissions, corresponding to pre-established minimum and maximum amounts which vary from year to year; • Azimut Holding Spa, in its capacity as the Parent Company, Azimut Sgr Spa, Azi- mut Consulenza Sim Spa, AZ Investimenti Sim Spa, Azimut Capital Management Sgr Spa and Azimut Fiduciaria Spa in their capacity as subsidiary companies, have adopted the Tax Consolidation Regime. In light of this arrangement, the subsidiary companies pay the Company an amount equivalent to the taxes arising from their respective taxable income; • a contractually established annual fee (total of 1,000 thousand euro) is payable for the coordination activities carried out by the Parent Company on behalf of the subsidiary companies Azimut Sgr Spa and Azimut Consulenza Sim Spa; • Azimut Holding Spa has issued guarantees to the subsidiary companies Azimut Con- sulenza Sim Spa, AZ Investimenti Sim Spa and Apogeo Consulting Sim Spa.

Azimut Holding Spa’s Shareholders’ Meeting of 24 April 2007 authorised a plan to encourage the development of the subsidiary AZ Investimenti Sim Spa via equity swap agreements with parties identified by the Remuneration Committee as having specific competencies for the growth of the company, including some directors, key management personnel and financial advisors named as related parties. These contracts expired on 30 June 2010 and were settled on 19 July 2010. For more details, please Section 6 of the Notes. Some of the financial advisors employed by Azimut Consulenza Sim Spa and AZ Investimenti Sim Spa, identified as related parties, have been granted loans by the respective companies. During the year, one financial advisor, who is also a director at Azimut Consulenza Sim Spa, was granted an advance fee, which was paid in January 2011. These transactions amounted to a total of 7,288 thousand euro. At 31 December 2010 Azimut Holding Spa did not have loan relationships with subsidiary and associate companies Moreover, the directors of the Group who also act as managers of mutual funds are exempt from paying fees and commissions on any personal investments made in the funds they manage. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 108 G r u p p o A z i m u t The following table shows the impact that the transactions or positions with related parties other than those indicated above have on the Group’s financial condition:

Total Related parties Absolute value % Assets Other assets 66,411 7,288 10.97 Liabilities Other liabilities 81,396 5,145 6.32 Payables 106,004 36 0.03 Profit and Loss Account Fee and commission expenses 163,512 317 0.19 Admin costs 62,816 12,043 19.17

These amounts are shown in detail in the corresponding sections of Parts B and C of these Notes.

6.1 Dividends paid Section 6 The ordinary dividend for 2010 amounted to 0.10 euro per share, with an extraordi- Other information nary dividend of the same amount (0.10). Payment was made as follows: the ordinary dividend of 0.10 euro was paid 50% in cash and the remaining 50% in treasury shares held in the company’s portfolio; the extraordinary dividend was paid in treasury shares held in the portfolio. Therefore, each shareholder received (before withholding tax) 0.05 in cash, as well as a bonus issue of 1 Azimut Holding Spa share per 60 ordinary shares held (totalling 2,182,252 shares). The aforementioned bonus shares (all held as treasury shares in the company’s portfolio) were awarded with ex-dividend date of 24 May 2010. Based on the official stock price on 10 March 2010, the total dividend amounted to roughly 0.20 euro per ordinary share.

6.2 Significant non-recurring events and transactions The significant non-recurring events that took place in 2010 are as follows: • partial advance repayment, at 20% of the par value of the 2009-2016 subordinated bond (“Azimut 2009-2016 subordinato 4%”), which led to a reduction in the balance sheet item “Outstanding securities” of 16,844 thousand euro; • acquisition of 100% of Apogeo Consulting Sim’s capital from Cattolica Assicurazi- oni Group for 3,185 thousand euro in cash; • Settlement with beneficiaries of the payable amount totalling 27.8 million euro included in the equity swap contracts for the 2007-2009 AZ Investimenti Sim Spa growth plan which expired on 30 June 2010, with the payment of 18.4 million euro and allocation of 1,372,218 Azimut Holding Spa shares. The transaction led to a WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 109 Notes to the consolidated accounts

reduction in the shareholders’ equity item “Other reserves”. The agreements were amended in light of the fact that some of the recipients of the payable amount expressed a desire to sell some of their shares. In light of this, in order to prevent a sale on the market and potential alterations and instability in the normal performance of the stock, the original agreements were amended to include the possibility of a cash payment; There were no unusual transactions during the period.

6.3 AZ Investimenti Sim Spa growth plan Although the project is not treated as a benefit plan from a legal/statutory point of view, in accounting terms it is governed by IFRS 2 Share-based payments. The following information is therefore provided:

The structure of the transaction is as follows: • total number of AZ Investimenti Sim shares (split between the two agreements) at 1,112,926; • 3-year duration of the agreements as of 30 June 2007, expiring on 30 June 2010, which also corresponds to the date for the settlement of the payable amount; • in the event that the equity swap agreements close the period in the money for the counterparties, then Azimut Holding Spa will distribute a number of treasury shares (bought on the market) equal to the value due, divided by the closing price of the Azi- mut Holding Spa stock on the day the agreements expire. On the other hand, should they close out of the money, the other parties must settle the resulting absolute value to Azimut Holding Spa in cash. • there are no particular conditions for the accrual of the amount payable by the counterparties (if in the money) or by Azimut Holding (if out of the money); however, in the event that a financial advisor or employee contract is terminated before the due date, the number of AZ Investimenti Sim shares involved will be reduced proportionately. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 110 G r u p p o A z i m u t Impact on net profit and financial condition On 19 July 2010, Azimut Holding Spa settled the positive payable amount of the equity swap contracts for the three year period 2007-2009. Details of the transaction are described in Section 12 - Shareholders Equity - Item 130 Treasury Shares of these Notes. As regards the project for the 2008-2010 and 2009-2011 AZ Investimenti Sim Spa growth plans authorised at the Shareholders’ Meetings of 23 April 2008 and 29 April 2009, it should be noted that no equity swap contracts had been established at 31 December 2010.

6.5 Auditing and non-auditing service fees As stipulated by article 149 duodecies of Consob Regulation number 11971/99 and subsequent amendments and supplements, the details of fees (net of VAT and expenses) due to the auditing company and companies within its network for auditing and non-auditing services during 2010 are as follows:

Type of service Service provider Recipient Fee/Euro Auditing Deloitte & Touche Spa Parent Company - Azimut Holding Spa 70,585 Subsidiaries (*) 297,037 Deloitte network Subsidiaries (**) 270,657 Other services: assistance with assessment Deloitte network Parent Company - 90,000 of Group anti-money laundering Azimut Holding S.p.A. processes Group total 728,279

(*) includes a) euro 187,499 for the auditing of statements of mutual funds managed by Azimut Sgr Spa and statements of hedge funds managed by Azimut Capital Management Sgr Spa not included in the relative P&L accounts, the cost being borne by the Funds themselves, and b) 9,153 euro for the auditing of the pension fund included in the P&L account of Azimut Sgr Spa. (**) includes 201,500 euro for the auditing of the AZ 1 Fund managed by AZ Fund Management Sa not included in the P&L, the cost being borne by the Fund itself

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 111 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 112 G r u p p o A z i m u t Certification of the consolidated accounts pursuant to article 154-bis of Legislative Decree n° 58/98

1. The undersigned, Pietro Giuliani, Chairman of the Board of Directors and Chief Executive Officer, and Marco Malcontenti, Director responsible for the preparation of the accounting statements of Azimut Holding Spa, hereby certify, having also taken into account the provisions of article 154-bis, paragraphs 3 and 4 of Legisla- tive Decree 58 of 24 February 1998: • the adequacy in view of the nature of the business and • the effective application

of the administrative and accounting procedures used for the preparation of the consolidated accounts in 2010.

2. The evaluation of the adequacy of the administrative and accounting procedures for the preparation of the consolidated accounts as at 31 December 2010 is based on a system drafted by Azimut Holding, in accordance with the Internal Control - Inte- grated Framework model issued by the Committee of Sponsoring Organisations of the Treadway Commission, an internationally accepted reference framework.

3. The undersigned also certify that:

3.1. the consolidated accounts:

• accurately represent the figures contained in the Group’s accounting records; • were prepared in accordance with the International Accounting standards (IAS)/ International Financial Reporting Standards (IFRS) endorsed by the European Commission pursuant to Regulation (EC) 1606/02 of the European Parliament and Council, in force at the time the accounts were approved, and with each applicable interpretation, as well as the provisions issued in accordance with article 9 of Leg- islative Decree 38/2005, and to the best of their knowledge, provide a fair and accurate representation of the financial condition of the Company and its controlled undertakings.

3.2. the Management Report contains a reliable analysis of the operating performance and consolidated results, in addition to the situation of the Company and the subsidiaries included in the scope of consolidation, as well as a description of the main risks and uncertainties to which Azimut Group is exposed.

Milan, 10 March 2011

Chairman and Chief Executive Officer Director responsible for preparing (Pietro Giuliani) company accounting statements (Marco Malcontenti) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 113 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 114 G r u p p o A z i m u t Azimut Holding Spa Financial statements at 31 December 2010 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 115 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 116 G r u p p o A z i m u t Report on the company’s financial condition and operating performance

Dear Shareholders, At 31 December 2010, net profit amounted to 77,587,320 euro (65,586,294 euro at 31 December 2009). Operating profit stood at 78,649,285 euro, up by 13,672,055 euro on 31 December 2009 (64,977,230 euro), mainly thanks to differences in dividends received, which amounted to 89,618,375 euro at the end of 2010 (78,036,362 at 31 December 2009). The aforementioned item is composed entirely of dividends paid by the Group companies and reported on a cash basis and also includes a 38,250,000 euro interim dividend payment on 2010 earnings from the subsidiary AZ Fund Management Sa in December 2010 (in 2009 the interim dividend amounted to 51,000,000 euro). Interest income, negative at -5,152,834 euro, included interest charges amounting to 5,932,912 euro (6,848,372 euro at 31 December 2009): the reduction on the 31 December 2009 result is due to the gradual decline in interest rates during the year and to the partial advance redemption of 17.7 million euro, or 20% of the par value of the “Azimut 2009-2016 subordinato 4%” convertible bond, on 1 July 2010.

In regards to the methods used for the assessment of net financial debt, shown in the following table, reference should be made to the CESR recommendation dated 10 February 2005, and more specifically to the paragraph “Capitalisation and indebtedness” in Chapter II. Receivables and payables include those of a financial nature, whereas trade receivables and payables have been excluded. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 117 Report on the company’s financial condition and operating performance

Items 31/12/10 31/12/09 A Cash 3,301 1,858 B Cash equivalents: 85,830,333 67,351,656 Due from banks 82,318,243 67,344,543 Due from financial institutions 3,512,090 7,113 C Available-for-sale assets 0 0 D Total cash A+B+C 85,833,634 67,353,514 E Short term receivables 0 0 F Short term bank loans - 0 G Current portion of long term debt: (5,102,201) (5,435,249) Subordinated bonds (1,415,312) (1,769,140) Due to banks (lease-back) (3,188,875) (3,211,220) Due to banks (BPN loan) (498,014) (454,889) H Other short term payables 0 0 I Short term financial debt F+G+H (5,102,201) (5,435,249) J Short term financial debt (net) I+E+D 80,731,433 61,918,265 K Long-term bank loans: (99,400,000) (102,500,000) Due to banks (BPN loan) (90,000,000) (90,000,000) Due to banks (lease-back) (9,400,000) (12,500,000) L Subordinated bonds (66,792,825) (82,719,828) M Other long term debt 0 0 N Long term financial debt K+L+M (166,192,825) (155,219,828) O Net (financial) debt J+N (85,461,392) (123,301,563)

Net financial debt stood at 85.5 million euro, an improvement of roughly 37.8 million euro on 31 December 2009. The result includes 6.5 million euro of dividend payments and a 1.2 million euro payment to the charitable organisation Fondazione Azimut Onlus in accordance with the decision of the AGM on 29 April 2010, in addition to the following transactions during the year: • on 7 July 2010, Azimut Holding acquired 100% of Apogeo Consulting Sim from Cattolica Assicurazioni Group with a payment of 3.2 million euro; • on 19 July 210, as agreed by the parties on 8 July 2010 and in amendment of the previous agreements, Azimut Holding Spa settled the payable amount totalling 27.8 million euro included in the equity swap contracts for the 2007-2009 Az Investimenti Sim Spa growth plan which expired on 30 June 2010, with the payment of 18.4 million euro and allocation of 1,372,218 Azimut Holding Spa shares. The agreements were amended in light of the fact that some of the recipients of the payable amount expressed a desire to sell some of their shares. In light of this, in order to prevent a sale on the market and potential alterations and instability in the normal perform- WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 118 G r u p p o A z i m u t ance of the stock, the original agreements were amended to include the possibility of a cash payment; • in October 2010, Azimut Holding Spa acquired 19.9% of Daxtor Srl by subscribing to a reserved capital increase with a total of 395,000 euro in cash; • during 2010, Azimut Holding Spa bought 1,545,811 treasury shares for a total of 10.5 million euro.

Azimut Consulenza Sim Spa Subsidiary company results Net profit amounted to 25,483,966 euro at 31 December 2010 (11,675,857 euro at 31 December 2009).

Azimut Sgr Spa

Net profit amounted to 12,138,991 euro at 31 December 2010 (26,179,141 euro at 31 December 2009).

AZ Fund Management SA

Net profit stood at 114,099,971 euro at 31 December 2010 (127,504,742 euro at 31 December 2009).

AZ Life Ltd

Net profit amounted to 6,979,391 euro at December 2010 (7,370,611 euro at 31 December 2009).

Azimut Capital Management Sgr Spa

Net profit amounted to 1,343,806 euro at 31 December 2010 (492,995 euro at 31 December 2009).

AZ Investimenti Sim Spa

Net profit amounted to 8,940,287 euro at 31 December 2010 (12,494,036 euro at 31 December 2009). WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 119 Report on the company’s financial condition and operating performance

AZ Capital Management Ltd

Net profit amounted to 423,819 euro at 31 December 2010 (830,828 euro at31 December 2009).

Azimut Fiduciaria Spa

Net loss amounted to -46,038 euro at 31 December 2010 (-31,742 euro at 31 De- cember 2009).

Apogeo Consulting Sim Spa

Net profit amounted to 46,831 at 31 December 2010 (loss of 681,636 at 31 Decem- ber 2009).

Az International Holdings Sa

The company was founded on 15 December 2010 and was not yet operative on 31 December 2010.

Significant events Apogeo Consulting Sim Spa during the period Azimut Group and Cattolica Assicurazioni reached an agreement in February for the acquisition of 100% of Apogeo Consulting Sim capital, wholly owned by Cattol- ica Assicurazioni Group. On 7 July 2010, after gaining authorisation from the Bank of Italy, Azimut Holding acquired 100% of Apogeo Consulting Sim from Cattolica Assicurazioni for roughly 3.2 million in cash.

Settlement of Azimut Fiduciaria S.p.A. losses On 10 March 2010, Azimut Fiduciaria Spa’s Board of Directors acknowledged the need to file a request for its sole shareholder Azimut Holding Spa to settle the losses reported in year-end accounts at 31 December 2009 with a payment of 31,742 euro. Azimut Holding settled the amount on 7 May 2010.

Azimut Holding Annual General Shareholders’ Meeting of 29 April 2010 The Shareholders’ Meeting of 29 April 2010 approved the following: 2009 annual report The AGM approved 2009 results which included a Parent Company net profit of 65.5 million euro. The Meeting also approved: • a pre-tax dividend of 0.05 euro per share; • with bonus share issue of 1 ordinary Azimut Holding Spa share per 60 ordinary shares held. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 120 G r u p p o A z i m u t The Shareholders’ Meeting also approved the payment of 1.2 million euro, or 1% of consolidated pre-tax profit, to the charitable organisation Fondazione Azimut.

