CONSOLIDATED FINANCIAL STATEMENTS for the YEAR ENDED 31 DECEMBER 2017 Azimut Holding S.P.A

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Azimut Holding S.p.A.

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AZIMUT GROUP 2017 Consolidated annual report

Page

COMPANY BODIES 3

AZIMUT GROUP'S STRUCTURE 4

MAIN INDICATORS 5

MANAGEMENT REPORT 7 Baseline scenario Significant events of the year Azimut Group's financial performance for 2017 Main balance sheet figures Information about main Azimut Group companies Key risks and uncertainties Related-party transactions Organisational structure and corporate governance Human resources Research and development Significant events after the reporting date Business outlook Non-financial disclosure

CONSOLIDATED FINANCIAL STATEMENTS 90 Consolidated balance sheet Consolidated income statement Consolidated statement of comprehensive income Consolidated statement of changes in shareholders' equity Consolidated cash flow statement

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 98 Part A – Accounting policies Part B – Notes to the consolidated balance sheet Part C – Notes to the consolidated income statement Part D – Other information

CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS 204

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COMPANY BODIES

Board of Directors Pietro Giuliani Chairman Sergio Albarelli Chief Executive Officer Paolo Martini Co-Managing Director Andrea Aliberti Director Alessandro Zambotti (*) Director Marzio Zocca Director Gerardo Tribuzio (**) Director Susanna Cerini (**) Director Raffaella Pagani Director Antonio Andrea Monari Director Anna Maria Bortolotti Director Renata Ricotti (***) Director

Board of Statutory Auditors Vittorio Rocchetti Chairman Costanza Bonelli Standing Auditor Daniele Carlo Trivi Standing Auditor Maria Catalano Alternate Auditor Luca Giovanni Bonanno Alternate Auditor

Independent Auditors PricewaterhouseCoopers S.p.A.

Manager in charge of financial reporting Alessandro Zambotti

(*) Co-opted with effect from 3 April 2017. The Shareholders confirmed the appointment in their Meeting of 27 April 2017 (*) With effect from 27 April 2017, as per the Shareholders’ Meeting of 28 April 2016 (***) Co-opted on 4 May 2017 to replace Paola Mungo

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AZIMUT GROUP'S STRUCTURE

The Azimut Group operates globally in 17 countries and is comprised of the parent company, Azimut Holding S.p.A., and 76 subsidiaries.

Source: company figures updated to 31/12/2017 Note (1): controls the distribution companies M&O Consultoria, FuturaInvest and Azimut Brasil Wealth Management. Note (2): controls AZ Sinopro Insurance Planning. Note (3): Azimut reached an agreement to acquire the residual 49% with effect from 31/01/2018. Note (4): 30% held by Azimut Partecipazioni, wholly owned by Azimut Holding, and merged into Azimut Capital Management SGR S.p.A., with effect from 01/01/2018, and 19% held by Azimut Financial Insurance S.p.A. Note (5): controls 37 companies at 31/12/2017. Note (6): controls SDB Financial Solutions with effect from 8 January 2018.

1989 Year of incorporation 2004 Year of flotation

17 50.4 Total assets Geographical coverage countries

6.8 Inflows for 2017 1,638 Financial advisors

811 Revenues for 2017 215 million Net profit for 2017 million

830 Employees 15.97 Share price

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MAIN INDICATORS

2011 2012 2013 2014 2015 2016 2017

Financial indicators (in millions of euros) Total income: 326 434 472 552 708 706 811 of which fixed 266 282 322 394 485 519 607 management fees EBIT 90 177 182 193 280 205 278 Net profit for the year 80 161 156 92 247 173 215

Operating indicators Financial advisors 1,390 1,396 1,477 1,524 1,576 1,637 1,638 155 160 163 173 195 198 208 Customers thousand thousand thousand thousand thousand thousand thousand Assets in fund management (billions of 14.6 17.5 21.4 26.7 31.2 35.8 40.2 euro) Net inflows (billions of 0.9 1.6 3.1 4.8 4.5 3.5 4.2 euro) Customers' net weighted average -6.80% 8.00% 4.20% 4.80% 1.60% 3.60% 2.20% performance

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Breakdown of assets under management 31/12/2017 Mutual funds 65% Discretionary portfolio management 19% AZ Life insurance 14% Advisory 2%

Ripartizione del patrimonio al 31 dicembre 2017

2% 14%

19% 65%

Fondi comuni Gestioni patrimoniali Assicurazioni AZ Life Advisory

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MANAGEMENT REPORT

BASELINE SCENARIO

FINANCIAL MARKETS AND THE GLOBAL ECONOMY

Background scenario

Economic growth was solid in the main advanced and emerging economies; but, however, it was not associated with any pick-up in inflation, which remained weak. Short-term prospects remain favourable, but the risk remains that a downward adjustment of the price of financial assets may slow down the economic activity.

