2013 Report Azimut Holding Spa

2013 Report Azimut Holding Spa Gruppo Azimut Summary

Azimut Group Management Report 1

Consolidated financial statements at 31 December 2012 25

Notes to the consolidated accounts at 31 December 2012 37

Certification of the consolidated accounts pursuant 117 to article 154-bis of Legislative Decree n° 58/98

Azimut Holding Spa Management Report 119

Financial statements at 31 December 2012 137

Notes to the accounts at 31 December 2012 149

Attachments 205

Certification of the accounts pursuant 210 to article 154-bis of Legislative Decree n° 58/98 6 Gruppo Azimut Consolidated financial statements at 31 December 2013

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The Azimut Group achieved record performance in 2013, in line with the previous Group results year. Specifically, the Group consolidated net profit amounted to 155,753 thousand euro (160,695 thousand euro in 2012), while consolidated EBIT came to 182,505 thousand euro (180,808 thousand euro in 2012). Total assets under management at the end of 2013 reached 21.4 billion euro, up by approximately 22% compared to the end of 2012. Total assets, including assets under custody, amounted to 23.9 billion euro. In 2013, the Group set a historical record in terms of inflows (up 120% on 2012), confirming the Group’s upward trend. Group total inflows were positive at 3,104 million euro at 31 December 2013. The recruitment of financial advisors showed a positive balance: in 2013, the Group networks showed 159 new engagements, bringing the total number of advisors to 1477.

Assets (amounts in millions of euro) Total assets Figures in millions of euro AUM AUM Change and net inflows 31/12/2013 31/12/2012 Absolute % Mutual funds 18,649 15,668 2,981 19.0% Discretionary portfolio management and other 2,860 1,939 921 47.5% AZ Life insurance 2,576 1,540 1,036 67.3% Double counting (2,664) (1,653) (1,011) 61.2% Total AUM, net 21,421 17,494 3,927 22.4% Securities, third-party funds and A/C 2,529 2,098 431 20.5% Total 23,950 19,592 4,358 22.2%

Net inflows (amounts in millions of euro) Figures in millions of euro 2013 2012 Absolute % Change Mutual funds 2,243 1,051 1,192 113.4% Discretionary portfolio management 849 495 354 71.5% AZ Life insurance 975 576 399 69.2% Double counting (963) (536) (427) 79.7% Total net inflows 3,104 1,586 1,518 95.7% Securities, third-party funds and A/C 132 (112) 244 n/a Total 3,236 1,474 1,762 119.5%

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Consolidated net financial With regard to the methods used to assess net financial debt, reference is made to the debt 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 are considered as cash equivalents given that they are collected by the Group during the first few working days after the reporting date.

Items 31/12/2013 31/12/2012 A Cash 16 19 B Cash equivalents: 548,067 342,525 Due from banks 486,588 295,954 Due from managed funds 61,479 46,571 C Available-for-sale financial assets 97,466 57,922 D Total cash A+B+C 645,549 400,466 E Short term receivables F Short term bank loans - - G Current portion of long term debt: (13,740) (34,174) Bonds (Azimut ‘09-’16) (354) (708) Bonds (Azimut ‘11-’16 Senior) (19) (20) Bonds (Azimut ‘13-’20 Convertible) (52) Due to banks (lease-back) (3,123) (3,145) Due to banks (BPN loan) (10,192) (30,301) H Other short term payables I Short term financial debt F+G+H (13,740) (34,174) J Short term financial debt (net) I-E-D 631,809 366,292 K Long term bank loans: (40,100) (53,200) Due to banks (BPN loan) (40,000) (50,000) Due to banks (lease-back) (100) (3,200) L Bonds (228,183) (34,936) Bonds (Azimut ‘09-’16) (17,005) (34,115) Bonds (Azimut ‘11-’16 Senior) (817) (821) Bonds (Azimut ‘13-’20 Convertible) (210,361) M Other long term debt - - N Long term financial debt K+L+M (268,283) (88,136) O Net (financial) debt J+N 363,526 278,156

4 Gruppo Azimut Net financial position was at +364 million euro at 31 December 2013, an improvement of 85 million euro on the 278 million euro at 31 December 2012. The results were impacted by the liquidity generated by operating activities, as well as by 94.2 million euro for the payment of dividends to shareholders and holders of profit-participating financial instruments and the payment to Fondazione Azimut Onlus of 1.8 million euro made in execution of the Shareholders’ resolution of 24 April 2013, in addition to the following main operations performed during the year: • exercise of the call option on 134,643 profit-participating financial instruments for a total of 3,231 thousand euro, pursuant to the Shareholders’ resolution of 29 April 2010 and the subsequent resolutions of the Board of Directors; • on 27 September 2013, Azimut Holding Spa acquired 16.84% of Siamo Soci Srl against a total consideration of 700 thousand euro; • on 30 August 2013, AZ International Holdings Sa acquired 51% of Taiwanese AN Ping Investment against a consideration of 2,029 thousand euro; • on 2 October 2013, AZ International Holdings Sa acquired 55% of Athenaeum Ltd against a consideration of 1,404 thousand euro; • on 10 October 2013, AZ International Holdings acquired 50% of AZ Legan Admi- nistracao de Recursos Ltda, through its subsidiary AZ Brasil Holdings Ltda, against a consideration of 7,431 thousand euro; • on 20 December 2013, Azimut Holding Spa acquired 46% of Programma 101 Spa against a total consideration of 423 thousand euro.

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Loans raised and repaid during the year

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

Euro/000 Interest rate Currency Nominal Effective Total Total Maturity Nominal Book Value Value Balance at 01/01/2013 Euro 119,536 Of which: BPN loan - Line A Euro Euribor+1.15 Euribor+1.15 20,000 20,000 2013 BPN loan - Line B Euro Euribor+1.25 Euribor+1.25 70,000 60,000 2018 Subordinated bond “Azimut 2009-2016” Euro 4% 5.15 53,075 32,429 2016 Bond “Azimut 2011-2016 Senior” Euro 2.50% 3.06% 884 807 2016 Lease-Back debt Euro Euribor+0.4% Euribor+0.4% 9,400 6,300 2015 Issues: 210,361 Subordinated bond “Azimut 2013-2020” Euro 2.13% 4.91% 250,000 209,880 2020 Repayments: Euro (50,515) BPN loan - Line A Euro Euribor+1.25 Euribor+1.25 (20,000) (20,000) 2013 BPN loan - Line B Euro Euribor+1.25 Euribor+1.25 (10,000) (10,000) 2013 Subordinated bond “Azimut 2009-2016” Euro 4% 5.71 (17,691) (17,405) 2016 Bond “Azimut 2011-2016 Senior” Euro 2.50% 3.06% (10) (10) 2016 Lease-Back debt Euro Euribor+0.4% Euribor+0.4% (3,100) (3,100) 2015 Balance at 31/12/2013 Euro 279,382

The instalments of the loan granted by Banco Popolare relating to Lines A and B totalling 30,000 thousand euro were repaid on 30 June 2013. In April 2013, following the request from a subscriber of the “Azimut 2011-2016 Senior” bond, Azimut Holding Spa, in accordance with the regulations of said bond, repurchased 10 bonds for an amount of 10 thousand euro. On 1 July 2013, as well as paying the interest instalment of 1,415 thousand euro, and in execution of the Board of Directors’ decision of 9 May 2013, Azimut Holding Spa also 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 original par value. As from 25 November 2013, Azimut Holding Spa completed the issue of the subordinated bond 2013-2020 (“Azimut 2013-2020 convertible 2.125%) totalling 250 million euro, of which 35.7 million euro was recognised as an equity component.

6 Gruppo Azimut Reconciliation of Azimut Holding Spa net income and shareholders’ equity to consolidated figures Total shareholders’ equity of which profit at 31/12/2013 for the year Holding opening balance 619,331 148,510 Adjustments due to changes in calendar year 2,106 Total Holding shareholders’ equity 621,437 148,510 Adjustments: Results of consolidated companies 253,805 253,805 Subsidiary consolidation effects 110,379 Azimut Holding Spa dividend cancellation (160,514) (160,514) Azimut Consulenza Sim Spa dividend cancellation (42,862) (42,862) AZ Investimenti Sim Spa dividend cancellation (41,148) (41,148) AZ International dividend cancellation (1,898) (1,898) Equity accounted investments 1,550 35 Tax adjustments (2,183) 362 Other consolidation adjustments (49,823) (537) Total Group shareholders’ equity 688,742 155,753 Minority interest 4,852 126 Total shareholders’ equity 693,594 155,879

In order to provide a more effective representation of results, the income statement Reclassified consolidated has been reclassified and thus better reflects the content of the items according to income statement operating criteria. The main reclassifications involved the following: • cost recoveries on portfolio management reported under “Fee and commission income” have been reclassified as “Other income” in the reclassified income statement; • net premiums and the corresponding change in the technical reserves, commissions and recovered expenses relating to insurance and investment products issued by AZ Life Ltd, reported under “Net premiums”, “Change in technical reserves” and “Fee and commission income”, have been reclassified as “Insurance income”; • commission expenses paid to the distribution network, reported under “Fee and commission expenses” are now classified as “Acquisition costs”; the Enasarco/Firr contributions related to these commission expenses and the other trade payables associated with the distribution network, booked under “Administrative costs”, are now classified as “Acquisition costs”; the amount allocated to the supplementary indemnity provision for agents (ISC) reported under “Provisions for risks and charges” has been reclassified as “Acquisition costs”; administrative cost recoveries, reported under “Other operating income and costs” were recognised as a reduction of “Overheads/administrative costs”;

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• interest expense on loans was reported under “Interest expense” in the reclassified income statement.

Euro/000 2013 2012 (*) Acquisition fees 9,055 7,637 Fixed management fees 321,603 281,934 Variable management fees 107,201 119,714 Other income 6,608 6,174 Insurance income 27,629 18,114 Total income 472,096 433,573 Acquisition costs (208,049) (173,259) No-load fees (6,232) (13,787) Overheads/administrative costs (69,440) (62,582) Amortisation / provisions (6,830) (6,704) Total costs (290,551) (256,332) EBIT 181,545 177,241 Net financial income 8,973 10,508 Net non-recurring costs (5,101) (1,508) Interest expense (3,177) (4,488) Pre-tax profit (loss) 182,240 181,753 Income tax (28,519) (21,522) Deferred tax assets/liabilities 2,158 139 Net profit 155,879 160,370 Profit (loss) attributable to minority interest 126 (325) Group net profit 155,753 160,695

(*) The figures for the previous year were restated compared to the originally published figures due to the retrospective application of the new version of IAS 19.

Consolidated EBIT and Group consolidated net profit at 31 December 2013 came to 181,545 thousand euro (177,241 thousand euro at 31 December 2012) and 155,753 thousand euro (160,695 thousand euro at 31 December 2012), respectively. Overheads for 2013 rose on 2012. The increase is also due to the consolidation of foreign equity investments.

Financial markets and the The expansion of global economic activity and international trade continued in global economy 2013 at a moderate pace. The US economy is picking up, also thanks to fewer uncertainties surrounding the budget policy. Moreover, the implementation of the Federal

8 Gruppo Azimut Reserve’s decision to reduce the purchase of securities did not cause any increase in the volatility of financial markets and exchange rates. The emerging economies have continued to grow, although a downward trend is possible due to less expansionary global financial conditions. According to the most recent indicators, after the increase recorded in the third quarter of 2013, global trade continued to grow in the fourth quarter of the year: up to 4.9% on the previous period and year and up to 1.2% on the second quarter). This trend is in line with annual growth of approximately 3%. Inflation remained extremely moderate in developed countries. In November, the consumer price index grew 1.2% and 2.1% in the United States and the United Kingdom, respectively, on 2012, while in Japan, the change in the general price index, positive since last summer, reached 1.6%. The consumer price trend in emerging countries remained high in India, Brazil and Russia. Based on the most recent forecasts by the OECD, in 2014, world growth will recover 3.6% after the 2.7% fall recorded in 2013. Operations are expected to rise in the United States and the United Kingdom by 2.9% and 2.4%, respectively, while Japan will experience a 1.5% slow-down. Increases are expected also in the main emerging economies, except for Brazil.

European economy

Despite the modest recovery of the eurozone, the economy remains weak. The fragile economic growth reflects an extremely moderate trend of consumer prices, generating higher interest rates and a slow reduction of private and public debt. As inflation remains below the level necessary for price stability and considering moderate monetary and credit trends and weak economic activities, the ECB Governing Council reduced the official rates in November and confirmed they will remain unchanged or even lower than the current ones for a long time. The Governing Council also confirmed that, if necessary, all available tools will be used to maintain accommodating monetary conditions. In the third quarter of 2013, the GDP in the eurozone grew 0.1% on the second quarter of the year, following the increase in consumption (0.1%), the piling up of stocks and the increase in gross fixed investments (0.5%). Imports remained strong (1.2%), while exports fell 0.3%. With respect to the main eurozone economies, GDP rose 0.3% in Germany, following the increase in construction investments, while it fell 0.1% in France, as a consequence of the negative effect of net foreign demand and the decrease in investments. In Italy, GDP remained unchanged, halting the long recession period.

Emerging markets

The economies of the main emerging countries experienced different trends. In the third quarter of 2013, China grew (up 7.8% on the third quarter of 2012) following the measures adopted during the summer to promote investments and support ex-

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ports. GDP growth remained modest in India (4.8%) despite the strong depreciation of the rupee and the recovery of agricultural production. In Brazil, GDP experienced a slow-down (to 2.2%), while Russia GDP continued to stagnate. The most recent indicators confirm the growth in China, thanks to recovery of exports and strong consumption and investments. In November, the Chinese authorities unveiled a large number of reforms to strengthen market economy and increase competition in the financial and manufacturing sectors, along with an increased fle- xibility of exchange rates. Forecasts remain weak for Brazil, India and Russia, where, according to analysts, growth is set to remain modest. The financial markets of emerging countries benefited from the general increase in risk appetite which, to date, has more than offset the uncertainties surrounding the intensity of the internal cyclical recovery and the Federal Reserve’s decisions. Share prices rose, while sovereign risk premiums experienced a moderate fall. However, in developed countries, the gap in the performance of stock markets, widened: at mid- January, the indices of emerging economies remained below 7.6%, compared to those recorded in early 2013, against a 24.8 increase in those of G7 countries. After cutting the Selic rate for the tenth time in October, bringing it to an all-time low of 7.25%, the Central Bank of Brazil expressly committed to maintaining stable monetary conditions for a sufficiently long period.

Bond markets

Over the last few months of 2013, the interest rates on ten-year US and UK treasury securities rose 25 and 12 bp, respectively, between the end of September and mid- January, reflecting the progressive improvement of the economic situation. In Japan and Germany, returns remained unchanged. In the eurozone, the diffusion of the sovereign debt crisis continued to weaken thanks, inter alia, to stronger prospects for an economic recovery and the ECB’s monetary policy decisions. Premiums on sovereign credit default swaps (CDS) and the interest rate differentials with Germany fell considerably in all eurozone countries which were more directly affected by crisis, with respect to both short-term and medium-/long-term maturities. The decrease led to an average fall of 20 bp in the return of ten-year securities in the entire eurozone. The differentials between the returns of the bonds issued by non-financial companies and the corresponding government securities fell for high credit rating securities and, in particular, for riskier securities.

Equity markets

Since the end of the third quarter of the year, the stock market indices of the main developed countries rose, mainly thanks to the positive signs indicating an economic revival. During the fourth quarter of the year, the main increases were recorded in the United States and in Japan (8.8% and 9.6%, respectively), compared to the eurozone and the United Kingdom (6.4% and 4.1%, respectively). The volatility implied

10 Gruppo Azimut in stock market index option prices, which increased in December, reduced after the Federal Reserve’s decision. Overall share prices have risen 13% in Italy and 8% in the eurozone since the end of September. Against substantially stable profitability prospects for listed companies, the increase in share prices should trigger a decrease in investors’ risk premium. The increase in share prices covered the main segments of the Italian stock market, except for raw materials, and was particularly strong in the insurance and banking segments (21% and 28%, respectively). The decrease in the expected variability of share prices based on stock market index option prices continued.

Azimut Holding Spa Significant events of the year Sale of equity investment in In Alternative Società di consulenza a r.l. On 6 March 2013, the sale by Azimut Holding Spa of 20% of the share capital of In Alternative Società di Consulenza a r.l. (formerly In Alternative Sgr Spa) was finalised for 186 thousand euro.

Azimut Holding Spa Annual Ordinary Shareholders’ Meeting of 24 April 2013 The Shareholders’ Meeting of 24 April 2013 approved the following:

Approval of 2012 financial statements The Shareholders’ Meeting approved the 2012 financial statements, which included a Parent Company net profit of 117.1 million euro. The Shareholders also approved a pre-tax ordinary dividend of 0.55 euro per share. They also approved the payment to Fondazione Azimut Onlus of 1.8 million euro, equal to 1% of pre-tax consolidated profit and the payment of 16.05 euro for each participating financial instrument held by Top Key People at the time of approval of payment of the dividend.

Corporate Bodies The Shareholders’ Meeting renewed the mandate of Azimut Holding Spa. Board of Directors, composed of 9 members who will remain in office for the three years 2013-2015 and up until approval of the 2015 financial statements. The Meeting also reconfirmed the position of the Chairman. The Board of Directors reconfirmed the Executive Committee, the Chief Executive Officer, the Co-CEO and the General Manager. The Shareholders’ Meeting appointed the Board of Statutory Auditors for the three years 2013-2015 and up until approval of the 2015 financial statements. The Board is composed of 5 auditors, three of whom are standing members. They also reconfirmed the position of the Chairman. The Shareholders’ Meeting approved the appointment of PricewaterhouseCoopers Spa to conduct the legally-required audit for the period 2013-2021.

Financial advisor incentive scheme The Shareholders’ Meeting approved an incentive scheme based on the purchase

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of Azimut Holding Spa shares reserved for financial advisors recruited by Azimut Group companies, being the companies directly or indirectly controlled by Azimut Holding Spa, between 1 January 2013 and 30 April 2014. The Azimut Group investment firms (Sim) may nevertheless propose other forms of incentives not based on shares or financial instruments to their eligible financial advisors.

Proposal for purchase and allocation of treasury shares The Shareholders’ Meeting authorised the purchase, pursuant to current regulations, of up to a maximum of 28,000,000 ordinary Azimut Holding shares, or 19.55% of share capital at the date of the resolution, in one or more instalments over an 18-month period. The shares must be purchased for an amount not lower than the implied book value of Azimut Holding shares and a maximum unit price of no more than 25 euro subject to revocation, for the period yet to elapse, of authorisation granted at the Annual Shareholders’ Meeting of 26 April 2012. The Shareholders further resolved to free up the shares purchased on the back of the aforementioned resolution either for sale on the market, in execution of any stock option plans, or for use as payment in any acquisition of shareholdings as well as to exercise warrants awarded following subscription of non-convertible “Azimut 2009- 2016 subordinato 4%” subordinated bonds, the issue of which was approved by the Board of Directors on 8 April 2009.

Remuneration Report: Resolutions pursuant to Article 123-ter, paragraph 6 of Italian Legislative Decree no. 58/98. The Shareholders’ Meeting approved the Company policy concerning remuneration of members of the management boards, general managers and key managers, as well as the procedures used to adopt and implement said policy.

Redemption of 2009-2016 subordinated bond (“Azimut 2009 - 2016 subordinato 4%”) The Azimut Holding Spa Board of Directors’ meeting of 8 May 2013 resolved to make an advance partial redemption of the “Azimut 4% 2009-2016” Subordinated Bonds, as established by Article 9 of the Bond Terms. Said article awards the Azi- mut 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 Su- bordinated Bonds in subsequent years. The advance partial redemption was made in cash on 1 July 2013, for 20% of the par value on issue, amounting to 17,691 thousand euro.

Exercise of warrants issued on the “Azimut 2009-2016 Subordinato 4%” Bond In 2013, in consideration of the positive performance of the Azimut share, which reached the price set for the exercise of the warrants (12 euro) assigned at the placement of the Subordinated Bond “Azimut 2009-2016 Subordinato 4%”, 976,500

12 Gruppo Azimut warrants were exercised for a total amount of 11,718 thousand euro, in exchange for the delivery of the same amount of treasury shares.

Exercise of the call option on profit-participating financial instruments In May 2013, Azimut Holding Spa exercised the call option pursuant to the Sha- reholders’ resolution of 29 April 2010 and subsequent resolutions by the Board of Directors, on 134,643 profit-participating financial instruments at a price of 24 euro each, for a total amount of 3,231 thousand euro.

Repayment of the Banca Popolare di Novara loan On 30 June 2013, the Parent Company made payments of instalments (Lines A and B) of the loan granted by Banca Popolare di Novara (now Banco Popolare) for a total amount of 30 million euro.

Incorporation of Azimut Global Counseling Srl On 4 July 2013, Azimut Global Counseling Srl was established, with initial capital of 10,000 euro, fully subscribed by Azimut Holding Spa. On 17 September 2013, a capital injection of 500,000 euro was made.

Agreement to purchase 51% of Augustum Opus Sim On 25 July 2013, Azimut Holding Spa reached an agreement with the partners of Augustum Opus Sim, an independent asset management company, based on which it will initially acquire 51% to then reach up to 100% following the sixth year. The consideration for the acquisition of 51% of Augustum Opus Sim amounts to 10 million euro, and the value of the remaining 49% will be determined based on the profitability of the partnership during the period (indicatively 10 times the profits: estimated figure ranging between 10-20 million euro). This transaction is subject to the Bank of Italy’s approval.

Capital injections to AZ International Holdings Sa During the year, in execution of the Executive Committee’s decision of 22 January 2013, Azimut Holding Spa made a capital injection of 26.5 million euro.

Liquidation of Azimut Fiduciaria Spa On 11 September 2013, the Shareholders of Azimut Fiduciaria Spa resolved the company’s early dissolution and put it into liquidation with effect from 17 September 2013, being the date the resolution was registered with the Milan company register. The company was struck off the Company register on 10 January 2014.

Acquisition of an equity investment in Siamosoci Srl On 27 September 2013, Azimut Holding Spa acquired 10% of Siamosoci Srl through a 400,000 euro capital injection and share premium. On 18 December 2013, an additional 300,000 euro was paid, increasing the percentage of investment to 16.84%.

Acquisition of an equity investment in Programma 101 Spa On 20 December 2013, Azimut Group and Fondo Italiano di Investimento finalised

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their commitment as the main investors of Programma 101, a venture capital ope- rator which focuses on investments in the digital sector. Azimut Group and Fondo Italiano di Investimento participate in the project with an individual 15 million investment over a three-year period. Programma 101 has a 50 million euro target and was established to meet the demand for venture capital for operations ranging between 500 thousand and 1.5 million euro by Italy’s technological excellence. On 21 December 2013, Azimut Holding Spa paid 426 thousand euro to acquire 46.30% of the company.

Issue of the subordinated bond 2013-2020 convertible into Azimut Holding Spa ordinary shares On 11 November 2013, Azimut Holding Spa’s Board of Directors approved the issue of a subordinated bond convertible into ordinary shares of 250 million euro. Bonds were issued at a nominal unit amount of 100,000 euro, have a seven-year term and an annual nominal fixed-rate return of 2.125%, gross of tax; it is payable on a six-month basis, on 25 November and 25 May of each year starting from 25 May 2014. The conversion premium is set at 30% above the 18.6612 euro reference price, calculated using the weighted average of Azimut ordinary share price on the Italian Stock Exchange between the launch and the definition of the final terms. Bondholders will be entitled to exercise the conversion right at any time from the fourth year and forty-fifth day after the issue to 20 days prior to the maturity date, with the exception of early conversion subject to the occurrence of specific cir- cumstances. Without prejudice to the conversion terms, early repayment, repurchase or cancellation, bonds will be repaid at par on 25 November 2020. They will be initially convertible in treasure shares, already issued, fully subscribed and owned by the Company. However, in addition to the conversion, the latter will be entitled to deliver newly-issued shares pending the future approval by the competent company bodies. Under the bond terms, the Company undertakes not to commence any action that could lead to an adjustment of the conversion ratio, unless the Company has a sufficient number of shares (already issued or newly-issued) to satisfy the Bondholders’ conversion rights, considering the conversion ratio adjustment. Finally, the Company undertakes not to sell the shares and to hold them on a restricted deposit account throughout the term of the convertible bond. The Company will file for admission of the bonds on a regulated market or an international trading multilateral system by the first interest payment date (25 May 2014). The bonds were offered to and placed with exclusively with Italian and foreign qualified investors, not resident in the Uni- ted States, Canada, Australia, Japan and South Africa, excluding any placement with the public and exempt from the regulations governing public offering. Placement was completed on 25 November 2013 with the subscription of the entire nominal amount of 250 million euro.

Outsourcing of the back office delegate An agreement to outsource Azimut Capital Management Sgr Spa back office to BNP Security Services, Azimut Consulenza Sim, AZ Investimenti Sim and Apogeo Con- sulting Sim back offices to CESAM (Centro Services Asset Management Srl - MOL Group), the back office for asset management and order receipt and transmission

14 Gruppo Azimut to Objectway Wealth Services/AMS and the pension fund administrative service to ICPBI, was signed in December 2013. Outsourcing will become effective in 2014.

Azimut Capital Management Sgr Spa

Merger by acquisition of Azimut Sgr Spa On 29 March 2013, the Bank of Italy authorised the merger of Azimut Sgr Spa into Azimut Capital Management Sgr Spa. On 17 April 2013, the share capital increase against payment was carried out, increasing share capital from 1,000 thousand euro to 2,000 thousand euro, with the issue of 1,000,000 new shares. 20,000 shares were subscribed by the shareholder Azimut Holding Spa and, subject to the partial waiver of option rights pursuant to Article 2441 of the Italian Civil Code, 500,000 shares were subscribed by Azimut Consulen- za Sim Spa and 480,000 by AZ Investimenti Sim Spa. As per the merger deed dated 11 September 2013, Azimut Sgr Spa was merged into Azimut Capital Management Sgr Spa with tax and accounting effects as of 1 January 2013 and statutory effect as of 1 October 2013. The recognition of the transaction had no effect on the consolidated financial statements of Azimut Holding Spa; indeed, the transaction took place between companies which belong to the same Group not linked by any direct equity investment.

Azimut Previdenza fund updating Restyling of the Azimut Previdenza fund commenced on 1 October 2013. The main changes are as follows: creation of a bond segment, the possibility of allocating contributions to different segments and the issue of classes with collective membership (minimum 20 members).

Azimut Consulenza Sim Spa

Sale of the business unit by Azimut Consulenza Sim Spa to Deloitte Finance Process Solution Spa On 30 December 2013, Azimut Consulenza Sim Spa sold a business unit related to administrative/accounting services (specifically accounting data-entry and purchase cycle) to Deloitte Finance Process Solution Spa, with effect from 1 January 2014. The consideration of this transaction amounted to 10,000 euro.

AZ International Holdings Sa

Acquisition of an additional 5% of the share capital of Global Securities On 17 January 2013, as planned in the shareholders’ agreements, AZ International Holdings increased its equity investment in the Turkish Global Securities from 5% to 10%. On 6 November 2013, having obtained the local authorities’ authorisations, an

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additional 5% of Global Securities was acquired against a consideration of approximately 0.5 million euro.

Capital increase payment to An Zhong IM Limited and acquisition of 100% of share capital On 14 February 2013, the subsidiary AZ International Holdings Sa paid in 3.5 million euro as a contribution to the capital increase of the subsidiary An Zhong IM Limited, fully reserved to AZ International Holdings, which thus increased its equity investment to 99.9% (65% at 31 December 2012). Subsequently, on 17 April 2013, 3,500 shares were transferred, equal to 0.1% held by CMT in An Zhong IM Limited, to AZ International Holdings, which thus acquired 100% of the company’s capital.

Agreement for acquisition of 51% of An Ping Investment On 27 June 2013, AZ International Holdings Sa and An Ping Investment, a company incorporated in Taiwan which holds 100% of the capital of Sinopro Finan- cial Planning Taiwan Limited (“Sinopro”), signed an investment agreement and shareholders’ agreement to launch a joint venture to distribute asset management products in Taiwan. On 30 August 2013, AZ International Holdings Sa subscribed the reserved share capital to acquire 51% of An Ping Investment. The total consideration for this transaction, inclusive of the business plan financing, amounted to approximately 2 million euro. The relevant agreements provide for call/put options.

Agreement to purchase 50% of Legan Administracao de Recursos On 6 September 2013, Azimut, through AZ International Holdings Sa and Legan Administracao de Recursos (“Legan”), a Brazilian independent asset management company, entered into an investment agreement and shareholders’ agreement to launch an asset management joint venture in Brazil. On 10 October 2013, after completing the authorisation process with the competent authorities, AZ Internatio- nal Holdings Sa, through its subsidiary AZ Brasil Holdings Ltda, acquired 50% of Legan Administracao de Recursos (Legan), a Brazilian asset management company, from the current shareholders. In this respect, a share capital increase of approximately 7.4 million euro was paid to Legan Partecipacoes Sa, the Brazilian company which controls it. Indeed, Legan’s share capital is 99.5% held by Legan Partecipaco- es Sa, while the remaining percentage is owned by minority interests. The agreement provides for put/call options.

Incorporation of AZ Brasil Holdings Ltda As part of the Brazilian development project, AZ Brasil Holdings Ltda, wholly owned by AZ International Holdings Sa and with a share capital of 22,000,000 Reais, was incorporated on 11 September 2013 in order to acquire and/or sell equity investments and create and manage them, including with respect to joint ventures and commercial collaborations to be developed with third parties.

16 Gruppo Azimut Acquisition of 55% of Athenaeum Ltd in Singapore On 2 October 2013, Azimut Group, through its subsidiary AZ International Hol- dings Sa and the independent asset management company Athenaeum of Singa- pore, entered into an investment agreement and shareholders’ agreement to launch an asset management joint venture. Upon completion of the authorisation process by the competent authorities, on 25 October 2013, AZ International Holdings Sa acquired 55% of Athenaeum through a 1.5 million euro share capital increase which will be used to finance the company’s development plans. The agreements provide for a price adjustment mechanism which is linked to the increase in assets over the next two years and put/call options.

Partnership agreement between Azimut Group and Futurainvest Group to provide financial consultancy services. On 12 December 2013, Azimut, through AZ International Holdings Sa and Group FuturaInvest’s partners, entered into an investment agreement and shareholders’ agreement to launch a joint venture which will provide financial consultancy services in the Brazilian market. Subject to some conditions precedent, Azimut Group will acquire, through AZ Brasil Holdings Ltda, 50% of Group FuturaInvest, which is active in the financial advisory field, and an equity investment in the asset management company. Moreover, subject to Banco Central do Brasil’s approval, countersigned by the President of Brazil, it will acquire an equity investment in FuturaInvest DTVM, a financial institution which distributes financial products to local financial investors. The total consideration amounts to approximately 12.5 million Reais (roughly 3.9 million euro). It was mainly paid as part of a share capital increase aimed at suppor- ting the group’s development plan.

AZ Fund Management Sa

Launch of new products Starting from 31 January 2013, the range of sub-funds in the diversified fund AZ FUND 1 was expanded with the launch of the Bond Target 2016 Equity Options sub-fund, which mainly invests in bonds. However, the total exposure of this sub- fund to equity markets under normal market conditions may reach a maximum of 80% of net assets in the sub-fund, which will mainly be realised using options on stock market indices, including sector indices.

In February 2013, AZ Fund Management Sa began to market new AZ Multi Asset sub-funds named: “World Trading”, “Global Tactical Asset Allocation”, “Flex” and “Romeo”.

On 16 September 2013, the sub-funds of the Luxembourg diversified AZFUND1 were launched, specifically: • Top Rating: which invests in shares, bonds and government securities; • Asset Timing: which invests in UCITS units and/or other similar UCIs, shares and

17 Management report

securities, bonds and/or monetary market securities; • Hybrid Bonds: which invests in bonds (fixed rate, floating rate, index-linked, subordinated, convertible and cum warrant); • Lira Plus: which focuses investments mainly on the stock market instruments of Tur- kish issuers, in addition to fixed- and floating-rate Turkish bonds, up to 30% of the sub-fund assets; • Global Sukuk: which feeds the AZ Multi Asset - Global Sukuk (the Master) sub-funds and permanently invests 85% of its assets in the above Master; • Short Term Global High Yield: which mainly invests in government bonds and monetary market instruments; • Bond Target 2017 Equity Options: which invests in Bonds with residual currency in line with the “target date” of 31 December 2017 and in shares, for the residual part.

In May 2013, AZ Fund was QFII certified; consequently, it can now directly invest in various asset classes of the Chinese financial market. The Sif diversified “AZ Pure Chine” was launched on 2 September 2013.

Product updating for the AZ Multi Asset Fund On 16 September 2013, the new BTPortfolio sub-fund of the Luxembourg diversified AZ Multi Asset fund was launched. It invests exclusively in government bonds.

Updating of the AZ Fund 1 Fund As of 21 October 2013, with a view to improve the efficiency of AZ Fund 1 diversified fund, the “Formula Commodity Trading”, “Trend”, European Dynamic”, “For- mula Macro Dynamic Trading” and “Italian Trend” sub-funds will be transformed into feeders of the respective master funds of the AZ Multi Asset fund.

As from 20 December 2013, the sub-funds of the AZ Fund 1 fund, “Commodity Trading”, “Trend”, “European Dynamic”, “Macro Dynamic Trading” and “Italian Trend” have been transformed into feeders of the corresponding sub-funds of the AZ Multi Asset fund (specifically: Institutional Commodity Trading, Institutional T, Institutional Europe D, Institutional Macro Dynamic Trading and Institutional Italy T) for which, as mentioned earlier, master classed were created in the meantime. Consequently, as from the above date, the feeding sub-funds of the AZ Fund 1 fund shall invest at least 85% of their assets into the master classes of the corresponding sub-funds of the AZ Multi Asset fund.

AZ Life Ltd

Launch of new products In the first half of the year, this insurance company expanded its range of products with the launch - effective from 15 March 2013 - of two new unit-linked policies: “AZ Navigator” and “AZ Navigator Plus”. The new unit-linked policies are targeted to medium-high end clients, as they have

18 Gruppo Azimut high initial minimum premiums. The product “AZ Navigator Plus” can also be cu- stomised for individual clients by creating a dedicated Internal Insurance Fund. In the unit-linked policy “AZ Navigator”, on the contrary, premiums paid are fully invested in one of the three Internal Funds available based on the contract. These In- ternal Funds - “Low Volatility”; “Balanced Flexible” and “Equity Dynamic” - have increasing risk-return profiles. Lastly, in June, AZ Life expanded its range of Internal Fund available under the “Pleiadi” unit-linked contract with the launch of “Quasar”, an Internal Fund with a flexible management approach which has the option of using quantitative instruments to regulate exposure to equity markets.