Proposal for purchase and allocation of treasury shares Shareholders authorised the purchase, pursuant to current regulations, of up to a maximum of 28,000,000 ordinary Azimut Holding shares, or 19.55% of current share capital in one or more instalments over an 18-month period. The shares must be purchased for an amount no lower than the implied book value of Azimut Hold- ing shares and a maximum unit price of no more than 20 euro subject to revocation, for the period yet to elapse, of authorisation granted at the Annual General Share- holders’ Meeting of 29 April 2009. The Shareholders also resolved to free up the shares purchased on the back of the aforementioned resolution either for sale on the market or in execution of any stock option plans, or for use in the execution of the AZ Investimenti Sim Spa growth plans already approved at the Shareholders Meetings of 24 April 2009, 23 April 2008 and 29 April 2009. Shares are also to be made available in the event that, once certain conditions have been met, warrants are exercised by the holders of non-convertible subordinated bonds, the issue of which was approved by the Board of Directors on 8 April 2009, as well as for the bonus issue authorised by the Shareholder’s Meet- ing.

Azimut Holding Extraordinary Shareholders’ Meeting of 29 April 2010 Shareholders approved the amendments to the by-laws required to issue financial instruments to financial advisors, employees and managers of the Azimut Group identified by the Board of Directors as “top key people”. Recipients will therefore be awarded the right to part of year-end earnings based on the group’s consolidated net profit, upon the condition that: 1 . The Shareholders’ Meeting approves a dividend for the year in question; 2. Consolidated profit for the year (net of any capital gains on the disposal of equity WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 121 Report on the company’s financial condition and operating performance

investments and tangible or intangible assets) amounts to over 88.3 million euro; 3. In the year in question, the recipient possesses all the prerequisites of “top key people”, as identified by the Board of Directors by 31 May of the same year in relation to each category of beneficiaries (financial advisors, employees and managers).

Azimut Holding Board of Directors’ Meeting of 29 April 2010 In order to complete the governance of the Group, following the decisions of the Shareholders’ Meeting of the same date, the Parent Company Board of Directors renewed the executive committee, the internal audit committee and remuneration committee for the years 2010-2012. The same meeting also renewed the contracts of the Chief Executive Officer, Co-Chief Executive Office and Managing Director.

Redemption of 2009-2016 subordinated bond (“Azimut 2009 - 2016 subordinato 4%”) The Azimut Holding S.p.A. Board of Directors resolved to make an advance partial redemption of the “Azimut 2009 - 2016 subordinato 4%” Bonds on 24 June 2010, as established by article 9 of the Bond Terms. The said article awards the Azimut Holding Board the right to make an advance partial redemption as of 1 July 2010 (inclusive) and for each subsequent year that the Bond is valid, on the interest payment date (as established by the Bond Terms), amounting to no more than 20% of the par value of the Subordinated Bonds each year. In the event that in any given year the Board of Directors authorises the redemption of less than the limit of 20%, the residual part of the Subordinated Bond not subject to early redemption that year may be added to the 20% of the par value of the Sub- ordinated Bonds in subsequent years. On 1 July 2010, Azimut Holding Spa made an advance partial redemption of the 2009-2016 subordinated bond (“Azimut 2009 - 2016 subordinato 4%”) totalling 17.7 million euro, or 20% of the par value.

AZ Investimenti Sim Spa growth plan On 19 July 210, as agreed by the parties on 8 July 2010 and in amendment of the previous agreements, Azimut Holding Spa settled the payable amount of 27.8 million euro included in the equity swap contracts for the 2007-2009 AZ Investimenti Sim Spa growth plan which expired on 30 June 2010. The eligible parties received a total of 18.4 million euro and were allocated 1,372,218 Azimut Holding Spa shares. The agreements were amended in light of the fact that some of the recipients of the payable amount expressed a desire to sell some of their shares. In light of this, in order to prevent a sale on the market and potential alterations and instability in the normal performance of the stock, the original agreements were amended to include the possibility of a cash payment. In reference to the 2008-2010 and 2009-2011 AZ Investimenti growth plans approved respectively at the Shareholders’ Meetings of 23 April 2008 and 29 April 2009, no Equity Swap contracts were entered into.

2001-2016 bond (“Azimut 2011-2016 - Senior 2.5%”) On 14 October 2010, the Azimut Holding Spa Board of Directors approved the issue of a bond with a duration of 5 years from the issue of the first tranche and fixed WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 122 G r u p p o A z i m u t coupon rate of 2.5% with a total par value of 200 million euro. The issuer will buy back the bonds at any time at a guaranteed price set in the offer document. Azimut Holding obtained Consob authorisation for the placement on 29 December 2010.

AZ International Holdings Sa On 15 December 2010, AZ International Holdings Sa was founded and established under Luxembourg law, and is wholly owned by Azimut Holding Spa. The purpose of the company is to acquire equity stakes in the companies created by Azimut Group as required with a view to further overseas expansion.

Notice of Assessment to Azimut Holding Spa as the consolidating entity for national tax consolidation purposes. On 20 December 2010, the Company, as consolidating entity for the purposes of National Tax Consolidation, received a notice of assessment on “theoretical” regional tax (IRES) amounting to 1.3 million euro in the tax return filed by Azimut Consulenza Sim Spa for the tax year 2005, observations on which mainly referred to transfer pricing.

Key risks Azimut holding spa and group: key risks For the purpose of risk monitoring, the Group has identified the main risks as follows: and uncertainties

Strategic risk Strategic risk is defined as a current or potential risk of a reduction in earnings or capital as a result of changes in operations or of incorrect, inadequate decision- making and failure to respond to the competitive scenario, This risk depends firstly on the earnings profile generated by the sale of services and products by financial advisors, by the management of Funds and by incorrect or imprudent evaluation of market trends in terms of clients and products to be distributed. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 123 Report on the company’s financial condition and operating performance

Sales activity is monitored through reports on the sales performance by geographic area and by financial products sold. Financial advisors and their respective Area Del- egates/Area Managers (financial advisors responsible for coordinating specific areas of the country) also meet regularly to keep track of the market situation and take the relevant steps to preserve the competitiveness of each geographic area. Finally, market research and analysis by the research and marketing department is used to compare results to those of Azimut’s competitors and monitor the performance of funds. Regular reports on results achieved, and particularly on the financial condition of the Group, are fundamental to monitoring the outcome of strategic decisions taken by the company’s Board of Directors and Internal Audit Committee, thus enabling them to identify any corrective measures to be taken.

Sales network risks The Group’s investment firms (Sim - società d’intermediazione mobiliare) mainly recruit financial advisors with years of experience in the field, gained while working for rival companies or in bank retail services. The process of recruiting individual advisors is strict and involves both local branches and the marketing departments of the subsidiary investment firms. Moreover, in addition to past experience, qualifications and references gained on the market are also considered. In Azimut Consulenza Sim’s case, its horizontal structure requires that financial advisors are able to perform their jobs autonomously: by focusing on this aspect during recruitment, the company tends to avoid choosing inexperienced candidates. As regards AZ Investimenti Sim and Apogeo Consulting Sim, their pyramid structures are organised to allow area managers to constantly monitor the individual advisors’ ability to manage their client portfolios. What’s more, in the cases of Azimut Consulenza Sim Spa, AZ Investimenti Sim Spa and Apogeo Consulting Sim Spa, in order to limit the risks arising from any fraudu- lent action by financial advisors while performing their activities, purposely created insurance policies have been taken out against loyalty risks and professional liability insurance for the financial advisors themselves (with the maximum annual claims deemed adequate for the said advisors to operate). Finally, the marketing departments of each company work closely with the Internal Audit department to share the information required to monitor the conduct of individual financial advisors.

Operational risk Operational risk is related to potential losses due to inadequate or defective aspects of procedure, human resources, internal processes, or external events. As well as being generally evaluated in quantitative terms, monitored and mitigated in accordance with current regulations, this risk is also subject to qualitative assessment for the individual Group companies. Therefore, the Group uses a process to identify and evaluate the operational risks based on Risk Self Assessment methods, which take account of the frequency and severity of identified risk factors. This procedure allows the companies to establish appropriate control and monitoring techniques, i.e. measures to limit the negative effects of any adverse conditions to which the Group is exposed. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 124 G r u p p o A z i m u t Given the presence of this type of risk, the Group has established the following measures to monitor and limit the effects: • “mapping” of main company processes, by means of an analysis of existing procedure and interviews with the heads of the various departments; • identification of risks within the “mapped” procedures; • evaluation of control measures (primary or secondary level) in respect of risk areas, highlighting any unmonitored situations; • definition and implementation of a reporting system via the Internal Audit and Risk Management Committees, in order to report the final results on the unmonitored risks and any action taken.

Reputational risk Reputational risk originates from risk factors such as compliance, strategy, outsourcing and other specific variables such as the public scenario, significance of the trademark and company image, exposure to external communication processes. In order to limit this type of risk, a series of procedures has been put in place aimed at mini- mising both their cause and effect, the most important aspects being: • complaints received by Group companies are monitored constantly, so as to analyse any problems caused by strategic decisions and operating errors and the effects that these may have on the company’s reputation; • a record of corporate risks of all subsidiary companies is constantly updated, in order to identify which departments, procedures and activities are most subject to reputational risks; • the Internal Audit and Risk Management Committee, where the presence of managers allows for top-down management of action to be taken to limit reputational risks or respond to any events caused by them; • the Marketing and Investor Relations departments, centralised at Group level, have sole responsibility for dealing with public relations/external communications and the company’s image; • an Internal Code of Conduct governs the treatment of any action that gives rise to WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 125 Report on the company’s financial condition and operating performance

conflicts of interest, cases of insider trading or market abuse and any penalties as a result of failure to comply with regulations. With the introduction of regulations for the treatment of privileged information pursuant to art. 115-b of Legislative Decree 58/98 (TUF - Financial Services Act), Azi- mut Holding Spa established a Register for itself and on the behalf of its subsidiaries, by creating a database with the technical/operating features required to guarantee that logical and physical security requirements are met, records cannot be changed and that information is easily accessible.

Compliance risk Compliance risk is related to legal and administrative sanctions, significant financial losses or damage to reputation as a result of non-compliance with laws and regulations or internal procedures (e.g. by-laws, codes of conduct, corporate governance codes). Given that all levels of the company are exposed to this risk, limiting its effects mainly involves ensuring that personnel take adequate responsibility in the performance of their work by complying with the internal code of conduct, code of ethics and procedure manual. The Compliance Committee, within Azimut Consulenza Sim Spa, ensures that internal procedures are in line with the objective to prevent any breaches of current regulation or internal standards. In more detail, the compliance committee: • proposes any organisational and procedural changes to ensure adequate protection against any identified risks of non-compliance; • supplies a report to all the relevant bodies, including the Italian Securities and Ex- change Commission (pursuant to Legislative Decree 231/2001), the Board of Statu- tory Auditors and the Internal Audit and Risk Management Committee. • controls the efficiency of organisational adaptations (structures, processes, procedures); • constantly monitors any changes to regulations governing the investment service sector, and circulates the relevant information to all parties concerned.

Liquidity risk Liquidity risk arises when the company is unable to gain access under reasonable economic conditions to the financial resources required to ensure its efficiency. The main factors that determine liquidity levels are the resources provided from or used by administrative and investment activities, as well as loan expiry and renewal or liquidity of investments and market conditions. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 126 G r u p p o A z i m u t The company has adopted a set of policies and procedures aimed at streamlining the management of financial resources, reducing this risk by means of: • cash flow management and payment based on Group-wide policy; • maintaining an adequate level of liquidity available thanks to constant cash flow generation; • monitoring prospective liquidity conditions during planning procedure.

Key uncertainties

For information on relationships with group companies, please see Part D, Section Intra-group relationships 4.6 of the Notes on related party transactions.

In 2010, marketing, communication and training activity was focused on providing Marketing activity sales support to financial advisers and strengthening the distinct identity of the various Group networks. Financial education continued with, among other things, the creation of a blog and an IPAD application. During the year, Wealth Management activity was intensified and ad hoc instruments, including an advertising campaign, created for the launch of the new Apogeo Consulting Sim network. Particular atten- tion was paid to training schemes for financial partners by means of courses dedicated to both product-related issues and to relating and negotiating skills.

In 2010, the Group once again continued to develop its relations with institutional Investor relations investors, which account for the majority of the shareholder structure. Following approval of results and periodic reports, the company organised conference calls followed by numerous road-shows on the main European markets and in the U.S.. The Azimut Holding stock is currently covered by the analysts of thirteen Italian and WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 127 Report on the company’s financial condition and operating performance

foreign investment firms. During the year, the share price moved from 9.226 euro on 30 December 2009 to 6.78 euro on 30 December 2010.

Azimut Holding Share Price in 2010 Source: Bloomberg - reference prices

Organisational structure Azimut Holding Spa complies with corporate governance regulations in force in and corporate governance Italy. Moreover, the corporate governance structure partially reflects the recommen- dations contained in the Code of Conduct. For more information on the subject, please refer to the attached report on corporate governance and ownership prepared pursuant to article 123-b of the Financial Services Act. Azimut has established a risk management and internal audit procedure for financial reporting, using as a reference the “COSO Report”, according to which the Internal Control in the broadest sense is “a process effected by an entity’s Board of Directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives”; specifically, the objective of reliable financial reporting.

Outsourcing During the year 2008, Azimut Group began outsourcing its IT and operating services to the companies Asset Management Service Spa and AMS Back Office Srl, respectively. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 128 G r u p p o A z i m u t Among other things, the two 5-year outsourcing contracts establish the guidelines for the activity (particularly in terms of outsourcing targets, in relation to the overall company strategy and the qualitative/quantitative standards expected of the process, i.e. service level agreements), the penalties and limits of the awarded mandates.

Human resources At 31 December 2010, Company personnel amounted to 17, broken down as follows:

Position 31/12/2010 31/12/2009 Directors 6 6 Middle managers 7 6 Office staff 4 4 Total 17 16

The company is not engaged in any research and development activities. Research and development activities

The company has not set up any regional offices in Italy, nor is it engaged in any Regional and branch activity through branch offices. offices

As at 31 December 2010 Azimut Holding Spa subsidiary companies did not hold nor Treasury shares did they hold during the year any treasury shares or shares of the Parent Company, either directly or via trust companies or third parties. On 27 May 2010, Azimut Holding Spa launched a bonus issue of 1 ordinary Azimut Holding Spa for every 60 ordinary shares held, totalling 2,182,252 shares;. On 19 July 210, as agreed by the parties on 8 July 2010 and in amendment of the previous agreements, Azimut Holding Spa settled the payable amount totalling 27.8 million euro included in the equity swap contracts for the 2007-2009 AZ Investi- menti Sim Spa growth plan which expired on 30 June 2010, with the payment of 18.4 million euro and allocation of 1,372,218 Azimut Holding Spa shares. During the year, Treasury Shares were the subject of various transactions with an overall increase in the portfolio of 1,545,811 shares for a total of 10.5 million euro. As at 31 December 2010, the Company’s treasury share portfolio was therefore composed of 10,263,040 shares, or 7.164% of share capital. In regards to activity after 31 December 2010 and up to the reporting date, 1,590,715 treasury shares have been acquired for a total of 11.6 million euro.