Business in the main advanced economies continued to grow in the second half of 2017, with an economic scenario that remained positive in the last few months of the year. In the United States, the most recent figures point to robust growth. In the United Kingdom, private consumption showed signs of revival, with the leading indicators revealing a growth rate for the last quarter of 2017 in line with the average of the first three quarters. In Japan, the most recent economic figures point to an acceleration in economic activity in the fourth quarter of the previous year.

In emerging countries, the economic recovery which began in the first half of 2017 continued. In China, growth remained stable in the last few months of the year, after exceeding expectations in the previous quarters. During the summer months, GDP rose in India and Brazil.

Inflation in the main advanced economies remained low, slightly above 2% in the United States, while it fluctuated around 0.5% in Japan. The United Kingdom remains an exception, with a 3% increase in prices, assisted by the depreciation of the pound. Finally, inflation remained modest in the main emerging economies.

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agreed, the uncertainties surrounding the structure of the relationship between the two economies remain high. The outcome of the latest meeting between the countries (United States, Canada and Mexico) members of the North American Free Trade Agreement (NAFTA) for its revision makes the future of international trade agreements less predictable. However, the effects of the tax reform in the United States approved on 20 December 2017 (Tax Cuts And Jobs Act), envisaging a decrease in the tax rates for households and businesses, may stimulate global growth.

International financial markets

The conditions on the international financial markets remain relaxed. In the main advanced economies, long-term interest rates rose on the modest levels recorded at the end of September. In the Eurozone, the sovereign risk premiums decreased considerably. Stock prices reached historic highs, despite different trends. The euro appreciated against the main currencies and this trend is expected to continue in the short term.

In the United States, the yields on the 10-year bonds rose by approximately 20 basis points compared to the end of September 2016 (to 2.6%). The increase mainly took place in the days immediately after the Federal Reserve meeting held on December of the last year.

Since the beginning of the fourth quarter, the interest rates on the 10-year German bonds rose by 12 basis points, to 0.58%. In the Eurozone, the sovereign risk premiums benefited from the strengthening of growth and the favourable reaction of market players to the rescheduling of the purchase programme unveiled by the ECB. Since the end of September, the yield differentials between the 10-year government bonds and the corresponding German bonds decreased in Italy, Spain and Belgium (by 25, 22 and 12 basis points, respectively) and, even more significantly, in Portugal (- 71 basis points), as this country benefited from S&P’s upgrading of the sovereign rating to investment grade in September, followed by Fitch’s upgrading in December. They remained almost unchanged in France, while they rose in Ireland (+ 14 basis points) due, in part, to the technical issue related to the benchmark change.

Share prices continued to rise in the United States and, to a lesser extent, in the Eurozone. The volatility implied in both markets remained at very low levels. The financial markets of

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emerging countries recorded different trends, with significant increases in India and Brazil, a modest rise in China and a slight decrease in Russia.

Since the end of September, the euro has appreciated against the US dollar by 3.6%, by 1.9% against the yen and by 0.8% against the pound. In nominal effective terms, starting from the end of 2016, the euro appreciated by 8.8%. With respect to derivative markets, traders’ long (buying) positions on the euro prevailed. The positive values of a risk reversal highlight the demand for coverage against the appreciation of the euro. These trends continue to point to an expected appreciation of the euro in the short-term against the US dollar.

The USA

US share prices grew considerably and the major indexes repeatedly scored new record highs. Small-caps also set a new record high in the last few days of 2017. Share prices benefited from the increase in the corporate profits which exceeded expectations, the recovery of mergers and acquisitions, and the optimism generated by the expected tax reform which was subsequently implemented. The US Federal Reserve (the “Fed”) continued the gradual normalisation of its monetary policy and announced that it will start reducing the 4,500 billion USD mortgage-backed bonds and securities accumulated as part of quantitative easing programmes. As largely expected, the Fed increased interest rates three times (March, June and December), bringing the fed fund rate within a range of between 1.25% and 1.50%. Furthermore, the central bank confirmed that three more increases will take place in 2018 and two in 2019. Janet Yellen Fed chairwoman’s mandate expires in early 2018. She will be replaced by Jay Powell. The latter is expected to pursue the current policy, envisaging the slow normalisation of interest rates.