Tax Position

During 2009, the Lombardy Regional Tax Authority - Monitoring, Litigation and Collection Unit - Large Taxpayer Office ordered a routine tax inspection for the subsidiaries Azimut Consulenza Sim Spa and Azimut Sgr Spa (which was merged into Azimut Capital Management Sgr Spa with statutory effects from 1 October 2013) covering the tax years 2005, 2006 and 2007 for direct tax, VAT and IRAP (regional business tax) purposes. Following the inspections, both companies were served with Official Tax Audit Re- ports in 2010 for additional tax payments totalling 14 million euro for IRES (corporate income tax) and IRAP (regional business tax) from Azimut Consulenza Sim Spa and totalling 18 million euro for IRES and IRAP and a 4.8 million euro penalty in terms of VAT from Azimut Capital Management Sgr Spa. The latter amount related to the position of Custodian Bank. In 2011, Azimut Consulenza Sim Spa demonstrated the groundlessness of the Tax Authority’s claims on the issue of transfer pricing and the tax inspections for the tax years 2005, 2006 and 2007 were definitively closed through an audit settlement which resulted in the payment of a total amount of 457 thousand euro for IRES and IRAP. Azimut Capital Management Sgr Spa on the other hand filed its requests and obser- vations with the Tax Authority on 27 December 2010 in response to the comments contained in the Official Tax Audit Report, reiterating that all allegations were false and unfounded, reserving the right to demonstrate these inaccuracies under any ju- risdiction. Azimut Capital Management Sgr Spa did not receive any notices of assessment in terms of IRES and IRAP, while on 24 January 2013 the Lombardy Regional Tax Authority - Large Taxpayer Office - of the Tax Authority notified Azimut Capital Management Sgr Spa with the decision to impose penalties in terms of VAT for the tax years 2005, 2006 and 2007 for an amount of approximately 3.6 million euro. Deeming these findings unfounded, Azimut Capital Management Sgr Spa submitted an appeal within the legal deadline. With respect to the latter point, for the purposes of completeness, it is noted that the Tax Authority, in its resolution 97/e of 17 December 2013, was in favour of

19 Management report

subjecting to VAT only 28.3% of the total commission paid to the Bank for custodian services. In 2011, the Milan Finance Police Corps of the Italian Finance Police ordered ordinary tax inspections of Azimut Holding Spa, AZ Life Ltd., AZ Fund Management Sa and Azimut Consulenza Sim Spa. On 29 October 2012, an Official Tax Audit Report was served to Azimut Holding Spa, which sets forth findings relating to direct taxes for the year 2003. Subsequently, on 22 March 2013, a similar Official Tax Audit Report was served relating to the tax years 2004 to 2011. More specifically, the above Official Tax Audit Reports alleges a tax elusive conduct under Article 37-bis of Italian Presidential Decree 600/1973 of the Management Buy Out transaction carried out by Tumiza Spa (now Azimut Holding Spa) and assumes a higher taxable base and, as such, higher direct taxes due for a total of approximately 20 million euro. Azimut Holding Spa considers the findings of the Finance Police to be unfounded also, and above all, based on two tax clearance applications submitted at the time to the Lombardy Regional Tax Authority, which expressed a favourable opinion on the Company’s approach, which are now objected to in the Official Tax Audit Report. Moreover, in procedural terms, the tax year 2004 should no longer be considered susceptible to audit, even doubling the legal time limits. To date, Azimut Holding Spa has not received any notice of assessment in this regard. In order to avoid the end of the statute of limitations, on 14 December 2012, the Italian Finance Police drew up an Official Tax Audit Report for AZ Fund Manage- ment Sa, which was followed by a notice of assessment by the Tax Authority for 2001 only, for the purpose of establishing extra tax payments in terms of IRES and IRAP amounting to 1.2 million euro. On 16 January 2013, AZ Fund Management Sa submitted an application for the settlement of the tax assessment. In December 2013, the Tax Authority served a notice of assessment to AZ Fund Management Sa for 2002 relating to IRES and IRAP on income of approximately 1 million euro. On 11 February 2014, AZ Fund Management Sa submitted an application for the settlement of the tax assessment for 2002. On 24 April 2013, the Italian Finance Police drew up an Official Tax Audit Report for AZ Life LTD for the tax years from 2004 to 2011. On 9 May 2013 an Official Tax Audit Report was drawn up for AZ Fund Management Sa for the tax years from 2002 to 2011. Both of these Reports aim to establish extra tax payments in terms of IRES and IRAP for total taxes of up to a maximum of 22 million euro and 159 million euro, respectively. Both of the above companies deem the findings to be unlawful and unfounded, reserving the right to demonstrate said unlawfulness and unfoundedness in any venue. The tax audit on Azimut Consulenza Sim Spa was completed without significant findings.

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

20 Gruppo Azimut Strategic risk Strategic risk is defined as a current or potential risk of a reduction in earnings or -ca pital 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 Delegates/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 governance and control bodies, 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 re- cruit 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 regard 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. Furthermore, 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 liability insurance for the financial advisors themselves (with the maximum annual claims deemed adequate for 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. Internal control over financial advisors is based on the identification and analysis of possible irregularities in remote monitoring and inspections at financial advisors’ offices. These controls are carried out also to check compliance with presentation criteria, correct keeping of archives and fulfilments vis-a-vis the Body in charge of

21 Management report

the Financial Advisors’ register. Should any irregularity be detected, or in case of non-compliance with the code of conduct, the financial advisors directly involved or their In-charge are asked to prepare a specific report giving explanations or to take adequate measures.

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 assess 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 Control and Risk Management Committee, 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 contracts with Asset Management Service Spa and Objectway Financial Software Spa were signed, and with con Deloitte Enterprise Risk Service (on 1 Oc- tober 2013), 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.

22 Gruppo Azimut 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 minimising 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 subsidiaries is constantly updated, in order to identify which departments, procedures and activities are most subject to reputational risks; • the Internal Control 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 Italian Legislative Decree no. 58/98 (TUF - Financial Services Act), Azimut 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 department, 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 department: • proposes any organisational and procedural changes to ensure adequate protection against any identified risks of non-compliance; • submits a report to all relevant bodies, including the Supervisory Body (pursuant to Italian Legislative Decree no. 231/2001), the Board of Statutory Auditors, the Inter- nal Control and Risk Management Committee;

23 Management report

• controls the efficiency of organisational changes (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 regard 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.

Related party disclosures Pursuant to Consob Regulation on Related parties (Resolution no. 17221 of 10 March 2010, as amended), dated 22 November 2010, the Board of Directors of

24 Gruppo Azimut Azimut Holding Spa approved the procedures that ensure transparency and fairness of related party transactions (“Related Party Transaction Procedure” available on Azimut’s website at www.azimut.it). With reference to paragraph 8 of Article 5 of the Consob Regulation on periodic disclosure of related party transactions, the Group did not engage in any “significant” transactions during 2013. No other atypical or unusual transactions were performed. Disclosures on other related party transactions are provided in in paragraph “Rela- ted Party Transactions” in Part D, Section 5 of the Notes to the consolidated financial statements.

Azimut Holding Spa complies with corporate governance regulations in force in Organisational structure Italy. Moreover, the corporate governance structure partially reflects the recommen- and corporate governance dations contained in the Code of Conduct for Listed Companies published by Borsa Italiana. For more information reference should be made to the attached Report on corporate governance and ownership prepared pursuant to Article 123-bis of the Financial Services Act (TUF). Azimut Holding Spa has established a risk management and internal control procedure for financial reporting, using as a reference the “COSO Report”, under 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 control over financial reporting are described in the Report on corporate governance and ownership.

Human resources As at 31 December 2013, Group personnel amounted to 215 employees, broken down as follows:

Position 2013 2012 Directors 50 43 Middle managers 71 53 Office staff 94 77 Total 215 173

The increase in the number of employees at 31 December 2013 over the previous year reflects the consolidation of recently acquired companies.

The research and development activities undertaken by the Azimut Group focus Research and exclusively on the “production” of investment instruments and services and on the development activities

25 Management report

sale 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 2013, these activities were focused on enhancing the range of products offered, as detailed in the “Significant events of the year” section of this report; • market analyses and surveys of current and potential client needs; • life insurance market analysis.

Secondary and branch The Irish insurance company AZ Life Ltd. has been authorised by the Insurance offices Industry Supervisory Body (ISVAP) to engage in business activities in Italy as a permanent establishment via a regional office in Milan.

Treasury shares At 31 December 2013, Azimut Holding Spa subsidiaries 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. In 2013, 976,500 treasury shares were assigned against the exercise of the same number of warrants issued at the placement of the Subordinated Bond “Azimut 2009 - 2016 Subordinato 4%”, and transactions were carried out on treasury shares which resulted in a total decrease of 348,964. At 31 December 2013, Azimut Holding Spa’s treasury share portfolio therefore stan- ds at 10,703,695 shares, or 7.472% of share capital. With regard to transactions subsequent to 31 December 2013, up to the date of approval of this report, 77,550 treasury shares were assigned against the exercise of the same number of warrants issued at the placement of the Subordinated Bond “Azimut 2009 - 2016 Subordinato 4%”.

Business outlook Group total inflows were positive at approximately 1.198 million euro at 28 February 2014. Total assets, including assets under custody, reached 25 billion euro, of which 22 billion euro relates to assets under management. Given the above figures and the positive results of the subsidiaries in early 2014, consolidated performance is expected to be positive this year. Nonetheless, this year’s economic, financial and operating performances will also be affected by financial market trends.

Milan, 6 March 2014

Chairman and CEO On behalf of the Board of Directors (Pietro Giuliani)

26 Gruppo Azimut Consolidated balance sheet at 31 December 2012

27 Consolidated balance sheet at 31 December 2013 Assets

Euro/000 31/12/2013 31/12/2012 Cash and cash equivalents 16 19 Financial assets measured at fair value 2,583,395 1,542,097 Available-for-sale financial assets 99,996 60,592 Held-to-maturity financial assets 0 210 Receivables 573,895 358,256 Equity investments 3,038 1,416 Tangible assets 2,960 2,446 Intangible assets 369,250 359,587 Tax assets 89,415 52,224 a) current 50,978 11,819 b) deferred 38,437 40,405 of which pursuant to Italian Law 214/2011 840 6,787 Non-current assets held for sale and discontinued operations 75 261 Other assets 64,419 63,063 Total assets 3,786,459 2,440,171

On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

28 Gruppo Azimut Consolidated profit and loss account at 31 December 2013 Liabilities and shareholders’ equity

Euro/000 31/12/2013 31/12/2012( *) Payables 106,164 133,729 Outstanding securities 228,608 35,664 Technical reserves where the investment risk is borne by policyholders 310,994 333,279 Financial liabilities measured at fair value 2,305,428 1,228,596 Other technical reserves 350 350 Tax liabilities 83,537 58,447 a) current 33,903 11,599 b) deferred 49,634 46,848 Other liabilities 36,659 36,467 Staff severance pay (TFR) 2,265 2,052 Provisions for risks and charges 21,935 20,797 b) other provisions 21,935 20,797 Share capital 32,324 32,324 Treasury shares (-) (82,224) (99,143) Equity instruments 72,521 39,515 Share premium reserve 173,987 173,987 Reserves 334,077 281,273 Valuation reserves (771) 930 Profit (loss) for the year 155,753 160,695 Minority interest 4,852 1,209 Total liabilities and shareholders’ equity 3,786,459 2,440,171

(*) The figures were restated compared to the originally published figures due to the retrospective application of the new version of IAS 19.

On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

29 Consolidated income statement at 31 December 2013

Items 01/01/13 01/01/12 Euro/000 31/12/2013 31/12/2012 (*) Gains/losses on disposal or repurchase of: 270 (282) a) financial assets 556 180 b) financial liabilities (286) (462) Net financial liabilities measured at fair value (353) 0 Fee and commission income 451,555 420,838 Fee and commission expenses (190,097) (168,541) Interest income and similar income 9,033 9,460 Interest expenses and similar expenses (3,069) (4,215) Dividends and similar income 15 29 Net premiums 3,645 5,486 Net gains/(losses) on financial instruments at fair value through income statement 61,943 56,701 Change in technical reserves where the investment risk is borne by policyholders 22,285 23,067 Redemptions and claims (66,929) (71,226) Total income 288,298 271,317 Adjustments/write-backs due to impairment of: 0 (3,550) a) financial assets 0 (3,550) Administrative costs (96,684) (79,046) a) personnel costs (37,685) (34,665) b) other administrative costs (58,999) (44,381) Net impairment and write-ups of tangible assets (1,007) (943) Net impairment and write-ups of intangible assets (3,271) (1,122) Net provisions for liabilities and charges (2,383) (5,704) Other operating income and costs (2,448) (144) Operating profit 182,505 180,808 Profit (loss) from equity investments (265) 793 Gains (Losses) on disposal of investments 0 152 Pre-tax profit (loss) from continuing operations 182,240 181,753 Income tax on profit from continuing operations (26,361) (21,383) Net profit (loss) from continuing operations 155,879 160,370 Profit (loss) for the year 155,879 160,370 Profit (loss) for the year attributable to minority interest 126 (325) Parent Company profit (loss) for the year 155,753 160,695

Basic earnings per share 1.168 1.209 Diluted earnings per share 1.168 1.209

(*) The figures were restated compared to the originally published figures due to the retrospective application of the new version of IAS 19. On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

30 Gruppo Azimut Consolidated statement of comprehensive income

Items 2013 2012 Euro/000 (*) Profit (loss) for the year 155,879 160,370 Other comprehensive income, net of taxes, not transferred to profit or loss Tangible assets Intangible assets Defined benefit plans (44) (59) Non-current assets and disposal groups held for sale Portion of valuation reserves of equity Accounted investees Other comprehensive income, net of taxes, transferred to profit or loss Foreign investment hedges Exchange rate differences (852) 304 Cash flow hedge Available-for-sale financial assets (805) 901 Non-current assets held for sale Portion of valuation reserves of equity Accounted investees Total other comprehensive/(expense), net of taxes (1,701) 1,146 Comprehensive income (Item 10+130) 154,178 161,516 Consolidated comprehensive income attributable to minority interest 126 (325) Comprehensive consolidated income attributable to parent company 154,052 161,841

(*) The figures were restated compared to the originally published figures due to the retrospective application of the new version of IAS 19.

On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

31 Consolidated statement of changes in shareholders’ equity for the year ended 31 December 2012 (*)

Allocation of retained earnings Change during the year Shareholders’ equity transactions Items Balance Change in Balance Reserves Dividends Changes Issue of new Treasury Extraordinary Changes Other Consolidated Group Shareholders’ at 31/12/11 opening at 01/01/12 and other in reserves shares share dividend in equity changes comprehensive shareholders’ equity balance distributions purchases payments instruments income for equity at attributable to 2012 31/12/12 monority interest at 31/12/2012 Share capital 32,324 32,324 32,324 63 Share premium reserve 173,987 173,987 173,987 Other reserves: a) income-related 235,122 122 235,244 46,678 2,436 284,358 1,471 b) other (3,085) (3,085) Valuation reserves (94) (122) (216) 1,146 930 Equity instruments 3,515 3,515 36,000 39,515 Treasury shares (97,643) (97,643) (2,400) 900 (99,143) Profit (loss) for the year 80,444 80,444 (46,678) (33,766) 160,636 160,695 (325)

Group shareholders’ equity 427,655 427,655 (33,766) (2,400) 36,251 161,841 589,581 Shareholders’ equity attributable to minority interest 3 3 1,471 60 (325) 1,209

32 Gruppo Azimut Allocation of retained earnings Change during the year Shareholders’ equity transactions Items Balance Change in Balance Reserves Dividends Changes Issue of new Treasury Extraordinary Changes Other Consolidated Group Shareholders’ at 31/12/11 opening at 01/01/12 and other in reserves shares share dividend in equity changes comprehensive shareholders’ equity balance distributions purchases payments instruments income for equity at attributable to 2012 31/12/12 monority interest at 31/12/2012 Share capital 32,324 32,324 32,324 63 Share premium reserve 173,987 173,987 173,987 Other reserves: a) income-related 235,122 122 235,244 46,678 2,436 284,358 1,471 b) other (3,085) (3,085) Valuation reserves (94) (122) (216) 1,146 930 Equity instruments 3,515 3,515 36,000 39,515 Treasury shares (97,643) (97,643) (2,400) 900 (99,143) Profit (loss) for the year 80,444 80,444 (46,678) (33,766) 160,636 160,695 (325)

Group shareholders’ equity 427,655 427,655 (33,766) (2,400) 36,251 161,841 589,581 Shareholders’ equity attributable to minority interest 3 3 1,471 60 (325) 1,209

(*) The figures were restated compared to the originally published figures due to the retrospective application of the new version of IAS 19.

On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

33 Consolidated statement of changes in shareholders’ equity for the year ended 31 December 2013 (*)

Allocation of retained earnings Change during the year Shareholders’ equity transactions Items Balance Change in Balance Reserves Dividends Changes Issue of new Treasury Extraordinary Changes Other Consolidated Group Shareholders’ at 31/12/12 opening at 01/01/13 and other in reserves shares share dividend in equity changes comprehensive shareholders’ equity balance distributions purchases payments instruments income at equity at attributable to (*) 31/12/13 31/12/13 monority interest at 31/12/2013 Share capital 32,324 32,324 32,324 3,822 Share premium reserve 173,987 173,987 173,987 Other reserves: a) income-related (*) 284,299 59 284,358 64,723 349,081 988 b) other (3,085) (3,085) 1,943 (13,862) (15,004) Valuation reserves (*) 989 (59) 930 (1,701) (771) (84) Equity instruments 39,515 39,515 33,006 72,521 Treasury shares (99,143) (99,143) (1,454) 18,373 (82,224) Profit (loss) for the year 160,695 160,695 (64,723) (95,972) 155,753 155,753 126

Group shareholders’ equity 589,581 589,581 (95,972) (1,454) 34,949 4,511 154,052 685,667 Shareholders’ equity attributable to minority interest 1,209 1,209 (245) 3,762 126 4,852

34 Gruppo Azimut Allocation of retained earnings Change during the year Shareholders’ equity transactions Items Balance Change in Balance Reserves Dividends Changes Issue of new Treasury Extraordinary Changes Other Consolidated Group Shareholders’ at 31/12/12 opening at 01/01/13 and other in reserves shares share dividend in equity changes comprehensive shareholders’ equity balance distributions purchases payments instruments income at equity at attributable to (*) 31/12/13 31/12/13 monority interest at 31/12/2013 Share capital 32,324 32,324 32,324 3,822 Share premium reserve 173,987 173,987 173,987 Other reserves: a) income-related (*) 284,299 59 284,358 64,723 349,081 988 b) other (3,085) (3,085) 1,943 (13,862) (15,004) Valuation reserves (*) 989 (59) 930 (1,701) (771) (84) Equity instruments 39,515 39,515 33,006 72,521 Treasury shares (99,143) (99,143) (1,454) 18,373 (82,224) Profit (loss) for the year 160,695 160,695 (64,723) (95,972) 155,753 155,753 126

Group shareholders’ equity 589,581 589,581 (95,972) (1,454) 34,949 4,511 154,052 685,667 Shareholders’ equity attributable to minority interest 1,209 1,209 (245) 3,762 126 4,852

(*) The figures were restated compared to the originally published figures due to the retrospective application of the new version of IAS 19.

On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

35 Consolidated cash flow statement

Indirect method 2013 2012 (*) A. Operating activities 2013 2012(*) 1. Operations 164,829 95,625 profit for the year (+/-) 155,879 160,370 gains/losses on held-for-trading financial assets and financial assets/liabilities measured at fair value (-/+) (32,913) (90,451) gains/losses on hedging activities (-/+) 0 0 net impairment loss (+/-) 0 3,550 net impairment losses on fixed tangible and intangible assets (+/-) 4,278 2,065 net accruals to provisions for risks and charges and other expenses/income (+/-) 2,383 5,704 tax and duties still to be paid 35,672 16,046 net impairment losses on assets held for sale, net of tax (+/-) 0 0 other changes (+/-) (470) (1,659) 2. Cash provided from or used by financial assets (1,052,063) (630,334) held-for-trading financial assets 0 0 financial assets measured at fair value (1,008,385) (617,873) available-for-sale financial assets (1) (170) due from banks (778) (697) due from financial institutions (2,302) 619 due from clients (1,483) (1,701) other assets (39,114) (10,512) 3. Cash provided from or used by financial liabilities 1,203,971 681,784 due to banks (32,547) (12,996) due to financial institutions 441 1,354 due to clients 361 75 outstanding securities 193,247 (17,591) held-for-trading financial liabilities 0 0 financial liabilities measured at fair value 1,076,832 734,606 technical reserves (22,285) (23,068) other liabilities (12,078) (596) Net cash provided from or used by operating activities 316,737 147,075

36 Gruppo Azimut 2013 2012 (*) B. Investing activities 1. Cash provided from: 411 375 disposal of equity investments 186 75 dividends 15 0 disposal of held-to-maturity financial assets 210 0 disposal of tangible assets 0 300 disposal of intangible assets 0 0 disposal of subsidiaries and business units 0 0 2. Cash used by: (16,041) (5,067) purchase equity investments (1,586) (1,481) purchase held-to-maturity financial assets 0 (210) purchase tangible assets (1,521) (617) purchase intangible assets (6,832) (2,759) purchase subsidiaries and business units (6,102) 0 Net cash provided from or used by investing activities (15,630) (4,692) C. Financing activities issue/purchase of treasury shares 16,919 (2,400) change in other reserves (13,620) 4,910 change in capital and reserves attributable to minority interest 3,643 1,531 issue/purchase of equity instruments 33,006 36,000 dividends and other distributions (95,972) (33,766) Net cash provided from (or used by) financing activities (56,024) 6,275 Net cash provided (or used) for the year 245,083 148,658

Reconciliation 2013 2012 Opening cash and cash equivalents 400,466 251,808 Total net cash provided/used for the year 245,083 148,658 Closing cash and cash equivalents 645,549 400,466

(*) The figures were restated compared to the originally published figures due to the retrospective application of the new version of IAS 19.

Reference should be made to the paragraph on the “Consolidated net financial debt” of the Management Report for a breakdown of “Cash and cash equivalents”.

On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

37 38 Gruppo Azimut Notes to the consolidated accounts at 31 December 2013

39 40 Gruppo Azimut Notes to the consolidated financial statements

Part A - Accounting policies

A.1 General information

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

These consolidated financial statements have been drawn up in accordance with the Section 2 instructions issued by the Bank of Italy set out in the Regulation dated 21 January General reporting criteria 2014, with particular reference to the schedules and information to be provided in the notes to the financial statements, which are expressly set out in said Regulation for financial companies that are parent companies of stock brokerage companies, adequately adapted to best represent the financial position and results of operations of the Group, which includes asset management companies and an insurance company. In particular, since the scope of consolidation encompasses the Irish insurance company AZ Life Ltd., the balance sheet and income statement include the items which are typical of the insurance business, taking as a reference ISVAP (now IVASS) regulation No. 7 dated 13 July 2007 concerning the provisions disciplining the technical aspects of the consolidated financial statements of insurance companies drawn up on the basis of IFRS. In accordance with the provisions set forth in Article 5, paragraph 2 of Italian Legi- slative Decree no. 38 dated 28 February 2005, the consolidated financial statements have been drawn up by adopting the euro as the reporting currency. Figures are reported in thousands of euro, unless otherwise specified. The consolidated financial statements comprise the balance sheet, the income statement, the statement of comprehensive income, the cash flow statement (prepared using the indirect method), the statement of changes in shareholders’ equity and these notes.

These notes are composed of: Part A - Accounting policies Part B - Notes to the Balance Sheet Part C - Notes to the Income statement Part D - Other information

41 Notes to the consolidated financial statements

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 (now IVASS), may highlight problems that, if not taken into proper consideration, could compromise the Group’s stability and ability to operate as a going concern. Although the economic outlook is uncertain, an overall valuation of the past and current financial position and results of operations 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 on an going concern basis for the foreseeable future. The consolidated financial statements have been prepared clearly and give a true and fair view of the Group’s financial position and results of operations. Transactions and other events have been recognised and presented in accordance with principles of substance over form. As stated above, these consolidated financial statements have been prepared on a going concern and accruals basis, using the historic cost, save for the measurement of certain financial assets and liabilities, measured at fair value. Assets and liabilities, costs and income have not been offset against each other, unless required or permitted by a standard or interpretation.

Accounting standards, amendments and interpretations in force from 1 January 2013 New documents issued by the IASB and endorsed by the EU application of which is mandatory as of the year commencing on 1 January 2013.

1 Examples of which are shown in the Going Concern Audit Standard 570. 2 As described in the Management Report

42 Gruppo Azimut Document Issue Date of coming Endorsement EU regulation date into force date and date of publication Amendments to IAS 1 June 2011 1 July 2012 5 June 2012 (EU) 475/2012 Presentation of Financial Statements 6 June 2012 on the presentation of other comprehensive income IAS 19 (2011) Employee benefits June 2011 1 January 2013 5 June 2012 (EU) 475/2012 6 June 2012 Amendments to IFRS 7 December 2011 1 January 2013 13 December 2012 (EU) 1256/2012 Financial instruments: disclosures - Offsetting 29 December 2012 financial assets and financial liabilities IFRS 13 Fair value measurement May 2011 1 January 2013 11 December 2012 (EU) 1255/2012 29 December 2012 Amendments to IAS 12 - December 2010 1 January 2013 11 December 2012 (EU) 1255/2012 Income taxes - Deferred Tax: (for IASB: 29 December 2012 Recovery of underlying assets 1 January 2012) Amendments to IFRS 1 - First-time December 2010 1 January 2013 11 December 2012 (EU) 1255/2012 adoption - Severe hyperinflation and (for IASB: 29 December 2012 removal of fixed dates for first-time adopters 1 July 2011) Amendments to IFRS 1 - First-time March 2012 1 January 2013 4 March 2013 (EU) 183/2013 adoption of IFRS - Government loans 5 March 2013 Annual improvements to IFRS (2009-2011) May 2012 1 January 2013 27 March 2013 EU 301/2013 28 March 2013

For a description of the main effects arising from the introduction of the above documents, where applicable to the consolidated financial statements of the Azimut Group, reference should be made to section 4 – Other information.

43 Notes to the consolidated financial statements

Documents endorsed by the EU and applicable as of 1 January 2014 At the date of these consolidated financial statements, the competent bodies of the European Union completed the endorsement process necessary for the adoption of the documents listed below and applicable as of 1 January 2014. The Group did not opt for the early adoption of these documents:

Document Issue Date of coming Endorsement EU regulation date into force date and date of publication Amendments to IAS 32 Financial December 2011 1 January 2014 13 December 2012 (EU) 1256/2012 instruments: presentation - Offsetting 29 December 2012 financial assets and financial liabilities IFRS 10 Consolidated financial statements May 201d 1 January 2014 11 December 2012 (EU) 1254/2012 (for IASB: 29 December 2012 1 January 2013) IFRS 11 Joint arrangements May 2011 1 January 2014 11 December 2012 (EU) 1254/2012 (for IASB: 1 29 December 2012 January 2013) IFRS 12 Disclosure of interests May 2011 1 January 2014 11 December 2012 (EU) 1254/2012 in other entities (for IASB: 29 December 2012 1 January 2013) IAS 27 (2011) Separate financial statements May 2011 1 January 2014 11 December 2012 (EU) 1254/2012 (for IASB: 29 December 2012 1 January 2013) IAS 28 (2011) Investments in associates May 2011 1 January 2014 11 December 2012 (EU) 1254/2012 and joint ventures (for IASB: 29 December 2012 1 January 2013) Transition guidance amendments June 2012 1 January 2014 4 April 2013 EU 313/2013 (Amendments to IFRS 10, IFRS 11 (for IASB: 5 April 2013 and IFRS 12) 1 January 2013) Investment entities (Amendments to IFRS 10, October 2012 1 January 2014 20 November 2013 UE 1174/2013 IFRS 12 and IAS 27) 21 November 2013 Recoverable amount disclosure for May 2013 1 January 2014 19 December 2013 UE 1374/2013 non-financial assets (amendments 31 December 2013 to IAS 36) Novation of derivatives and continuation June 2013 1 January 2014 19 December 2013 UE 1375/2013 of hedge accounting (amendment to IAS 39) 31 December 2013

The Azimut Group is still completing the analysis of the effects arising from the introduction, as of next year, of the above documents, where applicable.

44 Gruppo Azimut On 10 February 2014, following the Executive Committee’s resolution of 22 January Section 3 2013, Azimut Holding Spa made a capital injection of 1.5 million euro to increase Significant events after the the share capital of the subsidiary AZ International Holdings Sa. reporting date

Acquisition of 50% of the advisory company of the FuturaInvest Group On 13 February 2014, the Azimut Group, through the Brazilian sub-holding AZ Brasil Holdings and the partner FuturaInvest Group, completed the purchase of 50% of the financial advisory company of the FuturaInvest Group, and of 50% of the asset management company (funds of funds and individual portfolio management) of the FuturaInvest Group. Moreover, subject to Banco Central do Brasil’s approval, countersigned by the President of Brazil, it will acquire 50% of FuturaIn- vest DTVM (Distribuidora de Titulos de Valores Mobiliarios), a financial institution which distributes financial products to local financial investors.

Product updating for Azimut Capital Management sgr Spa With respect to the Formula Target 2013 fund, having reached the target date set out in the Regulation, as of 1 January 2014, the management company set a new “target date”. Moreover, based on the current interest rate trends, it decided to increase the total exposure to stock markets, mainly through stock market indices’ option. Following the changes to the relevant operating criteria, the Fund was renamed “For- mula Target 2017 Equity Options”. Moreover, as from 3 March 2014, the speculative funds Aliseocinque and Azimut Multistrategy were merged into the Aliseo speculative fund.

The consolidated financial statements were authorised for publication by Azimut Holding Spa’s Board of Directors on 6 March 2014.

Application of the new version of IAS 19 Section 4 The main change is the requirement, for defined benefit plans to follow a single cri- Other information terion for recognising actuarial gains/losses, which must be immediately included, net of taxes, in the calculation of net liabilities to employees as an offsetting entry to a shareholders’ equity item (Other Comprehensive Income), to be shown in the statement of comprehensive income for the year. The accounting policy adopted by the Group up to 31 December 2012, using the alternative treatments permitted by the previous version of IAS 19, involved immediately recognising all actuarial gains and losses in the income statement. The changes introduced by the new IAS 19 must be applied retrospectively, as required by IAS 8 and the transitional provisions set forth in the standard. Therefore, for the purpose of providing corresponding prior period/year disclosure, the actuarial gains and losses taken to profit or loss under “Personnel costs” have been restated, net of taxes (included in profit or loss under “Income tax on profit from continuing operations”), in shareholders’ equity under “Valuation reserves”. Specifically, at 31 December 2012, the different recognition of actuarial losses led to a higher amount (59 thousand euro) in the income statement compared to that

45 Notes to the consolidated financial statements

originally recognised and, as a result, a decrease in shareholders’ equity reserves for the same amount. The application of this standard had no effects on earnings per share, as the amount of the change was modest.

Disclosure pursuant to IFRS 13 Assets and liabilities measured at fair value are measured and classified based on the fair value hierarchy established by IFRS 13, which consists of three levels assigned based on the observable input used in the valuation techniques applied: • Level 1: quoted prices in active markets for identical assets and liabilities that the entity can access at the measurement date; • Level 2: inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly; • Level 3: unobservable figures for the asset or liability, which reflect the assumptions that market participants should use in pricing the asset or liability, including risk assumptions (of the model used and input used). For information on assets and liabilities measured at fair value and fair value hierarchy, reference should be made to the section on Accounting policies?.

Use of estimates The consolidated financial statements have been prepared using estimates and assumptions which have an effect on recognised income, costs, assets and liabilities and the corresponding notes. These estimates and assumptions, based on the best possible calculations by management, are revised periodically and the effects of any changes are reflected directly in profit or loss. Estimates with a significant impact on these consolidated financial statements relate to the impairment test on intangible assets (trademark, goodwill and goodwill arising on consolidation), the recoverability of deferred tax assets, accruals to hedge contingent liabilities for litigation, charges for supplementary indemnity for clients to be paid to financial advisors, tax assessments underway and the financial liabilities recognised in respect of the contractual commitments for the purchase of the residual equity investments in some subsidiaries. There is no other relevant information to be disclosed for reporting purposes.

Section 5 The Azimut Group consolidation scope has been established in accordance with IAS Consolidation scope and 27. methods The following have been added to the scope of consolidation since 31 December 2012: • Azimut Global Counseling Srl, set up on 4 July 2013, wholly owned by Azimut Hol- ding Spa; • An Ping Investment, a Taiwanese company, purchased on 30 August 2013, whose share capital is held by AZ International Holdings Sa (51%) and by third parties (49%); • Athenaeum, based in Singapore, purchased on 2 October 2013, whose share capital

46 Gruppo Azimut is held by AZ International Holdings Sa (55%) and by third parties (45%); • AZ Brasil Holdings Ltda, based in Brazil, set up on 11 September 2013, wholly owned by AZ International Holdings S.A; • On 10 October 2013, acquisition of AZ Legan Administração de Recursos Ltda, a Brazilian company, whose share capital is indirectly owned by AZ Brasil Holdings Ltda (49.75%).

On 17 April 2013, AZ International Holdings Sa acquired 100% of AN Zhong IM Limited (65% at 31 December 2012).

For consolidated companies that prepare their financial statements in a functional currency different from that of the Parent Company, the amounts expressed in cur- rencies other than the euro were translated as follows: for the balance sheet, using the closing rate, and for the income statement, using the average exchange rate for the year. The differences arising from the translation of opening shareholders’ equity using closing rates, along with those triggered by the use of closing and average exchange rates are classified under the specific item “foreign exchange differences” in the valuation reserve.