In light of the positive results of the subsidiaries during 2010 and on the back of the Business outlook dividends proposed by the Boards of Directors of the said companies at the respective Shareholders’ Meetings, the Company is expected to generate a profit this year. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 129 Report on the company’s financial condition and operating performance

Profit allocation plan Dear Shareholders, we hereby submit for your approval the financial statements as at 31 December 2010 including the notes to the accounts, as submitted by the Board of Directors. The financial statements show a year-end profit of euro 77,587,320, which we propose to allocate as follows: • 1,102,360 euro, or 1% of pre-tax consolidated profit, to be paid to the charitable organisation Fondazione Azimut pursuant to article 32 of the by-laws. • a pre-tax ordinary dividend of 0.25 euro to be allocated to the Shareholders for each of the shares comprising the company’s share capital of 32,324,092 euro, excluding any treasury shares held on the day preceding the ex-dividend date, the ordinary dividend at 0.10 euro and an extra dividend of 0.15 euro; • the remainder to be allocated to “Other Reserves”. We propose to pay the dividend and award treasury shares as of 26 May 2010 and set 23 May 2010 as the ex-dividend date. We also propose that the entire share capital transaction reserve amounting to 10,792,214 be reported under “ Other Reserves”

Milano, 10 March 2011

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 130 G r u p p o A z i m u t WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 131 Equity investments of members of the Board of Directors, Managing Directors and key management personnel, in accordance with art. 79 and annex 3C of Consob Regulation 11971/99

Name Invested Company Ownership Type of N° of shares held N° of shares N° of share N° of share held at ownership at previous year-end purchased in 2010 sold in 2010 year-end (31/12/2009) (31/12/2010) Baldin Alessandro Azimut Holding Spa Indirect - in trust Owned 101,826 1,697 - 103,523 Belotti Pietro (*) Azimut Holding Spa Indirect - in trust Owned 544,423 46,387 - 590,810 Boldori Attilio (*) Azimut Holding Spa Indirect - in trust Owned 63,968 1,066 - 65,034 Capeccia Alessandro Azimut Holding Spa Indirect - in trust Owned 289,484 4,824 39,300 255,008 Casella Guido (*) Azimut Holding Spa Indirect - in trust Owned 570,359 9,505 77,722 502,142 Giacani Giancarlo Azimut Holding Spa Indirect - in trust Owned 128,708 2,145 - 130,853 Giuliani Pietro Azimut Holding Spa Indirect - in trust Owned 1,885,005 127,922 - 2,012,927 Malcontenti Marco Azimut Holding Spa Indirect - in trust Owned 243,038 177,915 - 420,953 Miele Maurizio Azimut Holding Spa Indirect - in trust Owned 100,982 1,683 - 102,665 Missora Stefano Azimut Holding Spa Indirect - in trust Owned 1,150,979 63,106 - 1,214,085 Mungo Paola Azimut Holding Spa Indirect - in trust Owned 26,863 209,793 - 236,656 Stievano Romano (*) Azimut Holding Spa Indirect - in trust Owned 123,127 2,052 - 125,179

(*) position held until 28/04/2010 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 132 G r u p p o A z i m u t Name Invested Company Ownership Type of N° of shares held N° of shares N° of share N° of share held at ownership at previous year-end purchased in 2010 sold in 2010 year-end (31/12/2009) (31/12/2010) Baldin Alessandro Azimut Holding Spa Indirect - in trust Owned 101,826 1,697 - 103,523 Belotti Pietro (*) Azimut Holding Spa Indirect - in trust Owned 544,423 46,387 - 590,810 Boldori Attilio (*) Azimut Holding Spa Indirect - in trust Owned 63,968 1,066 - 65,034 Capeccia Alessandro Azimut Holding Spa Indirect - in trust Owned 289,484 4,824 39,300 255,008 Casella Guido (*) Azimut Holding Spa Indirect - in trust Owned 570,359 9,505 77,722 502,142 Giacani Giancarlo Azimut Holding Spa Indirect - in trust Owned 128,708 2,145 - 130,853 Giuliani Pietro Azimut Holding Spa Indirect - in trust Owned 1,885,005 127,922 - 2,012,927 Malcontenti Marco Azimut Holding Spa Indirect - in trust Owned 243,038 177,915 - 420,953 Miele Maurizio Azimut Holding Spa Indirect - in trust Owned 100,982 1,683 - 102,665 Missora Stefano Azimut Holding Spa Indirect - in trust Owned 1,150,979 63,106 - 1,214,085 Mungo Paola Azimut Holding Spa Indirect - in trust Owned 26,863 209,793 - 236,656 Stievano Romano (*) Azimut Holding Spa Indirect - in trust Owned 123,127 2,052 - 125,179

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 133 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 134 G r u p p o A z i m u t Azimut Holding Spa Financial statements at 31 December 2010 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 135 Balance sheet at 31 December 2010 Assets

Assets 31/12/10 31/12/09 10. Cash and cash equivalents 3,301 1,858 40. Available for sale financial assets 645,009 250,009 60. Receivables 85,830,551 68,031,327 90. Equity investments 263,002,403 259,213,037 100. Tangible assets 127,206 231,249 110. Intangible assets 185,296,055 185,232,522 120. Tax assets 23,470,909 24,851,837 a) current 8,100,753 8,029,343 b) deferred 15,370,156 16,822,494 140. Other assets 14,124,637 13,296,654 Total assets 572,500,071 551,108,493

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 136 G r u p p o A z i m u t Balance sheet at 31 December 2010 Liabilities and shareholders’ equity

Liabilities and shareholders’ equity 31/12/10 31/12/09 10. Payables 103,086,889 106,166,109 20. Outstanding securities 68,208,137 84,488,968 70. Tax liabilities 35,334,163 31,987,600 a) current 329.553 - b) deferred 35,004,610 31,987,600 90. Other liabilities 5,390,221 8,796,095 100. Staff severance pay 567,366 498,714 120. Share capital 32,324,092 32,324,092 130. Treasury shares (-) (85,944,949) (100,975,986) 140. Equity instruments 3,461,611 3,461,611 150. Share premium reserve 173,986,915 173,986,915 160. Valuation reserves 158,498,306 144,788,081 180. Profit (loss) for the year 77,587,320 65,586,294 Total liabilities and shareholders’ equity 572.500,071 551,108,49

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 137 Profit and loss account at 31 December 2010

2010 2009 10. Interest income and similar income 780,078 125,978 20. Interest expenses and similar charges (5,932,912) (6,848,372) Net interest income (5’152,834) (6,722,394) 30. Fee and commission income 2,000,000 1,500,000 Net fee and commission income 2,000,000 1,500,000 50. Dividends and similar income 89,618,375 78,036,362 90. Gains/losses on disposal of: (1,071,693) 379,396 a) Financial assets 0 379,396 b) Financial liabilities (1,071,693) 0 Total income 85,393,848 73,193,364 110. Administrative costs (8,045,123) (9,182,708) (a) personnel costs (4,614,260) (5,277,433) (b) other administrative costs (3,430,864) (3,905,275) 120. Impairment of tangible assets (138,952) (121,655) 130. Impairment of intangible assets (80,417) (223,858) 160. Other operating income and costs 1,519,929 1,312,087 Operating profit 78,649,285 64,977,230 170. Profit (loss) from equity investments (31,742) (340,360) Pre-tax profit (loss) from continuing operations 78,617,543 64,636,870 190. Income tax on profit from continuing operations (1,030,223) 949,424 Net profit (loss) from continuing operations 77,587,320 65,586,294 Net profit (loss) 77,587,320 65,586,294

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 138 G r u p p o A z i m u t Statement of comprehensive income

Items 2010 2009 10. Profit (loss) for the year 77,587,320 65,586,294 20. Available for sale financial assets 30. Tangible assets 40. Intangible assets 50. Foreign investment hedge 60. Cash flow hedge 70. Foreign exchange differences 80. Non-current assets held for sale 90. Actuarial gains (losses) on defined benefit plans 100. Share of valuation reserves of equity accounted investments 110. Other comprehensive net income 120. Comprehensive income (Items 10+110) 77,587,320 65,586,294

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 139 Cash flow statement

Indirect method Amount 2010 2009 A. Operating activites 1. Operations 78,069,756 64,221,747 profit for the year (+/-) 77,587,320 65,586,294 gains/losses on financial assets/liabilities held for trading and financial assets/liabilities designated at fair value through P&L (-/+) 0 0 gains/losses on hedging activities (-/+) 0 0 net impairment loss (+/-) 0 0 depreciation and impairment of fixed tangible and intangible assets (+/-) 219,369 345,513 net provisions for liabilities and charges and other expenses/income (+/-) 0 0 tax and duties (111,541) (949,424) net impairment and depreciation of disposal groups held for sale net of tax (+/-) 0 0 other changes (+/-) 374,608 (760,636) 2. Cash provided from or used by financial assets 4,360,949 (8,825,342) financial assets held for trading 0 0 financial assets designated at fair value 0 0 financial assets available for sale 0 0 due from banks 679,453 (679,653) due from financial institutions 0 104,134 due from clients 0 3,337 other assets 3,681,496 (8,253,160) 3. Cash provided from or used by financial liabilities (22,742,328) (27,458,384) due to banks (3,100,000) (113,100,000) due to financial institutions 0 0 due to clients 0 0 outstanding securities (16,634,659) 82,719,828 financial liabilities held for trading 0 0 financial liabilities designated at fair value 0 0 technical reserves (3,007,669) 2,921,788 Cash provided from or used by operating activities 59,688,377 27,938,020

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 140 G r u p p o A z i m u t Amount 2010 2009 B. Investing activities 1. Cash provided from: 0 866,085 disposal of equity investments 0 866,085 dividends on equity investments 0 0 disposal of financial assets held to maturity 0 0 disposal of tangible assets 0 0 disposal of intangible assets 0 0 disposal of subsidiaries and businesses 0 0 2. Cash used by: (4,363,225) (202,891) purchase of equity investments (4,184,366) (49,803) purchase of financial assets held to maturity 0 0 purchase of tangible assets (34,909) (22,729) purchase of intangible assets (143,950) (130,359) purchase of subsidiaries and businesses 0 0 Cash provided from or used by investing activities (4,363,225) 663,194 C. Financing activities issue/purchase of treasury shares (10,497,021) 6,935,792 change in other reserves (18,565,249) issue/purchase of equity instruments 0 3,461,611 dividends and other distributions (7,782,762) (13,049,927) Cash provided from or used by financing activities (36,845,032) (2,652,524) Net cash provided or used during the year 18,480,120 25,948,690

Reconciliation Opening cash and cash equivalents 67,353,513 41,404,823 Net cash provided /used during the year 18,480,120 25,948,690 Closing cash and cash equivalents 85,833,633 67,353,513

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 141 Statement of changes in shareholders’ equity for the year ended 31 December 2010

Allocation of retained earnings Changes during the year Shareholders’ equity transactions Items Balance Change in Balance Reserves Dividends Changes Issue of Treasury Extraordinary Changes in Other Comprehensive Shareholders’ at 31/12/09 opening at 01/01/10 and other in reserves new shares share purchases dividends equity changes income equity balance distributions payments instruments at 31/12/10 at 31/12/10 Share capital 32,324,092 32,324,092 32,324,092 Share premium reserve 173,986,915 173,986,915 173,986,915 Other reserves: a) earnings 133,995,867 133,995,867 41,910,227 (28,200,002) 147,706,092 b) other 10,792,214 10,792,214 10,792,214 Equity instruments 3,461,611 3,461,611 3,461,611 Treasury shares (100,975,986) (100,975,986) 15,893,305 (10,497,021) 9,634,753 (85,944,949) Retained earnings - Profit (loss) for the year 65,586,294 65,586,294 (41,910,227) (23,676,067) 77,587,320 77,587,320

Shareholders’ equity 319,171,007 319,171,007 - (17,782,762) (10,497,021) (18,565,249) 77,587,320 359,913,295 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 142 G r u p p o A z i m u t Allocation of retained earnings Changes during the year Shareholders’ equity transactions Items Balance Change in Balance Reserves Dividends Changes Issue of Treasury Extraordinary Changes in Other Comprehensive Shareholders’ at 31/12/09 opening at 01/01/10 and other in reserves new shares share purchases dividends equity changes income equity balance distributions payments instruments at 31/12/10 at 31/12/10 Share capital 32,324,092 32,324,092 32,324,092 Share premium reserve 173,986,915 173,986,915 173,986,915 Other reserves: a) earnings 133,995,867 133,995,867 41,910,227 (28,200,002) 147,706,092 b) other 10,792,214 10,792,214 10,792,214 Equity instruments 3,461,611 3,461,611 3,461,611 Treasury shares (100,975,986) (100,975,986) 15,893,305 (10,497,021) 9,634,753 (85,944,949) Retained earnings - Profit (loss) for the year 65,586,294 65,586,294 (41,910,227) (23,676,067) 77,587,320 77,587,320

Shareholders’ equity 319,171,007 319,171,007 - (17,782,762) (10,497,021) (18,565,249) 77,587,320 359,913,295

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 143 Statement of changes in shareholders’ equity for the year ended 31 December 2009

Allocation of retained earnings Changes during the year Shareholders’ equity transactions Items Balance Change in Balance Reserves Dividends Changes Issue of Treasury Extraordinary Changes in Other Comprehensive Shareholders’ at 31/12/08 opening at 01/01/09 and other in reserves new shares share purchases dividends equity changes income equity balance distributions payments instruments at 31/12/09 at 31/12/09 Share capital 32,223,678 32,223,678 100,414 32,324,092 Share premium reserve 173,250,701 173,250,701 736,214 173,986,915 Other reserves: a) earnings 66,637,265 66,637,265 66,929,832 428,770 133,995,867 b) other 10,792,214 10,792,214 10,792,214 Equity instruments 3,461,611 3,461,611 Treasury shares (107,075,150) (107,075,150) 6,099,164 (100,975,986) Retained earnings - Profit (loss) for the year 79,979,759 79,979,759 (66,929,832) (13,049,927) 65,586,294 65,586,294

Shareholders’ equity 255,808,467 255,808,467 - (13,049,927) 428,770 836,628 3,461,611 6,099,164 65,586,294 319,171,007 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 144 G r u p p o A z i m u t Allocation of retained earnings Changes during the year Shareholders’ equity transactions Items Balance Change in Balance Reserves Dividends Changes Issue of Treasury Extraordinary Changes in Other Comprehensive Shareholders’ at 31/12/08 opening at 01/01/09 and other in reserves new shares share purchases dividends equity changes income equity balance distributions payments instruments at 31/12/09 at 31/12/09 Share capital 32,223,678 32,223,678 100,414 32,324,092 Share premium reserve 173,250,701 173,250,701 736,214 173,986,915 Other reserves: a) earnings 66,637,265 66,637,265 66,929,832 428,770 133,995,867 b) other 10,792,214 10,792,214 10,792,214 Equity instruments 3,461,611 3,461,611 Treasury shares (107,075,150) (107,075,150) 6,099,164 (100,975,986) Retained earnings - Profit (loss) for the year 79,979,759 79,979,759 (66,929,832) (13,049,927) 65,586,294 65,586,294

Shareholders’ equity 255,808,467 255,808,467 - (13,049,927) 428,770 836,628 3,461,611 6,099,164 65,586,294 319,171,007

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 145 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 146 G r u p p o A z i m u t Azimut Holding Spa Notes to the accounts at 31 December 2010 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 147 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 148 G r u p p o A z i m u t Notes to the accounts

Part A - Accounting policies

A.1 General information

The financial statements comply with the International Accounting Standards Section 1 (IAS)/International Financial Reporting Standards (IFRS) endorsed by the Euro- Statement of compliance pean Commission, pursuant to Regulation (EC) No. 1606/2002 issued by the Eu- with IAS/IFRS ropean Parliament and Council and effective at the date the consolidated financial statements are approved, as well as with every relevant applicable interpretation, and the provisions issued to implement Article 9 of Legislative Decree no. 38/2005.

The financial statements were drawn up in accordance with the instructions issued Section 2 by the Bank of Italy set out in the Regulations dated 16 December 2009, with par- General reporting criteria ticular reference to the statements and information to be provided in the Notes to the financial statements for asset management companies. Circular n° 0146317/11 issued by the Bank of Italy on 17 February 2011 describes the correct methods to be applied by financial intermediaries for the reporting and classification of some transactions in their accounts; these replace the previous instructions stipulated by the Bank of Italy Regulation dated 16 December 2009. For comparison purposes, 2009 figures have been reclassified accordingly and/or reported in accordance with the instructions contained in the circular. The financial statements comprise the Balance Sheet, the Profit and Loss Account, the Statement of comprehensive income, the Cash Flow Statement (prepared using the indirect method), the Statement of changes in shareholders’ equity and the Notes to the accounts.

The notes to the accounts are composed of: Part A - Accounting policies Part B - Notes to the Balance Sheet Part C - Notes to the Profit and Loss Account Part D - Other information

to the accounts: • list of equity investments in group companies, annex A; • list of significant equity investments, pursuant to Article 125 of Consob (Italian Securi- ties and Exchange Commission) Regulation No. 11971/99 as amended, annex B; • statement of fees paid to Directors and Auditors, managing directors and key management personnel, annex C.

