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Consolidated Financial Statements for the Year Ended 31 December 2017 Azimut Holding S.P.A

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Consolidated Financial Statements for the Year Ended 31 December 2017 Azimut Holding S.P.A Consolidated financial statements for the year ended 31 december 2017 Azimut Holding S.p.A. Consolidated financial statements for the year ended 31 december 2017 Azimut Holding S.p.A. 4 Gruppo Azimut Contents Company bodies 7 Azimut group's structure 8 Main indicators 10 Management report 13 Baseline scenario 15 Significant events of the year 19 Azimut Group's financial performance for 2017 25 Main balance sheet figures 28 Information about main Azimut Group companies 32 Key risks and uncertainties 36 Related-party transactions 40 Organisational structure and corporate governance 40 Human resources 40 Research and development 41 Significant events after the reporting date 41 Business outlook 42 Non-financial disclosure 43 Consolidated financial statements 75 Consolidated balance sheet 76 Consolidated income statement 78 Consolidated statement of comprehensive income 79 Consolidated statement of changes in shareholders' equity 80 Consolidated cash flow statement 84 Notes to the consolidated financial statements 87 Part A - Accounting policies 89 Part B - Notes to the consolidated balance sheet 118 Part C - Notes to the consolidated income statement 147 Part D - Other information 159 Certification of the consolidated financial statements 170 5 6 Gruppo Azimut Company bodies Board of Directors Pietro Giuliani Chairman Sergio Albarelli Chief Executive Officer Paolo Martini Co-Managing Director Andrea Aliberti Director Alessandro Zambotti (*) Director Marzio Zocca Director Gerardo Tribuzio (**) Director Susanna Cerini (**) Director Raffaella Pagani Director Antonio Andrea Monari Director Anna Maria Bortolotti Director Renata Ricotti (***) Director Board of Statutory Auditors Vittorio Rocchetti Chairman Costanza Bonelli Standing Auditor Daniele Carlo Trivi Standing Auditor Maria Catalano Alternate Auditor Luca Giovanni Bonanno Alternate Auditor Independent Auditors PricewaterhouseCoopers S.p.A. Manager in Charge of Financial Reporting Alessandro Zambotti (*) Co-opted with effect from 3 April 2017. The Shareholders confirmed the appointment in their Meeting of 27 April 2017 (*) With effect from 27 April 2017, as per the Shareholders’ Meeting of 28 April 2016 (***) Co-opted on 4 May 2017 to replace Paola Mungo 7 Azimut group's structure The Azimut Group operates globally in 17 countries and is comprised of the parent company, Azimut Holding S.p.A., and 76 subsidiaries. Azimut Holding S.p.A. (Listed:AZM.IM) AZ Fund AZ International (1999) Holdings (2010) (100% owner by (100%) Azimut Holdings) Luxembourg Luxembourg Azimut Capital AN Zhong AZ US Holdings AZ Athenaeum Sigma Fund Mgmt New Horizon CM Katarsis CA Management Sgr (AZ) IM (2015) (2013) (2016) (2017) (2011) (2004) (2011) (100%) (100%) (100%) (100%) (51%) (80%) (100%) Italy Hong Kong US Singapore Australia United Arab Emirates Switzerland Azimut Financial AZ IM HK AZ IM AZ Apice LLC Eskatos CM Insurance (2011) (2011) (2016) (2011) (2015) (100%) (100%) (100%) (70%) (100%) Italy Hong Kong China US Luxembourg AZ Life Dac AZ Swiss(5) AZ Sestante AZ Brasil Holdings (2003) (2012) (2015) (2013) Source: company figures updated (100%) (51%) (100%) (100%) to 31/12/2017 Ireland Switzerland Australia Brazil (1): controls the distribution companies M&O Consultoria, Azimut Enterprises Azimut Portföy CGM(3) CGM Sgr Azimut Brasil AZ Quest FuturaInvest and Azimut Brasil (2014) (2011) (2011) (2011) WM Holding(1) (2015) Wealth Management. (2015) (2): controls AZ Sinopro Insurance (100%) (100%) (51%) (100%) (100%) (66%) Planning. Italy Turkey Monaco Italy Brazil Brazil (3): Azimut reached an agreement to acquire the residual 49% with effect from 31/01/2018. Azimut Global AZ Sinopro FP(2) AZ Mèxico Holdings (4): 30% held by Azimut Counseling (2013) Sa de CV Partecipazioni, wholly owned by (2013) (2014) Azimut Holding, and merged into (100%) (51%) (94%) Azimut Capital Management Italy Taiwan Mexico SGR S.p.A., with effect from 01/01/2018, and 19% held by Azimut Financial Insurance (2) Azimut Libera AZ Sinopro SICE Màs Fondos Sa S.p.A. Impresa Sgr (2013) (2014) (2014) (5): controls 37 companies at 31/12/2017. (100%) (100%) (100%) (6): controls SDB Financial Solutions Italy Taiwan Mexico with effect from 8 January 2018. AZ Andes Spa AZ NGA(5) Asset management (2015) (2014) Distribution (92%) (52%) Life Insurance Chile Australia Alternatives 8 Gruppo Azimut 1989 Year of incorporation 2004 Year of flotation 50.4 billion Total assets 17 countries Geographical presence 830 Employees 1,638 Financial advisors 6.8 Inflows for 2017 811 milion Revenues for 2017 215 milion Net profit for 2017 15.97 Share price 9 Main indicators Financial indicators 2011 2012 2013 2014 2015 2016 2017 (in millions of euros) Total income: 326 434 472 552 708 706 811 of which fixed management fees 266 282 322 394 485 519 607 EBIT 90 177 182 193 280 205 278 Net profit for the period 