47 Notes to the consolidated financial statements

Graphical representation of the group at 31 December 2013 is as follows:

Azimut Holding Spa

Capogruppo

AZ Fund Azimut Capital AZ Capital AZ Management Management Management International Sa (*) Sgr Spa (*) Ltd Holdings Sa (100%) (100%) (100%) (100%)

Azimut AZ Apogeo An Zhong (AZ) Consulenza Investimenti Consulting IM Limited Sim Spa Sim Spa Sim Spa (100%) (100%) (85,80%) (100%)

AZ Life Ltd An Zhong (AZ) AZ Investment AZ Global Global AZ Swiss Sa AZ Brasil Athenaeum IM HK Limited Management Portfoy Securities Holdings Ltd Yonetimi Ltda (100%) (100%) (100%) (60%) (10%) (90%) (100%) (55%)

Azimut Katarsis Compagnie de An Ping AZ Legan Global Capital Gestion priveè Investment Participac¸o˜es Counseling Srl Advisor Sa Monegasque Sa (100%) (75%) (CGM) (51%) (51%) (50%)

Eskatos CGM Italia Sinopro Financial AZ Legan Capital Sim Financial Administrac¸a˜o Management Planning Taiwan de Recursos Sarl (100%) (100%) Ltd (100%) Ltda (99,5%)

(*) 51% owned directly by Azimut Holding Spa and 25% owned indirectly by Azimut Consulenza Sim Spa and 24% by AZ Investimenti Sim Spa

48 Gruppo Azimut Wholly and jointly-owned subsidiaries Company name Registered Type of Stake % of voting rights office ownership (*) Shareholder % stake A. Fully consolidated, wholly-owned companies 1. Azimut Capital Management Sgr Spa Milan 1 Azimut Holding Spa 51 51 Azimut Consulenza Sim Spa 25 25 AZ 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 AZ Investimenti Sim Spa 24 24 4. AZ Life Ltd Dublin 1 Azimut Holding Spa 100 100 5. AZ Investimenti Sim Spa Milan 1 Azimut Holding Spa 100 100 6. AZ Capital Management Ltd Dublin 1 Azimut Holding Spa 100 100 7. Apogeo Consulting Sim Spa Milan 1 Azimut Holding Spa 85.8 85.8 8. AZ International Holdings S.A. Luxembourg 1 Azimut Holding Spa 100 100 9. An Zhong (AZ) IM Hong Kong 1 AZ International Holdings Sa 100 100 10. An Zhong (AZ) IM HK Hong Kong 1 An Zhong (AZ) IM 100 100 11. AZ Investment Management Shanghai 1 An Zhong (AZ) IM 100 100 12. Compagnie de Gestion Priveè Monegasque Monaco 1 AZ International Holdings Sa 51 51 13. CGM Italia Sim Spa Milan 1 Compagnie de Gestion Priveè Monegasque 51 51 14. AZ Global Portfoy Yonetimi Turkey 1 AZ International Holdings Sa 60 60 15. Katarsis Capital Advisors Sa Lugano 1 AZ International Holdings Sa 75 75 16. Eskatos Capital Management Sarl Luxembourg 1 Katarsis Capital Advisors Sa 75 75 17. AZ Swiss Sa Lugano 1 AZ International Holdings Sa 90 90 18. Azimut Global Counseling Srl Milan 1 Azimut Holding Spa 100 100 19. An Ping Investment Taiwan 1 AZ International Holdings Sa 51 51 20. Sinopro Financial Planning Taiwan Ltd Taiwan 1 An Ping Investment 51 51 21. Athenaeum Ltd Singapore 1 AZ International Holdings Sa 55 55 22. AZ Brasil Holdings Ltda Brazil 1 AZ International Holdings Sa 100 100 23. AZ Legan Participações S.A. Brazil 1 AZ Brasil Holdings Ltda 50 50 24. AZ Legan Administração de Recursos Ltda. Brazil 1 AZ Legan Participações S.A. 49.75 49.75 B. Companies consolidated on a proportional basis (*) Type of ownership: (1) majority of voting rights at ordinary shareholders’ meetings

49 Notes to the consolidated financial statements

Equity-accounted investees

Product Registered Stake % of voting office rights Shareholder % stake Equity-accounted investees 1. Global Securities Turkey AZ International Holdings Sa 10 10 2. Programma 101 Spa Italy Azimut Holding Spa 46.3 46.3 3. SiamoSoci Srl Italy Azimut Holding Spa 16.84 16.84

2. Other information

For the purposes of consolidation, the financial statements at 31 December 2013 of consolidated companies were used. They were prepared in accordance with the IFRS and group criteria to which they make reference. The financial statements used are those prepared by the Boards of Directors of each company, duly reclassified and adjusted to comply with the above standards and criteria. The Parent Company financial statements and those of the subsidiaries have been consolidated on a line-by-line basis, including all subsidiaries and assuming all assets, liabilities, costs and income of each subsidiary, while eliminating the book value of the equity investments against the relevant share/quotaholders’ equity, as set out by the IFRS. The assets, liabilities, costs and income generated by transactions among consolidated companies have been eliminated in full, as have the profits and losses generated by transactions among consolidated companies which do not involve third parties. The book value of equity investments consolidated on a line-by-line basis which were held at 31 December 2001, has been eliminated against the net fair value of the assets and liabilities acquired at the date of the business combination pursuant to IFRS 3. For the consolidation of Apogeo Consulting Sim Spa, the book value of the investment has been eliminated against the related net fair value of the assets and liabilities acquired on 30 June 2010 (the date nearest to the acquisition of 7 July 2010), i.e. referring to the financial position at the same date. Furthermore, with respect to 14.2% of the share capital held by the Founding Members, following the transactions related to the scheme to allow financial advisors to participate in the shareholding structure of the subsidiary they operate for, we note that, based on the agreements between the parties which provide for the repurchase by Azimut Holding of the shares purchased by the Founding Members in exchange for Azimut Holding shares, there are no equity and profit/(loss) attributable to minority interest. Indeed, the shares sold are not freely transferable during the term of the transaction or at maturity (2014), when the shares will be transferred exclusively to Azimut Holding which will exchange them for treasury shares. With respect to the consolidation of Compagnie de Gestion privèe Monegasque

50 Gruppo Azimut SAM and CGM Italia Sim Spa, in accordance with IAS 27, they were consolidated on a line-by-line basis based on the contracts which, as agreed by the parties, assign to Azimut the economic benefits of the above companies and enable it to fully control them, as of 30 December 2011, being the date of acquisition of 51% of Com- pagnie de Gestion privèe Monegasque SAM. Based on the above, in the consolidated financial statements of the Azimut Group, the residual 49% of the company’s share capital is represented, as a financial liability measured at fair value, to the extent of the amount to be paid for the purchase (the amount of which depends on a contractually agreed consideration). The equity investment in Katarsis Capital Advisors Sa (50% up to 16 November 2012) was consolidated using the equity method up to the above purchase date by an additional 25% (16 November 2012). As of this date, the line-by-line consolidation method was applied and the difference between the net fair value of the acquired assets and liabilities and the total book value of the equity investment at such date was considered as a goodwill arising on consolidation. The residual 25% of the company’s share capital, considering the put option set out in the contractual arrangements in favour of the shareholder which holds the option is presented as a financial liability measured at fair value, to the extent of the present value of the estimated consideration to be paid for the purchase. The equity investments held in the foreign companies An Ping Investment (51%), Athenaeum Ltd (55%) and AZ Legan Administracao de Resursos Ltda (49.75), which were purchased during the year, have been consolidated on a line-by-line basis and the difference between the net fair value of acquired assets and liabilities and the book value of the equity investment at the purchase date was considered as goodwill arising on consolidation. The residual equity investments in Athenaeum Ltd and AZ Legan Administracao de Resursos Ltda, considering the put option set out in the contractual arrangements in favour of the shareholders which holds the option are presented as a financial liability measured at fair value, to the extent to the present value of the estimated consideration to be paid for the purchase. For information on consolidation differences, the consideration paid to purchase these equity investments and the measurement of put options (where applicable), reference should be made to “Section 11 – Intangible assets”, “Significant events of the year” and “Accounting policies” of these consolidated financial statements. The positive differences between the equity investments consolidated on a line-by- line basis and the related net fair value of the acquired assets and liabilities, were considered as goodwill arising on consolidation and tested for impairment to check the adequacy of the amount recognised.

A.2 Key financial statements items

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

51 Notes to the consolidated financial statements

Financial assets measured This category includes investments relating to insurance contracts (unit-linked po- at fair value licies) issued by the subsidiary AZ Life Ltd where the investment risk is borne by policyholders and comprise UCI units. These financial assets are measured at the market price corresponding to the price on the last day of trading during the reference period. The differences compared to the book values, corresponding to the purchase cost, are taken to profit or loss. 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 Financial assets held by the Group companies are classified in this category in the assets context of liquidity management policies. This category also includes the equity investments which do not qualify as subsidiaries, associates or jointly controlled entities. Upon initial recognition, available-for-sale financial assets are recognised at their fair value, which usually corresponds to the consideration paid for their purchase, plus any transaction costs in the event that they are tangible and definable. They are subsequently recognised at their fair value, recognising any fair value gains or losses in the specific shareholders’ equity reserve (“Valuation reserves”) until disposal or impairment. The fair value of available-for-sale financial assets is calculated based on the quoted prices in active markets or internal valuation models as described in the section on “Fair value hierarchy”. Impairment losses are recognised in the income statement when the purchase cost, net of any repayment of principal and amortisation, exceeds its recoverable amount. The cumulative gain or loss generated previously recognised in shareholders’ equity is reversed to profit or loss upon disposal or recognition of the impairment loss. When the reasons underlying the impairment loss cease to exist, the impairment loss is reversed directly against the shareholders’ equity reserve, in the case of equity instruments, and in profit or loss, in the case of debt instruments. Available-for-sale financial assets are derecognised when the contractual rights to receive the relevant cash flows cease to exist or upon transfer of all risks and rewards incidental to ownership. Assets which do not qualify as subsidiaries, associates or jointly-controlled entities, are not listed on active markets and for which the fair value cannot be measured reliably, are measured at cost. At the end of each year, impairment tests are carried out to establish which financial assets are to be impaired. This test is performed for each individual financial instrument, considering the impairment effects in accordance with IAS 39. Financial assets are derecognised when the contractual rights to the cash flows generated by the assets expire or when the asset is sold and all the risks and rewards of ownership have been transferred. With respect to impairment testing, the Company employs a specific policy that sets the limits in terms of severity and of durability, both according to the type of finan-

52 Gruppo Azimut cial instrument. Specifically, the benchmarks in terms of severity are as follows:

1. for debt instruments3 loss of 20% 2. for other financial instruments 4: ” loss of 30%

Durability is assessed based on a timescale of 18 months for debt instruments and 24 months for other financial instruments: specifically, 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 loss is recognised in the income statement. “Debt financial instruments” which 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, financial advisors and managed funds, or all receivables involving fixed or -de terminable payments and which are not listed on an active market. As this mainly involves trade receivables, they are measured at their estimated realisable value, being the best possible estimate of their fair value. Conversely, receivables relating to loans to financial advisors, initially recognised at their fair value equal to the amount granted, are subsequently measured at 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). Receivables are derecognised once settled.

Equity investments include the stakes held in associates measured using the equity Equity investments method. Companies are classified as associates pursuant to Article 2359 of the Ita- lian 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 recognised at cost and is subsequently adjusted to reflect the share of the profit (or loss) of the associate after the date of acquisition. The differences between the value of the equity investment and the associate’s shareholders’ equity are included in the associate’s book value, whereas the share of the profits/(losses) generated during the year by the associate in question is recognised in the consolidated income statement.

3 Money market instruments, bonds, money market mutual funds and bond funds. 4 Securities, equity, balanced and flexible funds, private equity and hedge funds.

53 Notes to the consolidated financial statements

Minority interest does not include any potential voting rights. Since goodwill included in the book value of a given investment in an associate is not recognised separately, this value is not subjected to a separate impairment test, in line with the provisions set forth in IAS 36 Impairment 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 recoverable amount and its corresponding book value, whenever the application of the provisions set forth in IAS 39 indicate a potential impairment; the latter value is recognised in the income statement. Equity investments include equity investments that are deemed to be strategic investments.

Tangible assets They include business properties, plant, furniture and fixtures, machines 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 recognised separately from buildings since only the latter is subject to depreciation as the useful life is not indefinite. This separation is necessary only in the case of self-contained properties: no separation is necessary if the property consists of a portion of the building (for example: an apartment), since in this case, the company does not own the surrounding land or land beneath. Azimut Group owns portions of property and therefore no separation was adopted for their measurement. Tangible assets are initially recognised at cost, including the extra costs directly attributable to the acquisition and start-up of the asset. They are subsequently measured at cost, less depreciation and impairment losses. Depreciation is charged annually on a straight-line basis over the remaining useful life. Leasehold improvements are recognised under assets since the tenant essentially has control over the assets and may receive economic benefits therefrom. Therefore, they are depreciated over a period corresponding to the remaining duration of the lease. Tangible assets are derecognised upon disposal or when the asset has been retired and future benefits are not expected from its disposal.

Intangible assets Intangible assets include goodwill, goodwill arising on consolidation, the “Azimut” trademark (under finance lease) and application software for long-term use. Goodwill is that paid by Azimut Holding Spa (formerly Tumiza Spa) to purchase the group in 2002 by acquiring the entire share capital of Azimut Holding Spa, incorporated in December of the same year, and corresponding to the portion of goodwill arising from the merger that, as per the appraisal prepared by the independent company PricewaterhouseCoopers Finance Srl, had not been allocated as an increase in the value of equity investments. Goodwill arising on consolidation is determined, on first-time consolidation, based on the difference between the subsidiaries’ shareholders’ equity and the value of the investments recognised. Goodwill and goodwill arising on consolidation are not amortised systematically, but are tested for impairment annually to check the adequacy of the book value in ac-

54 Gruppo Azimut cordance with that set out in IAS 36 Impairment of assets. The amount of the impairment, determined on the basis of the difference between the book value and its recoverable amount, if lower, is recognised in the income statement. Reference should be made to the specific paragraph on “Finance lease” for information of the “Azimut” trademark, acquired under finance lease via a sale and lease- back agreement. Software is recognised at cost, net of amortisation and impairment losses. Such assets are amortised based on the estimate of their remaining useful life. Intangible assets are derecognised at the date of disposal and when no future economic benefits are expected.

The sale and leaseback agreement related to the trademark, which can be classified Finance lease as a finance lease, was recognised in accordance with the requirements set out in IAS 17 - Leases. This accounting standard stipulates: • that the leased asset must be recognised under assets and the amount payable to the lease company recognised under liabilities at the fair value of the leased asset; • that the finance lease payments must be recognised over the term of the lease, reducing the initially-recognised liability. The related interest expense is recognised in the income statement; • that leased asset amortisation rates must be recognised in line with those adopted for owned amortisable assets; • recognition of an impairment loss, if any, in application of IAS 36 Impairment of assets. In the case of the sale and leaseback agreement, if the sale price is higher than the book value of the asset, the excess amount is recognised over the term of the agreement. However, in this specific case, considering the economic reasons for the transaction and the related contractual terms and conditions, which include an initial down payment, the transaction involved an advance payment equal to the sale price of the trademark, less the amount of the down payment. Consequently, the trademark is recognised under assets at the pre-disposal book value and the amount payable for the advance payment, initially recognised at the amount as determined above, is gradually reduced as the lease payments are made. Since the trademark under lease has an indefinite useful life, it is not amortised but is tested for impairment annually in accordance with IAS 36 Impairment of assets. The amount of the impairment, if any, determined on the basis of the difference between the book value and its recoverable amount, if lower, is recognised in the income statement.

Current taxes are calculated on the basis of an estimate of taxable income, in accor- Tax assets and liabilities dance with the tax regulations in force and by taking into account the effects gene-

55 Notes to the consolidated financial statements

rated by the Group’s Italian companies’ adoption of the tax consolidation regime. Taxes for the Group’s foreign companies are calculated in accordance with the tax 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 temporary differences arising between the tax base of assets and liabilities and their book values, 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 and liabilities for IRES purposes, as well as current and deferred taxes for IRAP purposes, 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 asset items. 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, they are recognised in the income statement over the foregoing period in accordance with the matching principle. In addition, “other assets” include the prepayments generated by 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 recognised at their par value. Payables in the form of mid/long-term loans, initially recognised at the amount collected, are subsequently measured at amortised cost using the effective interest rate method. The amortised cost corresponds to the initial book value, since no transaction costs are applicable and since the nominal interest rate of such liabilities is in line with market rates. 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. Payables are derecognised once settled.

56 Gruppo Azimut liability and an equity instrument of Azimut Holding Spa. Upon initial recognition, the fair value of the financial instrument, as a whole, is equal to the issue price, while the fair value of the debt component is based on the present value of contractual cash flows, calculated using the market rate for similar financial instruments, with similar cash flows, at the same expiry dates, excluding the embedded derivative. The fair value of the equity component - related to the warrants granted on a free basis to the subordinated bondholders at the same time as bonds are issued - was calculated as the difference between the fair value of the instrument, as a whole, and the fair value of the debt component. Consequently, the debt component was recognised under “Outstanding securities”, while the above equity component was recognised in shareholders’ equity, under “Equity instruments”. The costs borne by Azimut Holding Spa for the bond issue are allocated proportionally to the debt component and the equity component. Subsequent to initial recognition, the debt component is recognised at amortised cost, with financial charges established using the effective interest rate. The equity component is recognised under reserves and transferred to unallocated earnings when warrants are exercised, or reach maturity without being exercised When 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 recognised against the collected cash corresponding to the strike price.

The “Azimut 2011-2016 Senior 2,5%” convertible bond, issued by Azimut Holding Spa in 2011, was recognised at the fair value of the corresponding liability, which is equal to the issue price including the ancillary costs borne by the Company for the bond issue. Subsequent to initial recognition, the financial liability is measured at amortised cost using the effective interest rate method.

The “Azimut 2013-2020 convertibile 2,125%” bond, issued by Azimut Holding Spa on 25 November 2013, is recognised as a financial liability and an equity instrument being a financial instrument composed of a debt component and an embedded derivative (on equity instruments). Upon initial recognition, the fair value of the financial instrument, as a whole, is equal to the issue price, while the fair value of the debt component was calculated based on the present value of the contractually agreed cash flows, using a market rate for comparable financial instruments, with similar cash flows, at the same maturities, but no conversion option. Subsequent to initial recognition, this debt component is measured at amortised cost, using the effective interest rate method. The equity component, being the difference between the fair value of the instrument, as a whole, and the fair value of the debt component, was recognised in shareholders’ equity under “Equity instruments”. The costs borne by Azimut Holding Spa for the bond issue are allocated proportionally to the debt component and the equity component. The financial liabilities are derecognised after expiry or settlement.

57 Notes to the consolidated financial statements

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

Financial liabilities This item includes the commitments to policyholders arising from the unit linked po- measured at fair value licies issued by AZ Life Ltd, classified as investment contracts where the investment risk is borne by policyholders. It also includes the liabilities arising from the future exercise of the call options of the residual portion of share capital of some recently acquired companies. With respect to measurement, the amount reflects the counter value to be paid - in Azimut Holding shares, where contractually provided for - to sellers, following the exercise of the call options. The measurement reflects the estimated amount to be paid to the seller, based on the estimate of the future parameters set out in the relevant contracts, including AUM and profit for the year and which are subject to specific sensitivity analyses. The change in the amount on first recognition is taken to profit or loss. Financial liabilities are derecognised after settlement.

Other liabilities This item includes liabilities that are not ascribable to other liability items. Short-term liabilities (due within 12 months) and trade payables are recognised at their par value. In addition, this item includes the deferred income arising from the deferral of fee and commission income on the premiums of unit-linked policies classified as investment contracts. Other liabilities are derecognised once settled. This item includes the financial liabilities related to outstanding commitments for the purchase of residual equity investments in some subsidiaries, as per the relevant agreements.

Staff severance pay (TFR) Following the application of Italian Law no. 296 of 27/12/2006 (2007 Finance Act) and taking account of the methodology published on the Actuarial Society of Italy website, the calculation method for staff severance pay (TFR) was changed. In accordance with IAS 19, TFR is treated as defined benefit plans and recognised based on the actuarial value established using the projected unit credit method. This amendment entails that the projected unit credit 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 with the company, are employed by group companies with at least 50 employees, which are obliged by law to transfer TFR to the Italian National Institute for Social Security (INPS). Liabilities associated with staff severance pay at 31 December 2013, were measured as follows: • estimating the remaining duration of the employee’s employment contract within

58 Gruppo Azimut the company subject to valuation; • estimating the future wage/salary and inflationary trends, in the case that the projected unit credit method is applied; • taking into account any advances requested by employees, any portions which may be assigned to private pension funds, as well as the 11% substitute tax on the TFR revaluation; • assessing the payable already accrued by the Company (TFR) including the future annual provisions, to estimate the amount to be paid upon termination of employment, for whatever reason (resignation, retirement, death, disability); • discounting the previously estimated amount payable by the Company, and bringing it into line with the level of seniority acquired upon the measurement date, when 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 be adopted, as set out in “Sec- tion 10 - staff severance pay (TFR)” of these notes.

As mentioned earlier, following the introduction of the new version of IAS 19, actuarial gains and losses are recognised, net of the tax effects, against shareholders’ equity “Valuation reserves”. The new version of the standard was applied retrospectively; consequently, prior year balances were restated and reclassified accordingly.

Provisions for risks and charges are recognised in accordance with the requirements Provisions for risks set forth in IAS 37, namely when: and charges • 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 risks are discounted 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. Actuarial assumptions are unchanged with respect to the previous year.

Costs and income are recognised on an accrual basis and in accordance with the Costs and income matching principle. Fees, commissions and other income from services offered to clients are included in the income statement at the time the services are provided. Interest income and charges are recognised on an accruals basis based on the accrued interest and applying the effective interest rate method.

59 Notes to the consolidated financial statements

Treasury shares Treasury shares are recognised at purchase cost under a specific Group Sharehol- ders’ Equity item with a negative sign 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 under shareholders’ equity is reduced accordingly, upon acquisition.

Profit-participating The profit-participating financial instruments issued by Azimut Holding Spa as financial instruments per the Shareholders’ resolution of 29 April 2010 and subsequent resolutions of the Company’s Board of Directors are recognised under Equity instruments at the subscription amount, equal to their fair value, increasing shareholders’ equity. In- deed, under the By-laws, they have an indefinite life, are issued with no obligation for the Company to repay the amount paid by investors, participate in the allocation of the Company’s residual assets in case of liquidation, in subordination to the Com- pany’s creditors and shareholders. These instruments are not transferable, except to the Company (at their fair value and subject to specific conditions). In this case, the relevant equity rights are suspended. Furthermore, these instruments entitle their holders to receive a part of the Company’s profit as per the By-laws subject to, inter alia, the Shareholders’ approval of dividend distribution.

Fair value hierarchy In accordance with the provisions of IFRS 7 and IFRS 13, the group companies classify fair value measurement of financial assets and financial 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.

Specifically, 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 measurement date. For classification at Level 1, prices are measured together with all other characteristics of the financial asset or financial 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 measurement criteria are applied consistently over time. With respect to the financial instruments held as part of liquidity management -po licies and financial liabilities issued, according to the Group, the bonds issued and open-ended investment funds, whose fair value is designated as Level 1 if represented by the Net Asset Value (NAV) provided by the fund manager at the measurement date, are classified as Level 1. Conversely, with respect to listed funds and Exchange

60 Gruppo Azimut Trade Funds (ETF), Level 1 fair value is equal to the closing price of the relevant stock market, and the liquidity to be invested relating to unit-linked policies issued, Level 2 reflects the investments related to the unit-linked policies issued (where the investment risk is borne by policyholders), the associated financial liabilities and the bonds issued (measured using observable market data) and Level 3, the securities reported as “available-for-sale financial assets” measured at cost and financial liabilities related to the commitments to purchase the residual investments in some subsidiaries in accordance with ruling contractual agreements.

A.3 Disclosure about transfers between portfolios

The Group did not transfer any financial assets between portfolios during the year. A.3.1 Transfers between portfolios

Quantitative information A.4.5 Fair value hierarchy A.4.5.1 Accounting portfolios: breakdown by fair value level

Financial assets/liabilities measured at fair value Level 1 Level 2 Level 3 Total 1. Held-for-trading financial assets 2. Financial assets measured at fair value 95,528 2,487,868 2,583,396 3. Available-for-sale financial assets 97,466 2,530 99,996 4. Hedging derivatives 5. Tangible assets 6. Intangible assets Total 192,994 2,487,868 2,530 2,683,392 1. Held-for-trading financial liabilities 2. Financial liabilities measured at fair value 2,273,862 31,566 2,305,428 3. Hedging derivatives Total 2,273,862 31,566 2,305,428

61 Notes to the consolidated financial statements

A.4.5.2 Annual changes in financial assets measured at Level 3 fair value

Financial assets Held for Measured Available Hedging Tangible Intangible trading at fair value for sale assets assets assets 1. Opening balance 2,670 2. Increases 2 2.1. Purchases - 2.2. Profits allocated to: 2 2.2.1 Income statement 2 of which: gains - 2.2.2 Shareholders’ equity - 2.3. Transfers from other levels - 2.4. Other increases - 3. Decreases 142 3.1. Sales - 3.2. Redemptions - 3.3. Losses charged to: 142 3.3.1 Profit or loss losses - of which: losses - 3.3.2 Shareholders’ equity 142 3.4. Transfers from other levels - 3.5. Other decreases - 4. Closing balance 2,530

62 Gruppo Azimut A.4.5.3 Annual changes in liabilities measured at Level 3 fair value

Held-for-trading Financial liabilities Hedging financial liabilities measured at fair value derivatives 1. Opening balance 20,577 2. Increases 10,989 2.1. Purchases 10,636 2.2. Profits allocated to: 353 2.2.1 Profit or loss 353 of which: losses 353 2.2.2 Shareholders’ equity - 2.3. Transfers from other levels - 2.4. Other increases - 3. Decreases - 3.1. Sales - 3.2. Redemptions - 3.3. Losses charged to: - 3.3.1 Profit or loss losses - of which: gains - 3.3.2 Shareholders’ equity - 3.4. Transfers from other levels - 3.5. Other decreases - 4. Closing balance 31,566

Operating segment disclosure (IFRS 8)

Given the small size of the foreign companies under AZ International Holdings Sa, the Azimut Group’s business is mainly attributable to the companies directly controlled by Azimut Holding Spa and, though this business is conducted through nume- rous companies, each specialising in the distribution, promotion and management of financial and insurance products (essentially unit-linked products), it is attributable to 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 clients, as well as the methods adopted for the distribution of products and services are sufficiently similar as to ensure that the risks and benefits do not differ to any great extent but, on the contrary, have many comparable features. Furthermore, the business model of the operating companies directly controlled by Azimut Holding Spa is distinguished by the strong interaction between 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

63 Notes to the consolidated financial statements

the other hand, the excellent track record of portfolio management enables the distribution network to further penetrate the market. Therefore, these companies operate 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 regarding the allocation of resources and measurement of results and company performance. Consequently, the accounting information was not reported separately by operating segments, in line with the internal reporting system used by management and based on the individual accounting data used to prepare the consolidated financial statements under IFRS. Similarly, no information is provided on revenue per client and non-current assets in the form of breakdown 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. Therefore, given that there is only one operating segment subject to disclosure, information on income from clients broken down by product/service can be found within the details on the fee income and net premiums reported in the income statement of these notes, as the subsidiaries of AZ International Holding S.A. have an immaterial impact. For the purpose of developing the research, the acquisition and management of new international partnerships, Azimut Holding Spa established AZ International Holding Sa, a wholly-owned subsidiary incorporated under Luxembourg law to act as an incubator. Therefore, management has set out a consolidated reporting system for AZ Interna- tional Holdings Sa which, in turn, must send the Parent Company Azimut Holding Spa a consolidated reporting package for all foreign companies. Based on this disclosure, the assets managed by the foreign companies controlled by AZ International Holdings amount to 1,424 million euro at 31 December 2013 (972 million euro at 31 December 2012), while the share of the consolidated profit of those companies pertaining to AZ International Holdings Sa, amounted to 2,670 thousand euro at 31 December 2013 (1,707 thousand at 31 December 2012).

Earnings per share Basic earnings per share are calculated by dividing the net profit for the year by the average number of outstanding ordinary shares. There were no earnings dilutive transactions to be disclosed at 31 December 2013. 2013 2012 Basic earnings per share (**) 1.168 1.209 Average number of outstanding shares (*) 131,795,644 131,333,537 Diluted earnings per share (**) 1.168 1.209 Average number of outstanding shares (*) 131,795,644 131,333,537

* Outstanding shares are calculated net of treasury shares held by Azimut Holding Spa at the reporting date. ** Basic and diluted earnings per share, considering the allocation of the dividend from profit-participating financial instruments to top key people will be lower than the figure set out in the table by not more than 0.177 euro.

64 Gruppo Azimut Parte B - Informazioni sullo stato patrimoniale Assets

Cash and cash equivalents amount to 16 thousand euro and refer to cash on hand. Section 1 Cash and cash equivalents

The balance amounts to 2,583,395 thousand euro (1,542,097 thousand euro at 31 Section 3 December 2012). Financial assets measured at fair value 3.1 Breakdown of “Financial assets measured at fair value”

Item/Value Total 31/12/2013 Total 31/12/2012 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 1. Debt securities 0 0 structured securities other debt securities 0 0 2. Equity securities 0 0 3. UCI units 95,528 2,487,868 44,530 1,497,567 4. Loans Total 95,528 2,487,868 0 44,530 1,497,567 0

“UCI units” Level 2 refers solely to investments measured at fair value, relating to unit-linked policies issued by AZ Life Ltd where the investment risk is borne by policyholders.

65 Notes to the consolidated financial statements

3.2 Financial assets measured at fair value: breakdown by debtor/issuer Total Total 31/12/2013 31/12/2012 1. Debt securities a) Governments and Central Banks b) Other public bodies c) Banks d) Financial institutions e) Other issuers 2. Equity securities a) Banks b) Financial institutions c) Other issuers 3. UCI units 2,583,395 1,542,097 4. Loans a) Banks b) Financial institutions c) Clients Total 2,583,395 1,542,097

3.3 Financial assets measured at fair value: annual change

Change/Type Debt Equity UCI units Debt Total securities securities securities A. Opening balance 1,542,097 B. Increases 1,274,924 B1. Purchases 1,209,309 B2. Increases in fair value 65,615 B3. Other changes C. Decreases 233,626 C1. Sales 212,862 C2. Redemptions - C3. Decreases in fair value - C4. Other changes 20,764 D. Closing balance 2,583,395

66 Gruppo Azimut This item amounts to at 99,996 thousand euro (60,592 thousand euro at 31 Decem- Section 4 ber 2012). The breakdown is as follows: Available-for-sale financial assets 4.1 Breakdown of “Available-for-sale financial assets” Total 31/12/2013 Total 31/12/2012 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 1. Debt securities 2,019 1,637 - structured securities - other debt securities 2,019 1,637 2. Equity securities 2,530 2,670 3. UCI units 95,447 56,285 4. Loans Total 97,466 2,530 57,922 2,670

“UCI units” Level 1 refers to the units in investment funds managed by the Azimut Group as part of the Group’s liquidity management policies.

4.2 Available-for-sale financial assets: breakdown by debtor/issuer Total Total 31/12/2013 31/12/2012 1. Debt securities 2,019 1,637 a) Governments and Central Banks 2,019 1,637 b) Other public bodies c) Banks d) Financial institutions e) Other issuers 2. Equity securities 2,530 2,670 a) Banks 2,530 2,670 b) Financial institutions c) Other issuers 3. UCI units 95,447 56,285 4. Loans a) Banks b) Financial institutions c) Clients Total 99,996 60,592

67 Notes to the consolidated financial statements

4.3 Available-for-sale financial assets: annual change Debt Equity UCI units Loans Total securities securities A. Opening balance 1,637 2,670 56,285 - 60,592 B. Increases 385 2 154,602 - 154,989 B1. Purchases - 143,750 143,750 B2. Increases in fair value 385 2 881 1,268 B3. Write-ups - - charged to income statement - - charged to shareholders’ equity - - B4. Transfers from other portfolios - - B5. Other changes - 9,971 9,971 C. Decreases 3 142 115,440 115,585 C1. Sales - 109,457 109,457 C2. Redemptions - - - C3. Decreases in fair value 3 142 1,746 1,891 C4. Write-downs - - - C5. Transfers to other portfolios - - - C6. Other changes - 4,237 4,237 D. Closing balance 2,019 2,530 95,447 - 99,996

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

68 Gruppo Azimut 6.1 Due from banks Sezione 6 This item amounts to 489,430 thousand euro (298,018 thousand euro at 31 Decem- Receivables ber 2012). The breakdown is as follows: Breakdown Total 31/12/2013 Total 31/12/2012 Book value Fair value Book value Fair value L1 L2 L3 L1 L2 L3 1. Loans 1.1 Deposits and current accounts 488,998 488,998 297,480 297,480 1.2 Receivables for services 432 432 538 538 1.3 Repurchase agreements of which for government securities of which for other debt securities of which for equity securities 1.4 Other loans 2. Debt securities 2.1 Structured securities 2.2 Other debt securities Total 489,430 489,430 298,018 298,018

“Deposits and current accounts” is composed of cash deposited in the current accounts of the group companies, with interest in line with that applied to term deposits.

69 Notes to the consolidated financial statements

6.2 Due from financial institutions This item amounts to 4,896 thousand euro (2,594 thousand euro at 31 December 2012). The breakdown is as follows:

Breakdown Total 31/12/2013 Total 31/12/2012 Book value Fair value Book value Fair value L1 L2 L3 L1 L2 L3 1. Loans 1.1 Deposits and current accounts 1.2 Receivables for services - sale of products 4,896 4,896 2,594 2,594 1.3 Repurchase agreements of which for government securities of which for other debt securities of which for equity securities 1.4 Other loans 2. Debt securities 2.1 Structured securities 2.2 Other debt securities Total 4,896 4,896 2,594 2,594

“Receivables for services - sale of products” 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.

70 Gruppo Azimut 6.3 Due from clients

Breakdown Total 31/12/2013 Total 31/12/2012 Book value Fair value Book value Fair value L1 L2 L3 L1 L2 L3 1. Loans 1.1 Deposits and current accounts 1.2 Receivables for services: - - - sale of products 4,008 4,008 2,525 2,525 portfolio management 61,479 61,479 46,571 46,571 1.3 Repurchase agreements of which for government securities of which for other debt securities of which for other equity securities 1.4 Other loans 2. Debt securities 2.1 Structured securities 2.2 Other debt securities Total 65,487 65,487 49,096 49,096 “Receivables for services - portfolio management” includes receivables in the form of fee and commission income on mutual funds and managed funds accrued during December 2013 and collected the following month.

6.4 Due from financial advisors This item amounts to 14,082 thousand euro (8,548 thousand euro at 31 December 2012) and is mainly represented by loans disbursed to financial advisors of 6,078 thousand euro, which generate interest income in line with the Euribor rate plus a spread, in addition to advances on commissions paid to said financial advisors, amounting to 751 thousand euro. The terms for repayment of these loans vary on average from 12 to 36 months.

9.1 Equity investments: information Section 9 This item amounts to 3,038 thousand euro (1,416 thousand euro at 31 December Equity investments 2012). It includes equity investments held in associates and jointly-controlled companies pursuant to Art. 2359 of the Italian Civil Code as well as equity investments considered as “strategic investments” in so far as they have been made with the aim of establishing and maintaining a long term relationship with the company in which the

71 Notes to the consolidated financial statements

investment is made. Specifically, at 31 December 2013, “equity investments” included the 10% equity investment in the Turkish Global Securities, acquired by AZ International Holdings Sa and the equity investments held by Azimut Holding Spa in Programma 101 Spa and Siamosoci Srl, equal to 46.3% and 16.84%, respectively.