Europe

In the Eurozone, share prices generated considerable earnings during the year, supported by the continuous signs of revival of economic activity. However, despite the double-digit returns, they remained below many other countries. Emmanuel Macron’s victory in France’s presidential elections reassured investors but, in October, the political risks re-emerged when

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Catalonia was called to vote in the referendum on independence from Spain. Angela Merkel lost ground in Germany’s elections and, only in 2018, she managed to form a coalition government. In sector terms, IT, utility and industry obtained the best performance, while the telecommunication service sector was the only one to lose ground during the year. The economic news highlighted the growth momentum in the Eurozone. After year-on-year growth of 2.1% in the first quarter, the Eurozone’s GDP rose by 2.4% YoY in the second quarter and by 2.6% in the third. The Purchasing Managers’ Indexes (PMI) confirmed the momentum in the fourth quarter. In November, the Ifo Business Climate Index for Germany reached an all-time high for the fifth time this year, while the Economic Sentiment Indicator of the European Commission jumped to a record high since October 2000.

In the United Kingdom, share prices also rose (in GBP) and the FTSE 100 Index reached a new high in the last few days of the year. However, UK shares lagged behind those of the Eurozone, against a background of increasing signs of a slowdown in UK’s growth. Prime minister Theresa May’s bet to strengthen UK's negotiating power in the discussions over Brexit, had an incredible boomerang effect when the political elections failed to deliver the absolute majority to the Conservative Party. However, at the end of November, the investors welcomed the announcement that, according to the EU, the Brexit negotiations achieved sufficient progress to move on to the next stage of the discussions. Again in November, inflation jumped to 3%, the maximum level in five years, prompting the Bank of England to raise interest rates for the first time since 2007.

Emerging markets

In China, the new Five-Year Plan created stability, although the weakness of the economic figures points to a slowdown in the pace of growth. In India, the economic figures slowly improved after the markets absorbed two fundamental events: the discontinuation of cash and the introduction of a tax on goods and services. The share prices of the main emerging countries showed interesting valuations and should continue to benefit from the excellent performance of the global trade and the depreciation of the US dollar. However, since the expansive economic policy of some economies goes hand in hand with the increase in

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imbalances, there is still the risk, in particular, of strong and growing personal debts and real estate price inflation.

ITALY'S ASSETS UNDER MANAGEMENT MARKET According to Assogestioni's (Italy’s association of the investment management industry) figures, in 2017, the increase in Italy's assets under management continued, with 2,085 billion euro at year end (+7.6% on 1,937 billion euro at 2016 year end) and positive inflows of approximately 97.5 billion euro.

In 2017, inflows of collective portfolio management (+78.1 billion euro) exceeded considerably the number of management mandates (+19.4 billion euro). Portfolio management inflows are almost entirely related to institutional portfolio management (+15.4 billion euro), while retail portfolio management recorded a positive, albeit limited, growth (+4.0 billion euro).

ITALY'S FINANCIAL PRODUCT AND SERVICE DISTRIBUTION MARKET At the end of December 2017, Assoreti's (Italy’s association of the sales networks in the financial services industry) survey highlighted a record value for authorised financial advisor networks: total inflows amounted to 39.2 billion euro, up by 18.9% on the previous year, and was the highest amount the association has ever observed. During the year, the investment decisions strongly supported assets under management products, with net inflows of 35.0 billion euro and up by 89.5% on 2016. Conversely, total assets under custody products, positive at 4.2 billion euro, dropped considerably (14.5 billion euro in 2016).

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the year, the value of net premiums paid on insurance and social security products amounts to approximately 12.0 billion euro (-6.8% on 2016). Of this amount, 5.4 billion euro is invested in unit-linked policies, 4.6 billion euro in multi-line policies and 1.2 billion euro in traditional life insurance policies. Index-linked policies show a negative balance of 182 million euro. In 2017, the net resources for open-ended UCI generated by the network’s activities amount to 31.7 billion euro, accounting for 41.3% of total net investments in open collective portfolio management (76.7 billion euro). Total financial instruments under custody are negative by 33 million euro: according to the breakdown of figures, purchase orders prevailed on shares (3.1 billion euro) and ETPs (671 million euro), while disinvestments prevailed on government bonds (-1.1 billion euro), bonds (-1.7 billion euro) and certificates (-1.9 billion). Liquidity inflows for 2017 were positive at almost 4.2 billion euro.