The following annexes are included in and represent an integral part of these notes The financial statements are denominated in Euro. These financial statements have been prepared based on the going concern assumption. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 149 Notes to the accounts

Financial, operating and other indicators1 have been considered which, as also shown in the document issued on 6 February 2009 by the supervisory authorities Bank of Italy, Consob and ISVAP, may highlight problems that could compromise the stability and continuity of the company if not taken into proper consideration. An overall valuation of the past and current financial condition of the Company, its operating guidelines, group business model and the risks to which business activity is exposed2, which reveals no abnormalities, leads us to believe that there is no doubt that the Company can continue to operate successfully for the foreseeable future. The financial statements are a true and accurate representation of the company’s financial condition, net profit and cash flows. Transactions and other events have been described in detail and not solely in their legal form. The financial statements have been prepared according to the accrual accounting method, as well as based on the going concern assumption. Assets and liabilities, costs and income have not been offset against each other unless required or permitted by principle or interpretation, or by Instructions issued by the Bank of Italy.

Accounting standards and interpretations applied as of 1 January 2010 with no impact on the Company After gaining European Union approval, the new IFRS as well as amendments to the existing standards and new IFRIC interpretations came into force as of 1 January 2010, but had no impact on the company on the reporting date of the accounts. The changes are as follows: Amendments to IAS 27 - Consolidated and separate financial statements Amendments to IFRS 5 - Non-current assets held for sale and discontinued operations IFRS 1 (Restructured in 2008) - First-time adoption of international financial reporting standards IFRS 3- (Revised in 2008) - Business combinations IFRIC 16 - Hedges of a net investment in a foreign operation IFRIC 17 - Distribution of non-cash assets to owners IFRIC 18 - Transfers of assets from customers Amendments to IAS 28 - Investments in associates and IAS 31 - Interests in joint-ventures, following amendments to IAS 27 Amendments to IAS 39 - Financial instruments: recognition and measurement - Exposures qualifying for hedge accounting Amendments to IFRS 2 - Share-based payment - Group cash-settled share based payment transactions (withdrawal of IFRIC 8 and IFRIC 11) Improvement 2009 IAS/IFRS

Section 3 Agreements were signed on 10 January 2011 for the creation of a newco in Hong Significant events after Kong which will directly control the operating companies for the promotion, man- the reporting date agement and distribution of asset management products on Asian markets. The de-

1 Examples of which are shown in ISA 200, Document n° 570 on “Going Concerns” 2 As described in the Management Report WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 150 G r u p p o A z i m u t velopment of this area will take place in joint venture with local partners and marks the first step towards further penetration of other markets in the region. The investment in the newco is held by AZ International Holdings Sa, which will acquire stakes in the companies founded by the Group outside the Italian market as required. On 26 January 2011, the newco An Zhong (AZ) Investment Management Limited was created and is 65% owned by AZ International Holdings Sa and 35% by CMT Holdings Limited and on 9 February 2011 the newly created An Zhong (AZ) Invest- ment Management Limited acquired 100% of the share capital of An Zhong (AZ) Investment Management Hong Kong Limited, an asset management company currently awaiting authorisation from the competent authorities. On 15 February 2011, Azimut Group and Banca Tercas signed a binding letter of intent for a collaboration in the asset management sector. Based on this agreement, Azimut will be the reference partner of the entire Banca Tercas Group for investment products such as mutual funds and discretionary accounts. By the end of March 2011 Tercas Lux, the Luxembourg SICAV of the Tercas Group, will be merged into the Luxembourg umbrella fund AZFUND1. Meanwhile, as a long term investment, Azimut Holding Spa will buy 2% of the share capital of Banca Caripe Spa, controlled by Banca Tercas following the recent acquisition. The value of the deal, to be settled in cash, is roughly 5 million euro. The financial statements were authorised for publication by the Board of Directors on 10 March 2011.

Use of estimates Section 4 The financial statements have been prepared using estimates and assumptions which Other information have an effect on the income, costs, assets and liabilities in the balance sheet and corresponding notes. These estimates and assumptions, based on the best possible measurement by management, are revised periodically and the effects of any changes have a direct impact on the profit and loss account. There is no other relevant information to be disclosed for reporting purposes.

A.1 Key balance sheet items

This section describes the main accounting principles and valuation criteria adopted for the preparation of the financial statements. The said principles and criteria have been applied consistently throughout the years presented.

Available-for-sale financial assets Financial assets held by Group companies are classified in this category in the context of their individual liquidity management policies. This category also includes the assets which do not qualify as subsidiaries, associates or joint- ventures. Upon initial recognition, available-for-sale financial assets are reported in the balance sheet at their fair value, corresponding to the consideration paid for their purchase, plus any transaction costs in the event that they are tangible and definable. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 151 Notes to the accounts

Available-for-sale assets are subsequently charged at their fair value, reporting any capital gains or capital losses in the specific shareholders’ equity reserve until the financial asset is disposed of or any long-term impairment has been established. The gain or loss generated is charged to the profit and loss account at the date of disposal or at the date the foregoing impairment is established. The fair value of the available-for-sale assets is established based on the prices reported on the respective markets on the last day of trading in the reference period. Assets which do not qualify as subsidiaries, associates or joint-ventures, are not listed on active markets and for which the fair value cannot be measured reliably, are valued at cost. At the end of each year, impairment tests are carried out to establish which financial assets are to be derecognised. Valuations are performed for each individual financial instrument, considering the impairment effects in accordance with IAS 39. Financial assets are removed from the balance sheet when the contractual rights to the cash flows generated by the assets in question expire or when the asset is sold and all the risks and benefits of ownership have been transferred. When testing for any reduction in the fair value as compared to the amount at which the asset was initially reported (impairment), the Company employs a specific policy that establishes the limits to the loss of value in absolute terms (severity) and in terms of the extent of the loss (durability), both ordered according to the type of financial instrument. In more detail, the benchmarks in terms of severity are as follows: 1 .for “debt instruments3”: loss of 20% 2. for “other financial instruments4”: loss of 30%.

Durability is assessed based on a timescale of 18 months for “debt instruments” and 24 months for “other financial instruments”: in more detail, the fair value of each financial instrument is measured to establish if it is consistently lower than the corresponding initial cost over the last 18 or 24 months. For “other financial instruments”, in the event that the benchmarks are reached, the impairment is reported in the Profit and Loss Account, except in exceptional cases. “Debt financial instruments” selected on the basis of having exceeded the relative benchmarks, are subject to further qualitative assessment in order to establish the durability and severity of the losses, so as to confirm or refute any impairment decision.

Receivables Receivables include the amounts due from banks, from financial institutions, from clients and managed funds or all receivables involving fixed payments or in any case payments which are definable and are not listed on an active market. The initial recognition of a given receivable is carried out on the grant date based on the fair

7 Money market instruments, bonds, monetary mutual funds and bond funds. 8 Securities, equity, balanced and flexible funds, private equity and hedge funds WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 152 G r u p p o A z i m u t value of the financial instrument, equal to the amount granted, or the subscription price, including the cost/income directly referable to the individual receivable and determinable from the beginning of the operation even when settled at a later date. Receivables are valued at the presumed realisable value after initial recognition, understood as the best estimate possible of their fair value. Receivables are removed from the balance sheet after payment.

Equity investments include the stakes held in associate companies. Companies are Equity investments classed as associates pursuant to Article 2359 of the Italian Civil Code, i.e. companies in which the Group has at least 20% of voting rights and thus exerts significant influence, but not control, over financial and operating policies. Equity investments classed as fixed assets are valued at acquisition or formation cost, plus any extra costs arising from the acquisition or formation of the stake in question. The cost is reduced to reflect any impairment and reversed in the following financial years if the reasons for the adjustment adopted no longer apply. Any impairment is reported in the profit and loss account; if the reasons for the loss in value no longer apply following an event subsequent to the initial decrease in value, the value is written back and booked in the profit and loss account. Moreover, the cost of equity investments has been increased as a result of the accounting of the stock option plans (refer to the item “Share-based payments), entail- ing the issue/delivery of the Parent Company’s shares to the employees/financial advisors of subsidiary companies. Equity investments are derecognised when the contractual rights to the cash flow generated by the assets in question expire or when the stake is sold and all the risks and benefits related thereto are transferred.

Tangible assets include business properties, plant, furniture and fixtures and ma- Tangible assets chines and equipment of any kind, as well as the cost of renovating any property that is rented and amortised over the remaining duration of the contract (or the remaining useful life, whichever is shorter). Tangible fixed assets are initially reported at cost, including the extra costs directly attributable to the acquisition and start-up of the asset in question. The foregoing assets are subsequently valued at cost, minus any amortisation and depreciation. These assets are amortised on a straight-line basis each financial year in relation to their remaining useful life. The cost of renovating rented property is reported under assets in consideration of the fact that the tenant essentially has control over the assets and may receive economic benefits therefrom. Therefore, they are amortised over a period corresponding to the remaining duration of the lease contract. Tangible assets are eliminated from the balance sheet upon the date of disposal or when the asset has been retired and future benefits are not expected from its disposal. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 153 Notes to the accounts

Intangible assets Intangible assets include goodwill, the “Azimut” trademark (under lease-back) and application software for long-term use. Goodwill refers to the amount paid by Azimut Holding Spa (formerly Tumiza Spa) to purchase the group in 2002 by acquiring the entire share capital of Azimut Hold- ing Spa incorporated in December of the same year and corresponding to the part of merger deficit that, as shown by a survey conducted by the independent company PricewaterhouseCoopers Finance S.r.l., was not allocated as an increase in the value of the investments. Goodwill is not subject to a systematic amortisation process, but to an annual evaluation (impairment test) to verify the adequacy of the book value (recovery), in accordance with IAS 36 Impairment of assets. The amount of the impairment, determined on the basis of the difference between the book value and its salvage value, is reported in the Profit and Loss Account. Please refer to the specific paragraph on “Finance Leasing” as regards the “Azimut” trademark, acquired under finance leasing via a ‘sale and leaseback’ agreement. Intangible assets in the form of software are reported at cost, net of amortisation and impairment. Such assets are amortised based on the estimate of their remaining useful life. Intangible fixed assets are eliminated from the balance sheet at the date of disposal and if no future economic benefits are expected.

Finance Leasing For the purposes of reporting the ‘sale and leaseback’ agreement for the trademark, which can be classified as a finance leasing transaction, reference has been made to the requirements set out in IAS 17 - Leasing. This accounting standard stipulates: • that the leased asset must be entered under assets and the amount payable to the Leasing company reported under liabilities at the fair value of the leased asset; • that the finance leasing instalments are booked along the duration of the contract thus reducing the initial debt reported. The related interest charges are reported in the profit and loss account; • that leased asset amortisation rates must be reported in line with those adopted for owned amortisable assets; • entry of any loss as a result of the impairment of the asset, established in application of IAS 36 Impairment of assets. In the case of the “sale and leaseback” agreement if the consideration for sale is higher than the book value the excess is reported along the duration of the agreement. However, in this specific case, considering the economic motives for the transaction and the related contractual terms and conditions, which include an initial deposit, the transaction involves an advance payment equal to the counter value of the trademark minus the deposit. Consequently, the trademark is reported under assets for the pre-disposal book value and the amount payable for the advance payment, reported initially for the amount as determined above, is gradually reduced as the lease instalments are paid. Since the trademark has an indefinite useful life, it does not undergo amortisation WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 154 G r u p p o A z i m u t but is subject to an annual impairment test, in line with IAS 36 Impairment of assets. The amount of impairment, determined on the basis of the difference between the book value and the salvage value, if lower, is reported in the Profit and Loss Account.

Tax assets and liabilities Income taxes are calculated on the basis of conservative estimates of the taxable income, in accordance with the tax regulations in force and by taking into account the effects generated by the Italian Group companies’ adoption of the tax consolidation regime. Taxes are computed by applying the tax rates in force. Deferred tax assets and liabilities are computed in respect of the timing differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements, applying the tax rates in force in the years in which the aforementioned differences are expected to reverse. Deferred tax assets are recorded when there is reasonable certainty they will be recovered, i.e. to the extent that the company is expected to generate sufficient taxable income in the future to be able to recover the taxes paid. Deferred tax liabilities are recognised even when there is little or remote possibility that a related tax expense will materialise in the future, in accordance with IAS 12. Deferred tax assets for IRES, in line with current and deferred tax assets for IRAP are offset against each other, as assets and liabilities, in accordance with IAS 12.

Other assets This item includes assets which are not ascribable to other balance sheet asset items.

Short-term trade payables (due within 12 months) are reported at their par value. Payables Payables in the form of mid/long-term loans, reported initially at the amount raised, are subsequently reported at amortised cost using the effective interest rate method. The amortised cost corresponds to the initial value reported, since no transaction costs are applicable and since the nominal interest rate of such liabilities is in line with market rates. Payables are removed from the balance sheet after settlement.

As a financial instrument composed of a debt component and an embedded deriva- Outstanding securities tive (on equity instruments), the subordinated bond with warrants issued by Azimut Holding Spa on 1 July 2009 is reported as a financial liability and an equity instrument of Azimut Holding Spa. Upon initial recognition, the fair value of the entire financial instrument is equal to the issue price, while the fair value of the equity component is determined based on the fair value of the bonus warrants assigned to subordinated bondholders at the same time as bonds are issued. The debt component, calculated as the difference between the fair value of the instrument in its entirety and the fair value of the equity component, is reported under the item Outstanding securities, while the aforementioned equity component is reported under the shareholders’ equity item, Equity instruments. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 155 Notes to the accounts

The costs borne by Azimut Holding Spa for the bond issue are allocated proportionally to the debt component and to the component reported under shareholders’ equity. Following initial recognition, the debt component is reported at amortised cost, with interest charges established according to effective interest rates. The equity component is reported under reserves and transferred to retained earnings when warrants are exercised, or reach maturity without being exercised. In the event that warrants are exercised, at the strike price set by the relevant regulation, given that Azimut Holding Spa will issue a set number of treasury shares, the transfer of the treasury share reserve will be offset against the cash-in corresponding to the strike price.

Other liabilities This item includes liabilities which are not ascribable to other items reported under liabilities in the balance sheet. Short-term liabilities (due within 12 months) and trade liabilities are reported at their par value. Other liabilities are eliminated from the balance sheet after settlement.

Staff Severance Pay (TFR) Following the application of Law no. 296 of 27/12/2006 (2007 Budget) and taking account of the methodology published on the Actuarial Society of Italy website, the calculation method was changed for staff severance pay liabilities which, in accordance with IAS 19, are treated as benefits and are accounted for based on the actuarial value established using the projected unit credit method. This amendment entails that the projected unit cost method is not applied for those employees who have chosen to invest 100% of their TFR in private pension funds. As regards the valuation of liabilities associated with staff severance pay at 31 De- cember 2010, provision was made: • to estimate the remaining duration of the employee’s employment contract; • to estimate the future wage/salary and inflationary trends, in the case that the projected unit credit method is applied; • to take into account any advances requested by employees, any portions which may be assigned to private pension schemes, as well as the 11% substitute tax on the staff severance pay (TFR) revaluation; • to assess the already accrued amount payable by the Company (Staff severance pay - TFR) including the future annual provisions (legally required revaluations), to estimate the amount to be paid upon termination of employment, for whatever reason (resignation, retirement, death, disability); • to discount back the previously estimated amount payable by the Company, and to bring it in line with the level of seniority acquired upon the valuation date, in the event that the projected unit credit method has been applied.

The calculation is performed ad personam as outlined in IAS 19, and requires that specific technical, demographic and financial factors are adopted. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 156 G r u p p o A z i m u t To discount back the amount payable by the Company to its employees, the (zero coupon) spot rate curve on 30 June 2008 was applied, given that the same curve on 31 December 2010 was heavily influenced by the financial and lending market crisis that began in the second part of 2008 and which, therefore, does not reflect normal market conditions. Given that the reference date used was prior to the deterioration of the crisis, the distortive effects that would have arisen by applying the 31 Decem- ber 2010 curve do not appear. The costs arising from the plan are reported under personnel costs. The costs relating to the increase in the value of staff severance pay (TFR), in parallel to the approach of the payment date, are reported under the item Interest charges.