9.2 Annual change in equity investments Total value A. Opening balance 1,416 B. Increases 1,622 B.1 Purchases 1,586 B.2 Write-ups 0 B.3 Revaluations 0 B.4 Other changes 36 C. Decreases 0 C.1 Sales 0 C.2 Write-downs 0 C.3 Other changes 0 D. Closing balance 3,038

72 Gruppo Azimut This item amounts to 2,960 thousand euro (2,446 thousand euro at 31 December Section 10 2012). Tangible assets

10.1 Breakdown of “Tangible assets” - business purposes: breakdown of assets at cost”

Total 31/12/2013 Total 31/12/2012 Items/Valuation Assets Assets Assets Assets at cost at fair value at cost at fair value or revalued or revalued 1. Group-owned 2,960 2,446 a) land b) buildings 183 192 c) furniture & fixtures 833 953 d) capital goods e) other 1,944 1,301 2. Under finance lease a) land b) buildings c) furniture & fixtures d) capital goods e) other Total (assets at cost and revalued) 2,960 2,446

73 Notes to the consolidated financial statements

10.2 Tangible assets - business purposes: annual change Land Buildings Furniture Capital Other Total & fixtures goods A. Opening balance - 192 953 - 1,301 2,446 A.1 Total net impairment losses A.2 Opening net balances B. Increases 131 1,390 1,521 B.1 Purchases 131 - 1,390 1,521 B.2 Leasehold improvements B.3 Write-ups B.4 Increases in fair value taken to: a) shareholders’ equity b) income statement B.5 Exchange rate gains B.6 Transfers from investment property B.7 Other changes C. Decreases 9 251 747 1,007 C.1 Sales C.2 Depreciation 9 251 - 747 1,007 C.3 Impairment write-downs charged to: a) shareholders’ equity b) income statement C.4 Decreases in fair value charged to: a) shareholders’ equity b) income statement C.5 Exchange rate losses C.6 Transfers to: a) assets held for investment purposes b) assets held for sale C.7 Other changes D. Gross closing balance - 183 833 - 1,944 2,960 D.1 Total net impairment losses D.2 Net closing balance 183 833 - 1,944 2,960 E. Measurement at cost 183 833 - 1,944 2,960

74 Gruppo Azimut Depreciation rates are as follows: % rate Buildings 3% Furniture & fixtures 12% Other: Systems 15%-20-25% Motor vehicles 25% Electronic office equipment 20% Leasehold improvements Based on remaining duration of contract

Intangible assets amount to 369,250 thousand euro (359,587 thousand euro at 31 Sezione 11 December 2012). Intangible assets

11.1 reakdown of “Intangible assets”

Total 31/12/2013 Total 31/12/2012 Assets Assets Assets Assets at cost at fair value at cost at fair value 1. Goodwill and goodwill arising on consolidation 328,374 322,270 2. Other intangible assets 40,876 37,317 2.1 generated internally - 2.2 other 40,876 37,317 Total 369,250 359,587

• Goodwill and goodwill arising on consolidation relate to: • the purchase by Azimut Holding Spa (formerly Tumiza Spa), completed on 12 Fe- bruary 2002 of Azimut Holding Spa which owned 100% (directly or indirectly) of all the companies of the Azimut Group. This item was calculated as the difference between the initial value of cost of the equity investment, at the acquisition date, and the shareholders’ equity of the subsidiaries on 31 December 2001. Following the merger of Azimut Holding Spa into Tumiza Spa, with accounting effects on 1 July 2002, a portion of goodwill arising on consolidation, equal to 176.3 million euro (calculated based on a valuation by the independent company Pricewaterhou- seCoopers Corporate Finance Srl) was included in “Goodwill”; • the acquisition by Azimut Holding Spa of AZ Investimenti Sim Spa on 7 July 2005. This item was calculated as the difference between the acquisition cost of the equity investment and the shareholders’ equity of the subsidiary on the acquisition date; • the acquisition by Azimut Holding Spa of Apogeo Consulting Sim Spa on 7 July 2010. This item was calculated as the difference between the acquisition cost of the equity investment and the shareholders’ equity of the subsidiary at 30 June 2010;

75 Notes to the consolidated financial statements

• the acquisition of Compagnie de Gestion privée Monegasque Sam by the subsidiary AZ International Holdings Sa on 30 December 2011. This item was calculated as the difference between the value of the equity investment (including the residual 49% investment for which a financial liability was recognised at fair value) and the shareholders’ equity of the subsidiary at 30 December 2011; • the acquisition of an additional 25% of Katarsis Capital Advisors, besides the 50% stake already held, by AZ International Holdings Sa. on 16 November 2012. This item was calculated as the difference between the acquisition cost of the equity investment and the shareholders’ equity of the subsidiary at 16 November 2012. With respect to the equity investments purchased during the year, goodwill arising on consolidation can be analysed as follows: • the acquisition of An Ping by the subsidiary AZ International Holdings Sa on 30 August 2013. This item was calculated as the difference between the value of the equity investment and the shareholders’ equity of the subsidiary at 31 August 2013 (777 thousand euro); • the acquisition of Athenaeum by the subsidiary AZ International Holdings Sa on 2 October 2013. This item was calculated as the difference between the value of the equity investment and the shareholders’ equity of the subsidiary at 31 October 2013 (592 thousand euro); • the acquisition of 50% of AZ Legan Partecipaçoes Sa, based in Sao Paolo (Brazil), by the subsidiary AZ International Holdings Sa, through its subsidiary AZ Brasil Holdings Ltda, on 10 October 2013. The Brazilian company holds, in turn, 99.5% of Legan Administraçao de Recursos Ltda, an asset management company based in Sao Paolo (Brazil). This item was calculated as the difference between the value of the equity investment and the shareholders’ equity of the subsidiary at 31 October 2013 (4,733 thousand euro).

“Other intangible assets - Other” refer to: • 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 recognised at its original value (35,338 thousand euro) and the amount payable to the lease company under liabilities. The details of the foregoing transaction are described in item 10 “Payables” 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 5,381 thousand euro.

76 Gruppo Azimut 11.2 Intangible assets: annual change Total A. Opening balance 359,587 B. Increases 12,934 B.1 Purchases 6,832 B.2 Write-ups 0 B.3 Increases in fair value taken to: 0 shareholders’ equity 0 income statement 0 B.4 Other changes Business combinations 6,102 C. Decreases 3,271 C.1 Sales 0 C.2 Amortisation 3,271 C.3 Impairment write-downs charged to: 0 shareholders’ equity 0 income statement 0 C.4 Decreases in fair value charged to: 0 shareholders’ equity 0 income statement 0 C.5 Other changes 0 D. Closing balance 369,250

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

% rate Application software 33%

Impairment test With respect to “goodwill and goodwill arising on consolidation” and “trademarks” (when recognised as an intangible asset with an indefinite useful life), the IFRS, specifically IAS 36 - “Impairment of assets”, stipulate that the company must perform annual impairment tests to check the adequacy of the amounts recognised. The aim of the impairment test is to identify any impairment loss. Where the test shows that the value of an asset has been overestimated, the company shall recognise an impairment loss. For the purpose of impairment testing, two cash generating units (CGU) have been identified that basically reflect the Azimut Group’s business and to which the above intangible assets have been allocated.

77 Notes to the consolidated financial statements

The first CGU reflects the activity carried out by the companies directly controlled by Azimut Holding Spa, each specialising in the distribution, promotion and management of financial and insurance products (basically unit-linked products) and operating 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 operating results are revised periodically by management for the purpose of decisions regarding allocation of resources and measurement of results and company performance. The second CGU refers to the activity carried out by the foreign companies belon- ging to the Luxembourg company AZ International Holdings Sa, wholly owned by Azimut Holding Spa, aimed at identifying, acquiring and managing new foreign partnerships. Therefore, management has set out a consolidated reporting system for AZ Interna- tional Holdings Sa which, in turn, must send the Parent Company Azimut Holding a consolidated reporting package for all foreign companies.

CGU AZ International

The CGU of AZ International Holdings Sa is part of the Azimut Group to promote the development of the distribution of financial products, including in the relevant markets in which the companies of the above CGU operate. The impairment test for this CGU checks for impairment indicators on goodwill arising on consolidation of 46 million euro. The following companies belong to the “CGU AZ International”: • Katarsis Capital Advisors Sa; • Eskatos Capital Management Sarl; • Compagnie de Gestion Priveè Monegasque; • CGM Italia Sim Spa • AN Zhong (AZ) IM Limited; • AN Zhong (AZ) IM HK Limited; • AZ Investment Management; • AZ Global Portfoy Yonetimi; • Global Securities; • AN Ping Investment; • Sinopro Financial Planning Taiwan LTD; • Athenaeum LTD; • AZ Swiss; • AZ Brasil Holdings LTDA; • AZ Legan Partecipações S.A.; • AZ Legan Administração de Rescursos.

78 Gruppo Azimut CGU Azimut

The CGU of Azimut Holding Spa is comprised of the following companies, that are focussed on management and distribution: • Azimut Capital Management Sgr Spa; • AZ Investimenti Sim Spa; • Azimut Consulenza Sim Spa; • Apogeo Consulting Sim Spa; • AZ Fund Management Sa; • AZ Capital Management Ltd; • AZ Life Ltd. • Azimut Global Counseling Srl

Again, the impairment test for this CGU checks for impairment indicators on intangible assets of 318 million euro, represented by goodwill, goodwill arising on consolidation and the trademark. For the purposes of the impairment test of intangible assets, the value in use of CGUs was calculated using the Discounted Cash Flow method and comparing value in use with the book value of the CGUs, inclusive of the above intangible assets. The value in use of these assets calculated using the Discounted Cash Flow method is as follows: • Calculation of unlevered cash flows: for the purposes of this calculation, the -ex pected cash flow was approximated to the net profit for the year. Profits for the first five years were based on the “Budget 2014” and the project to 2018 of the “2009 – 2014 Business Plan”. The underlying assumptions are as follows: • the evolution of assets in line with the trend for the past few years; • profitability equal to the average of the past five years: there are no external sources to provide reliable information on the pricing trend. Therefore, historical profitability levels were used considering the value added of the advisory service offered to clients; • increase in overheads in line with forecast growth of personnel and structure. The flow increase after 2018 was kept constant at 2%.

• Calculation of the weighted average cost of capital (“WACC”), equal to 10.06%, based on the following parameters: • Risk free: 10-year Italian government bonds (BTP), December 2013; • Azimut beta: calculated on a 5-year timescale with daily readings (source: Bloom- berg) • Market risk premium: extra yield required for investments in shares rather than risk-free securities (Source: Credit Suisse Global Equity Strategy); • Azimut’s financial structure.

79 Notes to the consolidated financial statements

Cost of capital calculation: WACC 31-Dec-13 Risk-free rate 4.49% Market risk premium 5.30% Beta Unlevered 1.051 Risk premium 5.57% Cost of equity (Ke) 10.06% D/(D+E) 0% E/(D+E) 100% WACC 10.06%

• Discounting cash flows over the five-year timescale and cash flows calculated for terminal value purposes at the WACC to estimate the Enterprise Value of the CCU and calculating the value in use of the CGU by subtracting the net financial position from the Enterprise Value. Based on the above, management calculated Azimut CGU’s and AZ International CGU’s value in use at 2,916 million euro and 132 million euro, respectively. These amounts are greater than the CGUs’ book value of 607 million and 82 million euro, respectively, as no impairment losses were recognised. Furthermore, the CGU’s value in use was subjected to a sensitivity analysis which considered WACC changes and the long-term growth rate (g-rate). The tables below show the results of the sensitivity analyses which did not identify any impairment loss. Impairment test on the AZ International CGU

80 Gruppo Azimut Impairment test on the Azimut CGU

Stress Test Differenza tra Valore d’uso e Valore contabile della CGU WACC 8,06% 8,56% 9,06% 9,56% 10,06% 10,56% 11,06% 11,56% 12,06% 0,00% 48,86 44,57 40,76 37,34 34,27 31,48 28,95 26,64 24,51 0,50% 54,11 49,23 44,92 41,09 37,65 34,56 31,76 29,22 26,89 1,00% 60,10 54,50 49,60 45,26 41,41 37,96 34,86 32,04 29,48 1,50% 67,00 60,52 54,89 49,96 45,61 41,74 38,27 35,15 32,32 2,00% 75,04 67,45 60,94 55,28 50,33 45,96 42,07 38,58 35,44 2,50% 84,53 75,53 67,90 61,35 55,67 50,70 46,30 42,39 38,89 3,00% 95,89 85,06 76,02 68,35 61,77 56,06 51,06 46,65 42,72 3,50% 109,74 96,48 85,59 76,51 68,80 62,19 56,46 51,43 46,99

Diminuzione Flussi di Cassa 0% -5% -10% -15% -20% -25% 1,00 95% 90% 85% 80% 75% 50,33 46,59 42,84 39,10 35,35 31,61

Key: Difference between Value in use and Book value of the GCU Cash flow discount

Impairment Test on the Azimut CGU

Stress Test

Differenza tra Valore d’uso e Valore contabile della CGU WACC 8,06% 8,56% 9,06% 9,56% 10,06% 10,56% 11,06% 11,56% 0,00% 2.274 2.170 2.078 1.996 1.922 1.855 1.794 1.738 0,50% 2.400 2.283 2.179 2.086 2.004 1.929 1.862 1.800 1,00% 2.545 2.410 2.291 2.187 2.094 2.011 1.936 1.868 1,50% 2.711 2.555 2.419 2.300 2.195 2.102 2.018 1.943 2,00% 2.905 2.722 2.565 2.429 2.309 2.204 2.110 2.026 2,50% 3.134 2.917 2.733 2.575 2.438 2.318 2.212 2.118 3,00% 3.408 3.146 2.928 2.744 2.585 2.447 2.327 2.220 3,50% 3.742 3.422 3.159 2.940 2.755 2.595 2.457 2.336

81 Notes to the consolidated financial statements

Diminuzione Flussi di Cassa 0% -5% -10% -15% -20% 1,00 95% 90% 85% 80%

Key: Difference between Value in use and Book value of the GCU Cash flow discount

Finally, the analysis of the Azimut Holding share shows that market cap is considerably greater than the Group’s shareholders’ equity: considering shareholders’ equity of 694 million euro, the Company’s market cap at 31 December 2013 was equal to 3.4 billion euro.

Section 12 Tax assets Tax assets and tax liabilities This item amounts to 89,415 thousand euro (52,224 thousand euro at 31 December 2012). The breakdown is as follows:

12.1 Breakdown of “Tax assets: current and deferred” Total Total 31/12/2013 31/12/2012 Current 50,978 11,819 Deferred 38,437 40,405 of which pursuant to Italian Law 214/2011 840 6,787 Total 89,415 52,224

“Current tax assets” mainly refers to non-offset IRES and IRAP tax credits for the year 2013. “Deferred tax assets” mainly includes: • 9,768 thousand euro of deferred tax assets arising from the value of the lease instalments deductible in future years by virtue of the sale and lease-back agreement for the Azimut trademark; • 16,997 thousand euro to deferred tax assets relating to tax losses, of which 840 thousand euro refers to deferred tax assets pursuant to Italian Law 214/2011 and 655 thousand euro refers to deferred tax assets posted in relation to higher losses arising as a result of the filing of a specific petition for the failure to deduct IRAP pursuant to Article 2, paragraph 1 - quater of Italian Law Decree 201/2011; • 1,693 thousand euro of deferred tax assets relating to the adjustment of the book and tax value (IRAP) of the trademark and goodwill pursuant to Article 1, paragraph 51 of Law 244/2007 (2008 Finance Act) 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) up until the tax year underway at 31 December 2007; • to a lesser extent, the temporary differences resulting from the different timing crite-

82 Gruppo Azimut ria of IRES and IRAP tax deductibility for some cost items compared to that recognised in the income statement.

As regards deferred tax assets recognised on tax losses, in accordance with IAS 12, adjustments were made in order to establish the probability of these losses being recovered in subsequent tax years. Based on the assumptions pursuant to current tax regulations and related changes of the year, the ability of future taxable income, at Group level, comprising the companies which have adopted the tax consolidation regime, to absorb the tax losses which generated the recognition of deferred tax assets, also in previous years, was assessed.

Tax liabilities

This item amounts to 83,537 thousand euro (58,447 thousand euro at 31 December 2012). The breakdown is as follows:

12.2 Breakdown of “Tax liabilities: current and deferred”: Total Total 31/12/2013 31/12/2012 Current 33,903 11,599 Deferred 49,634 46,848 Total 83,537 58,447

“Current tax liabilities” includes the provisions for IRAP tax payable of Azimut Hol- ding Spa, Azimut Capital Management Sgr Spa and Apogeo Consulting Sim Spa, for IRES tax payables and the tax payables of the Group’s foreign companies, net of the tax advances paid, and the provisions estimated using prudential criteria, also for the purpose of evaluating settlement solutions for the tax audits under way, as described in the section “Tax position” of these notes. During the year, tax provisions amounted to approximately 10 million euro. “Deferred tax liabilities” mainly includes deferred tax liabilities relating to the difference between the book value and tax value of the trademark amounting to 11,686 thousand euro and the deferred tax liabilities recognised on the temporary difference between the book value and tax value of goodwill of 32,824 thousand euro. These tax liabilities, recognised in accordance with IAS 12, are not reasonably expected to become actual costs given that the aforementioned temporary differences will only be reduced following a negative impairment test result that leads to the recognition of an impairment loss on goodwill and the trademark and in the case of disposal of these assets. Moreover, this item includes deferred IRES and IRAP on unallocated earnings of the subsidiaries at 31 December 2013.

83 Notes to the consolidated financial statements

12.3 Changes in deferred tax assets (contra entry in income statement) Total Total 31/12/2013 31/12/2012 1. Opening balance 40,170 39,061 2. Increases 7,451 7,728 2.1 Deferred tax assets recognised in the year: 7,440 7,714 a) from previous years b) due to changes in accounting policies d) other 7,440 7,714 2.2 New taxes or increased tax rates 2.3 Other increases 11 14 3. Decreases 9,647 6,619 3.1 Deferred tax assets eliminated during the year 2,832 2,683 a) reversals 2,832 2,467 b) write-off of irrecoverable tax c) due to changes in accounting policies d) other 216 3.2 Decreases in tax rates 3.3 Other decreases 3,936 a) conversion into tax credits pursuant to Italian Law 214/2011 6,815 b) other 4. Closing balance 37,974 40,170

12.3.1 Change in deferred tax assets under Italian Law 214/2011 (contra entry in income statement) Total Total 31/12/2013 31/12/2012 1. Opening balance 6,787 3,380 2. Increases 840 3,407 3. Decreases 6,787 3.1 Reversals 3.2 Conversion into tax credits a) arising out of loss for the year b) arising out of tax losses 6,787 3.3 Other decreases 4. Closing balance 840 6,787

84 Gruppo Azimut 12.4 Changes in deferred tax liabilities (contra entry in income statement) Total Total 31/12/2013 31/12/2012 1. Opening balance 42,680 38,069 2. Increases 7,333 7,566 2.1 Deferred tax liabilities recognised in the year: 7,333 7,566 a) from previous years b) due to changes in accounting policies c) other 7,333 7,566 2.2 New taxes or increased tax rates 2.3 Other increases 3. Decreases 4,749 2,955 3.1 Deferred tax liabilities eliminated during the year 4,541 2,816 a) reversals 4,541 2,816 b) due to changes in accounting policies c) other 3.2 Decreases in tax rates 3.3 Other decreases 208 139 4. Closing balance 45,264 42,680

85 Notes to the consolidated financial statements

12.5 Changes in deferred tax assets (contra entry in shareholders’ equity) Total Total 31/12/2013 31/12/2012 1. Opening balance 235 4 2. Increases 228 231 2.1 Deferred tax assets recognised in the year: 228 231 a) from previous years b) due to changes in accounting policies d) other 228 231 2.2 New taxes or increased tax rates 2.3 Other increases 0 0 3. Decreases 0 0 3.1 Deferred tax assets eliminated during the year 0 0 a) from previous years b) due to changes in accounting policies d) other 3.2 Decreases in tax rates 3.3 Other decreases 4. Closing balance 463 235

12.6 Changes in deferred tax liabilities (contra entry in shareholders’ equity) Total Total 31/12/2013 31/12/2012 1. Opening balance 4,169 4,036 2. Increases 202 143 2.1 Deferred tax liabilities recognised in the year: 202 143 a) from previous years b) due to changes in accounting policies d) other 202 143 2.2 New taxes or increased tax rates 2.3 Other increases 3. Decreases 0 11 3.1 Deferred tax liabilities eliminated during the year 0 0 a) from previous years b) due to changes in accounting policies d) other 0 0 3.2 Decreases in tax rates 3.3 Other decreases 11 4. Closing balance 4,370 4,169

86 Gruppo Azimut 13.1 Breakdown of “Non-current assets held for sale and discontinued operations” Sezione 13 This item amounts to 75 thousand euro and includes the equity investment in Daxtor Non-current assets held Srl measured at its disposal price. for sale and discontinued operations and related liabilities - Item 130

This item amounts to 64,419 thousand euro (63,063 thousand euro at 31 December Sezione 14 2012). Other assets

14.1 Breakdown of “Other assets” Total Total 31/12/2013 31/12/2012 Due from Inland Revenue 20,795 22,495 Other receivables 24,317 14,396 Prepayments 19,307 26,172 Total 64,419 63,063

“Due from Inland Revenue” includes VAT credits of 4,261 thousand euro and amounts related to mathematical reserves of 16,534 thousand euro. “Other receivables” includes receivables from clients relating to the virtual duty stamp collected in early 2014. “Prepayments” includes commission expense, which does not pertain to the 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, Pleiadi and AZ Style insurance products and 18 months in the case of hedge funds. “Prepayments” also include the assets generated via the deferral of acquisition costs for unit-linked policies issued by the Group’s Irish insurance company, classified as investment contracts.

87 Notes to the consolidated financial statements

Liabilities

Section 1 Payables amount to 106,164 thousand euro (133,729 thousand euro at 31 December Payables 2012).

“Payables” (due to banks, financial institutions and clients) Items Total 31/12/2013 Total 31/12/2012 Due to Due to Due to Due to Due to Due to banks financial clients banks financial clients institutions institutions 1. Loans 53,414 86,646 1.1 Repurchase agreements of which for government securities of which for other debt securities of which for equity securities 1.2 Loans 53,414 86,646 2. Other payables 1,878 3,651 952 1,324 3,210 592 Total 55,292 3,651 952 87,970 3,210 592 Fair value L1 53,414 86,646 Fair value L2 - Fair value L3 1,878 3,651 952 1,324 3,210 592 Total fair value

“Loans” includes: a) a financial debt, amounting to 4,200 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. It also includes accrued interest expense at 31 December 2013 on the amount due to the lessor (23 thousand euro), to be paid at a pre-established date (31 October 2014). The lease-back agreement, which is not subject to condition precedent or subsequent or covenants has a duration of 9 years. Interest is calculated based on the 12-month Euribor plus 40 basis points. b) a loan of 50,000 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, condition precedent or subsequent. This item also includes accrued interest at 31 December 2013 on this loan, amounting to 192 euro, paid on the pre- established date (1 January 2014). “Other payables” mainly includes commissions accrued and to be settled for the sale of fund units.

88 Gruppo Azimut Due to financial advisors: The item had a balance of 46,268 thousand euro (41,957 thousand euro at 31 De- cember 2012). It mainly includes amounts due to financial advisors for commissions of December 2013 paid in January 2014, in addition to other accruals relating to 2013, which will be paid during the year, and other contractual commitments for commissions, including loyalty commissions, to be paid to financial advisors over the medium-long term.

2.1 Breakdown of “Outstanding securities” Section 2 Outstanding securities

Liabilities Total 31/12/2013 Total 31/12/2012 Book Fair value Book Fair value value value L1 L2 L3 L1 L2 L3 1. Securities 0 0 bonds 228,608 232,232 35,664 0 38,447 0 structured 0 0 0 0 0 other 228,608 232,232 35,664 0 38,447 0 other securities 0 0 0 0 structured 0 0 0 0 other 0 0 0 0 Total 228,608 0 232,232 0 35,664 0 38,447 0

The item “Outstanding securities” is broken down as follows: 1. 17,359 thousand euro of the original 88,457 bonds amounting to 1,000 euro each, of the “Azimut 2009-2016 subordinato 4%” bond, 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. At 31 December 2013, this item included accrued interest of 354 thousand euro which will be paid on a pre-established date (1 July 2014). On 1 July 2013, Azimut Holding Spa made an advance partial redemption of the

89 Notes to the consolidated financial statements

bond totalling 17,691 thousand euro, or 20% of the original par value. 2.“Azimut 2011-2016 Senior 2,5%” bond, amounting to 836 thousand euro originally composed of 884 bonds worth 1,000 euro each with a duration of 5 years and yield in line with the annual fixed nominal rate of 2.5% before tax. The amount refers to total bonds sold and includes the charges incurred by Azimut Holding Spa for the issue, in addition to interest expense accrued at 31 December 2013 which was paid on the pre-established date (1 February 2014). 3.convertible bond “Azimut 2013-2020 Convertibile 2.125%” amounting to 210,414 euro originally composed of 2,500 bonds worth 100,000 euro with a duration of seven years. The amount refers to total bonds sold and includes the charges incurred by the Parent Company for the issue and placement, in addition to interest expense accrued at 31 December 2013 which will be paid on the pre-established date. Convertible bonds bear gross annual interest of 2.125% and can be converted into Azimut Holding Spa ordinary shares (newly issued or existing). The conversion price is set at 24.26 euro. In accordance with IAS 32 and based on that set out in the section on Accounting policies, the total debt component of this financial instrument is 214,312 euro, whereas the equity component, calculated on a residual basis, amounts to 35,688 euro.

2.2 Subordinated securities This category includes the bond loan described in points 1 and 3 of this item.

Technical reserves where Technical reserves where the investment risk is borne by policyholders amount to the investment risk is 310,994 thousand euro (333,279 thousand euro at 31 December 2012) and refer to borne by policyholders the commitments arising from the unit-linked policies issued by the subsidiary AZ Life Ltd, classified as insurance contracts.

Section 4 This item amounts to 2,305,428 thousand euro (1,228,596 thousand euro at 31 De- Financial liabilities measured cember 2012) and includes the commitments arising from the unit-linked policies at fair value issued by the subsidiary AZ Life Ltd, classified as investment contracts (level 2). It also includes the liability (18,110 thousand euro) relating to the remaining 49% stake in Compagnie de Gestion Privée Monegasque Sam, the liability (2,820 thousand euro) reflecting the remaining 25% stake in Katarsis Capital Advisors S.A. and the liability (10,636 thousand euro) related to the remaining stake in Athenaeum and AZ Legan as outlined in Section 5 - Consolidation scope and methods - Other information of these notes. “Financial liabilities measured at fair value” (level 3) and the related measurement (described in the section on accounting policies) at 31 December 2013 led to the recognition of losses of 353 thousand euro (no gains or losses in 2012) under “Net result of financial assets and financial liabilities measured at fair value”.

90 Gruppo Azimut 4.1 Breakdown of “Financial liabilities measured at fair value”

Liabilities Total 31/12/13 Total 31/12/12 Fair value FV NV Fair value FV NV L1 L2 L3 L1 L2 L3 1. Payables 2,273,862 31,566 2,305,428 1,208,019 20,577 1,228,596 2. Debt securities bonds structured other other securities structured other

Total 2,273,862 31,566 2,305,428 1,208,019 20,577 1,228,596

“Tax liabilities” is described in detail in section 12 of these notes. Section 7 Tax liabilities

This liability amounts to 36,659 thousand euro (36,467 thousand euro at 31 Decem- Section 9 ber 2012). Other liabilities

Detail/Value Total Total 31/12/2013 31/12/2012 Due to suppliers 14,089 4,387 Due to Inland Revenue 4,495 9,741 Due to employees 2,877 2,940 Due to social security bodies 3,321 3,042 Other payables 9,050 14,621 Deferred income 2,827 1,736 Total 36,659 36,467

“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.

91 Notes to the consolidated financial statements

Section 10 The item amounts to 2,265 thousand euro (2,052 thousand euro at 31 December Staff severance pay (TFR) 2013) and refers to TFR accrued by personnel employed by the group companies at 31 December 2013.

10.1 “Staff severance pay (TFR)”: annual change Total Total 31/12/13 31/12/12 A. Opening balance 2,052 1,966 B. Increases 293 283 B1. Provisions for the year 263 86 B2. Other increases 30 197 C. Decreases 80 197 C1. Payments made 48 167 C2. Other decreases 32 30 D. Closing balance 2,265 2,052

10.2 Other information As set out in the section on “Accounting policies”, staff severance pay was calculated in accordance with IAS 19, based on specific following technical, demographic and financial assumptions:

Demographic assumptions

In order to eliminate the probabilities of removal of personnel in service due to death, the Sim/F 2000 table was used (ISTAT - Italian National Institute of Statistics - mortality table by gender), prudentially reduced by 20%. Decreases due to disability were calculated using the relevant INPS (the Italian social security institution) tables, reduced by 20%. Pension, which is considered the main reason for outgoing employees, was subject to a timescale equal to meeting the minimum requirement (contribution period or seniority), calculated in accordance with ruling legislation. The following parameters were used for other technical, non-financial factors: • Turnover: 1.5% constant; • Advance: 2% constant; • Amount paid in advance: 70%.

Finally, assessment of the allocation of TFR to private pension funds was carried out based on the behaviour observed on assessment (lack or partial adherence to private pension funds), without making any assumption on the future decisions of the personnel different from the current ones.

92 Gruppo Azimut Financial assumptions

IAS 19 requires utilisation of financial technical factors. These assumptions reflect their influence on the prospective trend of flows (following remuneration increases and forecast inflation scenarios) and discounting of the Company’s estimated liability at the measurement date. Indeed, the discount rate is the main financial assumption on which the analysis results depend. • Inflation: a constant rate of 2.00% was used with respect to the future inflation scenario to be used for remuneration and TFR revaluation. • Interest rates: the future liability to employees was discounted using the yield curve of debt securities in accordance with IAS 19.

The balance amounts to 21,935 thousand euro (20,797 thousand euro at 31 Decem- Section 11 ber 2012). Provisions for risks and charges 11.1 Breakdown of “Provisions for risks and charges” • Supplementary indemnity provision for agents established based on actuarial criteria, in accordance with IFRS, totalling 13,428 thousand euro. • Other provisions (8,507 thousand euro) for potential legal disputes with clients, for the present value of the estimated expense to settle the obligations. Other provisions also include provisions for legal and tax assistance fees related to the tax audits under way.

11.2 “Provisions for risks and charges”: annual change 31/12/2013 Opening balance 20,797 Increases during the year 4,243 Decreases during the year (3,101) Closing balance 21,935

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

At 31 December 2013, the fully paid up and subscribed share capital was composed of 143,254,497 ordinary shares, with a total value of 32,324 thousand euro.

93 Notes to the consolidated financial statements

12.2 Breakdown of “Treasury Shares” Types of shares Total 1. Treasury shares 82,224 1.1 Ordinary shares 82,224 1.2 Other shares -

During the year, treasury share transactions led to a total decrease in the portfolio of 1,325,464, shares for a total of 16,922 thousand euro. At 31 December 2013, the Parent Company Azimut Holding Spa held 10,703,695 treasury shares at an average book value of 7.682 euro per share.

12.3 Breakdown of “Equity instruments” At 31 December 2013, this item amounted to 72,521 thousand euro and related to the equity component of the subordinated bond, recognised upon issue at the fair value of the relevant warrants (3,515 thousand euro), net of the warrants exercised in 2013 (for additional information on the transaction reference should be made to the “Treasury shares” paragraph of the Management Report), at the issue amount, as per the Shareholders’ resolution of 29 April 2010, of 1,500,000 profit-participating financial instruments recognised in the previous year for a total of 36,000 thousand euro (equal to their fair value calculated by an independent leading company), and to the equity component of the convertible bond, recognised on 25 November 2013 upon issue of the convertible bond at 34,949 thousand euro, calculated on a residual basis as the difference between the fair value of the bond, as a whole, and the fair value of the debt component. The costs borne by Azimut Holding Spa for the bond issue are allocated proportionally to the debt component and the equity component.

12.4 Breakdown of “Share premium reserve” “Share premium reserve” amounted to 173,987 euro at 31 December 2013.

94 Gruppo Azimut 12.5 Other information Breakdown and changes in “Reserves” Legal reserve Other reserves Total A. Opening balance 6,465 274,808 281,273 B. Increases 66,666 66,666 B.1 Profit appropriations 64,723 64,723 B.2 Other changes 1,943 1,943 C. Decreases 13,862 13,862 C.1 Allocations loss account reserve dividends transfers to share capital C.2 Other changes 13,862 13,862 D. Closing balance 6,465 327,612 334,077

Breakdown and changes in “Valuation reserves”

Available- Tangible Intangible Cash flow Special Other Total for-sale assets assets hedge revaluation financial laws assets A. Opening balance 979 - - - - - 49 930 B. Increases 1,146 - - - - - 1,146 B.1 Increases in fair value 933 933 B.2 Other changes 213 213 C. Decreases 1,948 - - - - 899 2,847 C.1 Decreases in fair value 1,741 1,741 C.2 Other changes 207 899 1,106 D. Closing balance 177 - - - - (948) (771)

95 Notes to the consolidated financial statements

Minority interest

Breakdown of “Minority interest” 31/12/2013 1. Share capital 3,822 2. Treasury shares 0 3. Equity instruments 0 4. Share premium reserve 0 5. Reserves 988 6. Valuation reserves (84) 7. Profit (loss) for the year 126 Total 4,852

Minority interest refers to the interest in AZ Global Portfoy Yonetimi held by Global Yatirim Holding and the interests in Katarsis Capital Advisors S.a., AZ Swiss Sa, An Ping, Athenaeum and AZ Legan Participacoes held by third parties.