SIGNIFICANT EVENTS OF THE YEAR

1.1 The parent company – Azimut Holding S.p.A.

Capitalisation transactions carried out by Azimut Holding S.p.A. In 2017, following the Board of Directors' resolutions of 10 March 2016 and 4 May 2017, Azimut Holding S.p.A. made a capital injection of 35.7 million euro to increase the share capital of the subsidiary AZ International Holdings SA in order to finance the Group's international development, as described later on.

1.2 AZ International Holdings SA The Azimut Group carried out the following transactions during the year through its subsidiary AZ International Holdings SA.

Australia

The Australian sub-group which, to date, comprises 37 companies, including one, Sigma Funds Management Pty Ltd, authorised to carry out discretionary funds’ activities, had AuM worth 4.3 billion euro at 31 December 2017. 12

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In 2017, the following acquisitions were carried out through the Azimut Group's Australian subsidiary AZ Next Generation Advisory Pty Ltd (“AZ NGA”).

Menico Tuck Parrish Financial Services Pty Ltd – On 10 May 2017, AZ NGA entered into an agreement to acquire 100% of Menico Tuck Parrish Financial Services Pty Ltd (“MTP”). The agreement provided for the exchange, to the extent of 49%, of MTP shares with AZ NGA shares and the progressive repurchase of these shares over the next ten years. The residual 51% was paid in cash to the founding members. The transaction amounted to approximately 4.8 million A$ (approximately 3.3 million euro) and included both the cash and share exchange portions.

Peters & Partners Pty Ltd – On 12 May 2017, AZ Next Generation Accounting Pty Ltd (“AZ NG Accounting”) (a sub-holding set up on 8 May 2017 by AZ NGA) entered into an agreement to acquire 100% of Peters & Partners (“P&P”). The agreement provides for a swap of P&P shares with AZ NG Accounting shares for a total of approximately 3.9 million A$ (2.7 million euro) and a capital increase subscribed by AZ International Holdings through the subsidiary AZ NGA of roughly 4.1 million A$ (2.8 million euro).

Farrow Hughes Mulcahy Financial Services Pty Ltd – On 24 August 2017, AZ NGA entered into an agreement to acquire 100% of Farrow Hughes Mulcahy Financial Services Pty Ltd (“FHM”). The agreement provides for the exchange, to the extent of 49%, of FHM shares with AZ NGA shares and the progressive repurchase of these shares over the next ten years. The residual 51% was paid in cash to the founding members. The transaction amounted to approximately 9.3 million A$ (approximately 6.1 million euro) and included both the cash and share exchange portions. FHM operates through the Australian Financial Services License of its licensee issued by the local regulator (ASIC).

Wealthmed Australia Pty Ltd – On 6 September 2017, AZ NGA signed an agreement to acquire 100% of Wealthmed Australia Pty Ltd (“Wealthmed”) and its subsidiaries. The agreement provides for the exchange, to the extent of 49%, of Wealthmed shares with AZ NGA shares and the progressive repurchase of these shares over the next ten years. The residual 51% was paid in cash to the founding members. Wealthmed adopts an integrated business

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model which provides Australian doctors and health specialists with wealth management solutions. It provides its customers with a broad range of financial advisory services, including savings plans, pension advisory services, insurance solutions and financial planning and training. The transaction amounted to approximately 7 million A$ (approximately 4.7 million euro) and included both the cash and share exchange portions.

Dunsford Financial Planning Pty Ltd – On 13 November 2017, AZ NGA entered into an agreement to acquire 100% of Dunsford Financial Planning Pty Ltd (“DFP”). The agreement provides for the exchange, to the extent of 49%, of DFP shares with AZ NGA shares and the progressive repurchase of these shares over the next ten years. The residual 51% was paid in cash to the founding members. DFP provides financial planning and advisory services, social security schemes and private pensions, insurance, real estate planning and corporate advisory services. The transaction amounted to approximately 5.6 million A$ (approximately 3.6 million euro) and included both the cash and share exchange portions.