Costs and income are reported on an accrual accounting basis and according to the Costs and income matching principle. Dividends are reported in the profit and loss account at the date the shareholders’ right to receive payment is established. Interest income and charges are reported on an accruals accounting basis based on the accrued interest, and applying the effective interest rate method.

In accordance with the instructions contained in IFRS 7, the Company classifies fair Fair value hierarchy value measurement of its financial assets and liabilities based on a hierarchy that conveys the nature of inputs used. The levels are as follows: • Level 1: unadjusted quoted prices in active markets for assets and liabilities identical to those subject to valuation; • Level 2: inputs other than unadjusted quoted prices that are directly (as in the case of prices) or indirectly (deriving from prices) observable market data; • Level 3: inputs based unobservable market data. In more detail, the fair value of a financial instrument measured at Level 1 corresponds to the unadjusted price, to which the instrument – or an identical instrument – is sold on an active market on the reference date of the valuation. For classification at Level 1, prices are measured together with all other characteristics of the financial asset or liability: if the quoted price is adjusted in order to take account of specific conditions that require adjustment, the financial instrument is classified under a level other than Level 1.

Analyses for classification at other levels within the fair value hierarchy are performed analytically for each individual asset or liability held/issued; these analyses and valuation criteria are applied consistently over time. Amongst the main criteria used by the Company, in reference to financial instruments held and financial liabilities issued, the unquoted subordinated bonds issued (measured using observable market data) are classed as Level 2, and securities reported as “Available for sale financial assets” and measured at cost are classed as Level 3. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 157 Notes to the accounts

Share-based payments According to IFRS 2 Share-based payments, the fair value of share-based payments, i.e. the fair value of Company stock options, is reported in the balance sheet on the date that the options are granted to Group employees and financial advisors and spreading the cost over the vesting period. The related costs are shown in the profit and loss account under “Equity investments” relating to subsidiary companies in terms of options awarded to employees and financial advisors of these same companies, with the contra entry as a shareholders’ equity reserve, given that the plans involve the use of company shares. The calculation method adopted to determine the fair value in the case of stock option schemes with a set strike price takes into account all the features of the options (duration, price and exercise conditions), as well as the volatility of the stock (Azimut Holding Spa ordinary shares). Regarding stock option plans for which the strike price is not established on the grant date, the fair value is calculated based on the estimated theoretical value of ordinary shares at the time the discounted option is expected to be exercised, taking account of the interest rate curve. Failure to exercise the options does not mean that the cumulative cost is written off, but rather the equity component reported as a contra entry in the profit and loss account is made available during the vesting period. The same accounting criteria are used for the equity swap agreements drawn up for the purpose of the AZ Investimenti Sim Spa growth plan, following the decision of the Ordinary Shareholders’ Meeting of 24 April 2007. The agreements involve the shares of the subsidiary company, which may be exchanged for Azimut Holding Spa shares upon expiry. Although these types of plans in particular are not considered as benefits from a legal/statutory point of view, in accounting terms they fall under IFRS 2, given the counterparties with whom the equity swap agreements are signed (financial advisors, directors, and employees of Azimut Group). Considering the formula used to establish the payable amount and in light of the fact that the initial reference value of the agreements themselves is, on the start date, equal to the economic value of AZ Investimenti Sim (calculated by an independent third party), the fair value of these agreements, established on the start date and booked in the profit and loss account in proportion to the fraction of the 3-year period elapsed, is nil.

Treasury shares Treasury shares are reported at purchase cost under a specific item within Share- holders’ Equity as a negative and are therefore not subject to valuation. In the event that the shares are subsequently sold, the difference between the book value and the selling price is charged to Shareholders’ Equity. In the case of cancellation, the item charged to Shareholders’ Equity is reduced accordingly upon acquisition. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 158 G r u p p o A z i m u t A.3 Fair value disclosure

A.3.1 Transfers between portfolios The Company did not reclassify/transfer any financial assets between portfolios during the course of the year.

A.3.2 Fair value hierarchy A.3.2.1 Accounting portfolios: breakdown by fair value level

Financial assets/liabilities measured at fair value Level 1 Level 2 Level 3 Total 1. Financial assets held for trading 2. Financial assets designated at fair value 3. Financial assets available for sale 645,009 645,009 4. Hedging derivatives Total 645,009 645,009 1. Financial liabilities held for trading 2. Financial liabilities designated at fair value 3. Hedging derivatives Total

As at 31 December 2010, there were no financial assets or liabilities at Level 1 or Level 2 fair value, nor were there any during the course of the year.

A.3.2.2 Annual changes in financial assets designated at Level 3 fair value The item “Financial assets available for sale” includes the following investments: • the stake, corresponding to the purchase cost, in Genesi ULN SIM Spa (formerly Genesi Sim Spa, merged by acquisition into Genesi ULN SIM Spa on 13/07/2010), amounting to 5.56% as at 31 December 2010; • the stake, corresponding to the purchase cost, in Daxtor Srl acquired through the subscription of a reserved capital increase. The percentage owned as at 31 Decem- ber 2010 amounted to 19.9%. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 159 Notes to the accounts

Part B - Notes to the balance sheet Assets

Section 1 Cash and cash equivalents amounted to 3,301 euro (1,858 euro at December 2009) Cash and cash equivalents and refer to cash on hand and foreign currency. Item 10

Section 4 Available-for-sale financial assets amounted to 645,009 euro (250,009 euro at 31 De- Available-for-sale cember 2009). financial assets Item 40 4.1 Breakdown of item 40 “Available-for-sale financial assets

Assets/Amounts Total 31/12/2010 Total 31/12/2009 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 1. Debt securities - - - Structured securities - Other debt securities - 2. Equity securities - - 645,009 - 250,009 3. Loans - - - Total - - 645,009 - 250,009

The item “Equity securities and UCITS Units” refers to: • the equity investment reported at purchase cost in Genesi ULN Spa (formerly Gen- esi Sim Spa, merged by acquisition into Genesi ULN SIM Spa on 13/07/2010), amounting 5.56% at 31 December 2010. During 2005, the company accepted the binding offer from the other Genesi shareholders for the shares held by the company in the SIM (Investment Firm). In addition, Azimut Holding Spa gave confirmation to Genesi’s shareholders that it would only proceed with the disposal upon receipt of the related payment by the aforementioned shareholders. • the equity investment, reported at purchase cost, in Daxtor Srl, acquired through the subscription of a reserved capital increase. The percentage of capital held at 31 December 2010 was 19.9% and the value of the transaction 395 thousand euro, paid in cash. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 160 G r u p p o A z i m u t 4.2 Financial assets at fair value: breakdown by issuer Assets/Amounts Total Total 31/12/2010 31/12/2009 2. Financial assets a) Governments and Central Bnks - - b) Other public bodies - - c) Banks - - d) Financial institutions 250,009 250,009 e) Other issuers 395,000 - Total 645,009 250,009

4.3 Financial assets at fair value: annual changes

Change/type Debt securities Equity securities Loans Total and UCITS units A. Opening balance - 250,009 - 250,009 B. Increases - 395,000 - 395,000 B1. Purchases - 395,000 - 395,000 B2. Increases in fair value - - - - B.3. Write-backs - - - - charged to profit and loss - - - - charged to shareholders’ equity - - - - B.4. Transfers from other portfolios - - - - B.5. Other changes - - - - C. Reductions - - - - C1. Sales - - - - C2. Redemptions - - - - C3. Decreases in fair value - - - - C4. Write-downs - - - - C5. Transfers to other portfolios - - - - C6. Other changes - - - - D. Closing balance - 645,009 - 645,009 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 161 Notes to the accounts

Section 6 6.1 Due from banks Receivables The amount due from banks stood at 82,318,461 euro, a 14,294,465 euro increase item 60 on last year (68,023,996 euro at 31 December 2009). The following table shows the breakdown:

Breakdown 31/12/10 31/12/09 1. Deposits and current accounts 82,318,461 67,344,543 2. Loans - - 2.1. Repurchase agreements - - 2.2. Finance leasing - - 2.3. Factoring with-recourse - - without recourse - - 2.4. Other loans - - 3. Debt securities - - structured securities other debt securities 4. Other assets - 79,453 Total book value 82,318,461 68,023,996 Total fair value 82,318,461 68,023,996

The Company’s cash position at 31 December 2010 comprised the cash held in current accounts, with interest rates in line with those applied to term deposits. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 162 G r u p p o A z i m u t 6.3 Due from financial institutions The amount due from financial institutions stood at 3,512,090 euro (7,332 euro at 31 December 2009), up by 3,504,758 euro year on year. The breakdown is as follows:

Breakdown 31/12/10 31/12/09 1 Loans - - 1.1 Repurchase agreements - - 1.2. Finance leasing - - 1.3. Factoring with-recourse - - without recourse - - 1.4. Other loans - - 2. Debt securities - - structured securities other debt securities 3. Other assets 3,512,090 7,332 Total book value 3,512,090 7,332 Total fair value 3,512,090 7,332

“Other Assets” refers exclusively to the liquidity held in the securities and cash deposit with Azimut Consulenza Sim Spa to the amount of 3,509,982 euro and with Azimut Sgr Spa amounting to 2,108 euro.

Equity investments amounted to 263,002,403 euro (259,213,037 euro at 31 Decem- Section 9 ber 2009), up by 3,789,366 euro year on year. Equity investments Item 90 9.1 Equity investments: information The details of the company’s equity investments are provided in annex A of these Notes to the accounts, and refer to the financial statements of the wholly and jointly- owned subsidiary companies at 31 December 2010. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 163 Notes to the accounts

9.2 Annual change in equity investments Group equity Non-group equity Total investments investments A. Opening balance 258,968,579 244,458 259,213,037 B. Increases 3,785,366 4,000 3,789,366 B.1 Purchases 3,185,366 0 3,185,366 B.2 Write-backs 0 0 0 B.3 Revaluations 0 0 0 B.4 Other changes 600,000 4,000 604,000 C. Reductions 0 0 0 C.1 Sales 0 0 0 C.2 Write-downs 0 0 0 C.3 Other changes 0 0 0 D. Closing balance 262,753,945 248,458 263,002,403

The item “increases” is as follows: • purchases refer to: • 3,185,366 euro for the acquisition on 7 July 2010 of 100% of Apogeo Consulting Sim wholly owned by Cattolica Assicurazioni Group.

• other changes refer to: • 500,000 euro non-recoverable payment to Apogeo Consulting Sim Spa on 20 Sep- tember 2010 following Board approval on 29 July 2010; • 4,000 euro for the creation on 28 October 2010 of AZ Industry & Innovation Srl, based in Milan and founded to manage operating services in joint venture with sector specialists, providing exclusive industrial and energy consulting and assistance services to Group companies; • 100,000 euro upon creation on 15 December 2010 of AZ International Holding Sa, based in Luxembourg and founded to manage investments in companies created by Azimut Group as required for the purpose of further international expansion.

10.1 Breakdown of item 100 “Tangible assets” Tangible assets stood at 127,206 euro, down by 104,043 euro on last year’s result (euro 231,249 at 31 December 2010). The breakdown is as follows: WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 164 G r u p p o A z i m u t 31/12/10 31/12/09 Assets/Valuation Assets Assets Assets Assets at cost at fair value at cost at fair value or revalued or revalued 1. Business assets - - - - 1.1 Company-owned 127,206 - 231,249 - a) land - - - - b) buildings - - - - c) furniture & fixtures 92,298 - 99,425 - d) capital goods - - - - e) other 34,908 131,824 - 1.2 under lease - - - - a) land - - - - b) buildings - - - - c) furniture & fixtures - - - - d) capital goods - - - - e) other - - - - Total 1 127,0206 - 231,249 - 2. Assets under lease - - - - 2.1 un-optioned assets - - - - 2.2 assets retired at end of lease term - - - - 2.3 other assets - - - - Total 2 - - - - 3. Assets held for investment - - - - of which: granted under operating lease - - - - Total 3 - - - - Total (1+2+3) 127,206 231,249 - Total (assets at cost and revalued) 127,206 231,249 -

The item “other” includes electronic office equipment (personal computers, printers and monitors), one company car and the telephone system.

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 165 Notes to the accounts

Section 10 10.2 Tangible assets: annual change: Tangible assets Item 100

Land Buildings Furniture Capital Other Total & fixtures goods A. Opening balance - - 99,425 - 131,824 231,249 B. Increases - - 8,793 - 26,116 34,909 B.1 Purchases - - 8,793 - 26,116 34,909 B.2 Write-ups ------B.3 Increases in fair value ------charged to:

a) shareholders’ equity ------b) profit & loss ------B.4 Other changes ------C. Reductions - - 15,920 - 123,032 138,952 C.1 Sales ------C.2 Amortisation - - 15,920 - 123,032 138,952 C.3 Write-downs for impairment charged to: ------a) shareholders’ equity ------b) profit & loss ------C.4 Decreases in fair value charged to: ------a) shareholders’ equity ------b) profit & loss ------C.5 Other changes ------D. Closing balance - - 92,298 - 34,908 127,206

Amortisation is calculated based on the following rates, reduced by 50% for the first year.

Assets Rate Electronic office equipment 20% Furniture & fixtures 12% Telephone system 25% Motor vehicles 25% WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 166 G r u p p o A z i m u t Intangible assets amounted to 185,296,055 euro, up by euro 63,533 year on year Section 11 (euro 185,232,522 at 31 December 2009) and is broken down as follows: Intangible assets Item 110 11.1 Breakdown of item 110 “Intangible assets: 31/12/10 31/12/09 Assets Assets Assets Assets at cost at fair value at cost at fair value or revalued or revalued 1. Goodwill 149,829,431 - 149,829,431 - 2. Other intangible assets: - - - - 2.1 company-owned - - - - generated internally - - - - other 128,400 64,867 - 2.2 under lease 35,338,224 - 35,338,224 - Total 2 35,466,624 - 35,403,091 - 3. Assets under lease - - - - 3.1 un-optioned assets - - - - 3.2 assets retired at end of lease term - - - - 3.3 other assets - - - - Total 3 - - - - 4. Assets under operating lease - - - - Total (1+2+3+4) 185,296,055 185,232,522

The item “Goodwill”, originally amounting to 176,269,919 euro and corresponding to the portion of the merger deficit not used to increase the value of equity investments, refers to the ‘Goodwill’ paid by Azimut Holding Spa (formerly Tumiza Spa) to acquire the group by purchasing the entire share capital of the incorporated company Azimut Holding Spa in 2002. The item “Other intangible assets – other” refers exclusively to the cost of software (128,400 euro). The item “Other intangible assets – under lease” refers to the “Azimut” trademark acquired via the sale and leaseback agreement with Banca Italease Spa, which, as described in Part A “Accounting policies” of these Notes, is reported in the accounts at its original value with the amount payable to the leasing company. The details of the foregoing transaction are described in item 10 “Payables” reported under liabilities. Azimut Holding Spa has exclusive rights to the use of the trademark and holds a purchase option to buy back the asset at the end of the lease term (2 November 2015) for a repurchase price of 100 thousand euro (plus VAT). WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 167 Notes to the accounts

Impairment test

Regarding the items goodwill and trademarks (when reported as intangible assets with indefinite useful life), international accounting standards, specifically IAS36 – “Impairment of assets”, stipulate that the company must perform annual impairment tests to establish any reduction in the value of assets. More specifically: • Goodwill • Trademark as previously described. Where the test shows that the value of an asset has been overestimated, the company reports the impairment in its accounts. Given that the Group operates as a single structure, dedicated in its entirety to asset management and the sale of investment instruments, in which the contributions made by the individual companies appear to be indistinguishable, the impairment test on goodwill was performed by considering the Group as a single cash generating unit. The Group’s financial condition is also analysed based on the same assumption in the Management Report. The Group is again considered as a single cash generating unit when referring to the trademark, from which the Group expects to obtain a positive contribution to cash flow for an indefinite period of time. The value in use of these assets is calculated using the Discounted Cash Flow method, based on the following assumptions: 1. Discount rate: Unlevered cost of capital, CAPM method: • Risk free: 10-year Italian government bonds at 31 December 2010; • Beta: calculated on a 5-year timescale with daily readings (source: Bloomberg) • Market risk premium: extra yield required for investments in shares rather than risk free securities, calculated based on the 20-year historical average (source: Credit Su- isse Datastream). 2. Cash flows To calculate Cash Flow an approximate estimate is made based on net profit for the period.