96 Gruppo Azimut Parte C - Notes to the income statement

This item amounts to 270 thousand euro (282 thousand euro in 2012) Section 3 Gains (losses) on disposal 3.1 Breakdown of “Gains (losses) on disposal and repurchase” and repurchase

Total 31/12/2013 Total 31/12/2012 Items/Income items Gain Loss Net Gain Loss Net gain/(loss) gain/(loss) 1. Financial assets 1.1 Available-for-sale financial assets 518 0 518 256 (127) 129 1.2 Held-to-maturity assets 0 0 0 6 0 6 1.3 Other financial assets 38 0 38 44 0 44 Total 556 0 556 306 (127) 180 2. Financial liabilities 2.1 Payables 2.2 Outstanding securities 0 (286) (286) 0 (462) (462) Total (2) 0 (286) (286) 0 (462) (462) Total (1+2) 556 (286) 270 306 (589) (282)

4.1 Breakdown of “Net result of financial assets and financial liabilities measured at fair Section 4 value “ Net result of financial assets and financial liabilities measured at fair value

Items/Income items Gains Gains on disposal Losses Losses on disposal Net loss 1. Financial assets 1.1 Debt securities 1.2 Equity securities and UCI units 1.3 Loans 2. Financial assets and financial liabilities: exchange differences 3. Financial liabilities (353) (353) 3.1 Payables 3.2 Debt securities 3.3 Other liabilities 4. Credit and financial derivatives Total (353) (353)

97 Notes to the consolidated financial statements

Section 5 5.1 Breakdown of “Fee and commission income” Fees and commissions The breakdown is as follows: Detail Total Total 31/12/2013 31/12/2012 1. Trading on own account 0 0 2. Execution of orders on behalf of clients 0 0 3. Sales and distribution 19,901 18,235 securities 0 0 third party services: 19,901 18,235 portfolio management 0 0 collective portfolio management 14,853 14,935 insurance products 4,490 2,844 other 558 456 4. Portfolio management 430,937 402,015 own account 429,980 401,369 on behalf of third parties 957 646 5. Order receipt and transmission 717 588 6. Investment advisory 0 0 7. Financial structure advisory 0 0 8. Management of multilateral trading facilities 0 0 9. Custody and management 0 0 10. Currency trading 0 0 11. Other services 0 0 Total 451,555 420,838

98 Gruppo Azimut 5.2 Breakdown of “Fee and commission expense” Detail Total Total 2013 2012 1. Trading on own account 0 0 2. Execution of orders on behalf of clients 0 0 3. Sales and distribution 186,690 164,754 securities 0 54 third party services: 186,690 164,700 portfolio management 1,057 1,093 other 185,633 163,607 4. Portfolio management 2,144 2,654 own account 2,144 2,654 on behalf of third parties 0 0 5. Order intake 382 277 6. Investment advisory 0 0 7. Custody and management 0 0 10. Currency trading 0 0 8. Other services 881 856 Total 190,097 168,541

5.3 Off premises fee and commission income At 31 December 2013, this item amounted to 264,705 thousand euro (236,359 thousand euro at 31 December 2012), 9,401 thousand euro of which related to entry fees and 255.304 thousand euro to maintenance fees.

5.4 Off premises fee and commission expense At 31 December 2013, this item amounted to 190,097 thousand euro (168,541 thousand euro at 31 December 2012).

99 Notes to the consolidated financial statements

Section 6 6.1 Breakdown of “Interest income and similar income” Interest Interest income and similar income amounts to 9,033 thousand euro (9,460 thousand euro at 31 December 2012). Items/Technical forms Debt Repurchase Other Total 2013 Total 2012 securities agreements 1. Held-for-trading financial assets 0 0 2. Financial assets measured at fair value 0 0 3. Available-for-sale financial assets 22 22 22 4. Held-to-maturity financial assets 0 0 5. Receivables 8,816 8,816 9,090 5.1 Due from banks 8,816 8,816 9,090 5.2 Due from financial institutions 0 0 5.3 Due from clients 0 0 6. Other assets 195 195 348 7. Hedging derivatives 0 0 Total 22 0 9,011 9,033 9,460

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

6.2 Breakdown of “Interest expenses and similar expenses” This item amounts to 3,069 thousand euro (4,215 thousand euro at 31 December 2012).

Items/Technical forms Repurchase Other Securities Other Total Total agreements loans 2013 2012 1. Due to banks 990 990 1,867 2. Due to financial institutions 0 0 3. Due to clients 0 0 4. Outstanding securities 1,915 1,915 2,175 5. Held-for-trading financial liabilities 0 0 6. Financial liabilities measured at fair value 0 0 7. Other liabilities 164 164 173 8. Hedging derivatives 0 0 Total 0 990 1,915 164 3,069 4,215

“Due to banks - other loans” is mainly composed of interest expense on the loans raised by the Parent Company.

100 Gruppo Azimut “Net premiums” amounts to 3,645 thousand euro (5,486 thousand euro at 31 De- Net premiums cember 2012) for premiums relating to unit-linked policies issued by the Irish insurance company AZ Life Ltd, classified as insurance contracts.

This item amounts to 61,943 thousand euro (2012: 56,701 thousand euro) and is Gains (losses) on financial composed of realised gains and losses and changes in the value of financial assets and assets measured at fair liabilities, relating to unit-linked policies, and measured at fair value. value through income statement

9.1 Breakdown of “Personnel costs” This item amounts to 37,685 thousand euro (2012: 34,665 thousand euro). The bre- Section 9 Administrative costs akdown is as follows:

Items Total 2013 Total 2012 1. Employees 23,506 20,007 a) wages and salaries 17,335 14,253 b) social security 4,403 4,156 c) staff severance pay (TFR) 0 0 d) pension contributions 0 0 e) accrual to TFR 650 482 f) accrual to the pension provision and similar obligations: 0 0 defined contribution 0 0 defined benefit 0 0 g) private pension plans: 47 33 defined contribution 47 33 defined benefit 0 0 h) other expenses 1,071 1,083 2. Other personnel 528 624 3. Directors and Statutory Auditors 13,651 14,034 4. Early retirement costs 0 0 5. Cost recoveries for employees seconded to other companies 0 0 6. Reimbursed costs for employees seconded to the company 0 0 Total 37,685 34,665

101 Notes to the consolidated financial statements

9.2 Average number of employees by category 2013 2012 Directors 44 41 Middle managers 60 51 Other employees 85 77 Total 189 169

9.3 Breakdown of “Other administrative costs” This item amounts to 58,999 thousand euro (44,381 thousand euro at 31 December 2012). The breakdown is as follows: Total Total 2013 2012 Professional services 4,811 3,164 Advertising, promotion and marketing expenses 9,876 5,450 Telephone and fax 1,159 996 Enasarco/Firr contributions 5,076 4,561 Lease and rent 3,334 3,300 Insurance premiums 675 599 Tax liabilities 134 154 Lease and hire 3,990 2,317 Outsourcing and EDP Services 18,557 15,152 Maintenance costs 900 613 Other administrative costs 10,487 8,075 Total 58,999 44,381

Advertising, promotion and marketing costs include VAT on royalties paid by the subsidiaries Azimut Consulenza Sim Spa and Azimut Sgr Spa (merged by acquisition into Azimut Capital Management Sgr Spa effective from 1 October 2013) to Azimut Holding Spa (440 thousand euro).

102 Gruppo Azimut Net impairment and write-ups of tangible assets based on depreciation at 31 Decem- Section 10 ber 2013 are broken down as follows: Net impairment and write- ups of tangible assets 10.1 Breakdown of “Net impairment and write-ups of tangible assets” Items/impairment Depreciation Impairment Write-ups Net result and write-ups write-downs 1. group-owned 1,007 1,007 business purposes 1,007 1,007 investment purposes 2. Under finance lease business purposes investment purposes Total 1,007 1,007

Net impairment and write-ups of intangible assets based on amortisation at 31 De- Section 11 cember 2013 are broken down as follows: Net impairment and write-ups of intangible assets 11.1 Breakdown of “Net impairment and write-ups of intangible assets” Amortisation Impairment Write-ups Net result write-downs 1. Goodwill 2. Other intangible assets 3,271 3,271 2.1 group-owned 3,271 3,271 generated internally 0 other 3,271 3,271 2.2 Under finance lease Total 3,271 3,271

13.1 Breakdown of “Net accruals to provisions for risks and charges” Section 13 This item amounts to 2,383 thousand euro (5,704 thousand euro at 31 December Net accruals to provisions 2012) and includes the accrual to the supplementary indemnity provision for agents for risks and charges (3,043 thousand euro) and the net accrual to the provision for sundry risks and changes of -660 thousand euro, related to risks for disputes with clients, as described in the note to “Provisions for risks and charges” - Section 11 of Liabilities.

103 Notes to the consolidated financial statements

Section 14 14.1 Breakdown of “Other operating income and costs” Other operating income This item amounts to 2,448 thousand euro (144 thousand euro at 31 December and costs 2012) and is mainly composed of trade expenses and current account bank charges, in addition to charge-backs made to financial advisors and income for “soft commissions” received thanks to specific agreements.

Section 15 15.1 Breakdown of “Profit (loss) on equity investments” Profit (loss) on equity This item is a loss of 265 thousand euro (793 thousand euro at 31 December 2012). investments Items 2013 2012 1. Income 35 1,135 1.1 Revaluations 35 1,135 1.2 Profit on disposal 1.3 Write-ups 1.4 Other increases 2. Costs 300 342 2.1 Depreciation 142 98 2.2 Losses on disposal 244 2.3 Impairment write-downs 2.4 Other costs 158 Net result 265 793

17.1 Breakdown of “Income tax on profit from continuing operations” Section 17 Income tax on profit from Total Total continuing operations 2013 2012 1. Current taxes 28,520 21,522 2. Changes in current taxes of previous years 0 0 3. Decrease in current taxes for the year Italian Law no. 214 0 0 4. Change in deferred tax assets (4,968) (4,888) 5. Change in deferred tax liabilities 2,809 4,749 Taxes for the year 26,361 21,383

Income tax for the year mainly refers to IRAP and IRES paid by the Group’s Italian companies, taxes payable by the foreign companies as well as the income from tax consolidation amounting to the taxes receivable and due on taxable income transferred to the parent company by the Group’s Italian subsidiaries that have adopted the tax consolidation regime pursuant to Article 117 of Italian Presidential Decree 917/86.

104 Gruppo Azimut Taxes for the Group’s foreign subsidiaries are calculated in accordance with the tax regulations in force in the individual countries of residence. Current taxes also include a provision for taxes which is illustrated under the note to “Tax assets and liabilities”, to which reference is made. “Change in deferred tax assets” includes the release of deferred tax assets on the amount of the lease instalment deductible during the year, the posting of deferred tax assets on tax losses, including the portion pursuant to Italian Law 214/2011 and deferred tax assets recognised in relation to higher losses arising as a result of the filing of a specific petition for the failure to deduct IRAP pursuant to Article 2,- pa ragraph 1 – quater of Italian Law Decree no. 201/2011, in addition to deferred tax assets relating to temporary differences resulting from the different timing criteria of IRES tax deductibility. “Change in deferred tax liabilities” mainly includes deferred tax liabilities, in line deferred 12, related to the temporary differences between the book value and the tax value of goodwill. These tax liabilities are not expected to become actual costs given that the aforementioned temporary differences will 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. The same item also includes the deferred tax liabilities on dividends to be paid by the subsidiaries within the scope of consolidation.

This item is a profit of 126 thousand euro (loss of 325 thousand euro at 31 December Section 21 2012) and reflects the net balance of the profit/(loss) of AZ Global Portfoy Yonetimi, Profit (loss) for the year AZ Swiss Sa, Katarsis Capital Advisors Sa, An Ping, Athenaeum and AZ Legan attributable to minority Participacoes, to the extent of minority interests. interest

105 Notes to the consolidated financial statements

Part D - Other information

Section 1 C. Portfolio management Specific references to business activities C.1 Total value of portfolio management Total 31/12/2013 Total 31/12/2012 of which invested in of which invested in AM company funds AM company funds 1. Proprietary portfolio management 2,771,924 230,193 2,771,924 132,319 2. Discretionary portfolio management 402,774 33,550 217,698 35,942 3. Portfolio management delegated to third parties - - - -

C.1 Total net value of pension funds Net value of pension funds managed by Azimut Capital Management Sgr Spa at 31 December 2013: Total Total 31/12/2013 31/12/2012 1. Proprietary portfolio management 1.1 Open pension funds Azimut Previdenza Comparto Protetto 26,599 23,721 Azimut Previdenza Comparto Equilibrato 103,838 82,243 Azimut Previdenza Comparto Crescita 132,949 107,746 Azimut Previdenza Comparto Obbligazionario 457 - Total proprietary portfolio management 263,843 213,710 2. Discretionary portfolio management 2.1 Pension funds open-end - - closed-end - - other forms of pension funds - - Total discretionary portfolio management - - 3. Portfolio management delegated to third parties 3.1 Pension funds open-end Azimut Previdenza Comparto Garantito 23,063 16,970 closed-end - - other forms of pension funds - - Total portfolio management delegated to third parties 23,063 16,970

106 Gruppo Azimut D. Sales D.3 Sales and distribution: products and services sold off premises (value) Total 2013 Total 2012 Group company Third party Group company Third party products and products products products services and services and services and services 1. Debt securities - - - - structured securities - - - - other securities 2. Equity securities - - - - 3. UCI units 3,169,668 229,000 2,851,294 241,519 4. Other financial instruments - - - - 5. Insurance products 1,004,413 55,403 334,823 325,245 6. Debt securities - - - - of which leasing - - - - of which factoring - - - - of which consumer credit - - - - of which other - - - - 7. Portfolio management 1,028 551,956 90,781 8. Other (mortgages) Total 4,175,109 284,403 3,738,074 657,545

107 Notes to the consolidated financial statements

E. Order receipt and transmission E.1 Order receipt and transmission Amount Intra-group Transactions transactions with third parties A. Buy orders during the year 171,094 A.1 Debt securities 77,082 A.2 Equity securities 73,448 A.3 UCI units - 12,796 A.4 Derivative instruments - 7,685 financial derivatives 7,685 loan derivatives - A.5 Other - 83 B. Sell orders during the year 591,108 B.1 Debt securities 394,210 B.2 Equity securities 169,910 B.3 UCI units 7,439 B.4 Derivative instruments 19,518 financial derivatives 19,450 loan derivatives - 68 B.5 Other - 31

F. Advisory services on: Investments: 162,362 existing contracts

H. Custody and management of financial instruments With regard to order receipt, the Group’s investment firms have deposited the following client-owned assets with third parties at 31 December 2013: 1,338,478 thousand euro (market value which does not include accruals on the reporting date).

L. Commitments L.1 Commitments relating to guaranteed pension funds Azimut Capital Management Sgr Spa has created a guaranteed pension fund. The management of this fund product has been delegated to a leading insurance company. This Azimut Previdenza 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.

108 Gruppo Azimut L.2 Commitments and guarantees issued to third parties Guarantees were as follows at 31 December 2013: 31/12/13 31/12/12 Collateral and personal guarantees 8,282 15,591 8,282 15,591

As regards the business activities of the subsidiary 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.

L.3 Commitments and guarantees from third parties The Group has not received guarantees from third parties

L.4 Own securities deposited with third parties. Own securities in custody of third parties 2013 2012 UCI units deposited with BNP PARIBAS 66,407 44,414 UCI units deposited with Banque De Rothschild Luxembourg 23,162 11,431 UCI units deposited with Takasbank 40 440 UCI units deposited with BTG Pactual 5,693 Government securities and bonds deposited with other credit institutions 2,018 1,637 Azimut Holding Spa treasury shares deposited with Banco Popolare 202,056 127,726 Azimut Holding Spa treasury shares deposited with BPVI 5,099 2,790 Total 304,475 188,438

L.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 Banco Popolare Società Cooperativa. Third-party assets and securities entrusted by clients and invested in hedge funds are deposited with the custodian bank Banco Popolare Società Cooperativa. 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 Ser- vicing (International) Limited. Third-party assets and securities entrusted by clients invested in the discretionary portfolios of CGM Italia Sim Spa and Compagnie Monegasque Privèe, are mainly deposited with: Banca Popolare Commercio e Industria, UBS Milan, Banca Gene-

109 Notes to the consolidated financial statements

rali, Banca BSI Monaco. 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 and invested in Luxembourg funds are deposited with the custodian bank BNP Paribas. Third-party assets and securities entrusted by clients to AZ Investment Management are deposited with the custodian bank ICB, Shanghai Branch.

2.1 Financial risks Section 2 Information on risk The proprietary trading portfolios of the Azimut Group companies contain financial management and instruments subject to financial risk exclusively composed of mutual funds mana- hedging policies ged by Azimut Group companies and government securities, in the context of the Group’s liquidity management policies. The portfolio is mainly comprised of funds in euros, not exposed to the currency risk. Name Issuer Company Balance 31/12/2013 Type (€/000) Cash Overnight AZ Fund Mgt Sa Azimut Capital Management Sgr Spa 377 Open-end mutual fund Eskatos Multistrategy Eskatos Capital Mgt Sa Azimut Capital Management Sgr Spa 8,651 Open-end mutual fund AZ Multi Asset AZ Fund Management Sa Azimut Capital Management Sgr Spa 1,011 Open-end mutual fund Institutional Target AZ Fund Management Sa AZ Fund Management Sa 3,491 Open-end mutual fund AZ Multi Asset AZ Fund Mgt Sa AZ Fund Management Sa 7,008 Open-end mutual fund AZ Multi Asset AZ Fund Mgt Sa Azimut Holding Spa 4,420 Open-end mutual fund AZ Fund 1 AZ Fund Mgt Sa Azimut Holding Spa 50,000 Open-end mutual fund Eskatos Multistrategy Eskatos Capital Management Sa Azimut Holding Spa 14,510 Open-end mutual fund AZ Fund 1 AZ Fund Mgt Sa CGM Italia Sim Spa 100 Open-end mutual fund Eskatos Multistrategy Eskatos Capital Management Sa Eskatos Capital Management 1 Open-end mutual fund Global Menkul funds AZ Global Portfoy Yonetimi AZ Global Portfoy Yonetimi 40 Open-end mutual fund Minority interest funds AN Ping Investment AN Ping Investment 145 Open-end mutual fund Minority interest funds AZ Brasil Holdings Ltda AZ Brasil Holdings Ltda 5,693 Open-end mutual fund Government bond Turkish government AZ Global Portfoy Yonetimi 24 Government bond Government bond Italian government CGM Italia Sim Spa 1,465 Government bond Irish Government Stock 4.5% 2020 Irish government AZ Life Ltd 529 Government bond Total 97,465 (1)

(1): included under “Available-for-sale financial assets” in the financial statements at 31 December 2013.

110 Gruppo Azimut The financial risks associated with use of liquidity refer to bond and money market mutual funds, as well as flexible funds, characterised by low volatility of mark to market accounting and low exposure to liquidity, currency and credit risks. Azimut Group’s net financial position is a positive 363,526 thousand euro (31 De- cember 2012: 278,156 thousand euro): for additional information and a breakdown of current/non-current financial receivables/payables, reference should be made to the Management Report paragraph on “Consolidated net financial debt”. As regards the risks linked to the investment held in Eskatos Multistrategy, this UCITS is an asset that is completely unrelated to the normal risks that instruments usually present on the market are subject to. The yield of the Eskatos Multistrategy Fund was positive during the year, as well as in the first few months of 2014. As for financial assets measured at fair value at 31 December 2013, totalling 2,583 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 Function 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. Specifically, the assessment is performed by analysing 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 Function 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. This indicator is supplemented by analyses obtained via a multi-factor valuation system in the case of equity portfolios. In addition, the Risk Management Function 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 (Banco Popolare Group) as well as the financial debt arising from the lease-back agreement for the “Azimut” trademark. Interest on the financial liability 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 loans issued by Azimut Holding Spa are not subject to interest rate risks as the rate is fixed.

111 Notes to the consolidated financial statements

2.2 Operational risks

Qualitative information

1. General information 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 Control 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 3.1 Company shareholders’ equity Information on Shareholders’ Equity 3.1.1 Qualitative information For information on the individual shareholders’ equity items, please refer to Part B of these notes.

112 Gruppo Azimut 3.1.2 Quantitative information 3.1.2.1 Company shareholders’ equity: breakdown Items/Value Total Total 31/12/2013 31/12/2012 1. Share capital 32,324 32,324 2. Share premium reserve 173,987 173,987 3. Reserves 334.0772 281,273 income-related a) legal 6,465 6,465 b) statutory c) treasury shares d) other 342,616 277,893 other (15,004) (3,085) 4. (Treasury shares) (82,224) (99,143) 5. Valuation reserves (771) 930 Available-for-sale financial assets 177 979 Tangible assets Intangible assets Foreign investment hedge Cash flow hedge Foreign exchange differences (720) 132 Non-current assets held for sale and discontinued operations Special revaluation laws Actuarial gains/losses on defined benefit plans (228) (181) Share of valuation reserves for equity accounted investees 6. Equity instruments 72,521 39,515 7. Profit (loss) for the year 155,753 160,695 Total 685,667 589,581

113 Notes to the consolidated financial statements

3.1.2.2 Valuation reserves of Available-for-sale financial assets: breakdown Assets/Value Total 31/12/2013 Total 31/12/2012 Positive Negative Positive Negative reserve reserve reserve reserve 1. Debt securities 68 21 2. Equity securities - - 3. UCI units 434 (325) 967 (9) 4. Loans - - - - Total 502 (325) 988 (9)

3.1.2.3 Valuation reserves of Available-for-sale financial assets: annual change Debt Equity UCI Debt securities securities units securities 1. Opening balance 21 - 958 - 2. Increases 52 - 1,094 - 2.1 Increases in fair value 52 - 881 - 2.2 Transfer through income statement of negative reserves: - - - - following impairment - - - - following disposal - - - 2.3 Other changes - - 213 - 3. Decreases 5 - 1,943 - 3.1 Decreases in fair value 0 - 1,349 - 3.2 Impairment write-downs - - - - 3.3 Transfer through income statement of positive reserves: following disposal - - 392 - 3.4 Other changes 5 - 202 - 4. Closing balance 68 - 109 -

3.2 Regulatory capital and capital ratios Regulatory capital was prepared pursuant to the Bank of Italy regulation of 24 Oc- tober 2007.

114 Gruppo Azimut 3.2.1 Regulatory capital 3.2.1.2 Quantitative information Tier I capital - positive items Total Subscribed share capital 37,050 Reserves 508,195 Profit for the year 155,753 Hybrid tier I instrument Other positive Tier I capital items (EQUITY INSTRUMENTS) 72,521 Tier I capital – negative items Share settlement Treasury shares (64,114) goodwill (295,550) Other intangible assets (29,189) Retained losses Significant losses for the current year Negative AFS reserves Net capital gains on tangible assets Other negative Tier I capital items Total tier I capital 384,666 Tier II capital Positive AFS reserves (computable part) Positive valuation reserves: other computable items included Hybrid instruments not included in tier I capital Tier II subordinated debt and hybrid capitalisation instruments 192,333 Net capital gains on tangible assets (included) Other positive Tier II capital items Surplus Total tier II capital 192,333 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 III capital -

115 Notes to the consolidated financial statements

Items to be deducted Equity investments, subordinated assets and hybrid capitalisation instruments (18,866) Non trading assets and other items to be deducted (10,382) Other items to be deducted Total items to be deducted (29,249) Regulatory capital 547,750

Capital requirements Capital requirements for credit risks 24,770 Capital requirements for operational risks 34,406 Total capital requirements 59,176

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, in accordance with the Bank of Italy regulation.

3.3 Group Capital adequacy Azimut Holding Spa’s (the Parent Company of the Azimut Group) financial group includes all direct and indirect subsidiaries. Total Total capital resources 563,655 Capital requirements of financial components (59,176) Required solvency margin of insurance components (3,700) Total capital requirements (62,876) Total surplus (deficit) 500,778

116 Gruppo Azimut Section 4 Statement of comprehensive income

Items Pre-tax profit Income tax Net profit 10. Profit (loss) for the year 182,240 (26,361) 155,879 Other comprehensive items not transferred through income statement (60) 17 (44) 20. Tangible assets 30. Intangible assets 40. Defined benefit plans (60) 17 (44) 50. Non-current assets held for sale 60. Share of valuation reserves for equity accounted investees Other comprehensive items transferred through income statement 70. Foreign investment hedge: a) changes in fair value b) transfer through income statement c) other changes 80. Foreign exchange differences: (852) (852) a) changes in fair value b) transfer through income statement c) other changes (852) (852) 90. Cash flow hedge: a) changes in fair value b) transfer through income statement c) other changes 100. Available-for-sale financial assets: (811) 6 (805) a) changes in rates (811) 6 (805) b) transfer through income statement impairment write-downs gains/losses on disposal c) other changes 110. Non-current assets held for sale: a) changes in fair value b) transfer through income statement c) other changes

117 Notes to the consolidated financial statements

Items Pre-tax profit Income tax Net profit 120. Share of valuation reserves for equity accounted investees: a) changes in fair value b) transfer through income statement impairment write-downs gains/losses on disposal c) other changes 130. Total other net income (1,723) 22 (1,701) 140. Comprehensive income (Items 10+130) 180,517 (26,339) 154,178 Consolidated comprehensive income attributable to minority interest 80 46 126 160. Consolidated comprehensive income attributable to parent company 180,438 (26,385) 154,052

Section 5 5.1 Information on key management fees Related party transactions At 31 December 2013, directors’ fees amounted to 12,955 thousand euro. Fees for the Board of Statutory Auditors, calculated based on the parameters in force, amounted to 696 thousand euro.

5.2 Loans and guarantees issued to Directors and Statutory Auditors At 31 December 2013, no guarantees had been issued to directors and statutory auditors.

5.3 Related party disclosures Related party transactions refer exclusively to commercial transactions carried out by Azimut Holding Spa with its subsidiaries and associates, and among its subsidiaries and/or associates in 2013. They are part of the Group’s ordinary business and were conducted on an arm’s length basis. Moreover: • for use of the trademark, the subsidiaries Azimut Capital Management Sgr Spa and Azimut Consulenza Sim Spa pay Azimut Holding Spa annual royalties totalling 2,000 thousand euro, established by contract; • Azimut Holding Spa, as the parent company, Azimut Capital Management Spa, Azimut Consulenza Sim Spa, AZ Investimenti Sim Spa Azimut Capital Manage- ment Sgr Spa and Apogeo Consulting Sim Spa as subsidiaries, have adopted the tax consolidation regime. In light of this arrangement, the subsidiaries pay the Company or receive from the Company an amount equivalent to the taxes arising from their respective taxable income; • a contractually established annual fee (totalling 1,000 thousand euro) is payable for the coordination activities carried out by the Parent Company on behalf of the subsidiaries Azimut Capital Management Sgr Spa and Azimut Consulenza Sim Spa;

118 Gruppo Azimut • Azimut Holding Spa has issued guarantees to the subsidiaries Azimut Consulenza Sim Spa, AZ Investimenti Sim Spa and Apogeo Consulting Sim Spa

Azimut Consulenza Sim and AZ Investimenti Sim Spa have disbursed loans to se- veral financial advisors, identified as related parties, to develop their business. These terms and conditions of these loans are arm’s length. At 31 December 2013, they amounted to 5,186 thousand euro. With respect to the scheme described in the paragraph “Sales of Apogeo Consulting Sim Spa shares” of these notes, the sale of which took place last year and involved, inter alia, the Initiative Founding members, some of which are also directors thereof. Azimut Holding Spa had no loan relationships with subsidiaries or associates at 31 December 2013. 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. With respect to profit-participating financial instruments, in accordance with Sha- reholders’ resolutions, 12 key directors subscribed 213,538 instruments (paying the corresponding amount), including the Chairman and Chief Executive Officer Pietro Giuliani (95,650), the Co-CEO Marco Malcontenti (33,000), the Managing Director Paola Antonella Mungo (33,000), the directors Alessandro Baldin (15,000), Alessan- dro Capeccia (1,500), Andrea Manetti (2,518), Renato Fantoni (1,370). As per the Shareholders’ agreement related to Azimut Holding Spa, 658 related parties initially subscribed a total of 1,141,819 instruments. The company subsequently exercised the option on 134,643 participating instruments.

The following table shows the impact that the transactions or positions with related parties have on the Group’s financial position: Total Related parties Absolute % value Assets Receivables 573,895 7,561 1.32 Liabilities Other liabilities 36,659 7,288 19.88 Income statement Fee and commission expenses 190,097 21 0.01 Administrative costs 96,684 15,331 15.86

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

119 Notes to the consolidated financial statements

Section 6 6.1 Average number of financial advisors Other information In 2013, the average number of financial advisors amounted to 1436.

6.2 Dividends paid The ordinary dividend for 2013 amounted to 0.10 euro per share, with an extraordinary dividend of 0.45 euro.

6.3 Significant non-recurring events and transactions The significant non-recurring events that took place in 2013 are as follows: • repayment of the instalments of Lines A and B of the loan disbursed by Banco Po- polare (formerly Banca Popolare di Novara), contractually due on 30 June 2013, of 30,000 thousand euro; • exercise of the call option on 134,643 profit-participating financial instruments, which resulted in a decrease in the shareholders’ equity item “Other reserves” for 3,231 thousand euro; • partial advance repayment, at 20% of the par value of the subordinated bond (“Azi- mut 2009-2016 subordinato 4%”), which led to a reduction in the liability item “Outstanding securities” of 17,405 thousand euro; • acquisition of 51% of the Taiwanese An Ping Investment for a total of 2 million euro in cash; • acquisition of 55% of the Singapore-based Athenaeum for a total of 1.4 million euro in cash; • acquisition of 49.75% of the Brazilian AZ Legan for a total of 7.4 million euro in cash; • issue of the convertible bond “Azimut 2013-2020 2.125%”, with resulted in an increase of the liability item “Outstanding securities” by 209,881 thousand euro.

There were no unusual transactions during the period.

6.4 Sale of Apogeo Consulting Sim Spa shares In 2012, having obtained the Bank of Italy’s authorisation, as part of an existing scheme aimed at promoting the purchase of equity interests in Apogeo Consulting Sim Spa by the financial advisors who work with the company, who are also Initia- tive Founding members, Azimut Holding Spa performed transactions involving the subsidiary’s capital. Considering the provisions agreed between the parties, although the scheme 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. Under this standard, fair value measurement and cost allocation over the scheme period were based on the disposal or repurchase prices of shares. Such prices were determined based on criteria (shareholders’ equity plus a value obtained by multiplying assets managed/administered by the company by a certain multiple) that reflect the economic value of the company at the scheme launch (2008) and termination date (2013). Consequently, on the date the project agreement was signed, the above fair value, net of the consideration paid, was zero and had no impact on the Group’s income

120 Gruppo Azimut statement. Furthermore, at the end of the scheme, Azimut Holding Spa will repurchase Apogeo shares using treasury shares purchased on the market from time to time and inde- pendently of this scheme. At the reporting date, the effect on the Group’s financial position amounts to 6 million euro, equal to the fair value of the transaction at 31 December 2013.

6.5 Auditing and non-auditing service fees As stipulated by Article 149-duodecies of Consob Regulation no. 11971/99 and subsequent amendments and supplements, the details of fees (net of VAT and expenses) due to the audit company and companies within its network for auditing and non-auditing services during 2013 are as follows:

Service Service provider Recipient Fees euro/’000 Audit PricewaterhouseCoopers Spa Parent Company Azimut Holding Spa 35 Subsidiaries(*) 273 PricewaterhouseCoopers Spa network Subsidiaries (**) 551 Financial & tax due diligence PricewaterhouseCoopers Adisory Spa Parent Company - Azimut Holding Spa 5 Financial & tax due diligence PricewaterhouseCoopers Spa Parent Company - Azimut Holding Spa 35 Group total 899

(*) This amount includes: 101,906 euro for the audit of the financial statements of the pension funds and the funds managed by Azimut Capital Management Sgr Spa not included in the income statement as the related cost is borne by the funds. (**) This amount includes 388,635 euro for the audit of the AZ Fund 1 and AZ Multi Asset funds managed by AZ Fund Management Sa not included in the income statement as the related cost is borne by the Fund.

On behalf of the Board of Directors Chairman and CEO (Pietro Giuliani)

121 122 Gruppo Azimut Certification of the consolidated financial statements pursuant to Article 154-bis of Italian Legislative Decree no. 58/98

1. The undersigned, Pietro Giuliani, Chairman of the Board of Directors and Chief Executive Officer, and Marco Malcontenti, Manager in charge of financial reporting of Azimut Holding Spa, hereby represent, having also taken into account the provisions of Article 154-bis, paragraphs 3 and 4 of Italian Legislative Decree no. 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 2013 consolidated financial statements.

2. The evaluation of the adequacy of the administrative and accounting procedures for the preparation of the consolidated financial statements at 31 December 2013 is based on a process designed by Azimut Holding in line with the Internal Control - Integrated Framework model issued by the Committee of Sponsoring Organisations of the Treadway Commission, an internationally accepted reference framework.

3. The undersigned also represent that:

3.1. the consolidated financial statements: • are consistent with the accounting books and records; • have been prepared in accordance with the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) endorsed by the Euro- pean Commission, pursuant to Regulation (EC) No. 1606/2002 issued by the Euro- pean Parliament and Council and effective at the date these consolidated financial statements were approved, as well as with every relevant applicable interpretation, and the provisions issued to implement Article 9 of Italian Legislative Decree no. 38/2005 and give a true and fair view of the issuer’s and the consolidated companies’ financial position and results of operations;

3.2. the Management Report contains a reliable analysis of the consolidated operating performance and results, in addition to the situation of the issuer and the consolidated companies, and a description of the main risks and uncertainties to which it is exposed.

Milan, 6 March 2014

Chairman and Chief Executive Officer Manager in charge of financial reporting (Pietro Giuliani) (Marco Malcontenti)

123 124 Gruppo Azimut Azimut Holding Spa Financial statements at 31 December 2012

125 126 Gruppo Azimut Report on the company’s financial condition and operating performance

Dear Shareholders, Net profit for 2013 amounted to 148,509,791 euro (2012: 117,128,045 euro). Operating profit came to 151,416,390 euro (at 31 December 2012: 119,269,068 euro). The increase is mainly due to the greater dividends collected which amounted to 160,529,137 euro at year-end (at 31 December 2012: 133,227,330 euro). Opera- ting profit is comprised of dividends paid by the group companies and recognised on a cash basis and of a 63,750,000 euro interim dividend for 2013 paid by the subsidiary AZ Fund Management Sa in December 2013 (in 2012, the interim dividend amounted to 70,252,500 euro). Interest expense of 3,011,460 euro (at 31 December 2012: 4,141,593 euro) fell following the partial early redemption of 17.7 million euro, or 20% of the par value of the “Azimut 2009-2016 subordinato 4%” bond, on 1 July 2013.

With regard to the methods used to assess net financial debt, shown in the table below, reference is 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 have been excluded.