80 161 156 92 247 173 215 Operating indicators 2011 2012 2013 2014 2015 2016 2017 Financial advisors 1,390 1,396 1,477 1,524 1,576 1,637 1,638 Clients 155 160 163 173 185 198 208 thousand thousand thousand thousand thousand thousand thousand Assets in fund management (billions of euro) 14.6 17.5 21.4 26.7 31.2 35.8 40.2 Net inflows (billions of euro) 0.9 1.6 3.1 4.8 4.5 3.5 4.2 Clients' net weighted average performance -6.8% 8.0% 4.2% 4.8% 1.6% 3.6% 2.20% 10 Gruppo Azimut Mutual funds 65% Breakdown of assets under management Discretionary portfolio management 19% at 31 December 2017 AZ Life insurance 14% Advisory 2% 14% 2% 65% 19% Breakdown of assets under management at 31 December 2017 Mutual funds Discretionary portfolios AZ Life Insurance Advisory 11 12 Gruppo Azimut Management Report of the Consolidated financial statements for the year ended 31 december 2017 13 14 Gruppo Azimut Management report of the Azimut Group Baseline scenario Financial markets and the global economy Background scenario Economic growth was solid in the main advanced and emerging economies; but, however, it was not associated with any pick-up in inflation, which remained weak. Short-term prospects remain favourable, but the risk remains that a downward adjustment of the price of financial assets may slow down the economic activity. Business in the main advanced economies continued to grow in the second half of 2017, with an economic scenario that remained positive in the last few months of the year. In the United States, the most recent figures point to robust growth. In the United Kingdom, private consumption showed signs of revival, with the leading indicators revealing a growth rate for the last quarter of 2017 in line with the average of the first three quarters. In Japan, the most recent economic figures point to an acceleration in economic activity in the fourth quarter of the previous year. In emerging countries, the economic recovery which began in the first half of 2017 continued. In China, growth remained stable in the last few months of the year, after exceeding expectations in the previous quarters. During the summer months, GDP rose in India and Brazil. Inflation in the main advanced economies remained low, slightly above 2% in the United States, while it fluctuated around 0.5% in Japan. The United Kingdom remains an exception, with a 3% increase in prices, assisted by the depreciation of the pound. Finally, inflation remained modest in the main emerging economies. The risks to the world economy remain linked to the possible volatility increase in financial markets, in addition to the sudden escalation of geopolitical tensions, specifically in North Korea, and the uncertainties about the economic policies, which may have a negative effect on the confidence of households and businesses. Although the first phase of Brexit has been agreed, the uncertainties surrounding the structure of the relationship between the two economies remain high. The outcome of the latest meeting between the countries (United States, Canada and Mexico) members of the North American Free Trade Agreement (NAFTA) for its revision makes the future of international trade agreements less predictable. However, the effects of the tax reform in the United States approved on 20 December 2017 (Tax Cuts And Jobs Act), envisaging a decrease in the tax rates for households and businesses, may stimulate global growth. The conditions on the international financial markets remain relaxed. In the main International financial advanced economies, long-term interest rates rose on the modest levels recorded markets at the end of September. In the Eurozone, the sovereign risk premiums decreased considerably. Stock prices reached historic highs, despite different trends. The euro appreciated against the main currencies and this trend is expected to continue in the short term. In the United States, the yields on the 10-year bonds rose by approximately 20 basis points compared to the end of September 2016 (to 2.6%). The increase mainly 15 Management report of the Azimut Group took place in the days immediately after the Federal Reserve meeting held on December of the last year. Since the beginning of the fourth quarter, the interest rates on the 10-year German bonds rose by 12 basis points, to 0.58%. In the Eurozone, the sovereign risk premiums benefited from the strengthening of growth and the favourable reaction of market players to the rescheduling of the purchase programme unveiled by the ECB. Since the end of September, the yield differentials between the 10-year government bonds and the corresponding German bonds decreased in Italy, Spain and Belgium (by 25, 22 and 12 basis points, respectively) and, even more significantly, in Portugal (- 71 basis points), as this country benefited from S&P’s upgrading of the sovereign rating to investment grade in September, followed by Fitch’s upgrading in December. They remained almost unchanged in France, while they rose in Ireland (+ 14 basis points) due, in part, to the technical issue related to the benchmark change.
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