Henderson Maxwell Pty Ltd – On 11 December 2017, AZ NGA signed an agreement to acquire 100% of Henderson Maxwell Pty Ltd (“HM”) and its subsidiaries. The agreement provides for the exchange, to the extent of 49%, of HM shares with AZ NGA shares and the progressive repurchase of these shares over the next ten years. The residual 51% was paid in cash to the founding members. The transaction amounted to approximately 11.6 million A$ (approximately 7.6 million euro) and included both the cash and share exchange portions.

The latter acquisitions confirm Azimut’s goal, pursued through the sub-holding AZ NGA, to continue to expand in Australia, in an integrated business model that provides its customers with financial planning and accounting solutions, including savings plans, financial advisory, pension advisory, insurance solutions and strategic financial planning and training.

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All the above transactions entail AZ International Holdings SA's progressive repurchase of 49% of the individual companies over the next ten years.

MTP, P&P, FHM, Wealthmed, DFP and HM operate through the Australian Financial Services License of its licensee issued by the local regulator (ASIC). However, the acquisitions were not subject to the local authority's approval.

AZ Sestante Pty Ltd – On 18 April, the option to increase the equity investment in AZ Sestante to 100% was exercised. The Australian company, that acts as a trustee and manager of mutual funds in Australia, was set up to launch and offer funds locally. The transaction amounted to approximately 0.02 million euro.

Switzerland

AZ Swiss & Partners S.A. was set up in 2012 and in January 2016 obtained FINMA's (the Swiss Regulatory Authority) approval to operate under license in accordance with the Swiss Collective Investment Schemes Act (CISA) and provide services for collective investment schemes (CISA). Today, AZ Swiss & Partners S.A. manages 14 UCITS and one alternative fund (including 2 in Advisory) and discretionary portfolios for approximately 90 customers. The year-end total assets under management amount is equal to 1.570 billion euro.

SDB Financial Solutions S.A. – On 26 June 2017, AZ Swiss & Partners S.A. (“AZ Swiss”) entered into a binding purchase and sale agreement to acquire 100% of SDB Financial Solutions S.A. (“SDB”). The company will become a subsidiary of AZ Swiss as of 8 January 2018 and will continue to be managed by the current management team. Thanks to this second acquisition and organic growth, AZ Swiss' assets under management topped 2 billion CHF (1.9 billion euro).

SDB's valuation is based on a multiple of the 2016 pro-forma profit. In addition to the fixed component, the parties have agreed on a price adjustment linked to the attainment of certain targets over the long term. The closing took place in January 2018, with FINMA's approval and upon the occurrence of some conditions precedent, set out in the purchase and sale agreement.

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Dubai

The acquisition of 80% of New Horizon Capital Management Ltd (subsequently renamed “AZ New Horizon Ltd”) by AZ International Holdings SA was authorised in Dubai in June 2017 and became effective on 1 July 2017. The company allows to operate locally through a “class 3” license granted by the Dubai Financial Services Authority (“DFSA”). Consequently, it offers a wide range of financial services, including collective investment plans, discretionary portfolios and financial advisory. The consideration of this transaction, including the subsequent capital increase, amounted to approximately 2.6 million euro.

Iran

On 9 October 2017, through AZ International Holdings SA, the Azimut Group signed an agreement to acquire 20% of Mofid Entekhab (“Entekhab”), Iran’s largest independent asset management company, member of the Mofid Group and Iran’s main brokerage and financial advisory company. Azimut and Entekhab also entered into a shareholder agreement to develop an onshore financial advisory platform and set up an offshore fund to enable foreign investors to access Iran’s capital market. Entekhab was founded in 2016 and originates from Mofid Securities’ assets under management business line. At the end of September 2017, it managed assets totalling 89 million USD, comprised of six mutual funds and managed deposits. Mofid Securities is a market leader among Iran’s brokerage companies and has over 300,000 customers.

2 - OTHER SIGNIFICANT EVENTS OF THE YEAR

Purchases of treasury shares by Azimut Holding S.p.A. As of 7 February 2017, as resolved by the Shareholders in their Ordinary meeting of 28 April 2016, Azimut Holding S.p.A. launched a share buy-back programme in order to subsequently re-sell treasury shares or use them to acquire or exchange equity investments, accumulate the capital stock for the execution of stock options programmes, service the financial instruments convertible into Company's shares or any other useful purpose which increases the value of the Company in compliance with the legislation from time to time in force. The maximum number of shares that could be repurchased on 7 February 2017 was 18,263,710, representing approximately 13% of share capital. Buybacks could be executed in tranches, for

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a total amount of 25,000,000 euro at the maximum price of 50 euro (only for the first tranche the maximum acquisition price was up to 30 euro).