127 Report on the company’s financial condition and operating performance

Items 31/12/13 31/12/12 A Cash 3,722 1,944 B Cash equivalents: 326,028,145 153,029,437 Due from banks 326,028,145 153,029,437 C Available-for-sale financial assets 68,930,174 8,093,416 D Total cash A+B+C 394,962,041 161,124,797 E Short term receivables 0 0 F Short term bank loans - - G Current portion of long term debt: (13,739,472) (34,173,578) Bonds (Azimut ‘09-’16) (353,828) (707,656) Bonds (Azimut ‘11-’16 Senior) (18,828) (19,573) Bonds (Azimut ‘13-’20 Conv.) (52,397) - Due to banks (lease-back) (3,122,752) (3,144,793) Due to banks (BPN loan) (10,191,667) (30,301,556) H Other short term payables 0 0 I Short term financial debt F+G+H (13,739,472) (34,173,578) J Short term financial debt (net) I-E-D 381,222,568 126,951,219 K Long-term bank loans: (40,100,000) (53,200,000) Due to banks (BPN loan) (40,000,000) (50,000,000) Due to banks (lease-back) (100,000) (3,200,000) L Bonds (227,942,965) (34,501,908) Bonds (Azimut ‘09-’16) (16,768,438) (33,683,534) Bonds (Azimut ‘11-’16 Senior) (813,142) (818,374) Bonds (Azimut ‘13-’20 Convertible) (210,361,385) 0 M Other long term debt 0 0 N Long term financial debt K+L+M (268,042,965) (87,701,908) O Net (financial) debt J+N 113,179,603 39,249,311

Net financial position was at +113.1 million euro at 31 December 2013, an improvement of 74 million euro on 31 December 2012. The results were impacted by the payment of dividends (94.2 million euro) to shareholders and holders of profit-participating financial instruments and the payment of 1.8 million euro to Fondazione Azimut Onlus made in execution of the Sha- reholders’ resolution of 24 April 2013, in addition to the following main operations performed during the year: • exercise of the call option on 134,643 profit-participating financial instruments for a total of 3,231,432 thousand euro, pursuant to the Shareholders’ resolution of 29 April 2010 and the subsequent resolutions of the Board of Directors;

128 Gruppo Azimut • on 27 September 2013, Azimut Holding Spa acquired 16.84% of Siamo Soci Srl against a total consideration of 700,000 euro; • on 20 December 2013, Azimut Holding Spa acquired 46% of Programma 101 Spa against a total consideration of 423,813 euro; • during the year, in execution of the Executive Committee’s decision of 22 January 2013, Azimut Holding Spa made a capital injection of 26.5 million euro to increase the share capital of AZ International Holdings Sa.

Azimut Consulenza Sim Spa Performance of subsidiaries Net profit at 31 December 2013 amounted to 29,068,583 euro (at 31 December 2012: 32,926,539 euro).

AZ Fund Management Sa

Net profit at 31 December 2013 amounted to 156,586,845 euro (at 31 December 2012: 161,676,771 euro).

AZ Life Ltd

Net profit at 31 December 2013 amounted to 13,330,139 euro (at 31 December 2012: 9,785,600 euro).

Azimut Capital Management Sgr Spa Net profit at 31 December 2013 amounted to 21,136,586 euro (at 31 December 2012: 139,641).

AZ Investimenti Sim Spa

Net profit at 31 December 2013 amounted to 24,957,758 euro (at 31 December 2012: 27,346,257 euro).

AZ Capital Management Ltd

Net profit at 31 December 2013 amounted to 196,715 euro (at 31 December 2012: 214,190 euro).

129 Report on the company’s financial condition and operating performance

Apogeo Consulting Sim Spa

Net profit at 31 December 2013 amounted to 136,728 euro (at 31 December 2012: 104,792 euro).

Azimut Global Counseling Srl

The net loss at 31 December 2013 amounts to 155,095 euro.

AZ International Holdings Sa

Net profit at 31 December 2013 amounted to 350,985 euro (at 31 December 2012: net loss of 158,855 euro).

Sale of equity investment in In Alternative Società di consulenza a r.l. Significant events of the year On 6 March 2013, the sale by Azimut Holding Spa of 20% of the share capital of In Alternative Società di Consulenza a r.l. (formerly In Alternative Sgr Spa) was finalised for 185,679 euro.

Azimut Holding Spa Annual General Shareholders’ Meeting of 24 April 2013 The Shareholders’ Meeting of 24 April 2013 approved the following: Approval of 2012 financial statements The Shareholders’ Meeting approved the 2012 financial statements, which included a Parent Company net profit of 117.1 million euro. The Shareholders also approved a pre-tax ordinary dividend of 0.55 euro per share. They also approved the payment to Fondazione Azimut Onlus of 1.8 million euro, equal to 1% of pre-tax consolidated profit and the payment of 16.05 euro for each participating financial instrument held by Top Key People at the time of approval of payment of the dividend.

Corporate Bodies The Shareholders’ Meeting renewed the mandate of Azimut Holding Spa Board of Directors, composed of 9 members who will remain in office for the three years 2013-2015 and up until approval of the 2015 financial statements. The Meeting also reconfirmed the position of the Chairman. The Board of Directors reconfirmed the Executive Committee, the Chief Executive Officer, the Co-CEO and the General Manager. The Shareholders’ Meeting appointed the Board of Statutory Auditors for the three years 2013-2015 and up until approval of the 2015 financial statements. The Board is composed of 5 auditors, three of whom are permanent members. They also reconfirmed the position of the Chairman. The Shareholders’ Meeting approved the appointment of PricewaterhouseCoopers Spa to conduct the legally-required audit for the period 2013-2021.

130 Gruppo Azimut Financial advisor incentive scheme The Shareholders’ Meeting approved an incentive scheme based on the purchase of Azimut Holding Spa shares reserved for financial advisors recruited by Azimut Group companies, being the companies directly or indirectly controlled by Azimut Holding Spa, between 1 January 2013 and 30 April 2014. The Azimut Group investment firms (Sim) may nevertheless propose other forms of incentives not based on shares or financial instruments to their eligible financial advisors.

Redemption of 2009-2016 subordinated bond (“Azimut 2009 – 2016 subordinato 4%”) The Azimut Holding Spa Board of Directors’ meeting of 8 May 2013 resolved to make an advance partial redemption of the “Azimut 4% 2009-2016” Subordinated Bonds, as established by Article 9 of the Bond Terms. Said article awards the Azi- mut 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 Su- bordinated Bonds in subsequent years. The advance partial redemption was made in cash on 1 July 2013 and amounted to 17,691,400 euro.

131 Report on the company’s financial condition and operating performance

Exercise of the call option on profit-participating financial instruments In May 2013, Azimut Holding Spa exercised the call option pursuant to the Sha- reholders resolution of 29 April 2010 and subsequent resolutions by the Board of Directors, on 134,643 profit-participating financial instruments at a price of 24 euro each, for a total amount of 3,231,432 euro.

Acquisition of an equity investment in Siamosoci Srl On 27 September 2013, Azimut Holding Spa acquired 10% of Siamosoci Srl throu-

132 Gruppo Azimut gh a 400,000 euro capital injection and share premium. On 18 December 2013, an additional 300,000 euro was paid, increasing the percentage of investment to 16.84%.

Acquisition of an investment in Programma 101 Spa On 20 December 2013, Azimut Group and Fondo Italiano di Investimento finalised their commitment as the main investors of Programma 101, a venture capital ope- rator which focuses on investments in the digital sector. Azimut Group and Fondo Italiano di Investimento participate in the project with an individual 15 million investment over a three-year period. Programma 101 has a 50 million euro target and was established to meet the demand for venture capital for operations ranging between 500 thousand and 1.5 million euro by Italy’s technological excellence. On 21 December 2013, Azimut Holding Spa paid 425,813 euro to acquire 46.30% of the company.

Issue of the subordinated bond 2013-2020 convertible into Azimut Holding Spa ordinary shares On 11 November 2013, Azimut Holding Spa’s Board of Directors approved the issue of a subordinated bond convertible into ordinary shares of 250 million euro. Bonds were issued at a nominal unit amount of 100,000 euro, have a seven-year term and an annual nominal fixed-rate return of 2.125%, gross of tax; it is payable on a six-month basis, on 25 November and 25 May of each year starting from 25 May 2014. The conversion premium is set at 30% above the 18.6612 euro reference price, calculated using the weighted average of Azimut ordinary share price on the Italian Stock Exchange between the launch and the definition of the final terms. Bondholders will be entitled to exercise the conversion right at any time from the fourth year and forty-fifth day after the issue to 20 days prior to the maturity date, with the exception of early conversion subject to the occurrence of specific cir- cumstances. Without prejudice to the conversion terms, early repayment, repurchase or cancellation, bonds will be repaid at par on 25 November 2020. They will be initially convertible in treasure shares, already issued, fully subscribed and owned by the Company. However, in addition to the conversion, the latter will be entitled to deliver newly-issued shares pending the future approval by the competent company bodies. Under the bond terms, the Company undertakes not to commence any action that could lead to an adjustment of the conversion ratio, unless the Company has a sufficient number of shares (already issued or newly-issued) to satisfy the Bondholders’ conversion rights, considering the conversion ratio adjustment. Finally, the Company undertakes not to sell the shares and to hold them on a restricted deposit account throughout the term of the convertible bond. The Company will file for admission of the bonds on a regulated market or an international trading multilateral system by the first interest payment date (25 May 2014). The bonds were offered to and placed with exclusively with Italian and foreign qualified investors, not resident in the United States, Canada, Australia, Japan and South Africa, excluding any placement with the public and exempt from the regulations governing public offering.

133 Report on the company’s financial condition and operating performance

Placement was completed on 25 November 2013 with the subscription of the entire nominal amount of 250 million euro.

Azimut Capital Management Sgr Spa

Merger by acquisition of Azimut Sgr Spa On 29 March 2013, the Bank of Italy authorised the merger of Azimut Sgr Spa into Azimut Capital Management Sgr Spa. On 17 April 2013, the share capital increase against payment was carried out, increasing share capital from 1,000,000 euro to 2,000,000 euro, with the issue of 1,000,000 new shares. 20,000 shares were subscribed by the shareholder Azimut Holding Spa and, subject to the partial waiver of option rights pursuant to Article 2441 of the Italian Civil Code, 500,000 shares were subscribed by Azimut Consulenza Sim Spa and 480,000 by AZ Investimenti Sim Spa. As per the merger deed dated 11 September 2013, Azimut Sgr Spa was merged into Azimut Capital Management Sgr Spa with tax and accounting effects as of 1 Janua- ry 2013 and statutory effect as of 1 October 2013.

Azimut Consulenza Sim Spa

Tax Position As part of the routine tax inspection ordered by the Milan Finance Police Corps of the Italian Finance Police in 2011 for Azimut Holding Spa, on 29 October 2012, an Official Tax Audit Report was served to the company which sets forth findings relating to direct taxes for 2003. More specifically, the above Official Tax Audit -Re port alleges a tax elusive conduct under Article 37-bis of Italian Presidential Decree 600/1973 of the Management Buy Out transaction carried out by Tumiza Spa (now Azimut Holding Spa) and assumes a higher taxable base and, as such, higher taxes due for a total of approximately 12 million euro. Azimut Holding Spa considers the findings of the Finance Police to be unfounded

134 Gruppo Azimut also, and above all, based on two tax clearance applications submitted at the time to the Lombardy Regional Tax Authority, which expressed a favourable opinion on the Company’s approach, which are now objected to in the Official Tax Audit Report . Moreover, in procedural terms, the tax year 2004 should no longer be considered susceptible to audit, even doubling the legal time limits. To date, Azimut Holding Spa has not received any notice of assessment in this regard.

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

Strategic risk Strategic risk is defined as a current or potential risk of a reduction in earnings or -ca pital 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 Delegates/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 governance and control bodies, thus enabling them to identify any corrective measures to be taken.

135 Report on the company’s financial condition and operating performance

advisors’ ability to manage their client portfolios. Furthermore, 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 liability insurance for the financial advisors themselves (with the maximum annual claims deemed adequate for 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. Internal control over financial advisors is based on the identification and analysis of possible irregularities in remote monitoring and inspections at financial advisors’ offices. These controls are carried out also to check compliance with presentation criteria, correct keeping of archives and fulfilments vis-a-vis the Body in charge of the Financial Advisors’ register. Should any irregularity be detected, or in case of non-compliance with the code of conduct, the financial advisors directly involved or their In-charge are asked to prepare a specific report giving explanations or to take adequate measures.

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 assess 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 Control 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 contracts with Asset Management Service Spa and Objectway Financial

136 Gruppo Azimut Software Spa were signed, and with Deloitte Enterprise Risk Service (on 1 October 2013), 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.

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 minimising 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 subsidiaries is constantly updated, in order to identify which departments, procedures and activities are most subject to reputational risks; • the Internal Control 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 Italian Legislative Decree no. 58/98 (TUF - Financial Services Act), Azimut 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.

137 Report on the company’s financial condition and operating performance

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 department, 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 department: • proposes any organisational and procedural changes to ensure adequate protection against any identified risks of non-compliance; • submits a report to all relevant bodies, including the Supervisory Body (pursuant to Italian Legislative Decree no. 231/2001), the Board of Statutory Auditors, the Inter- nal Control and Risk Management Committee; • controls the efficiency of organisational changes (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 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.

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 conside-

138 Gruppo Azimut red, 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.

Pursuant to Consob Regulation on Related parties (Resolution no. 17221 of 10 Related party disclosures March 2010, as amended), dated 22 November 2010, the Board of Directors of Azimut Holding Spa approved the procedures that ensure transparency and fairness of related party transactions (“Related Party Transaction Procedure” available on Azimut’s website at www.azimut.it). With reference to paragraph 8 of Article 5 of the Consob regulation on periodic disclosure of related party transactions, the Group did not engage in any “significant” transactions during 2013. No other atypical or unusual transactions were performed.

For information on relationships with group companies, please see Part D, Section 5 Intra-group relationships of the Notes to the financial statements on related party transactions.

In 2013, marketing, communication and training activities were focused on provi- Marketing activity ding sales support to financial partners and strengthening the Group’s recruiting activities. Support to event development and organisation continued throughout the year: over 400 events involving the Group’s networks and divisions have been organised across Italy, focusing, in particular, on the activities related to the Libera Impresa project, dedicated to entrepreneurs and Italian companies. The first part of the year was marked by the Group’s first TV campaign: “Azimut, the power of independence”, which was aired on the main TV channels between March and June 2013 with over 6,000 releases. Training for financial partners mainly focused on managing and developing custo- mer relationships, including through IT tools, and generational transition issues.

In 2013, the Company continued to develop its relations with institutional investors, Investor relations which account for the majority of the shareholder structure. Following approval of annual financial statements and interim reports, the Company organised conference calls and road-shows on the main European markets and in the U.S.. The Azimut Holding Spa stock is currently covered by the analysts of thirteen Italian and foreign investment firms. During the year, the stock price (reference price) rose from 10.85 euro at 28 December 2012 to 19.83 euro at 30 December 2013.

139 Report on the company’s financial condition and operating performance

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 Listed Companies published by Borsa Italiana. For more information reference should be made to the attached Report on corporate governance and ownership prepared pursuant to Article 123-bis of the Financial Services Act (TUF). Azimut has established a risk management and internal control procedure for financial reporting, using as a reference the “COSO Report”, under 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.

Human resources As at 31 December 2013, Company personnel amounted to 23, broken down as follows:

Position 31/12/2013 31/12/2012 Directors 9 10 Middle managers 11 11 Office staff 3 4 Total 23 25

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

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

Treasury shares At 31 December 2013, Azimut Holding S.p.A subsidiaries 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. In 2013, 976,500 treasury shares were assigned against the exercise of the same number of warrants issued at the placement of the Subordinated Bond “Azimut 2009 - 2016 Subordinato 4%”, and transactions were carried out on treasury shares which resulted in a total decrease of 348,964. At 31 December 2013, Azimut Holding Spa’s treasury share portfolio therefore stan- ds at 10,703,695 shares, or 7.472% of share capital. With regard to transactions subsequent to 31 December 2013, up to the date of approval of this report, 77,550 treasury shares were assigned against the exercise of the same number of warrants issued at the placement of the Subordinated Bond “Azimut 2009 - 2016 Subordinato 4%”.

140 Gruppo Azimut Given the positive results of the subsidiaries for 2013 and considering the dividends Business outlook proposed by the Boards of Directors of said companies at the respective Sharehol- ders’ Meetings, the Company is expected to generate a profit for 2014.

Dear Shareholders, Profit allocation plan we hereby submit for your approval the financial statements as at 31 December 2013, including the notes thereto, as submitted by the Board of Directors. The financial statements show a profit for the year of 148,509,791 euro, which we propose to allocate as follows: • 1,821,145 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 0.70 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 0.60 euro; • 15.58 euro for each participating financial instrument held by Top Key People at the time of approval of payment of the dividend, equal to 0.00001% of consolidated profit, under Art. 32 of the By-laws; • the remainder to be allocated to “Other Reserves”.

We propose that the dividend be paid as of 22 May 2014, 19 May 2014 as the ex- dividend payment date and 21 May 2014 as the record date.

Milan, 6 March 2014

On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

141 142 Gruppo Azimut Azimut Holding Spa Financial statements at 31 December 2013

143 Balance sheet at 31 December 2013 Assets

Euro 31/12/13 31/12/12 10. Cash and cash equivalents 3,722 1,944 40. Available-for-sale financial assets 71,460,288 10,763,156 60. Receivables 326,028,145 153,029,437 90. Equity investments 326,147,939 298,291,929 100. Tangible assets 692,023 365,802 110. Intangible assets 185,378,053 185,377,995 120. Tax assets 34,496,935 31,123,626 a) current 17,021,614 10,717,886 b) deferred 17,475,321 20,405,740 of which pursuant to Italian Law 214/2011 840,278 6,786,914 130. Non-current assets held for sale and discontinued operations 75,000 260,679 140. Other assets 16,784,164 16,334,408 Total assets 961,066,269 695,548,976

On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

144 Gruppo Azimut Balance sheet at 31 December 2013 Liabilities and shareholders’ equity

Euro 31/12/13 31/12/12 10. Payables 53,414,419 86,646,349 20. Outstanding securities 228,368,019 35,229,137 70. Tax liabilities 45,799,405 43,686,019 a) current 1,144,610 2,205,475 b) deferred 44,654,795 41,480,544 90. Other liabilities 13,099,461 10,658,919 100. Staff severance pay (TFR) 554,286 482,928 110. Provisions for risks and charges 500,000 500,000 b) other provisions 500,000 500,000 120. Share capital 32,324,092 32,324,092 130. Treasury shares (-) (82,224,263) (99,143,847) 140. Equity instruments 72,497,172 39,461,611 150. Share premium reserve 173,986,915 173,986,915 160. Reserves 274,271,928 254,433,512 170. Valuation reserves (34,956) 155,296 180. Profit (loss) for the year 148,509,791 117,128,045 Total liabilities and shareholders’ equity 961,066,269 695,548,976

On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

145 Profit and loss account at 31 December 2013

Items (Euro) 2013 2012 (*) 30. Gains/losses on disposal or repurchase of: (446,966) (489,661) a) financial assets (63,150) (10,755) b) financial liabilities (383,816) (478,906) 50. Fee and commission income 2,000,000 2,000,000 70. Interest income and similar income 4,359,703 2,735,789 80. Interest expenses and similar expenses (3,011,460) (4,141,593) 90. Dividends and similar income 160,529,137 133,227,330 Total income 163,430,414 133,331,865 100. Net impairment loss 0 (3,550,009) a) financial assets 0 (3,550,009) 110. Administrative costs (12,921,951) (11,704,149) a) personnel costs (6,031,890) (6,182,747) b) other administrative costs (6,890,061) (5,521,402) 120. Net impairment and write-ups of tangible assets (155,614) (83,092) 130. Net impairment and write-ups of intangible assets (228,424) (200,247) 160. Other operating income and costs 1,291,965 1,474,700 Operating profit 151,416,390 119,269,068 170. Profit (loss) from equity investments (300,357) (397,224) Pre-tax profit (loss) from continuing operations 151,116,033 118,871,844 190. Income tax on profit from continuing operations (2,606,242) (1,743,799) Net profit (loss) from continuing operations 148,509,791 117,128,045 Profit (loss) for the year 148,509,791 117,128,045

(*) The figures were restated compared to the originally published figures due to the retrospective application of the new version of IAS 19.

On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

146 Gruppo Azimut Statement of comprehensive income

Items (Euro) 2013 2012 (*) 10. Profit (loss) for the year 148,509,791 117,128,045 Other comprehensive income, net of taxes, not transferred to profit or loss 40. Defined benefit plans (9,149) (2,934) Other comprehensive income, net of taxes, transferred to profit or loss 100. Available-for-sale financial assets (181,103) 96,444 130. Other comprehensive income/(expense), net of taxes (190,252) 93,510 140. Comprehensive income (Item 10+130) 148,319,539 117,221,555

(*) The figures were restated compared to the originally published figures due to the retrospective application of the new version of IAS 19.

On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

147 Statement of changes in shareholders’ equity for the year ended 31 December 2012 (*)

Allocation of retained earnings Changes during the year Shareholders’ equity transactin Items Balance at Change Balance at Reserves Dividends Changes Issue of Treasury share Extraordinary Changes Other Comprehensive Shareholders’ 31/12/11 in opening 01/01/12 and other in reserves new shares purchases dividend in equity changes income at equity at balance distributions payments instruments 31/12/12 31/12/2012 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) income-related 202,406,068 (71,215) 202,334,853 50,796,227 2,436,311 255,567,391 b) other (1,133,880) (1,133,880) Equity instruments 3,461,611 3,461,611 36,000,000 39,461,611 Valuation reserves (9,429) 71,215 61,786 93,510 155,296 Treasury shares (96,743,381) (96,743,381) (2,400,466) (99,143,847) Profit )loss) for the year 84,561,745 84,561,745 (50,796,227) (33,765,518) 117,128,045 117,128,045

Shareholders’ equity 399,987,621 399,987,621 - (33,765,518) (2,400,466) 37,302,431 117,221,555 518,345,623

148 Gruppo Azimut Allocation of retained earnings Changes during the year Shareholders’ equity transactin Items Balance at Change Balance at Reserves Dividends Changes Issue of Treasury share Extraordinary Changes Other Comprehensive Shareholders’ 31/12/11 in opening 01/01/12 and other in reserves new shares purchases dividend in equity changes income at equity at balance distributions payments instruments 31/12/12 31/12/2012 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) income-related 202,406,068 (71,215) 202,334,853 50,796,227 2,436,311 255,567,391 b) other (1,133,880) (1,133,880) Equity instruments 3,461,611 3,461,611 36,000,000 39,461,611 Valuation reserves (9,429) 71,215 61,786 93,510 155,296 Treasury shares (96,743,381) (96,743,381) (2,400,466) (99,143,847) Profit )loss) for the year 84,561,745 84,561,745 (50,796,227) (33,765,518) 117,128,045 117,128,045

Shareholders’ equity 399,987,621 399,987,621 - (33,765,518) (2,400,466) 37,302,431 117,221,555 518,345,623

(*) The figures were restated compared to the originally published figures due to the retrospective application of the new version of IAS 19.

On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

149 Statement of changes in shareholders’ equity for the year ended 31 December 2013

Allocation of retained earnings Changes during the year Shareholders’ equity transactin Items Balance at Change Balance at Reserves Dividends Changes Issue of Treasury share Extraordinary Changes Other Comprehensive Shareholders’ 31/12/12 in opening 01/01/13 and other in reserves new shares purchases dividend in equity changes income for equity at balance distributions payments instruments 2013 31/12/2013 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) income-related (*) 255,564,458 2,933 255,567,391 21,155,907 (1,317,490) 275,405,808 b) other (1,133,880) (1,133,880) (1,133,880) Equity instruments 39,461,611 39,461,611 33,035,561 72,497,172 Valuation reserves (*) 158,229 (2,933) 155,296 (190,252) (34,956) Treasury shares (99,143,847) (99,143,847) (1,454,281) 18,373,865 (82,224,263) Profit )loss) for the year 117,128,045 117,128,045 (21,155,907) (95,972,137) 148,509,791 148,509,791

Shareholders’ equity 518,345,623 518,345,623 - (95,972,137) (1,454,281) - 33,035,561 17,056,375 148,319,539 619,330,679

150 Gruppo Azimut Allocation of retained earnings Changes during the year Shareholders’ equity transactin Items Balance at Change Balance at Reserves Dividends Changes Issue of Treasury share Extraordinary Changes Other Comprehensive Shareholders’ 31/12/12 in opening 01/01/13 and other in reserves new shares purchases dividend in equity changes income for equity at balance distributions payments instruments 2013 31/12/2013 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) income-related (*) 255,564,458 2,933 255,567,391 21,155,907 (1,317,490) 275,405,808 b) other (1,133,880) (1,133,880) (1,133,880) Equity instruments 39,461,611 39,461,611 33,035,561 72,497,172 Valuation reserves (*) 158,229 (2,933) 155,296 (190,252) (34,956) Treasury shares (99,143,847) (99,143,847) (1,454,281) 18,373,865 (82,224,263) Profit )loss) for the year 117,128,045 117,128,045 (21,155,907) (95,972,137) 148,509,791 148,509,791

Shareholders’ equity 518,345,623 518,345,623 - (95,972,137) (1,454,281) - 33,035,561 17,056,375 148,319,539 619,330,679

(*) The opening balances were restated compared to the originally published figures due to the retrospective application of the new version of IAS 19.

On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

151 Cash flow statement

Metodo indiretto 2013 2012 (*) A. Operating activities 1. Operations 147,390,883 120,404,073 profit for the year (+/-) 148,509,791 117,128,045 gains/losses on held-for-trading financial assets and financial assets/liabilities measured at fair value (-/+) 0 0 gains/losses on hedging activities (-/+) 0 0 net impairment loss (+/-) 0 3,550,009 net impairment losses on tangible and intangible assets (+/-) 384,038 283,339 net accruals to provisions for risks and charges and other expenses/income (+/-) 0 0 tax and duties still to be paid (1,369,199) (209,743) net impairment losses on assets held for sale, net of tax (+/-) 0 0 other changes (+/-) (133,747) (347,577) 2. Cash provided from or used by financial assets 683,240 (4,835,968) held-for-trading financial assets 0 0 financial assets measured at fair value 0 0 available-for-sale financial assets (2,303) 0 due from banks 0 0 due from financial institutions 0 0 due from clients 0 0 other assets 685,543 (4,835,968) 3. Cash provided from or used by financial liabilities 161,826,930 (27,031,596) due to banks (33,100,000) (13,100,000) due to financial institutions 0 0 due to clients 0 0 outstanding securities 193,441,057 (16,764,585) held-for-trading financial liabilities 0 0 financial liabilities measured at fair value 0 0 other liabilities 1,485,874 2,832,989 Net cash provided from or used by operating activities 309,901,053 88,536,509

152 Gruppo Azimut 2013 2012 (*) B. Investing activities 1. Cash provided from: 327,055 359,000 disposal of equity investments 327,055 359,000 dividends 0 0 disposal of held-to-maturity financial assets 0 0 disposal of tangible assets 0 0 disposal of intangible assets 0 0 disposal of subsidiaries and business units 0 0 2. Cash used by: (28,866,130) (3,668,782) purchase equity investments (28,155,813) (3,230,500) purchase held-to-maturity financial assets 0 0 purchase tangible assets (481,835) (264,052) purchase intangible assets (228,482) (174,230) purchase subsidiaries and business units 0 0 Net cash provided from or used by investing activities (28,539,075) (3,309,782) C. Financing activities issue/purchase of treasury shares 16,919,584 (2,400,466) change in other reserves (1,507,742) 1,395,941 issue/purchase of equity instruments 33,035,561 36,000,000 dividends and other distributions (95,972,137) (33,765,518) Net cash provided from (or used by) financing activities (47,524,734) 1,229,957 Net cash provided (or used) for the year 233,837,244 86,456,684

Reconciliation 2013 2012 Opening cash and cash equivalents 161,124,797 74,668,113 Total net cash provided/used for the year 233,837,244 86,456,684 Closing cash and cash equivalents 394,962,041 161,124,797

(*) The figures were restated compared to the originally published figures due to the retrospective application of the new version of IAS 19. Reference should be made to the paragraph on the “net financial debt” of the -Ma nagement Report for a breakdown of “Cash and cash equivalents”.

On behalf of the Board of Directors Chairman and Chief Executive Officer (Pietro Giuliani)

153 154 Gruppo Azimut Azimut Holding Spa Notes to the accounts at 31 December 2013

155 156 Gruppo Azimut Notes to the accounts

Part A - Accounting policies

A.1 General information

These 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 (EC) Regulation No. 1606/2002 issued by the Eu- with IAS/IFRS ropean Parliament and Council and effective at the date these separate financial statements were approved, as well as with every relevant applicable interpretation, and the provisions issued to implement Article 9 of Italian Legislative Decree no. 38/2005.

These separate financial statements have been drawn up in accordance with the Section 2 instructions issued by the Bank of Italy set out in the Regulation dated 21 January General reporting criteria 2014, with particular reference to the schedules and information to be provided in the notes to the financial statements, which are expressly set out in said Regulation for financial companies that are parent companies of stock brokerage companies.

These separate financial statements comprise the balance sheet, the income statement, the statement of comprehensive income, the cash flow statement (prepared using the indirect method), the statement of changes in shareholders’ equity and these notes.

These notes are composed of: Part A - Accounting policies Part B - Notes to the Balance Sheet Part C - Notes to the Income statement Part D - Other information

The following annexes are included in and represent an integral part of these notes: • list of equity investments in group companies, Annex A; • list of significant equity investments, pursuant to Article 125 of Consob (Italian -Se curities and Exchange Commission) Regulation No. 11971/99 as amended, Annex B.

These financial statements are denominated in Euro.

They have been prepared based on the going concern assumption. Financial, operating and other indicators5 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 (now IVASS), may highlight critical issues that, if not taken into proper consideration, could compromise the Company’s stability and ability to

5 Examples of which are shown in the Going Concern Audit Standard 570.

157 Notes to the accounts

operate as a going concern. An overall valuation of the Company’s past and current financial condition and results of operations, its operating guidelines, group business model and the risks to which it is exposed6 which, inter alia, reveals no irregularities, confirm that the Com- pany will continue to operate as a going concern for the foreseeable future.

These financial statements have been prepared clearly and give a true and fair view of the Company’s financial position, results of operations and cash flows. Transactions and other events have been recognised and presented in accordance with the principle of substance over form. As stated above, these financial statements have been prepared on a going concern and accruals basis, using the historic criterion, save for the measurement of certain financial assets and liabilities, measured at fair value. Assets and liabilities, costs and income have not been offset against each other, unless required or permitted by a standard or an interpretation, or by the Instructions issued by the Bank of Italy.

6 As described in the Management Report.

158 Gruppo Azimut Document Issue date Date of coming Endorsement date EU regulation into force and date of publication Amendments to IAS 1 Presentation June 2011 1 July 2012 5 June 2012 (EU) 475/2012 of Financial Statements on the presentation 6 June 2012 of other comprehensive income IAS 19 (2011) Employee benefits June 2011 1 January 2013 5 June 2012 (EU) 475/2012 6 June 2012 Amendments to IFRS 7 Financial instruments: December 2011 1 January 2013 13 December 2012 (EU) 1256/2012 disclosures - Offsetting financial assets 29 December 2012 and financial liabilities IFRS 13 Fair value measurement May 2011 1 January 2013 11 December 2012 (EU) 1255/2012 29 December 2012 Amendments to IAS 12 - Income taxes - December 2010 1 January 2013 11 December 2012 (EU) 1255/2012 Deferred Tax: Recovery of underlying assets (for IASB: 29 December 2012 1 January 2012) Amendments to IFRS 1 - First-time adoption - December 2010 1 January 2013 11 December 2012 (EU) 1255/2012 Severe hyperinflation and removal of fixed (for IASB: 29 December 2012 dates for first-time adopters 1 July 2011) Amendments to IFRS 1 - First-time adoption March 2012 1 January 2013 4 March 2013 (EU) 183/2013 of IFRS - Government loans 5 March 2013 Annual improvements to IFRS (2009-2011) May 2012 1 January 2013 27 March 2013 EU 301/2013 28 March 2013

For a description of the main effects arising from the introduction of the above documents, where applicable to the Company’s financial statements, reference should be made to section 4 - Other information.

159 Notes to the accounts

Documents endorsed by the EU and applicable as of 1 January 2014. At the date of these separate financial statements, the competent bodies of the Eu- ropean Union completed the endorsement process necessary for the adoption of the documents listed below which are not yet applicable and for which the Company did not elect early application:

Document Issue date Date of coming Endorsement date EU regulation into force and date of publication Amendments to IAS 32 Financial instruments: December 2011 1 January 2014 13 December 2012 (EU) 1256/2012 presentation - Offsetting financial assets 29 December 2012 and financial liabilities IFRS 10 Consolidated financial statements May 2011 1 January 2014 11 December 2012 (EU) 1254/2012 (for IASB: 29 December 2012 1 January 2013) IFRS 11 Joint arrangements May 2011 1 January 2014 11 December 2012 (EU) 1254/2012 (for IASB: 29 December 2012 1 January 2013) IFRS 12 Disclosure of interests May 2011 1 January 2014 11 December 2012 (EU) 1254/2012 in other entities (for IASB: 29 December 2012 1 January 2013) IAS 27 (2011) Separate financial statements May 2011 1 January 2014 11 December 2012 (EU) 1254/2012 (for IASB: 29 December 2012 1 January 2013) IAS 28 (2011) Investments in associates May 2011 1 January 2014 11 December 2012 (EU) 1254/2012 and joint ventures (for IASB: 29 December 2012 1 January 2013) Transition guidance amendments June 2012 1 January 2014 4 April 2013 EU 313/2013 (Amendments to IFRS 10, IFRS 11 (for IASB: 5 April 2013 and IFRS 12) 1 January 2013) Investment entities October 2012 1 January 2014 20 November 2013 UE 1174/2013 (Amendments to IFRS 10, IFRS 12 21 November 2013 and IAS 27) Recoverable amount disclosure May 2013 1 January 2014 19 December 2013 UE 1374/2013 for non-financial assets 31 December 2013 (amendments to IAS 36) Novation of derivatives and continuation June 2013 1 January 2014 19 December 2013 UE 1375/2013 of hedge accounting (amendment to IAS 39) 31 December 2013

The Company is still completing the analysis of the effects arising from the introduction, as of next year, of the above documents, where applicable.

On 10 February 2014, following the Executive Committee’s resolution of 22 January Section 3 Significant events after the 2013, the Company made a capital injection of 1.5 million euro to increase the share reporting date capital of the subsidiary AZ International Holdings Sa. These separate financial statements were authorised for publication by the Com- pany’s Board of Directors on 6 March 2014.

160 Gruppo Azimut Application of the new version of IAS 19 Section 4 The main change is the requirement, for defined benefit plans, to follow a single Other information criterion for recognising actuarial gains/losses, which must be immediately included, net of taxes, in the calculation of net liabilities to employees as a balancing entry to a shareholders’ equity item (Other Comprehensive Income), to be shown in the statement of comprehensive income for the year. The accounting policy adopted by the Group up to 31 December 2012, using the alternative treatments permitted by the previous version of IAS 19, involved immediately recognising all actuarial gains and losses in the income statement. The changes introduced by the new IAS 19 must be applied retrospectively, as required by IAS 8 and the transitional provisions set forth in the standard. Therefore, for the purpose of providing corresponding prior period/year disclosure, the actuarial gains and losses taken to profit or loss under “Personnel costs” have been restated, net of taxes (included in profit or loss under “Income tax on profit from continuing operations”), in shareholders’ equity under “Valuation reserves”. At 31 December 2012, the different recognition of actuarial losses did not generate any significant changes to the relevant items.

Disclosure pursuant to IFRS 13 Assets and liabilities measured at fair value are measured and classified based on the fair value hierarchy established by IFRS 13, which consists of three levels assigned based on the observable input used in the valuation techniques applied: Level 1: quoted prices in active markets for identical assets and liabilities that the entity can access at the measurement date; Level 2: inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly; Level 3: unobservable figures for the asset or liability, which reflect the assumptions that market participants should use in pricing the asset or liability, including risk assumptions (of the model used and input used).