Earnings are established for the first 5 years, using the “2011 Budget” and “2011- 2015 Business Plan” prepared in accordance with the following assumptions: 1. Assets under management at 27 billion euro in 2014 (confirming the assumptions included in the “2010-2014 Business Plan”) and 30 billion euro in 2015. External sources are unable to provide reliable figures on the future growth of total AuM within the sector. 2. Profitability at the average of the past 5 years External sources are unable to provide reliable information on the pricing trend and therefore historical profitability levels have been used considering the value added of the advisory service offered to clients. 3. Increase in overheads in line with forecast growth of personnel and structure. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 168 G r u p p o A z i m u t Cash flow growth beyond 2015 (covered by the business plan) has been maintained at 2%, using the average profits reported in the Business Plan as the estimated profit for the first year after the plan.

Sensitivity

Enterprise Value WACC 6.60% 7.20% 7.80% 8.40% 9.00% 9.60% 10.20% 10.80% 11.40% 12.00% 0.00% 2,847.0 2,607.3 2,404.4 2,230.3 2,079.3 1,947.2 1,830.5 1,726.7 1,633.8 1,550.2 0.50% 3,028.8 2,755.6 2,527.2 2,333.4 2,166.8 2,022.1 1,895.3 1,783.1 1,683.2 1,593.7 1.00% 3,243.0 2,927.8 2,668.2 2,450.5 2,265.3 2,105.8 1,967.0 1,845.2 1,737.3 1,641.1 1.50% 3,499.1 3,130.3 2,831.5 2,584.5 2,376.8 2,199.8 2,047.1 1,914.0 1,796.9 1,693.1 G 2.00% 3,811.0 3,371.7 3,023.0 2,739.4 2,504.3 2,306.2 2,136.9 1,990.6 1,862.8 1,750.3 2.50% 4,199.0 3,664.4 3,250.6 2,920.7 2,651.4 2,427.5 2,238.4 2,076.4 1,936.2 1,813.5 3.00% 4,694.7 4,026.8 3,525.6 3,135.4 2,823.1 2,567.3 2,353.9 2,173.2 2,018.2 1,883.8 3.50% 5,350.4 4,487.2 3,864.6 3,394.0 3,025.9 2,729.9 2,486.7 2,283.3 2,110.7 1,962.2 4.00% 6,258.2 5,091.5 4,292.8 3,711.4 3,269.3 2,921.6 2,641.0 2,409.6 2,215.6 2,050.6

Enterprise Value - Intangible Asset WACC 6.60% 7.20% 7.80% 8.40% 9.00% 9.60% 10.20% 10.80% 11.40% 12.00% 0.00% 2,528.9 2,289.2 2,086.2 1,912.2 1,761.2 1,629.1 1,512.4 1,408.6 1,315.7 1,232.0 0.50% 2,710.6 2,437.5 2,209.1 2,015.3 1,848.7 1,704.0 1,577.1 1,465.0 1,365.1 1,275.6 1.00% 2,924.8 2,609.7 2,350.0 2,132.3 1,947.1 1,787.7 1,648.9 1,527.1 1,419.2 1,323.0 1.50% 3,181.0 2,812.2 2,513.4 2,266.3 2,058.7 1,881.7 1,729.0 1,595.8 1,478.8 1,375.0 G 2.00% 3,492.9 3,053.5 2,704.8 2,421.3 2,186.2 1,988.0 1,818.8 1,672.4 1,544.7 1,432.2 2.50% 3,880.9 3,346.3 2,932.4 2,602.5 2,333.3 2,109.4 1,920.2 1,758.3 1,618.0 1,495.4 3.00% 4,376.6 3,708.7 3,207.5 2,817.3 2,504.9 2,249.1 2,035.8 1,855.1 1,700.1 1,565.6 3.50% 5,032.2 4,169.1 3,546.4 3,075.9 2,707.8 2,411.8 2,168.6 1,965.2 1,792.5 1,644.1 4.00% 5,940.0 4,773.4 3,974.6 3,393.3 2,951.2 2,603.5 2,322.8 2,091.5 1,897.5 1,732.4

By applying key value variables (WACC and G), the difference between Enterprise Value (Fair value) and Book Value) is positive. Discounting cash flows by 80%, using the most penalising WACC and G levels shown by the stress test, the difference between the Enterprise Value and Book Value is still positive. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 169 Notes to the accounts

Cash flow discount 10% 20% 30% 40% 50% 60% 70% 80% 170 151 132 113 94 76 57 38 EV-BV 1,563 1,304 992 702 484 353 292 271

Conclusions By applying key value variables (WACC and G), the difference between Enterprise Value (Fair value) and Book Value) is always positive. The Market cap has not once fallen below the Net Book Value since the company was listed. At current prices with Azimut Holding Spa’s Shareholders’ Equity at 360 million euro, the market values the company at 971 million euro. At the height of the economic crisis, when the stock hit a low of Euro 3.02, the market cap was nevertheless three times Shareholders’ Equity. The Enterprise Value calculated using a DCF method based on the “Business Plan is higher than the market price even with cash flow discounted by 50%.

Cash flow 10% 20% 30% 40% 50% 170 151 132 113 94 EV-IA 1,178 1,016 855 693 531 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 170 G r u p p o A z i m u t 11.2 Intangible assets: annual change Total 31/12/10 A. Opening balance 185,232,522 B. Increases 143,950 B.1 Purchases 143,950 B.2 Write-ups - B.3 Increases in fair value charged to: - a) shareholders’ equity - b) profit & loss - B.4 Other changes - C. Reductions 80,417 C.1 Sales 0 C.2 Amortisation 80,417 C.3 Write-downs charged to: - a) shareholders’ equity - b) profit & loss - C.4 Decreases in fair value charged to: - a) shareholders’ equity - b) profit & loss - C.5 Other changes - D. Closing balance 185,296,055

The amortisation rates for intangible assets with a finite useful life are as follows:

Asset Rate Software 33%

Tax assets Section 12 Tax assets and tax liabilities Tax assets amounted to 23,470,909 euro, down by 1,380,928 euro year on year Item 120 (24,851,837 euro at 31 December 2009). Item 70

12.1 Breakdown of item 120 “Tax assets: current and deferred” 31/12/10 31/12/09 Current 8,100,753 8,029,343 Deferred 15,370,156 16,822,494 Total 23,470,909 24,851,837 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 171 Notes to the accounts

The item “Current tax assets” includes tax on bank interest income amounting to 201,620 euro and tax credits arising from Tax Consolidation amounting to 7,890,133 euro.

The item “Deferred tax assets” includes: • 12,509,029 euro of deferred tax assets arising from the value of the leasing instalments deductible in future financial years by virtue of the sale and lease-back agreement for the Azimut trademark; • 1,129,472 euro of tax assets relating to the tax loss borne by the company in previous years net of taxable income ceded by the subsidiaries in accordance with the Tax Consolidation Regime, as shown in the tax return for the tax years in question; • 1,693,463 euro of tax assets relating to the adjustment of the “statutory reporting value” and “tax value” (IRAP) of the trademark and goodwill pursuant to article 1, paragraph 51 of Law 244/2007 (2008 Budget) and offset against future tax liabilities arising from amortisation and other negative items deducted off the balance sheet (as indicated in EC section of the Modello Unico tax return statement) up until the tax year underway at 31 December 2007; • to a lesser extent, the temporary differences resulting from the different timing criteria of IRES tax deductibility for some cost items compared to that reported in the Profit and Loss Account.

Tax liabilities

Tax liabilities stood at 35,334,163 euro, up by 3,346,563 euro year on year (31,987,600 euro at 31 December 2009).

12.2 Breakdown of item 70 “Tax liabilities: current and deferred” Breakdown 31/12/10 31/12/09 Current 329,553 - Deferred 35,004,610 31,987,600 Total 35,334,163 31,987,600

The item “Current tax liabilities” includes provisions for IRAP (Regional business tax), net of payments made during the year, calculated according to the regulations in force. The item “Deferred tax liabilities” mainly includes tax liabilities relating to the difference between the book value and tax value of the trademark amounting to WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 172 G r u p p o A z i m u t 11,421,314 euro and the deferred taxes relating to the timing difference between the book value and tax value of goodwill of 23,562,608 euro. These tax liabilities, stated in the accounts in accordance with IAS 12, are not expected to become actual costs given that the aforementioned timing differences will only be reduced following a negative impairment test result that leads to a write-down of goodwill and the trademark or in the case that the aforementioned assets are sold.

12.3 Changes in deferred tax assets (contra entry in profit and loss account) 31/12/10 31/12/09 1. Opening balance 16,822,494 17,433,350 2. Increases 92,086 384,614 2.1 Deferred tax assets recognised in the year 92,086 384,614 a) from previous years - - b) due to changes in accounting standards - - c) write-backs d) other 92,086 384,614 2.2 New taxes or changes in tax rates - - 2.3 Other increases - - 3. Reductions 1,544,424 995,470 3.1 Deferred tax assets derecognised during the year 1,544,424 995,470 a) reversals 1,087,931 995,470 b) write-off of irrecoverable tax 456,493 - c) due to changes in accounting standards - - 3.2 Reduced tax rates - - 3.3 Other reductions - - 4. Closing balance 15,370,156 16,822,494 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 173 Notes to the accounts

12.4 Changes in deferred tax liabilities (contra entry in profit and loss account) 31/12/2010 31/12/09 1. Opening balance 31,987,600 28,970,590 2. Increases 3,017,010 3,017,010 2.1 Deferred tax liabilities recognised in the year 3,017,010 3,017,010 a) from previous years - - b) due to changes in accounting standards - - c) write-backs - - d) other 3,017,010 3,017,010 2.2 New taxes or increased tax rates - - 2.3 Other increases - - 3. Reductions - - 3.1 Deferred tax liabilities derecognised in the year - - a) reversals - - b) write-off of irrecoverable tax - - c) due to changes in accounting standards - - 3.2 Reduced tax rates - - 3.3 Other reductions - - 4. Closing balance 35,004,610 31,987,600

Section 14 Other assets stood at 14,124,637 euro, an increase of 827,983 euro year on year Other assets (13,296,654 euro at 31 December 2009). Item 140 14.1 Breakdown of item 140 “Other assets” Breakdown 31/12/10 31/12/09 Due from Inland Revenue 2,590,972 1,679,044 Other receivables 11,519,213 11,600,831 Deferred charges 14,452 16,779 Total 14,124,637 13,296,654

The item “Due from Inland Revenue” refers exclusively to VAT credits. The item “Other receivables” includes: • 1,000,000 euro due from Azimut Sgr Spa and 1,000,000 euro from Azimut Con- sulenza Sim Spa in the form of royalties on the Azimut trademark due for the year 2010; • Receivables from the subsidiary Azimut Sgr Spa amounting to 600,000 euro for coordination services due for the year 2010; • Receivables due from the subsidiaries Azimut Sgr Spa (8,466,651 euro) and Azimut WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 174 G r u p p o A z i m u t Capital Management Sgr Spa (363,924 euro) for IRES tax arising from the taxable income for the tax year 2010 ceded to the Parent Company in accordance with the Tax Consolidation Regime, net of payables for advance IRES payments to the Com- pany, again under the tax Consolidation Regime, from the subsidiary companies; administrative cost recoveries and advances to suppliers (88,638 euro).

Liabilities

1.1 Due to banks The item due to banks stood at 103,086,889 euro, down by euro 3,079,220 com- Section 1 pared to the previous year (106,166,109 euro at 31 December 2009) and is broken Payables down as follows: Item 10

Items/Amounts 31/12/2010 31/12/2009 due to due to due to due to due to due to banks financial clients banks financial clients institutions institutions 1. Loans - - - 1.1 repurchase agreements - 1.2 other loans 103,086,889 - 106,166,109 2. other payables - - - - Total 103,086,889 - - 106,166,109 -

At 31 December 2010, the item “Loans” included: a loan, amounting to 12,500,000 euro, arising from the sale and lease-back agree- a ) ment signed by Banca Italease Spa and Azimut Holding Spa for the disposal of the Azimut trademark for 55,000,000 euro plus VAT and subsequent lease-back. The item also includes interest charges accrued as at 31 December 2010 on the amount due, i.e. 88,875 euro, to be paid at a pre-established date (31 October 2011). The lease-back agreement, which is not subject to covenants or restrictions, has a duration of 9 years and entails an initial deposit of 27,000,000 euro in addition to 9 advance annual instalments of 3,100,000 euro each, due on 31 October of every year through 2014. The deposit and first instalment were paid on 31 October 2006. The interest is calculated based on the 12-month Euribor plus 40 basis points. a loan of 90,000,000 euro granted by Banca Popolare di Novara on 22 April 2008 b) for an initial amount of 200 million euro, and divided into two lines, A and B, each amounting to 100 million euro. The credit lines are repayable in instalments and expire on 30 June 2013 and 30 June 2018 respectively, with the interest rate calculated based on the Euribor plus 115 basis points for Line A and 125 basis points for Line WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 175 Notes to the accounts

B. The loan is not subject to covenants or restrictions. Moreover, the instalments on Lines A and B of the loan granted by Banca Popolare di Novara which expired on 30 June 2010 and 30 June 2011 were paid in advance on 1 July 2009, in addition to the instalment on Line A expiring on 30 June 2012.

The item also includes interest charges accrued as at 31 December 2010 on this loan, amounting to 498,014 euro, paid in full on the pre-established date (1 January 2011).

Section 2 2.1 Breakdown of item 20 - “Outstanding shares” Outstanding shares Item 20

Liabilities 31/12/10 31/12/09 Book Fair value Book Fair value value value L1 L2 L3 L1 L2 L3 1. Securities ------bonds 68,208,137 - 68,208,137 - 84,488,968 - 84,488,968 - structured other 68,208,137 - 68,208,137 - 84,488,968 - 84,488,968 - other securities - - - structured other - - - Total 68,208,137 - 68,208,137 - 84,488,968 - 84,488,968 -

The item “Outstanding securities” stood at 68,208,137 thousand euro and refers to a non-convertible subordinated loan issued on 1 July 2009 of 88,457 bonds amounting to 1,000 euro each, with a duration of 7 years, possibility for advance redemption (partial or full) and yield at a fixed annual nominal rate of 4% before tax. A bonus warrant is attached to the bond for holders of no less than 10,000 euro of bonds (10 subordinated bonds), at 100 warrants for every 5 bonds held. The warrants, which are not transferable, may be exercised at any time during the vesting period, between 1 July 2009 and 30 June 2016 inclusive, allowing the bond holder to acquire Azimut Holding shares already held by the issuer (treasury shares) at a price of 12 euro per share (strike price or exercise price), at a ratio of one share per warrant. Warrants that have not been exercised by 30 July 2016 will be considered null and void. The item, a debt component of a financial instrument composed as indicated in Part A - Section A.2 of the Notes, includes accessory costs borne by the Company for the placement of the bond, allocated proportionally to the debt component as well as the interest payable at 31 December 2010, amounting to 1,415,312 euro, which will be paid on the pre-established date (1 July 2011). WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 176 G r u p p o A z i m u t On 1 July 2010, Azimut Holding S.p.A. made an advance partial redemption of the 2009-2016 subordinated bond (“Azimut 2009 - 2016 subordinato 4%”) totalling 17,691,400 euro, or 20% of the par value of the loan. The difference between this amount and the book value, established using the amortised cost method, was reported in the profit and loss account on the redemption date (16,619,707euro) under the item “Gains/losses on disposal or repurchase: d) financial liabilities” at 1,071,693 euro.