The purchase of the first tranche was completed on 27 February 2017 and involved a total of 1,492,550 treasury shares against a consideration of 24.8 million euro.

The second tranche of the purchase was completed on 6 June 2017 for a total of 1,334,000 treasury shares against a consideration of 25 million euro. Finally, the third tranche of the purchase was completed on 26 January 2018 for a total of 2,986,200 treasury shares against a consideration of 50 million euro.

Issue of a fixed-rate non-convertible bond On 20 March 2017, the Board of Directors of Azimut Holding S.p.A. approved the issue of a fixed-rate non-convertible bond (the “Bond”). The company closed the Bond placement at 350 million euro on 22 March 2017, with a fixed-rate coupon of 2.000% and a five-year duration, maturing on 28 March 2022. The bonds were offered to qualified investors, excluding those in the United States and other selected countries, and are listed on the Luxembourg Stock Exchange. In accordance with the “Use of Proceeds”, the Company may use the proceeds from the Bond for its own operations and to finance potential extraordinary transactions, including the possible repurchase of the Company's equity instruments currently outstanding and/or repay part of the debt or to finance the rescheduling and settlement of the Company's long-term debt, including the repurchase offer related to the subordinated convertible bond named “euro 250,000,000 2.125% Subordinated Convertible Bonds due 2020” issued by the Company in 2013 and maturing in 2020.

Repurchase of the convertible bond “euro 250,000,000 2.125% Subordinated Convertible Bonds due 2020” On 4 April 2017, Azimut Holding S.p.A.'s Board of Directors approved the invitation to the holders of its “euro 250,000,000 2.125% Subordinated Convertible Bonds due 2020” issued in November 2013 through a reverse bookbuilding process, to tender their bonds for purchase by the company.

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On 5 April 2017, at the Expiry of the Offer, bonds with an aggregate nominal amount of over 248,000,000 euro were validly tendered within the framework of the abovementioned offer, equal to 99.4% of the total nominal amount of the Bonds issued. On the same date, a bondholders' meeting (the "Meeting") was called to amend certain provisions of the Trust Deed and the terms and conditions of the Bonds, and in particular that covering the Issuer's possibility of early redemption. In the meeting held on 8 May 2017 at Azimut Holding S.p.A.'s registered office, the bondholders approved the amendments included in the agenda and, at the same time, Azimut Holding S.p.A. exercised the option for the early redemption of all Bonds still outstanding and not included in the offer. The total amount paid to settle the convertible bond was 279.4 million euro.

Azimut Holding S.p.A. General Shareholders’ Meeting of 27 April 2017 The shareholders’ meeting (both ordinary and extraordinary) of 27 April 2017 resolved the following:

Approval of 2016 financial statements The shareholders’ meeting approved the 2016 financial statements, which included a Parent Company net profit of 161.9 million euro. The shareholders concurrently resolved to pay a dividend of 1 euro per ordinary share, pre-tax, to be paid as of 24 May 2017, 22 May 2017 ex- dividend payment date and 23 May 2017 as the record date. 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 17,27 euro for each profit-participating financial instrument held by Top Key People at the time of approval of payment of the dividend.

Appointment of Directors The Shareholders were in favour of the appointment of Sergio Albarelli and Alessandro Zambotti as Directors. In their meeting of 27 April 2017, the Board of Directors of Azimut Holding S.p.A. confirmed Sergio Albarelli as Chief Executive Officer and Alessandro Zambotti as the Chief Financial Officer of the Group.

Proposal for purchase and allocation of treasury shares and consequent resolutions 18

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Furthermore, the Shareholders approved the purchase, including in one or more tranches, of up to 28,000,000 Azimut Holding S.p.A. ordinary shares, or 19.55% of the current share capital considering the shares already in portfolio upon purchase at a minimum unit price equal to at least the carrying amount of Azimut Holding S.p.A. ordinary shares and a maximum unit price of 50 euro.

Remuneration Report 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. Furthermore, the Shareholders were in favour of the proposal to increase the ratio between the fixed and variable components of remuneration up to 2:1.