Use of estimates These separate financial statements have been prepared using estimates and assumptions, which have an effect on the recognised income, costs, assets and liabilities and corresponding notes. These estimates and assumptions, based on the best possible calculations by management, are revised periodically and the effects of any changes are reflected directly in profit or loss. Estimates with a significant impact on these separate financial statements relate to the impairment test on intangible assets (trademark and goodwill), the recoverability of deferred tax assets and accruals to hedge contingent liabilities.

There is no other relevant information to be disclosed for reporting purposes.

161 Notes to the accounts

A.2 Key financial statements items

This section describes the main accounting policies and measurement criteria adopted for the preparation of these financial statements. Said policies and criteria have been applied consistently throughout the years presented.

Available-for-sale Financial assets held by the Company are classified in this category in the context of financial assets liquidity management policies. This category also includes equity investments, which do not qualify as subsidiaries, associates or jointly-controlled entities. Upon initial recognition, Available-for-sale financial assets are recognised at their fair value, which usually corresponds to the consideration paid for their purchase, plus any transaction costs in the event that they are tangible and definable. They are subsequently recognised at their fair value, recognising any fair value gains or losses in the specific shareholders’ equity reserve (“Valuation reserves”) until disposal or impairment. The fair value of Available-for-sale financial assets is calculated based on the quoted prices in active markets or internal valuation models as described in the section on “Fair value hierarchy”. Impairment losses are recognised in the income statement when the purchase cost, net of any repayment of principal and amortisation, exceeds the recoverable amount. The cumulative gain or loss generated previously recognised in shareholders’ equity is reversed to profit or loss upon disposal or recognition of the impairment loss. When the reasons underlying the impairment loss cease to exist, the impairment loss is reversed directly against the shareholders’ equity reserve, in the case of equity instruments, and in profit or loss, in the case of debt instruments. Available-for-sale financial assets are derecognised when the contractual rights to receive the relevant cash flows cease to exist or upon transfer of all risks and rewards incidental to ownership. Assets which do not qualify as subsidiaries, associates or jointly-controlled entities, are not listed on active markets and for which the fair value cannot be measured reliably, are measured at cost. At the end of each year, impairment tests are carried out to establish which financial assets are to be impaired. This test is performed for each individual financial instrument, considering the impairment effects in accordance with IAS 39. Financial assets are derecognised when the contractual rights to the cash flows generated by the assets expire or when the asset is sold and all the risks and rewards of ownership have been transferred. With respect to impairment testing, the Company employs a specific policy that sets limits in terms of severity and durability, both according to the type of financial instrument. Specifically, the benchmarks in terms of severity are as follows:

162 Gruppo Azimut 1. for debt instruments7: loss of 20% 2. for other financial instruments8: loss of 30%

Durability is assessed based on a timescale of 18 months for debt instruments and 24 months for other financial instruments: specifically, the fair value of each financial instrument is measured to establish if it was consistently lower than the corresponding initial cost over the last 18 or 24 months. For “other financial instruments”, in the event that the above benchmarks are reached, the impairment loss is recognised in the income statement. “Debt financial instruments” which 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 and all Receivables receivables involving fixed or determinable payments and which are not listed on an active market. They are initially recognised at the grant date based on the fair 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 subsequently measured at their estimated realisable value, being the best estimate possible of their fair value. They are derecognised once settled.

Equity investments include the stakes held in associates and subsidiaries. Companies Equity investments are classified as associates pursuant to Article 2359 of the Italian Civil Code, i.e. companies in which the Company has at least 20% of voting rights and thus exerts significant influence, but not control, over financial and operating policies. Equity investments classified as financial fixed assets are measured at acquisition or formation cost, plus any extra costs arising from the acquisition or formation of the investment. The cost is reduced to reflect impairment losses, if any, and reversed in the following financial years if the reasons for the impairment recognised no longer apply. Impairment losses are recognised in the income statement; if the reasons for the impairment loss no longer apply following an event subsequent to the initial recognition, the original amount is reversed through income statement. Moreover, the cost of equity investments is increased as a result of the recognition of stock-option plans, entailing the issue/delivery of the Parent Company’s shares to the employees/financial advisors of subsidiaries. Equity investments are derecognised when the contractual rights to the cash flow generated by the assets expire or when the stake is sold and all the risks and rewards

7 Money market instruments, bonds, money market mutual funds and bond funds. 8 Securities, equity, balanced and flexible funds, private equity and hedge funds.

163 Notes to the accounts

of ownership have been transferred.

Tangible assets They include furniture and fixtures, vehicles and office machines and equipment of any kind, as well as leasehold improvements, which are depreciated over the remaining duration of the lease (or the remaining useful life, whichever is shorter). They are initially recognised at cost, including the extra costs directly attributable to the acquisition and start-up of the asset. They are subsequently measured at cost, less depreciation and impairment losses. Depreciation is charged annually on a straight-line basis over the remaining useful life. Leasehold improvements are recognised under assets since the tenant essentially has control over the assets and may receive economic benefits therefrom. Therefore, they are depreciated over a period corresponding to the duration of the lease. Tangible assets are derecognised upon disposal or when the asset has been retired and future benefits are not expected from its disposal.

Intangible assets Intangible assets include goodwill, the “Azimut” trademark (under finance lease) and the application software for long-term use. Goodwill is that paid by Azimut Holding Spa (formerly Tumiza Spa) to purchase the group in 2002 by acquiring the entire share capital of Azimut Holding Spa, incorporated in December of the same year, and corresponding to the portion of goodwill arising from merger that, as per the appraisal prepared by the independent company PricewaterhouseCoopers Finance Srl, had not been allocated as an increase in the value of equity investments. Goodwill is not amortised systematically, but is tested for impairment annually to check the recoverability of its book value in accordance with that set out in IAS 36 Impairment of assets. The amount of the impairment, determined on the basis of the difference between the book value and its recoverable amount, if lower, is recognised in the income statement. Reference should be made to the specific paragraph on “Finance lease” for information on the “Azimut” trademark, acquired under finance lease via a sale and lease- back agreement. Software is recognised at cost, net of amortisation and impairment losses. Such assets are amortised based on their estimated residual useful life. Intangible assets are derecognised at the date of disposal and when no future economic benefits are expected.

Finance lease The sale and leaseback agreement related to the trademark, which can be classified as a finance lease, was recognised in accordance with the requirements set out in IAS 17 - Leases. This accounting standard stipulates:

164 Gruppo Azimut • that the leased asset must be recognised under assets and the amount payable to the lease company recognised under liabilities at the fair value of the leased asset; • that the finance lease payments must be recognised over the term of the lease, reducing the initially-recognised liability. The related interest expense is recognised in the income statement; • that leased asset amortisation rates must be recognised in line with those adopted for owned amortisable assets; • recognition of an impairment loss, if any, in application of IAS 36 Impairment of assets. In the case of the sale and leaseback agreement, if the sale price is higher than the book value of the asset, the excess amount is recognised over the term of the agreement. However, in this specific case, considering the economic reasons for the transaction and the related contractual terms and conditions, which include an initial down payment, the transaction involved an advance payment equal to the sale price of the trademark, less the amount of the down payment. Consequently, the trademark is recognised under assets at the pre-disposal book value and the amount payable for the advance payment, initially recognised at the amount as determined above, is gradually reduced as the lease payments are made. Since the trademark under lease has an indefinite useful life, it is not amortised but is tested for impairment annually in accordance with IAS 36 Impairment of assets. The amount of the impairment, if any, determined on the basis of the on the between the book value and its recoverable amount, if lower, is recognised in the income statement.

Current taxes are calculated on the basis of an estimate of taxable income, in accor- Tax assets and liabilities dance with the tax regulations in force and by taking into account the effects generated by the Group’s Italian subsidiaries’ 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 temporary differences arising between the tax base of assets or liabilities and their book values, applying the tax rates in force in the years in which the aforementioned differences are expected to reverse. Deferred tax assets are recognised 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 liability will materialise in the future, in accordance with IAS 12. Deferred tax assets and liabilities for IRES purposes, as well as current and deferred IRAP taxes, are offset against each other, as assets and liabilities, in accordance with IAS 12.

165 Notes to the accounts

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

Outstanding securities Being a financial instrument composed of a debt component and an embedded -de rivative (on equity instruments), the bond with warrants “Azimut 2009-2016 subordinato 4%” issued by the Company on 1 July 2009 is recognised as a financial liability and an equity instrument of the Company. Upon initial recognition, the fair value of the financial instrument, as a whole, is equal to the issue price, while the fair value of the debt component is based on the present value of contractual cash flows, calculated using the market rate for similar financial instruments, with similar cash flows, at the same expiry dates, but excluding the embedded derivative. The fair value of the equity component - related to the warrants granted on a free basis to the subordinated bondholders at the same time as bonds were issued - was calculated as the difference between the fair value of the instrument, as a whole, and the fair value of the debt component. Consequently, the debt component was recognised under “Outstanding securities”, while the above equity component was recognised in shareholders’ equity, under “Equity instruments”. The costs borne by the Company for the bond issue are allocated proportionally to the debt component and the equity component. Subsequent to initial recognition, the debt component is recognised at amortised cost, with financial charges established using the effective interest rate. The equity component is recognised under reserves and transferred to unallocated earnings when warrants are exercised, or reach maturity without being exercised. When warrants are exercised, at the strike price set by the relevant regulation, given that the Company will issue a set number of treasury shares, the transfer of the treasury share reserve will be recognised against the collected cash corresponding to the strike price.

The “Azimut 2011-2016 Senior 2,5%” convertible bond, issued by the Company in 2011, was recognised at the fair value of the corresponding liability, which is equal to the issue price including the ancillary costs borne by the Company for the bond issue. Subsequent to initial recognition, the financial liability is measured at amortised cost using the effective interest rate method.

The “Azimut 2013-2020 convertibile 2,125%” bond, issued by the Company on 25 November 2013, is recognised as a financial liability and an equity instrument being

166 Gruppo Azimut a financial instrument composed of a debt component and an embedded derivative (on equity instruments). Upon initial recognition, the fair value of the financial instrument, as a whole, is equal to the issue price, while the fair value of the debt component was calculated based on the present value of the contractually agreed cash flows, using a market rate for comparable financial instruments, with similar cash flows, at the same maturities, but no conversion option. Subsequent to initial recognition, this debt component is measured at amortised cost, using the effective interest rate method. The equity component, being the difference between the fair value of the instrument, as a whole, and the fair value of the debt component, was recognised in shareholders’ equity under “Equity instruments”. The costs borne by the Company for the bond issue are allocated proportionally to the debt component and the equity component. The financial liabilities are derecognised after expiry or settlement.

This item includes liabilities that are not ascribable to other liability items. Other liabilities Short-term liabilities (due within 12 months) and trade payables are recognised at their par value. Other liabilities are derecognised once settled.

Following the application of Italian Law no. 296 of 27/12/2006 (2007 Finance Act) Staff severance pay (TFR) and taking account of the methodology published on the Actuarial Society of Italy website, the calculation method for staff severance pay (TFR) was changed. In accordance with IAS 19, TFR is treated as defined benefit plans and recognised based on the actuarial value established using the projected unit credit method. This amendment entails that the projected unit credit method is not applied for those employees who have chosen to invest 100% of their TFR in private pension funds. Liabilities associated with staff severance pay at 31 December 2013, were measured as follows: • estimating the remaining duration of the employee’s employment contract; • estimating the future wage/salary and inflationary trends, in the case that the projected unit credit method is applied; • taking into account any advances requested by employees, any portions which may be assigned to private pension funds, as well as the 11% substitute tax on the TFR revaluation; • assessing the payable already accrued by the Company (TFR), including any future annual provisions (and legally-required revaluations), to estimate the amount to be paid upon termination of employment, for whatever reason (resignation, retirement, death, disability); • discounting the previously estimated amount payable by the Company, and bringing it into line with the level of seniority at the measurement date, when 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 be adopted, as set out in “Sec-

167 Notes to the accounts

tion 10 – Staff severance pay (TFR)” of these notes. As mentioned earlier, following the introduction of the new version of IAS 19, actuarial gains and losses are recognised, net of the tax effects, against shareholders’ equity (“Valuation reserves”). The new version of the standard was applied retrospectively; consequently, prior year balances were restated and reclassified accordingly.

Costs and income They are recognised on an accrual basis and in accordance with the matching principle. Dividends are recognised in the income statement on the date the shareholders’ right to receive payment is established. Financial income and charges are recognised on an accruals basis, based on accrued interest and applying the effective interest rate method.

Treasury shares Treasury shares are recognised at purchase cost under a specific shareholders’ equity item with a negative sign 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 taken to shareholders’ equity. In the case of cancellation, the item under shareholders’ equity is reduced accordingly, upon acquisition.

Fair value hierarchy In accordance with the provisions of IFRS 7 and IFRS 13, the Company classifies fair value measurement of financial assets and financial 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.

168 Gruppo Azimut Specifically, the fair value of a financial instrument measured at Level 1 corresponds to the unadjusted price, at which the instrument – or an identical instrument – is sold on an active market on the measurement date. For classification at Level 1, prices are measured together with all other characteristics of the financial asset or financial 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 measurement criteria are applied consistently over time. With respect to financial instruments held and financial liabilities issued, according to the Company, the bonds issued are classified as Level 2, while the equity securities classified as “available-for-sale financial assets” and measured at cost are classified as Level 3. With respect to the financial instruments held as part of liquidity management policies, in the case of open-ended investment funds, fair value is designated as Level 1 if represented by the Net Asset Value (NAV) provided by the fund manager at the measurement date. Conversely, with respect to listed funds and Exchange Trade Funds (ETF), Level 1 fair value is equal to the closing price of the relevant stock market.

A.3 Disclosure about transfers between portfolios

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

169 Notes to the accounts

A.4. Fair value disclosure

A.4.5 Fair value hierarchy A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels

Financial assets/liabilities measured at fair value Level 1 Level 2 Level 3 Total 1. Held-for-trading financial assets 2. Financial assets measured at fair value 3. Available-for-sale financial assets 68,930,174 2,530,114 71,460,288 4. Hedging derivatives Total 68,930,174 2,530,114 71,460,288 1. Held-for-trading financial liabilities 2. Financial liabilities measured at fair value 3. Hedging derivatives Total

A.4.5.2 Annual change in financial assets measured at Level 3 fair value on a recurring basis Financial assets Held for Measured Available Hedging trading at fair value for sale assets 1. Opening balance 2,669,740 2. Increases 2,304 2.1. Purchases 2.2. Profits allocated to: 2,304 2.2.1 Income statement 2,304 of which: gains 2.2.2 Shareholders’ equity 2.3. Transfers from other levels 2.4. Other increases 3. Decreases 141,930 3.1. Sales 3.2. Redemptions 3.3. Losses charged to: 3.3.1 Profit or loss losses of which: losses 141,930 3.3.2 Shareholders’ equity 3.4. Transfers from other levels 3.5. Other decreases 4. Closing balance 2,530,114

170 Gruppo Azimut Parte B - Notes to the balance sheet Assets

Cash and cash equivalents amount to 3,722 euro (1,944 euro at 31 December 2012) Section 1 and refer to cash on hand in euro and foreign currency. Cash and cash equivalents Item 10

This item amounts to 71,460,288 euro, up by 60,697,132 euro on 10,763,156 euro Section 4 at 31 December 2012. Available-for-sale financial assets 4.1 Breakdown of item 40 “Available-for-sale financial assets” Item 40

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 1. Debt securities structured securities other debt securities 2. Equity securities 2,530,114 2,669,740 3. UCI units 68,930,174 8,093,416 4. Loans Total 68,930,174 - 2,530,114 8,093,416 - 2,669,740

“UCI units” Level 1 refers to the units in investment funds managed by the Azimut Group as part of the Company’s liquidity management policies.

171 Notes to the accounts

4.2 Available-for-sale financial assets: breakdown by debtor/issuer 1. Debt securities a) Governments and central banks b) Other public bodies c) Banks d) Financial institutions e) Other issuers 2. Equity securities 2,530,114 2,669,740 a) Banks 2,530,114 2,669,740 b) Financial institutions c) Other issuers - - 3. UCI units 68,930,174 8,093,416 4. Loans a) Banks b) Financial institutions c) Clients Total 71,460,288 10,763,156

As regards the nature and form of risks arising from the above financial assets, reference should be made to section 1 - Part D “Other information – Information on risk management and hedging policies”.

172 Gruppo Azimut 4.3 Available-for-sale financial assets: annual change Debt Equity UCI units Loans Total securities securities A. Opening balance 2,669,740 8,093,416 10,763,156 B. Increases 2,304 61,467,197 - 61,469,501 B1. Purchases - 61,150,000 61,150,000 B2. Increases in fair value 317,197 317,197 B3. Write-ups 2,304 - - 2,304 taken to profit or loss 2,304 2,304 taken to shareholders’ equity - B4. Transfers from other portfolios - B5. Other changes - - C. Decreases 141,930 630,439 - 772,369 C1. Sales - - C2. Redemptions - C3. Decreases in fair value 141,930 567,000 708,930 C4. Write-downs - - - C5. Transfers to other portfolios - C6. Other changes 63,439 63,439 D. Closing balance 2,530,114 68,930,174 - 71,460,288

173 Notes to the accounts

Section 6 6.1 Due from banks Receivables This item amounts to 325,740,117 euro, a 172,726,542 euro increase on last year Item 60 (153,013,575 euro at 31 December 2012). The breakdown is as follows:

Breakdown Total 31/12/13 Total 31/12/12 Book Fair Value Book Fair Value value value L1 L2 L3 L1 L2 L3 1. Loans 1.1 Deposits and current accounts 325,740,117 325,740,117 153,013,575 153,013,575 1.2 Receivables for services 1.3 Repurchase agreements of which for government securities of which for other debt securities of which for equity securities 1.4 Other loans 2. Debt securities 2.1 Structured securities 2.2 Other debt securities Total 325,740,117 325,740,117 153,013,575 153,013,575

“Deposits and current accounts” is composed of cash deposited in current accounts with interest in line with that applied to term deposits.

6.2 Due from financial institutions This item amounts to 288,028 euro, up by 272,166 euro on 15,862 euro at 31 De- cember 2012. The breakdown is as follows:

174 Gruppo Azimut Breakdown Total 31/12/13 Total 31/12/12 Book Fair Value Book Fair Value value value L1 L2 L3 L1 L2 L3 1. Loans 1.1 Deposits and current accounts 288,028 288,028 15,862 15,862 1.2 Receivables for services - sale of products 1.3 Repurchase agreements of which for government securities of which for other debt securities of which for equity securities 1.4 Other loans 2. Debt securities 2.1 Structured securities 2.2 Other debt securities Total 288,028 288,028 15,862 15,862

This item refers exclusively to the liquidity held in the securities and cash deposit with Azimut Consulenza Sim Spa, equal to 259,370 euro (at 31 December 2012: 439 euro), and with Azimut Capital Management Sgr Spa, equal to 28,658 euro (at 31 December 2012: 15,423 euro).

Dividends and similar income amounted to 326,147,939 (298,291,929 euro at 31 Section 9 December 2012), up by 27,856,010 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, and refer to the financial statements of the wholly -owned subsidiaries at 31 December 2013. In accordance with IAS 36 governing impairment tests, the book value of the company’s equity investments was tested for impairment in order to identify any impairment indicators, if any.

175 Notes to the accounts

9.2 Annual change in equity investments Group equity Non-group Total investments equity investments A. Opening balance 298,291,929 - 298,291,929 B. Increases 27,030,000 1,125,813 28,155,813 B.1 Purchases 1,125,813 1,125,813 B.2 Write-ups B.3 Revaluations B.4 Other changes 27,030,000 27,030,000 C. Decreases 299,803 - 299,803 C.1 Sales - - C.2 Write-downs - C.3 Other changes 299,803 299,803 D. Closing balance 325,022,126 1,125,813 326,147,939

“Increases” relate to the capital injections for the future share capital increase of AZ International Holdings S.A., based in Luxembourg, made during the year as per the Executive Committee’s resolutions of 22 January 2013, and to the share capital increase of Azimut Capital Management Sgr Spa on 17 April 2013. “Increases” is comprised of: • purchases relating to: • 16.84% of Siamosoci Srl (700,000 euro); • 46% of Programma 101 Spa (425,813 euro); • other changes of 299,803 euro for the liquidation of Azimut Fiduciaria Spa.

176 Gruppo Azimut 10.1 Breakdown of item 100 “Tangible assets” - business purposes: breakdown of assets Section 10 at cost” Tangible assets This item amounts to 692,023 euro, up by 326,221 euro on 365,802 euro at 31 De- Item 100 cember 2012. The breakdown is as follows:

1. Company-owned 692,023 365,802 a) land b) buildings c) furniture & fixtures 64,380 73,474 d) capital goods e) other 627,643 292,328 2. Under finance lease a) land b) buildings c) furniture & fixtures d) capital goods e) other Total 692,023 365,802

“Other” includes electronic office equipment (personal computers, printers and monitors) and the telephone system.

177 Notes to the accounts

10.2 Tangible assets - business purposes: annual change Land Buildings Furniture Capital Other Total & fixtures goods A. Opening balance - - 73,474 - 292,328 365,802 A.1 Total net impairment losses A.2 Opening net balances B. Increases 9,435 472,400 481,835 B.1 Purchases 9,435 472,400 481,835 B.2 Leasehold improvements B.3 Write-ups B.4 Increases in fair value taken to: a) shareholders’ equity b) income statement B.5 Exchange rate gains B.6 Transfers from investment property B.7 Other changes C. Decreases 18,529 137,085 155,614 C.1 Sales C.2 Depreciation 18,529 137,085 155,614 C.3 Impairment write-downs charged to: a) shareholders’ equity b) profit or loss C.4 Decreases in fair value charged to: a) shareholders’ equity b) profit or loss C.5 Exchange rate losses C.6 Transfers to: a) assets held for investment purposes b) assets held for sale C.7 Other changes D. Gross closing balance - - 64,380 - 627,643 692,023 D.1 Total net impairment losses D.2 Net closing balance 64,380 - 627,643 692,023 E. Measurement at cost 64,380 - 627,643 692,023

178 Gruppo Azimut Depreciation is calculated based on the following rates, reduced by 50% for the first year:

% rate Electronic office equipment 20% Furniture & fixtures 12% Telephone system 25% Other assets 25%

Intangible assets amount to 185,378,053 euro, up by euro 58 on the euro 185,377,995 Section 11 at 31 December 2012. It is broken down as follows: Intangible assets Item 110 11.1 Breakdown of item 110 “Intangible assets: Total 31/12/2013 Total 31/12/2012 Assets Assets Assets Assets at cost at fair value at cost at fair value 1. Goodwill 149,829,431 149,829,431 2. Other intangible assets 35,548,622 35,548,564 2.1 generated internally 2.2 other 35,548,622 35,548,564 Total 185,378,053 185,377,995

“Goodwill” of an original amount of 176,269,919 euro and corresponding to the portion of goodwill arising from merger that had not been allocated as an increase in the value of equity investments relates to the goodwill paid by Azimut Holding Spa (formerly Tumiza Spa) to purchase the group in 2002 by acquiring the entire share capital of Azimut Holding Spa, incorporated in December of the same year. “Other intangible assets – other” refers to software purchase costs (210,398 euro) and 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 recognised at its original value along with a financial liability to the lessor. The details of the foregoing transaction are described in item 10 “Payables” 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).

Impairment test With respect to “goodwill” and “trademarks” (when recognised as an intangible asset with an indefinite useful life), the IFRS, specifically IAS 36 - “Impairment of assets”, stipulate that the company must perform annual impairment tests to check the adequacy of the amounts recognised. The aim of the impairment test is to identify any

179 Notes to the accounts

impairment loss: should the test identify the non-recoverability of accounting balances, the company shall recognise an impairment loss on the asset. For the purposes of impairment testing at group-level, two cash generating units (CGUs) have been identified that basically reflect the Azimut Group’s business and to which the above intangible assets (goodwill and trademarks) have been allocated.36 The first CGU, to which the Parent Company’s goodwill and trademarks were allocated, reflects the activity carried out by the companies directly controlled by Azimut Holding Spa, each specialising in the distribution, promotion and management of financial and insurance products (basically unit-linked products) and operating 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 operating results are revised periodically by management for the purpose of decisions regarding allocation of resources and measurement of results and company performance. The second CGU refers to the activity carried out by the foreign companies belon- ging to the Luxembourg company AZ International Holdings Sa, wholly owned by Azimut Holding Spa, aimed at identifying, acquiring and managing new foreign partnerships. The impairment test of the Azimut CGU, to which goodwill and the trademark were allocated, had a positive outcome, as described below. For the purposes of the impairment test, management calculated the value in use of the Azimut CGU using the Discounted Cash Flow method and comparing value in use with the book value of the CGU, inclusive of the above intangible assets (trademark and goodwill).

Value in use calculated using the Discounted Cash Flow method is as follows: • Calculation of unlevered cash flows: for the purposes of this calculation, the -ex pected cash flow was approximated to the net profit for the year. Profits for the first five years were based on the “Budget 2014” and the projection to 2018 of the “2009 - 2014 Business Plan. The underlying assumptions are as follows: • the evolution of assets in line with the trend for the past few years; • profitability equal to the average of the past five years: there are no external sources to provide reliable information on the pricing trend. Therefore, historical profitability levels were used considering the value added of the advisory service offered to clients; • increase in overheads in line with forecast growth of personnel and structure. The flow increase after 2018 was kept constant at 2%.

• Calculation of the weighted average cost of capital (“WACC”), equal to 10.06%, based on the following parameters: • Risk Free: 10-year Italian government bonds, December 2013; • Azimut Beta: calculated on a 5-year timescale with daily readings (source: Bloom- berg) • Market risk premium: extra yield required for investments in shares rather than risk free securities (Source: Credit Suisse Global Equity Strategy); • Azimut’s financial structure.

180 Gruppo Azimut Cost of capital calculation: WACC 31-Dec-13 Risk-free rate 4.49% Market risk premium 5.30% Beta Unlevered 1.051 Risk premium 5.57% Cost of equity (Ke) 10.06% D/(D+E) 0% E/(D+E) 100% WACC 10.06%

Discounting cash flows over the five-year timescale and cash flows calculated for terminal value purposes at the WACC to estimate the Enterprise Value of the CCU and calculating the value in use of the CGU by subtracting the net financial position from the Enterprise Value.

Based on the above, management calculated Azimut CGU’s value in use at 2,916 million euro. This amount is considerably greater than the CGU book value of 607 million, as no impairment losses were recognised. Furthermore, the CGU’s value in use was subjected to a sensitivity analysis, which considered WACC changes and the long-term growth rate (g-rate). The table below shows the results of the sensitivity analysis which did not identify any impairment loss.

Stress Test Differenza tra Valore d’uso e Valore contabile della CGU WACC 8,06% 8,56% 9,06% 9,56% 10,06% 10,56% 11,06% 11,56% 0,00% 2.274 2.170 2.078 1.996 1.922 1.855 1.794 1.738 0,50% 2.400 2.283 2.179 2.086 2.004 1.929 1.862 1.800 1,00% 2.545 2.410 2.291 2.187 2.094 2.011 1.936 1.868 1,50% 2.711 2.555 2.419 2.300 2.195 2.102 2.018 1.943 2,00% 2.905 2.722 2.565 2.429 2.309 2.204 2.110 2.026 2,50% 3.134 2.917 2.733 2.575 2.438 2.318 2.212 2.118 3,00% 3.408 3.146 2.928 2.744 2.585 2.447 2.327 2.220 3,50% 3.742 3.422 3.159 2.940 2.755 2.595 2.457 2.336

181 Notes to the accounts

Diminuzione Flussi di Cassa 0% -5% -10% -15% -20% 2.309 2.219 2.129 2.038 1.948

Key: Difference between Value in use and Book value of the GCU Cash flow discount

11.2 Intangible assets: annual change Total A. Opening balance 185,377,995 B. Increases 224,482 B.1 Purchases 224,482 B.2 Write-ups B.3 Increases in fair value taken to: shareholders’ equity profit or loss B.4 Other changes C. Decreases 228,424 C.1 Sales C.2 Amortisation 228,424 C.3 Impairment write-downs charged to: shareholders’ equity income statement C.4 Decreases in fair value charged to: shareholders’ equity income statement C.5 Other changes D. Closing balance 185,374,053

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

% rate Software packages 33%

182 Gruppo Azimut Tax assets Section 12 Tax assets and tax liabilities This item amounts to 34,496,935 euro, up by 3,373,309 euro on 31,123,626 euro at Item 120 31 December 2012. Item 70

12.1 Breakdown of item 120 “Tax assets: current and deferred” Current 17,021,614 10,717,886 Deferred 17,475,321 20,405,740 of which pursuant to Italian Law 214/2011 840,278 6,786,914 Total 34,496,935 31,123,626

“Current tax assets” includes tax on bank interest income amounting to 872,820 euro, net tax credits arising from tax consolidation amounting to 9,169,040 euro and receivables related to the conversion of tax losses on the trademark and goodwill as per Italian Law 214/2011 of 6,814,700 euro. “Deferred tax assets” mainly includes: • 9,767,890 euro of deferred tax assets arising from the value of the lease instalments deductible in future years by virtue of the sale and lease-back agreement for the Azimut trademark; • 840,278 euro of deferred tax assets relating to tax losses which are entirely traced back to deferred tax assets under Italian Law 214/2011; • 1,693,463 euro of deferred tax assets relating to the adjustment of the book and tax value (IRAP) of the trademark and goodwill pursuant to Article 1, paragraph 51 of Italian Law 244/2007 (2008 Finance Act) 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) 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 recognised in the income statement.

Tax liabilities

This item amounts to 45,799,405 euro, up by 2,113,386 euro on 43,686,019 euro at 31 December 2012.

12.2 Breakdown of item 70 “Tax liabilities: current and deferred” 31/12/13 31/12/12 Current 1,144,610 2,205,475 Deferred 44,654,795 41,480,544 Total 45,799,405 43,686,019

183 Notes to the accounts

“Current tax liabilities” includes the provisions for taxation prudentially accrued by Azimut Holding Spa in 2011 also to consider settlement agreements in respect of the tax audits commenced in 2011 and still underway. “Deferred tax liabilities” mainly includes deferred tax liabilities relating to the difference between the book value and tax value of the trademark amounting to 11,686,351 thousand euro and the deferred tax liabilities recognised on the temporary difference between the book value and tax value of goodwill of 32,823,671 thousand euro. These tax liabilities, recognised in accordance with IAS 12, are not reasonably expected to become actual costs given that the aforementioned temporary differences will only be reduced following a negative impairment test result that leads to the recognition of an impairment loss on goodwill and the trademark and in the case of disposal of these assets.

12.3 Changes in deferred tax assets (contra entry in income statement) 1. Opening balance 20,401,890 18,866,647 2. Increases 4,805,326 4,347,308 2.1 Deferred tax assets recognised in the year: 4,805,326 4,347,308 a) from previous years b) due to changes in accounting policies b) write-ups d) other 4,805,326 4,347,308 2.2 New taxes or increased tax rates 2.3 Other increases 3. Decreases 7,895,139 2,812,065 3.1 Deferred tax assets eliminated during the year 1,080,439 1,226,100 a) reversals 1,080,439 1,010,472 b) write-off of irrecoverable tax c) due to changes in accounting policies d) other 215,628 3.2 Decreases in tax rates 3.3 Other decreases 6,814,700 1,585,965 a) conversion into tax credits pursuant to Italian Law 214/2011 6,814,700 b) other 4. Closing balance 17,312,077 20,401,890

184 Gruppo Azimut 12.3.1 Change in deferred tax assets under Law 214/2011 (contra entry in income statement) Total Total 31/12/13 31/12/12 1. Opening balance 6,786,914 3,379,564 2. Increases 840,278 3,407,350 3. Decreases 6,786,914 3.1 Reversals 3.2 Conversion into tax credits a) arising out of loss for the year b) arising out of tax losses 6,786,914 3.3 Other decreases 4. Closing balance 840,278 6,786,914

12.4 Changes in deferred tax liabilities (contra entry in income statement) Total Total 31/12/13 31/12/12 1. Opening balance 41,443,689 38,356,668 2. Increases 3,087,021 3,087,021 2.1 Deferred tax liabilities recognised in the year: 3,087,021 3,087,021 a) from previous years b) due to changes in accounting policies c) other 3,087,021 3,087,021 2.2 New taxes or increased tax rates 2.3 Other increases 3. Decreases 3.1 Deferred tax liabilities eliminated during the year a) reversals b) due to changes in accounting policies c) other 3.2 Decreases in tax rates 3.3 Other decreases 4. Closing balance 44,530,710 41,443,689

185 Notes to the accounts

12.5 Changes in deferred tax assets (contra entry in shareholders’ equity) Total Total 31/12/13 31/12/12 1. Opening balance 3,850 3,850 2. Increases 159,394 2.1 Deferred tax assets recognised in the year: a) from previous years b) due to changes in accounting policies d) other 159,394 2.2 New taxes or increased tax rates 2.3 Other increases 3. Decreases 3.1 Deferred tax assets eliminated during the year a) reversals b) write-off of irrecoverable tax c) due to changes in accounting policies d) other 3.2 Decreases in tax rates 3.3 Other decreases 4. Closing balance 163,244 3,850

186 Gruppo Azimut 12.6 Changes in deferred tax liabilities (contra entry in shareholders’ equity) 1. Opening balance 36,855 274 2. Increases 87,230 36,855 2.1 Deferred tax liabilities recognised in the year: 87,230 36,855 a) from previous years b) due to changes in accounting policies d) other 87,230 36,855 2.2 New taxes or increased tax rates 2.3 Other increases 3. Decreases - 274 3.1 Deferred tax liabilities eliminated during the year - 274 a) from previous years b) due to changes in accounting policies d) other - 274 3.2 Decreases in tax rates 3.3 Other decreases 4. Closing balance 124,085 36,855

13.1 Breakdown of item 130 “Non-current assets held for sale and discontinued operations” Section 13 This item amounts to 75,000 euro and includes the equity investment in Daxtor Srl Non-current assets held measured at its disposal price. for sale and discontinued operations and related liabilities Item 130

This item amounts to 16,874,164 euro, up by 539,756 euro on 16,334,408 euro at Section 14 31 December 2012. Other assets Item 140 14.1 Breakdown of item 140 “Other assets” Breakdown 31/12/13 31/12/12 Due from Inland Revenue 4,173,041 3,823,362 Other receivables 12,550,536 12,441,517 Prepayments 60,587 69,529 Total 16,784,164 16,334,408

“Due from Inland Revenue” refers exclusively to VAT credits. “Other receivables” includes: • 1,000,000 euro due from the subsidiary Azimut Capital Management Sgr Spa and 1,500,000 euro due from the subsidiary Azimut Consulenza Sim Spa as royalties on the Azimut trademark for 2013 coordination activities;

187 Notes to the accounts

• the receivable due from subsidiaries for 9,464,187 euro mostly for IRES tax arising from the taxable income for the tax year 2013, transferred to the Parent Company in accordance with the tax consolidation regime, net of payables for tax transfers, under the tax consolidation regime, from the subsidiaries.