2.2 Subordinated Securities Please see previous paragraph.

The item “Tax liabilities” is described in detail in section 12 of these Notes. Section 7 Tax liabilities Item 70

Other liabilities amounted to 5,390,221 euro, down by 3,405,874 euro on last year’s Section 9 result (8,796,095 euro at 31 December 2009). Other liabilities Item 90 9.1 Breakdown of Item 90 “Other liabilities” 31/12/10 31/12/09 Due to suppliers 531,550 498,587 Due to Social Security Institutions 312,286 611,171 Due to Inland Revenue 284,630 412,395 Pension contributions 110,977 85,084 Deferred employee compensation 382,042 643,230 Other payables 3,768,736 6,545,628 Total 5,390,221 8,796,095

The item “Other payables” mainly includes amounts owed to the subsidiary companies Azimut Consulenza Sim Spa, AZ Investimenti Sim Spa and Azimut Fiduciaria Spa for withholding tax in the tax year 2010 transferred to the parent company in accordance with the tax consolidation regime.

Staff severance pay amounted to 567,366 euro, up by 68,652 euro on last year’s fig- Section 10 ure (498,714 euro at 31 December 2009). Staff severance pay Item 100 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 177 Notes to the accounts

10.1 “Staff severance pay”: annual change 31/12/10 31/12/09 A. Opening balance 498,714 569,801 B. Increases 79,915 120,714 B1. Provisions for the year 30,273 72,200 B2. Other increases 49,642 48,514 C. Reductions 11,263 191,801 C1. Payments made 11,263 191,801 C2. Other reductions D. Closing balance 567,366 498,714

Section 12 The breakdown of shareholders’ equity is as follows: Shareholders’ equity Items 120, 130, 140, 150, 12.1 Breakdown of Item 120 “Share capital” 160 e 170 Type Amount 1. Share capital 32,324,092 1.1 Ordinary shares 32,324,092 1.2 Other shares -

At 31 December 2010, fully paid up Share Capital was composed of 143,254,497 ordinary shares, with a total value of 32,324,092 euro.

12.2 Breakdown of Item 130 “Treasury Shares Type of shares Amount 1. Treasury shares 85,944,949 1.1 Ordinary shares 85,944,949 1.2 Other shares -

On 27 May 2010, Azimut Holding Spa launched a bonus issue of 1 ordinary Azi- mut Holding Spa share per 60 ordinary shares held, totalling 2,182,252 shares and 15,893,895 euro. On 19 July 210, as agreed by the parties on 8 July 2010 and in amendment of the previous agreements, Azimut Holding Spa settled the payable amount totalling 27.8 million euro included in the equity swap contracts for the 2007-2009 AZ Investimenti Sim Spa growth plan which expired on 30 June 2010, with the payment of 18.4 million euro and allocation of 1,372,218 Azimut Holding Spa shares. The agreements were amended in light of the fact that some of the recipients of the payable amount expressed a desire to sell some of their shares. In light of this, in order to prevent a sale on the market and potential alterations and instability in the normal performance of the stock, the original agreements were amended to include the possibility of a cash payment. In reference to the 2008-2010 and 2009-2011 AZ Investimenti growth plans respectively approved at the Shareholders’ Meetings of 23 April 2008 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 178 G r u p p o A z i m u t and 29 April 2009, no Equity Swap contracts were entered into. During the year treasury share transactions led to a total increase in the portfolio of 1,545,811 shares for a total value of 11.6 million euro. At 31 December 2010, Azimut Holding Spa held 10,263,040 treasury shares at an average book value of 8.374 euro per share.

12.3 Breakdown of item 140 “Equity instruments” The item stood at 3,461,611 and refers, as indicated in Part A - Section A.2. of the Notes, to the equity component of the subordinated bonds, corresponding to the fair value of the warrants issued.

12.4 Breakdown of item 150 “Share premium reserve” The item “Share premium reserve” amounted to 173,986,916 euro at 31 December 2010.

12.5 Breakdown of Item 160 “Reserves”

Legal Share capital Other Total reserve transaction reserves A. Opening balance 6,444,736 - 10,792,214 127,551,131 144,788,081 B. Increases 20,082 - 0 41,890,145 41,910,227 B.1 Profit appropriations 20,082 - - 41,890,145 41,910,227 B.2 Other changes - 0 0 C. Reductions - - - 28,200,002 28,200,002 C.1 Allocations - - 0 loss account reserve - - 0 dividends - 0 transfers to share capital - - 0 C.2 Other changes - 28,200,002 28,200,002 D. Closing balance 6,464,818 - 10,792,214 141,241,274 158,498,306

The item “Other reserves” changed as follows during the year: • “Increases: other changes” includes the share of retained earnings from 2009 (net of amount allocated to legal reserves) amounting to 41,890,145 euro; • “Reductions: other changes” refers to that described under item 130 “Treasury Shares” of the notes. The share capital transactions reserve is composed of the share-based payments (stock options) to financial advisors and employees of the Group companies, corresponding to the fair value of the options on the grant date, spread over vesting period.

The following gives details of the breakdown of shareholders’ equity, showing the origin and level of availability and “distributability” of the items, in accordance with WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 179 Notes to the accounts

article 2427 paragraph 7b of the Civil Code.

Details of Shareholders’ Equity Items (art. 2427 paragraph 7b of the Civil Code) Type/Description Summary of allocations over past three years Amount Purpose Available Loss account Other (*) amount reserve Share capital 32,324,092 Share capital reserve Treasury share reserve (85,944,949) Shares or equity investments in parent company Share premium reserve 173,986,915 A,B 173,986,915 Equity instruments 3,461,611 Share capital transaction cost reserve 10,792,214 A,B,C 10,792,214 Earnings reserve: Legal reserve 6,464,818 B 0 Retained earnings reserve 141,241,274 A,B,C 141,241,274 Total 326,020,403 - - Undistributable earnings 85,816,549 Residual distributable earnings 240,203,854

(*) A: for capital increase B: for loss account reserve C: for dividends

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 180 G r u p p o A z i m u t Part C - Notes to the profit and loss account

Interest income Section 1 Interest Interest income amounted to 780,078 euro (125,978 euro at 31 December 2009), up Items 10 e 20 by 654,100 euro year on year, and mainly includes pre-tax interest income on current accounts.

1.1 Breakdown of Item 10 “Interest income and similar income” Asset/income source Debt securities Loans Other 2010 2009 1. Held for trading assets - - - - - 2. Assets at fair value - - - - - 3. Available-for-sale assets - - - - - 4. Held to maturity assets - - - - - 5. Receivables - - - - - 5.1 Due from banks - - 780,078 780,078 122,418 5.2 Due from financial institutions - - - - 3,560 5.3 Due from clients - - - - - 6. Other assets - - - - - 7. Hedging derivatives - - - - - Total - - 780,078 780,078 125,978

Interest charge

Interest charges amounted to 5,932,912 euro (6,848,372 euro at 31 December 2009), down by 915,460 euro year on year.

1.3 Breakdown of item 20 “Interest charges and similar expenses” Liability/Expense source Loans Securities Other 2010 2009 1. Due to banks 2,028,741 - 266 2,029,007 4,669,021 2. Due to financial institutions - - - - - 3. Due to clients - - - - - 4. Outstanding securities - 3,877,156 - 3,877,156 2,148,789 5. Trading liabilities - - - - - 6. Liabilities at fair value - - - - - 7. Other liabilities - - 26,749 26,749 30,562 8. Hedging derivatives - - - - - Total 2,028,741 3,877,156 27,015 5,932,912 6,848,372 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 181 Notes to the accounts

The item “Due to banks - loans” includes interest on loans with Banca Popolare di Novara and the trademark lease back agreement.

Section 2 Fees and commissions amounted to 2,000,000 euro (1,500,000 euro at 31 December Fees and commissions 2009), up by 500,000 euro on last year’s figure, and include royalties on the Azimut Item 30 trademark for the year, charged to Azimut Consulenza Sim Spa and Azimut Sgr Spa.

2.1 Breakdown of item 30 “Fee and commission income” Details 2010 2009 1. leasing 2. factoring - - 3. consumer credit - - 4. merchant banking 5. guarantees issued - - 6. services: - - discretionary fund management currency trading - - product sales other 7. collection and payment services 8. servicing for securitisation 9. other commissions royalties 2,000,000 1,500,000 Total 2,000,000 1,500,000

Dividends and similar income amounted to 89,618,375 (78,036,362 euro at 31 De- Section 3 cember 2009), up by 11,582,013 euro year on year. Dividends and similar income Item 50 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 182 G r u p p o A z i m u t 3.1 Breakdown of item 50 “Dividends and similar income”

Voci/Proventi 2010 2009 Dividends Income Dividends Income from UCITS from UCITS 1. Held for trading assets - - - - 2. Available-for-sale assets - - - - 3. Assets at fair value - - - - 4. Equity investments: - - - - 4.1 for merchant banking - - - 4.2 for other 89,618,375 - 78,036,362 - Total 89,618,375 - 78,036,362 -

The item “Dividends: other” is as follows: Company 2010 2009 Azimut Consulenza Sim Spa 11,340,000 0 Azimut Sgr Spa 13,260,000 6,000,000 AZ Fund Management Sa 52,255,875 58,511,377 Azimut Capital Management Sgr Spa 400,000 2,900,000 AZ Capital Management Ltd 812,500 1,037,485 AZ Life Ltd 0 9,587,500 Az Investimenti Sim Spa 11,550,000 0 Total 89,618,375 78,036,362

An interim dividend on 2010 profit to the amount of 38,250,000 euro was received from AZ Fund Management Sa in December 2010.

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 183 Notes to the accounts

Section 7 Gains (losses) on disposal or repurchase amounted to 1,071,693 euro (379,396 euro Gains (losses) on disposal at 31 December 2009) and include losses arising from the partial advance redemp- or repurchase tion of the bond. Item 100 7.1 Breakdown of item 90 “Gains (losses) on disposal and repurchase”

Assets/earnings 2010 2009 Gain Loss Net result Gain Loss Net result 1. Financial assets ------1.1 Receivables ------1.2 Available-for-sale assets - - - 379,396 - 379,396 1.3 Held-to-maturity assets ------Total (1) - - - 379,396 - 379,396 2. Financial liabilities - (1,071,693) (1,071,693) - - - 2.1 Payables ------2.2 Outstanding securities (1,071,693) (1,071,693) - Total (2) - - - - Total (1+2) (1,071,693) (1,071,693) 379,396 - 379,396 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 184 G r u p p o A z i m u t Admin costs amounted to 8,045,123 euro (9,182,708 euro at 31 December 2008), Section 9 down by 1,137,585 euro year on year. Administrative costs Item 110 9.1 Breakdown of item 120.a. “Personnel costs” 2010 2009 1. Salaried personnel 2,517,163 2,399,377 a) wages and salaries 1,651,501 1,558,419 b) social security 617,505 577,056 c) staff severance pay (TFR) - - d) pension contributions - - e) TFR provisions 77,981 128,151 f) retirement funds and similar reserves: - - defined contribution - - defined benefit - - g) private pension plans: - - defined contribution - - defined benefit - - h) other expenses 170,176 135,752 2. Other personnel 167,220 254,036 3. Directors and Auditors 1,929,877 2,624,020 4. Early retirement costs - - 5. Cost recoveries for employees redeployed to other companies - - 6. Reimbursed costs for employees redeployed to the company - - Total 4,614,260 5,277,434

In light of the changes introduced by the Bank of Italy circular of 17 February 2011, any costs related to personnel (cost of insurance policies taken out for employees, costs of lunch vouchers, training courses, food and accommodation for employees on business trips) have been classified as “other expenses”. For comparison purposes, the corresponding amount in 2009 has been moved from item 110b “other administrative costs” to “Insurance premiums” and “Expenses for acquisition of non-professional assets and services”.

9.2 Average number of employees per category Positions 31/12/2010 31/12/2009 Directors 6 6 Middle managers 6,33 5,92 Office staff 4 4,33 Total 16,33 16,25 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 185 Notes to the accounts

9.3 Breakdown of item 110.b. “Other admin costs” 2010 2009 Professional services rendered 981,857 525,190 Insurance premiums 13,234 13,149 Indirect taxes 13,626 32,205 Advertising, promotion and marketing expenses 726,124 717,365 Outsourcing and EDP Services 361,304 298,570 Expenses for acquisition of non-professional assets and services 1,334,719 2,318,796 Total 3,430,864 3,905,275

Expenses for non-professional goods and services mainly include rental fees to the sum of 434,972 euro, maintenance and assistance fees to the amount of 114,307 euro, car hire costs of 112,594 euro, telephone and utility bills totalling 226,688 euro and expenses for administration, custody and management of securities amounting to 84,528 euro.

Section 10 10.1 Breakdown of “Value adjustments: tangible assets” Value adjustments: tangible assets Item 120 Assets/adjustments Amortisation Impairment Write-ups Net result (a) write-downs (c) (a+b-c) (b) 1. Business assets - - - - 1.1 Company-owned - - - - a) land - - - - b) buildings - - - - c) furniture & fixtures 15,920 - - 15,920 d) capital goods - - - - e) Other 123,032 - - 123,032 1.2 Under lease - - - - a) land - - - - b) buildings - - - - c) furniture & fixtures - - - - d) capital goods - - - - e) other - - - - 2. Assets under finance leasing - - - - 3. Assets held for investment purposes of which: under operating lease - - - - Total 138,952 - - 138,952 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 186 G r u p p o A z i m u t 11.1 Breakdown of item 130 “Value adjustments: intangible assets” Section 11 Value adjustments: intangible assets Item 130

Assets/Adjustments Amortisation Impairment Write-ups Net result (a) write-downs (c) (a+b-c) (b) 1. Goodwill - - - - 2. Other intangible assets - - - - 2.1 company-owned 80,417 - - 80,417 2.2 under lease - - - - 3. Assets under finance leasing - - - - 4. Assets ceded under operating lease - - - - Total 80,417 - - 80,417

Other operating income amounted to 1,519,929 euro (1,312,087 euro at 31 Decem- Section 14 ber 2009) and mainly includes recovered amounts for coordination activities by the Other operating income parent company and other amounts recovered from the subsidiary companies. Item 160

15.1 Breakdown of item 170 “Gains (losses) on equity investments”: Section 15 Items 2010 2009 Gains (losses) on equity investments 1. Income - - Item 170 1.1 Revaluations - - 1.2 Gains on disposal - - 1.3 Write-ups - - 1.4 Other income - - 2. Costs 31,742 340,360 2.1 Depreciation - 2.2 Losses on disposal - - 2.3 Impairment write-downs - - 2.4 Other costs 31,742 340,360 Net result 31,742 340,360

The item “Other costs” refers to the settlement of losses reported in the accounts of Azimut Fiduciaria Spa as at 31 December 2009.