Appointment of a Director On 4 May 2017, Azimut Holding S.p.A.'s Board of Directors co-opted Renata Ricotti onto the Board as independent director, replacing Paola Mungo. With this appointment, the total number of independent directors increases to 4, in line with the code of conduct and in accordance with the gender balance as per Article 147-ter.1-ter of the TUF (Consolidated Law on Finance). Furthermore, based on the declarations provided by the new independent Director and the information available to the company, the Board evaluated, pursuant to Article 144-novies.1-bis of the Issuers’ Regulation, whether the director met the criteria for independence envisaged by Article 147-ter.4 and 148.3 of the Consolidated Law on Finance and Article 3 of the Code of Conduct.

2.1 Significant events of the year

Repayment of Banco BPM S.p.A. loan On 30 June 2017, the Parent Company repaid the instalment (Line B) of the loan granted by Banco BPM S.p.A. for a total amount of 10 million euro.

Acquisition of 100% of Azimut Libera Impresa SGR S.p.A. (formerly Futurimpresa SGR S.p.A.) 19

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On 1 August 2017, the Parent Company reached an agreement with the Milan, Bergamo, Brescia and Como Chambers of Commerce to acquire the residual 45% of Futurimpresa SGR S.p.A., subsequently renamed Azimut Libera Impresa SGR S.p.A. (“Azimut Libera Impresa”) as of 4 October 2017, an asset management company specialised in the management of alternative investment funds. As a result of this transaction, which is worth approximately 2 million euro, Azimut Libera Impresa is now wholly owned by the Azimut Group. In addition to the Finanza e Sviluppo Impresa private equity fund, Azimut Libera Impresa also includes the Antares AZ I fund, launched in 2016 and specialised in private debt, the IPO Club fund, launched in 2017 and specialised in SPAC and Prebooking Company investments, both supporting Italy’s SMEs.

Covered warrants issue In 2017, the subsidiary Azimut Capital Management Sgr S.p.A. issued some covered warrants in favour of some employees (managers) which grant the right to subscribe the purchase or sale of a specific underlying financial asset at an agreed price and date. These instruments were subscribed at their fair value as per the appraisal report prepared by a leading independent company.

Acquisition of 100% of Augustum Opus SIM Azimut Holding S.p.A.’s purchase of the additional 49% from Augustum Opus SIM’s non- controlling investors was completed on 13 November 2017 for a total consideration of 1.7 million euro. At the same time, the company’s merger by incorporation into Azimut Capital Management Sgr S.p.A. was approved, effective from 1 December 2017.

Long-term incentive plan: the “2015-2019 plan”

During the year, the Boards of Directors of Azimut Capital Management Sgr S.p.A. and Azimut Financial Insurance S.p.A. approved the changes to the long-term 2015-2019 incentive plan reserved to the Group’s financial advisors who have contractual relationship with said companies. The details of the transaction are described in the “Other information” section of the Notes to the consolidated financial statements.

Partial demerger and merger by incorporation of Azimut Partecipazioni S.r.l. 20

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In 2017, the activities necessary for Azimut Partecipazioni S.r.l.’s partial demerger into Azimut Financial Insurance S.p.A. began pursuant to Article 2506-bis of the Italian Civil Code and the subsequent merger by incorporation of Azimut Partecipazioni S.r.l. into Azimut Capital Management SGR S.p.A. pursuant to Articles 2501-ter and 2505 of the Italian Civil Code. The entire transaction meets the need to simplify and streamline the Group’s corporate structure in Italy, also for the purposes of an effective allocation of costs and revenues. It provides for the allocation of part of the investment held by Azimut Partecipazioni S.r.l. in AZ Fund Management SA (19%) to Azimut Financial Insurance S.p.A. and the subsequent merger of Azimut Partecipazioni S.r.l. into Azimut Capital Management SGR S.p.A. with the transfer of the residual 30% investment in AZ Fund Management SA. The partial demerger became effective on 1 October 2017, while the merger by incorporation of Azimut Partecipazioni S.r.l. into Azimut Capital Management SGR S.p.A. became effective on 1 January 2018. No share exchange ratio was calculated for the partial demerger and the merger and no shares of the Company were allocated to Azimut Partecipazioni S.r.l. shareholders since the Parent Company is the sole share/quotaholder of both companies.