Liabilities

1.1 Payables Section 1 Payables This item amounts to 53,414,419 euro, down by 33,231,930 euro on the 86,646,349 Item 10 euro at 31 December 2012. It is broken down as follows:

Due to Due to Due to Due to Due to Due to banks financial clients banks financial clients institutions institutions 1. Debt securities 53,414,419 86,646,349 1.1 Repurchase agreements of which for government securities of which for other debt securities of which for other equity securities 1.2 Loans 53,414,419 86,646,349 2. Other payables Total 53,414,419 - - 86,646,349 - - Fair value L1 53,414,419 - - 86,646,379 - - Fair value L2 Fair value L3 Total fair value 53,414,419 86,646,349

At 31 December 2013, “Loans” included: a) a financial debt, amounting to 3,200,000 euro, arising from the sale and lease-back agreement signed by Banca Italease Spa and Azimut Holding Spa on 31 October 2006 for the disposal of the Azimut trademark for 55,000,000 euro plus VAT and subsequent lease-back. It also includes accrued interest expense at 31 December 2013 on this amount due (22,752 euro), to be paid at a pre-established date (31 October 2014). The lease-back agreement, which is not subject to any condition precedent or subsequent or any covenants, 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 the first instalment were paid on 31 October 2006. Interest is calculated based on the 12-month Euribor plus 40 basis points.

188 Gruppo Azimut b) a loan of 50,000,000 euro granted by Banca Popolare di Novara on 22 April 2008 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 B. The loan is not subject to covenants, condition precedent or subsequent. This item also includes accrued interest at 31 December 2013 on this loan, amounting to 191,667 euro, paid on the pre-established date (1 January 2014).

2.1 Breakdown of item 20 – “Outstanding securities” Section 2 Outstanding securities Item 20

Liabilities Total 31/12/2013 Total 31/12/2012 Book Fair value Book Fair value value value L 1 L 2 L 3 L 1 L 2 L 3 1. Securities bonds 228,368,019 232,231,507 35,229,137 38,446,839 structured other 228,368,019 232,231,507 35,229,137 38,446,839 other securities structured other Total 228,368,019 232,231,507 35,229,137 38,446,839

The item “Outstanding securities” is broken down as follows: 1.17,122,266 thousand euro of the original 88,457 bonds amounting to 1,000 euro each, of the “Azimut 2009-2016 subordinato 4%” bond, 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. The item, a debt component of a financial instrument composed as indicated in Part A - Section A.2 of these notes, includes accessory costs borne by the Company for the sale of the bond, allocated proportionally to the debt component as well as the accrued interest at 31 December 2013, amounting to 353,828 euro, which will be paid on the pre-established date (1

189 Notes to the accounts

July 2014). On 1 July 2013, Azimut Holding Spa made an advance partial redemption of the bond totalling 17,691,400 thousand euro, or 20% of the original par value. The difference between this amount and the book value, established using the amortised cost method, was recognised in the income statement on the redemption date (17,307,346 euro) under “Gains/losses on disposal or repurchase: d) financial liabilities” at 384,054 euro; 2. “Azimut 2011-2016 Senior 2,5%” bond, amounting to 831,971 thousand euro originally composed of 884 bonds worth 1,000 euro each with a duration of 5 years and yield in line with the annual fixed nominal rate of 2.5% before tax. The amount refers to total bonds sold and includes the charges incurred by the Company for the issue, in addition to interest expense accrued at 31 June 2013 which were paid on the pre-established date (1 February 2014). In April 2013, following the request from a bond holder, Azimut Holding Spa repurchased 10 bonds for an amount of 9,762 euro; convertible bond “Azimut 2013-2020 Convertibile 2.125%” amounting to 210,413,782 euro originally composed of 2,500 bonds worth 100,000 euro with a duration of seven years. The amount refers to total bonds sold and includes the charges incurred by the Company for the issue, in addition to interest expense accrued at 31 June 2013 which will be paid on the pre-established date. Convertible bonds bear gross annual interest of 2.125% and can be converted into Azimut Holding Spa ordinary shares (newly issued or existing). The conversion price is set at 24.26 euro. In accordance with IAS 32 and based on that set out in the section on Accounting policies, the total debt component of this financial instrument is 214,312,482 euro, whereas the equity component, calculated on a residual basis, amounts to 35,687,518 euro.

2.2 Subordinated securities This category includes the bond loan described in points 1 and 3 of this item.

Section 7 “Tax liabilities” is described in detail in section 12 of these notes. Tax liabilities Item 70 Section 9 This item amounts to 13,099,461 euro, up by 2,440,542 euro on 10,658,919 euro at Other liabilities 31 December 2012. Item 90

190 Gruppo Azimut 9.1 Breakdown of item 90 “Other liabilities” 31/12/13 31/12/12 Due to suppliers 1,921,560 640,296 Due to company bodies 164,356 208,000 Due to Inland Revenue 360,127 353,612 Due to social security bodies 172,617 164,476 Deferred employee remuneration 742,535 709,089 Other payables 9,738,266 8,583,446 Total 13,099,461 10,658,919

“Other payables” mainly includes amounts due to the subsidiaries Azimut Consulen- za Sim Spa and AZ Investimenti Sim Spa for withholding tax in the tax year 2013 and the negative taxable base transferred in accordance with the tax consolidation regime.

This item amounts to 554,286 euro, up by 71,358 euro on 482,928 euro at 31 De- Section 10 cember 2012. Staff severance pay (TFR) Item 10 10.1 “Staff severance pay (TFR): “annual change” Total Total 31/12/2013 31/12/2012 A. Opening balance 482,928 425,439 B. Increases 106,868 57,489 B1. Provisions for the year 87,798 50,376 B2. Other increases 19,070 7,113 C. Decreases 35,511 - C1. Payments made 3,285 C2. Other decreases 32,226 D. Closing balance 554,286 482,928

10.2 “Other information” As set out in the section on “Accounting policies”, staff severance pay was calculated in accordance with IAS 19, based on specific following technical, demographic and financial assumptions:

Demographic assumptions

191 Notes to the accounts

lity were calculated using the relevant INPS (the Italian social security institution) tables), reduced by 20%. Pension, which is considered the main reason for outgoing employees, was subject to a timescale equal to meeting the minimum requirement (contribution period or seniority), calculated in accordance with ruling legislation. The following parameters were used for other technical, non-financial factors: • Turnover: 1.5% constant; • Advance: 2% constant; • Amount paid in advance: 70%.

Financial assumptions

This item is unchanged from 31 December 2012 at 500,000 euro, set aside in the pre- Section 11 Provisions for risks and vious year for legal fees and tax support fees relating to the tax audits still under way. charges Item 110

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 and 170 Types of shares Total 1. Share capital 32,324,092 1.1 Ordinary shares 32,324,092 1.2 Other shares -

At 31 December 2013, the fully paid up and subscribed share capital was composed of 143,254,497 ordinary shares, with a total value of 32,324,092 euro.

192 Gruppo Azimut 12.2 Breakdown of item 130 “Treasury Shares” Types of shares Total 1. Treasury shares 82,224,263 1.1 Ordinary shares 82,224,263 1.2 Other shares -

During the year, treasury share transactions led to a total decrease in the portfolio of 1,325,464, shares for a total of 16,921,738 thousand euro. At 31 December 2013, Azimut Holding Spa held 10,703,695 treasury shares at an average book value of 7.682 euro per share.

12.3 Breakdown of item 140 “Equity instruments” This item amounts to 72,497,172 euro and, as described in Part A - Section A.2 of these notes, relates to the equity component of the subordinated bond, recognised upon issue at the fair value of the relevant warrants (3,461,611 euro), net of the total warrants exercised in 2013 (for additional information on the transaction reference should be made to the “Treasury shares” paragraph of the Management Report), at the issue amount, as per the Shareholders’ resolution of 29 April 2010, of 1,500,000 profit-participating financial instruments for a total of 36,000,000 euro (equal to their fair value calculated by an independent leading company), and to the equity component of the convertible bond, recognised on 25 November 2013 upon issue of the convertible bond at 34,949,500 euro, calculated on a residual basis as the difference between the fair value of the bond, as a whole, and the fair value of the debt component. The costs borne by the Company for the bond issue are allocated proportionally to the debt component and the equity component.

12.4 Breakdown of item 150 “Share premium reserve” “Share premium reserve” amounted to 173,986,916 euro at 31 December 2013.

12.5 Other information Breakdown of item 160 “Reserves” Legal reserve Other reserves Total A. Opening balance 6,464,818 247,968,693 254,433,511 B. Increases 21,155,907 21,155,907 B.1 Profit appropriations 21,155,907 21,155,907 B.2 Other changes 0 C. Decreases 1,317,490 1,317,490 C.1 Allocations loss account reserve dividends transfers to share capital C.2 Other changes 1,317,490 1,317,490 D. Closing balance 6,464,818 267,807,110 274,271,928

193 Notes to the accounts

“Other reserves ” - “increases - profit appropriations” includes the undistributed portion of the profit for 2012.

The following gives a breakdown of shareholders’ equity, showing the origin and level of availability and distributability of the items, in accordance with Article 2427 paragraph 7-bis of the Italian Civil Code.

Breakdown of shareholders’ equity (Art. 2427 no. 7-bis)

Type/Description Summary of uses over past three years Total Possible Available Loss account Other use (*) amount reserve Share capital increase 32,324,092 Share capital reserve Treasury share reserve -82,224,263 Shares or quotas of parent company Share premium reserve 173,986,915 A,B,C 173,986,915 Other reserves -1,133,880 Equity instruments 72,497,172 Income-related reserve: Legal reserve 6,464,818 B 0 Unallocated earnings 267,807,110 A,B,C 267,807,110 Total 441,794,025 0 0 Undistributable portion 82,224,263 Residual distributable portion 359,569,762

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

194 Gruppo Azimut Breakdown of item 170 “Valuation reserves”

Available- Tangible Intangible Cash flow Special Other Total for-sale assets assets hedge evaluationr financial laws assets A. Opening balance 87,015 - - - - 68,281 155,296 B. Increases 473,122 - - - - 3,469 476,591 B.1 Increases in fair value 317,197 - - - - - 317,197 B.2 Other changes 155,925 - - - - 3,469 159,394 C. Decreases 654,229 - - - - 12,614 666,843 C.1 Decreases in fair value 567,000 - - - - - 567,000 C.2 Other changes 87,229 - - - - 12,614 99,843 D. Closing balance (94,092) - - - - 59,136 (34,956)

Parte C - Notes to the income statement

The item is a loss of 446,966 euro (2012: 489,661 euro) and mainly relates to los- Section 3 ses arising from the partial advance redemption of the subordinated bond (384,054 Gains (losses) on disposal euro). or repurchase Item 30 3.1 Breakdown of item 30 “Gains (losses) on disposal and repurchase”

Items/Income items Total 2013 Total 2012 Gain Loss Net loss Gain Loss Net loss 1. Financial assets 1.1 Available-for-sale financial assets 289 (63,439) (63,150) 15,849 (26,604) (10,755) 1.2 Held-to-maturity financial assets 1.3 Other financial assets Total 289 (63,439) (63,150) 15,849 (26,604) (10,755) 2. Financial liabilities 2.1 Payables 2.2 Outstanding securities 238 (384,054) (383,816) 1,278 (480,184) (478,906) Total (2) 238 (384,054) (383,816) 1,278 (480,184) (478,906) Total (1+2) 527 (447,493) (446,966) 17,127 (506,788) (489,661)

195 Notes to the accounts

Section 5 Fees and commissions amount to 2,000,000 euro (unchanged from last year) and Fees and commissions include royalties on the “Azimut” trademark for the year, charged to the subsidiaries Item 50 Azimut Consulenza Sim Spa and Azimut Capital Management Sgr Spa.

5.1 Breakdown of item 50 “Fee and commission income” Detail Total 2013 Total 2012

. Trading on own account 2. Execution of orders on behalf of clients 3. Sales and distribution securities third party services: portfolio management collective portfolio management insurance products other 4. Portfolio management own account on behalf of third parties 5. Order receipt and transmission 6. Investment advisory 7. Financial structure advisory 8. Management of multilateral trading facilities 9. Custody and management 10. Currency trading 11. Other services 2,000,000 2,000,000 Total 2,000,000 2,000,000

Section 6 Interest income Interest Items 70 and 80 Interest income amounts to 4,359,703 euro, up by 1,623,914 euro on the previous year (at 31 December 2012: 2,735,789 euro), and mainly includes pre-tax interest income on current accounts.

196 Gruppo Azimut 6.1 Breakdown of item 70 “Interest income and similar income” Items/Technical forms Debt Repurchase Other Total 2013 Total 2012 securities agreements 1. Financial assets held for trading - - - - - 2. Financial assets measured at fair value - - - - - 3. Financial assets available for sale - - - - - 4. Financial assets held to maturity - - - - - 5. Receivables - - - - - 5.1 Due from banks - - 4,359,567 4,359,567 2,735,789 5.2 Due from financial institutions - - - - - 5.3 Due from clients - - - - - 6. Other assets - - 136 136 - 7. Hedging derivatives - - - - - Total - - 4,359,703 4,359,703 2,735,789

Interest expense

This item amounts to 3,011,460 euro, down by 1,130,133 euro on the previous year (at 31 December 2012: 4,141,593 euro) due to the partial redemption of the subordinated convertible bond.

6.2 Breakdown of item 80 “Interest expenses and similar expenses” Items/Technical forms Repurchase Other loans Securities Other Total 2013 Total 2012 agreements 1. Due to banks 975,142 10 975,152 1,851,221 2. Due to financial institutions 3. Due to clients 4. Outstanding securities 2,014,031 2,014,031 2,285,346 5. Held-for-trading financial liabilities 6. Financial liabilities measured at fair value 7. Other liabilities 22,277 22,277 5,027 8. Hedging derivatives Total 0 975,142 2,014,031 22,287 3,011,460 4,141,594

“Due to banks - other loans” includes interest on loans with Banco Popolare (formerly Banca Popolare di Novara) and the trademark lease-back agreement.

197 Notes to the accounts

Section 7 Dividends and similar income amount to 160,529,137, up by 27,301,807 euro on the Dividends and similar previous year (at 31 December 2012: 133,227,330 euro). income Item 90 7.1 Breakdown of item 90 “Dividends and similar income”

Dividends Income from Dividends Income from UCI units UCI units 1. Held-for-trading financial assets 2. Available-for-sale financial assets 14,956 28,768 3. Financial assets measured at fair value 4. Equity investments 160,514,181 133,198,562 Total 160,529,137 133,227,330

“Equity investments” is as follows:

2013 2012 Azimut Consulenza Sim Spa 35,280,000 22,480,000 Azimut S.G.R. Spa 11,577,000 6,630,000 AZ Fund Management Sa 75,862,181 80,028,562 Azimut Capital Management Sgr Spa 0 1,030,000 AZ Capital Management Ltd 400,000 0 AZ Life Ltd 7,995,000 7,280,000 AZ Investimenti Sim Spa 29,400,000 15,750,000 Total 160,514,181 133,198,562

An interim dividend on the 2013 profit to the amount of 63,750,000 euro was received from AZ Fund Management Sa in December 2013.

198 Gruppo Azimut This item amounts to 12,921,951 euro, up by 1,217,802 euro on the previous year Section 9 (2012: 11,704,149). Administrative costs Item 110 9.1 Breakdown of item 110.a. “Personnel costs” Items/Sectors Total Total 31/12/2013 31/12/2012 1. Employees 4,127,066 4,262,831 a) wages and salaries 2,961,370 3,102,826 b) social security 884,141 897,705 c) staff severance pay (TFR) d) pension contributions e) TFR provisions 158,221 140,352 f) accrual to the pension provision and similar obligations: defined contribution defined benefit g) private pension plans: defined contribution defined benefit h) other expenses 123,333 121,949 2. Other personnel 281,743 325,631 3. Directors and Statutory Auditors 1,623,081 1,594,285 4. Early retirement costs 5. Cost recoveries for employees seconded to other companies 6. Reimbursed costs for employees seconded to the company Total 6,031,890 6,182,747

9.2 Average number of employees by category Position 31/12/2013 31/12/2012 Directors 9 8 Middle managers 10 11 Office staff 3 3 Total 22 22

199 Notes to the accounts

9.3 Breakdown of item 110.b. “Other administrative costs” 2013 2012 Professional services rendered 1,422,552 614,306 Insurance premiums 22,457 20,626 Indirect taxes 17,844 56,505 Advertising, promotion and marketing expenses 1,931,628 1,936,919 Outsourcing and EDP services 678,657 788,900 Expenses for acquisition of non-professional goods and services 2,816,923 2,104,146 Total 6,890,061 5,521,402

Expenses for acquisition of non-professional goods and services mainly include leases of 342,388 euro, maintenance and assistance fees of 399,022 euro, car hire costs of 176,100 euro and telephone and utility bills totalling 241,874 euro.

Section 10 10.1 Breakdown of “Net impairment and write-ups of tangible assets” Net impairment and write- ups of tangible assets Item 120 Items/impairment and write-ups Depreciation Impairment Write-ups Net result (a) write-downs (c) (a+b-c) (b) 1. Company-owned business purposes 155,614 155,614 investment purposes 2. Under finance lease business purposes investment purposes Total 155,614 - - 155,614

200 Gruppo Azimut 11.1 Breakdown of item 130 “Net impairment and write-ups of intangible assets” Section 11 Net impairment and write- ups of intangible assets Item 130

Items/Impairment Amortisation Impairment Write-ups Net result write-downs and write-ups (a) write-downs (c) (a+b-c) (b) 1. Goodwill 2. Other intangible assets 2.1 Owned generated internally other 228,424 228,424 2.2 Under finance lease Total 228,424 - - 228,424

This item amounts to 1,291,965 euro (2012: 1,474,700 euro) and mainly includes Section 14 recovered amounts for coordination activities by the parent company and other Other operating income amounts recovered from the subsidiaries. and costs Item 160

15.1 Breakdown of item 170 “Profit (loss) on equity investments” Section 15 Items Total Total Profit (loss) on equity 31/12/2013 31/12/2012 investments Item 170 1. Income - 1,000 1.1 Revaluations - 1,000 1.2 Profit on disposal 1.3 Write-ups 1.4 Other income 2. Costs 300,357 398,224 2.1 Write-downs 141,930 122,779 2.2 Losses on disposal - 245,000 2.3 Impairment write-downs - - 2.4 Other costs 158,427 30,445 Net result 300,357 397,224

201 Notes to the accounts

Section 17 17.1 Breakdown of item 190 “Income tax on profit from continuing operations” Income tax on profit from 2013 2012 continuing operations Item190 1. Current taxes(*) 3,209,158 1,776,873 2. Changes in current taxes of previous years 3. Decrease in current taxes for the year 3.bis Reduction in current taxes for the year due to tax credits pursuant to Italian Law 214/2011 4. Change in deferred tax assets -3,689,937 -3,121,208 5. Change in deferred tax liabilities 3,087,021 3,087,021 Taxes for the year 2,606,242 1,742,686

(*) These figures were restated compared to the originally published figures due to the retrospective application of the new version of IAS 19.

Income tax for the year mainly refers to IRAP of the year, calculated in accordance with ruling legislation and income from tax consolidation amounting to the taxes receivable and due on taxable income transferred to the parent company by the Italian subsidiaries that have adopted the tax consolidation regime pursuant to Article 117 of Italian Presidential Decree 917/86. “Change in deferred tax assets” includes the release of deferred tax assets on the amount of the lease instalment deductible during the year, the recognition of deferred tax assets on tax losses, including the portion pursuant to Italian Law 214/2011 and deferred tax assets relating to temporary differences resulting from the different timing criteria of IRES tax deductibility. “Change in deferred tax liabilities” mainly includes deferred tax liabilities, in line with IAS 12, related to the temporary differences between the book value and the tax value of goodwill.

202 Gruppo Azimut 17.2 Reconciliation of theoretical tax burden and effective tax burden Reconciliation of theoretical tax burden and effective IRES-IRAP tax burden 31/12/2013 Taxable income Tax Tax rate Pre-tax profit 151,116,033 Theoretical tax burden 41,556,909 27.50 Effect of increases 816,147 224,440 27.65 Effect of decreases: of which: Dividends 152,502,718 (41,938,247) (0.10) Goodwill amortisation 9,334,808 (2,567,072) (1.80) Trademark amortisation 3,055,556 (840,278) (2.36) Other 1,058,818 (291,175) (2.55) Change in deferred tax assets 2,453,864 (674,813) (3.00) Change in deferred tax liabilities 9,334,807 2,567,072 (1.30) Other increases 19,875 (1.29) IRES tax for the year (1,943,289) (1.29) IRES effective tax rate (1.29) IRAP taxable income 69,288,933 3,859,388 5.57 Change in deferred tax assets 3,055,548 170,194 Change in deferred tax liabilities 9,334,808 519,949 IRAP tax for the year 4,549,531 5.57 Total income tax for the year 2,606,242

203 Notes to the accounts

Part D - Other information

Section 1 L. Commitments Specific references to business activities L.2 Other commitments A 31 December 2013, the company had commitments to Banca Popolare di Vicenza and Banca Popolare di Lodi (Gruppo Banco Popolare), for a total amount of 7 million euro relating to sureties issued in favour of the subsidiaries Azimut Consulenza Sim Spa, AZ Investimenti Sim Spa and Apogeo Consulting Sim Spa. No collateral was issued at 31 December 2013. 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.

Section 2 2.1 Market risks Information on risk management and hedging 2.1.1 Interest rate risk policies Qualitative information

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 the financial liability 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 seven-year subordinated bond issued by the company during 2009 provides for a fixed rate of 4%, whereas the “Senior” bond issued during 2011 provides for a fixed rate of 2.5% and the subordinated convertible bond 2013-2020 provides for a fixed rate of 2.125%. No specific interest rate risks exist as all the company’s loans bear fixed interest rates. As for credit risk, there are no specific problems given the nature of the company’s activity. At 31 December 2013, Azimut Holding Spa held only mutual funds managed by Azimut Group companies in its proprietary portfolio. Details at the reporting date:

204 Gruppo Azimut Product Issuer Balance Type 31/12/2013 AZ Multi Asset AZ Fund Mgt Sa 4,420,000 Open-end mutual fund Cash Overnight AZ Fund Mgt Sa 50,000,000 Open-end mutual fund Eskatos Multistrategy Eskatos Capital Management Sa 14,510,174 Open-end mutual fund Total 68,930,174 (1)

(1): included under “Available-for-sale financial assets” in the financial statements at 31 December 2013.

The financial risks associated with use of liquidity are therefore limited in light of investment policies which focus mainly on bonds, characterised by low volatility of mark to market and low exposure to liquidity, currency and credit risks. As regards the risks linked to the investment held in Eskatos Multistrategy, this UCITS is an asset that is completely uncorrelated with the normal risks that instruments usually present on the market are subject to. The yield of the Eskatos Multi- strategy Fund was positive during the year, as well as in the first few months of 2014. As regards the assessment procedure for the management of financial assets on behalf of third parties, the Risk Management Function 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. Specifically, the assessment is performed by analysing 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 Function 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. In addition, the Risk Management Function monitors the development of the risk models adopted and the return of the funds in relation to peers and the benchmark.

205 Notes to the accounts

Quantitative information

1. Distribution by remaining life (repricing date) of financial assets and liabilities Items/ On Up to From From From From Over Unspecified Remaining demand 3 months over 3 over over over 10 years duration life to up to 6 months 1 years 5 years 6 months to up to to up to to up to 1 year 5 years 10 years 1. Assets 1.1 Debt securities 1.2 Other assets 2. Liabilities 2.1 Payables 50,191,667 3,222,752 2.2 Debt securities 17,954,232 211,249,497 2.3 Other liabilities 3. Derivatives 3.1 Long positions 3.2 Short positions

Section 3 3.1 Company shareholders’ equity Information on shareholders’ equity 3.1.1 Qualitative information For information on the individual shareholders’ equity items, please refer to Part B of these notes.

206 Gruppo Azimut 3.1.2 Quantitative information

3.1.2.1 Company shareholders’ equity: breakdown Items/Value Total Total 31/12/2013 31/12/2012 1. Share capital 32,324,092 32,324,092 2. Share premium reserve 173,986,915 173,986,915 3. Reserves 274,271,928 254,504,726 income-related a) legal 6,464,818 6,464,818 b) statutory c) treasury shares d) other 268,940,990 249,173,788 other -1,133,880 - 1,133,880 4. (Treasury shares) -82,224,263 -99,143,847 5. Valuation reserves -34,956 87,015 Available-for-sale financial assets -94,092 87,015 Tangible assets Intangible assets Foreign investment hedge Cash flow hedge Foreign exchange differences Non-current assets held for sale and discontinued operations Special revaluation laws Actuarial gains/losses on defined benefit plans 59,136 Share of valuation reserves for equity accounted investees 6. Equity instruments 72,497,172 39,461,611 7. Profit (loss) for the year 148,509,791 117,125,112 Total 619,330,679 518,345,624

207 Notes to the accounts

3.1.2.2 Valuation reserves of available for sale assets: breakdown Assets/Value Total 31/12/2013 Total 31/12/2012 Positive reserve Negative reserve Positive reserve Negative reserve 1. Debt securities 2. Equity securities 3. UCI units 327,133 - 421,225 97,165 - 10,150 4. Loans Total 327,133 - 421,225 97,165 - 10,150

3.1.2.3 Valuation reserves of Available-for-sale financial assets: annual change

Debt securities Equity securities UCI units Loans 1. Opening balance 87,015 2. Increases 473,123 2.1 Increases in fair value 317,197 2.2 Transfer through income statement of negative reserves: following impairment following disposal 2.3 Other changes 155,926 3. Decreases 654,229 3.1 Decreases in fair value 567,000 3.2 Impairment write-downs 3.3 Transfer through income statement of positive reserves following disposal - 3.4 Other changes 87,229 4. Closing balance - 94,092

208 Gruppo Azimut Prospetto analitico della redditività complessiva Section 4 Statement of comprehensive income Items Pre-tax profit Income tax Net profit 10. Profit (loss) for the year 151,116,033 (2,606,242) 148,509,791 Other comprehensive items not transferred through income statement (12,614) 3,470 (9,144) 20. Tangible assets 30. Intangible assets 40. Defined benefit plans (12,614) 3,470 (9,144) 50. Non-current assets held for sale 60. Share of valuation reserves for equity accounted investees Other comprehensive items transferred through income statement 70. Foreign investment hedge: a) changes in fair value b) transfer through income statement c) other changes 80. Foreign exchange differences: a) changes in fair value b) transfer through income statement c) other changes 90. Cash flow hedge: a) changes in fair value b) transfer through income statement c) other changes 100. Available-for-sale financial assets: a) changes in book value (249,803) 68,697 (181,106) b) transfer through profit or loss impairment write-downs gains/losses on disposal c) other changes 110. Non-current assets held for sale: a) changes in fair value b) transfer through income statement c) other changes 120. Share of valuation reserves for equity accounted investees: a) changes in fair value b) transfer through income statement impairment write-downs gains/losses on disposal c) other changes 130. Total other comprehensive income (249,803) 68,697 (181,106) 140. Comprehensive income (Items 10+130) 150,853,616 (2,534,075) 148,319,541

209 Notes to the accounts

Section 5 5.1 Information on key management fees Related party transactions At 31 December 2013, directors’ fees amounted to 1,410,125 euro and the fees for the Board of Statutory Auditors members stood at 209,420 euro. The Board of Directors is composed of 9 members. The Board of Auditors has three standing members.

5.2 Loans and guarantees issued to Directors and Statutory Auditors No loans or guarantees were issued to Directors and Statutory Auditors.

5.3 Related party disclosures Related party transactions refer exclusively to commercial transactions carried out by Azimut Holding Spa with its subsidiaries in 2013. These transactions are part of the Group’s ordinary operations and are conducted on an arm’s length basis. The most important commercial transactions are described below: • for use of the trademark, the subsidiaries Azimut Capital Management Sgr Spa and Azimut Consulenza Sim Spa pay Azimut Holding Spa annual royalties totalling 2,000 thousand euro, established by contract; • Azimut Holding Spa, as the parent company, and Azimut Consulenza Sim Spa, AZ Investimenti Sim Spa, Azimut Capital Management Sgr Spa and Apogeo Consul- ting Sim Spa, as subsidiaries, have adopted the tax consolidation regime; • a contractually established annual fee (totalling 1,000,000 euro) is payable for the coordination activities carried out by the Parent Company on behalf of the subsidiaries Azimut Capital Management Sgr Spa and Azimut Consulenza Sim Spa; Furthermore, as mentioned earlier, Azimut Holding Spa issued sureties in favour of the subsidiaries Azimut Consulenza Sim Spa, AZ Investimenti Sim Spa and Apogeo Consulting Sim Spa. With respect to profit-participating financial instruments, in accordance with Sha- reholders’ resolutions, 12 key directors subscribed 213,538 instruments (paying the corresponding amount), including the Chairman and Chief Executive Officer Pietro Giuliani (95,650), the Co-CEO Marco Malcontenti (33,000), the Managing Director Paola Antonella Mungo (33,000), the directors Alessandro Baldin (15,000), Alessan- dro Capeccia (1,500), Andrea Manetti (2,518), Renato Fantoni (1,370). As per the Shareholders’ agreement related to Azimut Holding Spa, 658 related parties initially subscribed a total of 1,141,819 instruments. The company subsequently exercised the option on 134,643 participating instruments. Azimut Holding Spa had no loan relationships with subsidiaries or associates at 31 December 2013.

The impact that the transactions or positions with related parties have on the company’s financial position and results of operations is summarised below:

210 Gruppo Azimut Total Related parties Absolute value % Assets Receivables: 326,028,145 288,028 0.09 Receivables for cash held in deposit accounts 288,028 0.09 Other assets: 16,784,164 12,083,260 71.99 Receivables for tax consolidation 9,428,467 56.17 Invoices issued for administrative cost recoveries 44,793 0.27 Invoices to be issued for royalties and coordination activities 2,610,000 15.55 Liabilities Other liabilities: 13,033,623 9,818,497 75.33 IRES payables 9,652,100 74.06 Invoices to be received 2,041 0.02 Due to Statutory Auditors 164,356 1.26 Income statement Administrative costs 12,921,951 1,619,545 12.53 Statutory Auditors’ fees 209,420 1.62 Directors’ fees 1,410,125 10.91 Commission income (royalties) 2,000,000 2,000,000 100.00 Other operating income and costs 1,291,965 1,128,095 87.32 Guarantees and commitments 7,050,000 7,050,000 100.00

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

6.2 Dividends paid Section 6 The ordinary dividend for 2013 amounted to 0.10 euro per share, with an extraor- Other information dinary dividend of 0.45 euro. 6.3 Significant non-recurring events and transactions The significant non-recurring events that took place in 2013 are as follows: • repayment of the instalments of Lines A and B of the loan disbursed by Banco Po- polare (formerly Banca Popolare di Novara), contractually due on 30 June 2013, of 30,000,000 thousand euro; • partial advance repayment, at 20% of the par value of the subordinated bond (“Azi- mut 2009-2016 subordinato 4%”), which led to a reduction in the liability item “Outstanding securities” of 16,619,707 euro; • capital contribution of 26,500,000 euro for share capital increase of AZ Internatio- nal Holdings Sa; • exercise of the call option on 134,643 profit-participating financial instruments,

211 Notes to the accounts

which resulted in a decrease of the shareholders’ equity item “Other reserves” for 3,231,432 euro; • incorporation of Azimut Global Counseling Srl (510,000 euro); • purchase of 16.84% of SiamoSoci Srl against a cash consideration of 700,000 euro; purchase of 46% of Programma 101 Spa against a cash consideration of 425,813 • euro. issue of the convertible bond “Azimut 2013-2020 2.125%”, with resulted in an in- • crease of the liability item “Outstanding securities” by 214.3125.482 euro and an increase in “Equity instruments” by 35,687,518 euro.

There were no atypical and/or unusual transactions during the year.

6.5 Auditing and non-auditing service fees As stipulated by Article 149-duodecies of Consob Regulation number no. 11971/99 and subsequent amendments and supplements, the details of fees (net of VAT and expenses) due to the audit company and companies within its network for auditing and non-auditing services during 2013 are as follows:

212 Gruppo Azimut Service Service provider Fees (Euro) Audit PricewaterhouseCoopers Spa 35,000 Financial & tax due diligence PricewaterhouseCoopers Spa 35,000 Financial & tax due diligence PricewaterhouseCoopers Advisory Spa 5,000 Total 75,000

On behalf of the Board of Directors Chairman and CEO (Pietro Giuliani)

213 214 Gruppo Azimut Attachments

215 Annex A

9.1 Informazioni sui rapporti partecipativi

Book value Stake Voting rights Registered Total assets Total income Shareholders’ Profit/(loss) Listed 31/12/2013 office equity for the most recent year Wholly-owned subsidiaries

1. Azimut Consulenza Sim Spa 121,687,868 100% 100% Milan 150,818,021 233,975,740 53,879,728 29,068,583 NO Unsecured placement and order receipt

3. AZ Fund Management Sa 3,239,925 51% 51% Luxembourg 82,017,451 383,566,736 3,189,198 156,586,845 NO Mutual funds

4. AZ Life Ltd 5,012,150 100% 100% Ireland 2,628,938,169 22,088,216 15,828,752 13,330,139 NO Life insurance

5. Azimut Capital Management Sgr Spa 72,511,979 51% 51% Milan 64,497,862 78,560,587 9,361,322 21,136,586 NO Mutual and speculative funds management

6. AZ Investimenti Sim Spa 56,111,855 100% 100% Milan 97,871,370 73,284,774 56,206,905 24,957,758 NO Unsecured placement

7. AZ Capital Management Ltd 125,000 100% 100% Ireland 456,634 429,628 142,767 196,715 NO Hedge fund management

9. Apogeo Consulting Sim Spa 4,401,365 85.80% 85.80% Milan 12,140,629 18,979,435 3,232,597 136,728 NO Unsecured placement

10. AZ International Holdings Sa 61,421,984 100% 100% Luxembourg 61,538,116 815,257 61,068,884 350,985 NO Equity investment management

11. Azimut Global Counseling Srl 510,000 100% 100% Milan 431,721 - 510,000 (155,187) NO Advisory services

Note: The difference between the book value and the value under the equity method for the subsidiaries Azimut Consu- lenza Sim Spa, Azimut Capital Mngt Sgr Spa and AZ Fund Management Sa, refers to the revaluation performed after reallocation of goodwill arising from merger generated in 2002.

216 Gruppo Azimut Book value Stake Voting rights Registered Total assets Total income Shareholders’ Profit/(loss) Listed 31/12/2013 office equity for the most recent year Wholly-owned subsidiaries