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 187 Notes to the accounts

Section 17 17.1 Breakdown of item 190 “Income tax on profit from continuing operations” Income tax on profit from 2010 2009 continuing operations Item 190 1. Current tax assets (3,439,125) (4,577,290) 2. Changes in current taxes of previous years 3. Reduction in current taxes for the financial year 4. Change in deferred tax assets 1,452,337 610,856 5. Change in deferred tax liabilities 3,017,010 3,017,010 Taxes for the financial year 1,030,223 (949,424)

Current income tax for the year refers to IRAP provisions (1,471,317euro), calculated according to regulations in force, and income arising from tax consolidation corresponding to the taxes arising from taxable income transferred to the parent company by the Italian subsidiary companies that have adopted the Tax Consolida- tion Regime, pursuant to art.117 of Presidential Decree 917/86. The item “Change in deferred tax assets” includes the release of deferred tax assets arising from the value of the leasing contract deductible during the period, the cancellation of the share of deferred tax assets booked as a tax loss carry forward, as explained in Section 12 - Tax assets and liabilities, as well as the release of deferred tax assets arising from timing differences resulting from the different timing criteria of IRES (corporate income tax) tax deductibility. The item “Change in deferred tax liabilities” mainly includes deferred tax liabilities, in line with IAS 12, related to the timing differences between the book value and the tax value of goodwill. During September 2010, Azimut Holding filed a supplementary unified tax return for 2009 as well as a supplementary “Modello Consolidato Nazionale” for tax year 2008, in order to declare a higher tax loss after deducting the cost of the advance redemption of the Azimut 2004-2009 convertible bond into ordinary shares. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 188 G r u p p o A z i m u t 17.2 Reconciliation of theoretical tax burden and effective tax burden 31/12/2010 Taxable income Tax Tax rate Pre-tax profit 78,617,543 Theoretical tax burden 21,619,824 27.50 Effect of increases 343,134 94,362 27.62 Effect of decreases: of which: Dividends 85,137,456 (23,412,800) (2.16) Goodwill amortisation 9,334,808 (2,567,072) (5.43) Trademark amortisation 3,055,556 (840,278) (6.49) Other 372,605 (102,466) (6.63) Change in deferred tax assets 5,080,531 1,397,146 (4.85) Change in deferred tax liabilities 9,334,808 2,567,072 (1.58) Income tax for the year (1,244,212) (1.58) Effective tax rate (1.58)

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 189 Notes to the accounts

Part D - Other information

Section 1 D. Guarantees issued and commitments Specific references to business activities D.1 Value of guarantees issued and commitments Transactions Total Total 31/12/10 31/12/09 1) Financial guarantees issued to: 36,000,000 23,000,000 a) Banks b) Financial institutions 36,000,000 23,000,000 c) Clients 2) guarantees issued to: a) Banks b) Financial institutions c) Clients 3) Irrevocable commitments to supply funds to: a) Banks i) for specified use ii) for unspecified use b) Financial institutions i) for specified use ii) for unspecified use c) Clients i) for specified use ii) for unspecified use 4) Underlying commitments for credit derivatives: protection sales 5) Assets pledged as collateral for third party bonds 6) Other irrevocable commitments Total 36,000,000 23,000,000

At 31 December 2010, guarantees had been issued to Azimut Consulenza Sim Spa, AZ Investimenti Sim Spa and to Apogeo Consulting Sim Spa. No real guarantees had been issued as at 31 December 2010. As regards the business activities of AZ Life Ltd, for as long as there is no change in the shareholder structure, Azimut Holding Spa has made a commitment to the IFSRA (Irish Financial Services Regulatory Authority) to provide the insurance company with the necessary capital in the event that it is unable to meet an adequate solvency margin, in accordance with the relevant regulations. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 190 G r u p p o A z i m u t 3.2. Market risks Section 3 Information on risk Qualitative information management and hedging policies 1. General information The interest rate risk arises from the loan granted by Banca Popolare di Novara as well as the financial liabilities arising from the lease-back agreement for the “Azimut” trademark. Interest on liabilities arising from the lease-back agreement is in line with the 12-month Euribor plus 40 basis points. Interest on the loan granted by Banca Popolare di Novara on 22 April 2008, amounting to 200 million euro, and composed of two Lines, A and B, each amounting to 100 million euro, is in line with the Euribor plus 115 basis points for Line A and 125 basis points for Line B. Moreover, the subordinated bond loan issued by Azimut Holding Spa during 2009 is not subject to interest rate risks as the rate is fixed at 4%.

Quantitative information

1 Distribution by residual life (repricing date) of financial assets and liabilities

Voci/durata residua Up to From over From over From over From over Over 3 months 3 months 6 months 1 year to 5 years to 10 years to 6 months to 1 year 5 years 10 years 1. Assets 1.1 Debt securities 1.2 Receivables 1.3 Other assets 2. Liabilities 2.1 Payables 90,498,014 12,588,875 2.2 Debt securities 68,208,137 2.3 Other liabilities 3. Financial derivatives Options 3.1 Long positions 3.2 Short positions Other derivatives 3.3 Long positions 3.4 Short positions

WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 191 Notes to the accounts

Section 4 4.1.1 Qualitative information Information on Net Equity For information on the individual shareholders’ equity items, please refer to Part B of these Notes.

4.1.2 Quantitative information 4.1.2.1 Company shareholders’ equity: breakdown Items/Amounts Total Total 31/12/2010 31/12/2009 1. Share capital 32,324,092 32,324,092 2. Share premium reserve 173,986,915 173,986,915 3. Reserves 158,498,306 144,788,081 earnings a) legal 6,464,818 6,444,736 b) statutory c) treasury shares d) other 141,241,274 127,551,131 other 10,792,214 10,792,214 4. (Treasury shares) (85,944,949) (100,975,986) 5. Valuation reserves Available for sale financial assets Tangible assets Intangible assets Foreign investment hedge Cash flow hedge Foreign exchange differences Non-current assets and disposal groups for sale Legally required revaluations Actuarial gains/losses on defined benefit plans Share of valuation reserves of equity accounted investments 6. Equity instruments 3,461,611 3,461,611 7. Profit (loss) for the year 77,587,320 65,586,294 Total 359,913,295 319,171,0077 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 192 G r u p p o A z i m u t Items Pre-tax Income Net Section 5 profit tax profit Detailed statement of comprehensive income 10. Profit (loss) for the year 78,617,543 (1,030,223) 77,587,320 Other comprehensive pre-tax income 20. Available for sale financial assets: - - - a) changes in fair value - - b) reclassification through P&L - - - impairment write-downs - - - gains/losses on disposal - - - c) other changes - - - 30. Tangible assets - - - 40. Intangible assets - - - 50. Foreign investment hedge: - - - a) changes in fair value - - - b) reclassification through P&L - - - c) other changes - - - 60. Cash flow hedge: - - - a) changes in fair value - - - b) reclassification through P&L - - - c) other changes - - - 70. Foreign exchange differences: - - - a) changes in rates - - - b) reclassification through P&L - - - c) other changes - - - 80. Non-current assets held for sale: - - - a) changes in fair value - - - b) reclassification through P&L - - - c) other changes - - - 90. Actuarial gains (losses) on defined benefit plans - - - 100. Share of valuation reserves of equity accounted investments - - - a) changes in fair value - - - b) reclassification through P&L - - - impairment write-downs - - - gains/losses on disposal - - - c) other changes - - - 110. Other net income - - - 120. Comprehensive income (Item 10+110) 78,617,543 (1,030,223) 77,587,320 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 193 Notes to the accounts

Section 6 6.1 Director and key management fees Related party transactions No employees considered as key management.

6.2 Loans and guarantees issued to Directors and Auditors No loans or guarantees issued to Directors and Auditors. At 31 December 2010, director fees amounted to 1,500,042 euro and the cost of fees for the Board of Statutory Auditors members stood at 408,754 euro The Board of Directors is composed of 10 members. The Board of Auditors has three permanent members.

6.3 Related party transactions Related party transactions refer exclusively to business transactions engaged in by Azimut Holding Spa with its subsidiary and associate companies in 2010. The said transactions form part of the Group’s ordinary operations and are conducted on an arm’s length basis. The most important business dealings are described below: • Azimut Sgr Spa and Azimut Consulenza Sim Spa pay royalties to Azimut Hold- ing S.p.A annually for use of the Azimut trademark totalling 10% of net fees and commissions, excluding supplementary, variable management fees and commissions, corresponding to pre-established minimum and maximum amounts which vary from year to year; • Azimut Holding Spa, in its capacity as the Parent Company, Azimut Sgr Spa, Azi- mut Consulenza Sim Spa, AZ Investimenti Sim Spa, Azimut Capital Management Sgr Spa and Azimut Fiduciaria Spa in their capacity as subsidiary companies, have adopted the Tax Consolidation Regime; • a contractually established annual fee (total of 1,000,000 euro) is payable for the coordination activities carried out by the Parent Company on behalf of the subsidiary companies Azimut Sgr Spa and Azimut Consulenza Sim Spa.

What’s more, as mentioned earlier, Azimut Holding Spa has issued guarantees to its subsidiary companies Azimut Consulenza Sim Spa, AZ Investimenti Sim Spa and Apogeo Consulting Sim Spa.

The Azimut Holding Spa Shareholders’ Meeting of 24 April 2007 authorised a plan to encourage the growth of the subsidiary AZ Investimenti Sim Spa via equity swap agreements with parties identified by the Remuneration Committee as having specific competencies for the growth of the company, including some directors, key management personnel and financial advisors named as related parties. The agreements are described in more detail in Part D, Section 7 of these Notes. Azimut Holding Spa did not have loan relationships with subsidiary and associate companies at 31 December 2010.

The impact that the transactions or positions with related parties have on the company’s financial condition is summarised below: WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 194 G r u p p o A z i m u t Total Related parties Absolute value % Assets Receivables: 85,830,551 3,512,090 4.09 Receivables for cash held in deposit accounts 3,512,090 4.09 Other assets: 14,124,637 11,468,975 81.20 Receivables for Tax Consolidation income 8,830,575 62.52 Invoices issued for coordination activities 600,000 4.25 Invoices issued for admin cost recoveries 38,400 0.27 Invoices to be issued for Royalties 2,000,000 14.16 Liabilities Other liabilities: 5,390,221 4,087,042 75.82 Payables for IRES 3,774,756 70.03 Due to Auditors 312,286 5.79 Profit and loss account Admin. costs 8,045,123 1,908,796 23.73 Auditor fees 408,754 5.08 Director fees 1,500,042 18.65 Commission income (royalties) 2,000,000 100.00 Other operating income 1,512,929 1,252,762 82.80 Gains (losses) on equity investments 31,742 31,742 100.00 Guarantees and commitments 36,000,000 36,000,000 100.00

These items are described in detail in the corresponding sections of Parts B and C of these Notes.

7.1 Dividends paid Section 7 The ordinary dividend for 2010 amounted to 0.10 euro per share, with an extraordi- Other information nary dividend of the same amount (0.10). Payment was made as follows: the ordinary dividend of 0.10 euro was paid 50% in cash and the remaining 50% in treasury shares held in the company’s portfolio; the extraordinary dividend was paid in treasury shares held in the portfolio. Therefore, each shareholder received (before withholding tax) 0.05 in cash, as well as a bonus issue of 1 Azimut Holding Spa share per 60 ordinary shares held (totalling 2,182,252 shares). The aforementioned bonus shares (all held as treasury shares in the company’s portfolio) were awarded with ex-dividend date of 24 May 2010. Based on the official stock price on 10 March 2010, the total dividend amounted to roughly 0.20 euro per ordinary share. WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 195 Notes to the accounts

7.2 Significant non-recurring events and transactions The significant non-recurring events involving Azmiut Holding Spa in 2010 are as follows: • Partial advance repayment, at 20% of the par value of the 2009-2016 subordinated bond “Azimut 2009-2016 subordinato 4%”, which led to a reduction in the balance sheet item “Outstanding securities” of 16,619,707 euro; • Acquisition of 100% of Apogeo Consulting Sim’s capital from Cattolica Assicurazi- oni Group for 3,185,366 euro in cash; • Settlement with beneficiaries of the payable amount totalling 27.8 million euro included in the equity swap contracts for the 2007-2009 Az Investimenti Sim Spa growth plan which expired on 30 June 2010, with the payment of 18.4 million euro and allocation of 1,372,218 Azimut Holding Spa shares. The transaction led to a reduction in the shareholders’ equity item “Other reserves”. The agreements were amended in light of the fact that some of the recipients of the payable amount expressed a desire to sell some of their shares. In light of this, in order to prevent a sale on the market and potential alterations and instability in the normal performance of the stock, the original agreements were amended to include the possibility of a cash payment.

There were no unusual transactions during the period.

7.3 AZ Investimenti Sim Spa growth plan Although the project is not treated as a benefit plan from a legal/statutory point of view, in accounting terms it is governed by IFRS 2 Share-based payments. The following information is therefore provided:

Nature and scope of the agreements Azimut Holding Spa’s Ordinary Shareholders’ Meeting of 24 April 2007 authorised a project to enhance the development of the subsidiary AZ Investimenti Sim Spa using incentive schemes, to be accomplished indirectly via equity swap transaction. These schemes involve certain key figures chosen by the Remuneration Committee based on their specific competencies for the growth of the company and depend on any increase or decrease in the value of the investment firm in 2007-2009. On 27 July 2007 Azimut Holding Spa thus signed two 3-year equity swap agreements involving the shares of the investment firm with Timone Fiduciaria Spa, on the back of the mandate conferred by Group company financial advisors, directors and employees identified by the Remuneration Committee. The structure of the transaction is as follows: • total number of AZ Investimenti Sim shares (split between the two agreements) of 1,112,926; • 3-year duration of the agreements as of 30 June 2007, expiring on 30 June 2010, which also corresponds to the date for the settlement of the payable amount; • in the event that the equity swap agreements close the period in the money for the counterparties, then Azimut Holding Spa will distribute a number of treasury shares (bought on the market) equal to the value due, divided by the closing price of the Azi- WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 196 G r u p p o A z i m u t mut Holding Spa stock on the day the agreements expire. On the other hand, should they close out of the money, the other parties must settle the resulting absolute value to Azimut Holding Spa in cash; • there are no particular conditions for the accrual of the amount payable by the counterparties (if in the money) or by Azimut Holding (if out of the money); however, in the event that a financial advisor or employee contract is terminated before the due date, the number of AZ Investimenti Sim shares will be reduced proportionately.

Impact on net profit and financial condition On 19 July 2010, Azimut Holding Spa settled the positive payable amount of the equity swap contracts for the three year period 2007-2009. Details of the transaction are described in Section 12 - “Shareholders Equity - Item 130 Treasury shares” of the Notes. As regards the project for the 2008-2010 and 2009-2011 AZ Investimenti Sim Spa growth plans authorised at the Shareholders’ Meetings of 23 April 2008 and 29 April 2009, it should be noted that no equity swap contracts had been established at 31 December 2010.

7.4 Auditing and non-auditing service fees As stipulated by article 149 duodecies of Consob Regulation number 11971/99 and subsequent amendments and supplements, the details of fees (net of VAT and expenses) due to the auditing company and companies within its network for auditing and non-auditing services during 2010 are as follows:

Type of service Service provider Fees/Euro Auditing Deloitte & Touche Spa 70,585 Other services: assistance with assessment Deloitte network of Group anti-money laundering processes 90,000 Azimut Holding Spa total 160,585

On behalf of the Board of Directors The Chairman and CEO (Pietro Giuliani) WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 197 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 198 G r u p p o A z i m u t Attachments WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 199 Annex A

9.1 Information on equity investments

Company Book value Stake Voting Registered Total assets Total revenues Shareholders’ Retained Listed Activity al 31/12/2010 rights Office equity earnings

Azimut Consulenza Sim Spa 121,687,868 100% 100% Milan 149,718,759 202,956,464 56,688,645 25,483,966 NO Unsecured placement and order intake

Azimut Sgr Spa 69,077,829 51% 51% Milan 44,684,954 69,712,346 7,511,081 12,138,991 NO Collective and individual portfolio management

AZ Fund Management Sa 3,239,925 51% 51% Luxembourg 59,039,506 282,547,050 2,948,761 114,099,971 NO Mutual funds

AZ Life Ltd 5,012,150 100% 100% Ireland 878,575,491 85,676,559 13,844,672 6,979,391 NO Life insurance

Azimut Capital Management Sgr Spa 3,414,150 100% 100% Milan 6,216,391 12,692,278 1,478,124 1,343,806 NO Hedge fund management

AZ Investimenti Sim Spa 56,111,855 100% 100% Milan 83,990,810 57,023,775 56,158,019 8,940,287 NO Unsecured placement

AZ Capital Management Ltd 125,000 100% 100% Ireland 753,833 985,413 230,180 423,819 NO Hedge fund management

Azimut Fiduciaria Spa 299,803 100% 100% Milan 265,290 30,654 250,000 (46,038) NO Trust fund

Apogeo Consulting Sim Spa 3,685,365 100% 100% Milan 7,879,560 15,355,279 2,003,729 46,831 NO Unsecured placement

AZ International Holdings Sa 100,000 100% 100% Luxembourg 100,000 - 100,000 0 NO Equity investment management

Note: The difference between the book value and the value according the equity method for the subsidiaries Azimut Consulenza SIM S.p.A., Azimut Sgr S.p.A. and AZ Fund Management Sa, refers to the revaluation performed after reallocation of the merger deficit generated in the year ended December 31 2002 WorldReginfo - d85f6f8e-fa98-465f-b552-a52704525bfe 200 G r u p p o A z i m u t Company Book value Stake Voting Registered Total assets Total revenues Shareholders’ Retained Listed Activity al 31/12/2010 rights Office equity earnings