2.2 Other significant events of the year

Over its 25 years of activities, in line with market practices and given its size and business, the Azimut Group was subject to ordinary inspections by the Supervisory Authorities. In March 2017, as part of an ordinary inspection carried out by the Bank of Italy and concluded in 2015, to the extent of its duties, Consob fined some profiles of Azimut Consulenza SIM (now Azimut Capital Management SGR). The Company had already replied to the Supervisory Authorities and implemented the corrective measures to resolve the critical issues identified.

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AZIMUT GROUP'S FINANCIAL PERFORMANCE FOR 2017

The Azimut Group's consolidated net profit for 2017 amounts to 214,786 thousand euro (172,685 thousand euro in 2016), while consolidated EBIT came to 247,280 thousand euro (185,578 thousand euro in 2016).

The performance of the year was also affected by the Group's ongoing expansion which strengthened its presence outside Europe. The Group is comprised of several companies which distribute, manage and promote financial and insurance products in many countries, including Luxembourg, Ireland, China (Hong Kong and Shanghai), Monaco, Switzerland, Singapore, Brazil, Mexico, Taiwan, Chile, Australia, Turkey, the United States and Iran.

Through the subsidiary AZ International Holdings SA, a wholly-owned subsidiary incorporated under Luxembourg law to act as an incubator, the Group continued its mission to develop, research, acquire and manage international partnerships. In 2017, 16 companies (8 in 2016) were acquired and the Group's presence was strengthened thanks to the purchase of additional equity investments in previously acquired companies.

The recruitment of financial advisors showed a positive balance: in 2017, the Group's network showed 94 new engagements, bringing the total number of advisors to 1,638.

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ASSETS

Total assets under management at the end of 2017 reached 40.2 billion euro, up by approximately 12% compared to the end of 2016. Total assets, including assets under custody and third parties’ funds, amounted to 50.4 billion euro, up by 16% on 2016.

Figures in millions of euro Change 31/12/2017 31/12/2016 Absolute % Mutual funds 31,717 28,756 2,961 10% Discretionary portfolio management 9,454 7,701 1,753 23% and other AZ Life insurance 6,702 6,434 268 4% Advisory 1,119 869 250 29% Double counting (8,803) (7,960) (843) 11% Total AUM, net 40,189 35,800 4,389 12% Securities, third-party funds and 10,252 7,805 2,447 31% c/a Total assets 50,441 43,605 6,836 16%

NET INFLOWS

Group total net inflows were positive at 6.8 billion euro at 31 December 2017, slightly up on 2016 (+4%).

Change Figures in millions of euro 2017 2016 Absolute % Mutual funds 2,113 1,588 525 33% Discretionary portfolio 1,564 1,617 -54 -3% management and other AZ Life insurance 151 333 -182 -55% Advisory 202 239 -37 -16% Double counting 131 -267 398 -149% Total net inflows - Assets 4,161 3,510 651 19% under management Securities, third-party 2,632 3,019 -388 -13% funds and c/a Total net inflows 6,793 6,529 263 4%

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RECLASSIFIED CONSOLIDATED INCOME STATEMENT

In order to provide a more effective representation of the results, the income statement has been reclassified and thus better reflects the content of the items according to 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 Dac, 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 expense” are now classed as “Acquisition costs”; similarly, the Enasarco/Firr contributions related to these commission expenses and the other trade expenses associated with the distribution network, recognised under “Administrative costs”, have been reclassified as “Acquisition costs”; the amount allocated to the supplementary indemnity reserve for agents (ISC) reported under the item “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”;  interest expense on loans was reported under “Interest expense” in the reclassified income statement.

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01/01/2017 - 01/01/2016 - Euro/000 31/12/2017 31/12/2016 Acquisition fees 10,247 9,826 Fixed management fees 606,598 518,866 Variable management fees 136,379 130,770 Other income 8,456 7,611 Insurance income 48,864 38,575 Total income 810,544 705,648 Acquisition costs (337,456) (325,436) Overheads/administrative costs (178,534) (158,984) Amortisation and depreciation/provisions (16,465) (15,920) Total costs (532,455) (500,340) EBIT 278,089 205,308 Net financial income (13,057) (3,033) Net non-recurring costs (8,114) (6,323) Interest expense (9,646) (11,063) Pre-tax profit 247,272 184,889 Income tax (22,854) (19,281) Deferred tax assets/liabilities 1,491 11,696 Net profit 225,909 177,304 Profit attributable to minority interest 11,123 4,619 Group net profit 214,786 172,685

Consolidated EBIT and consolidated Group net profit at 31 December 2017 came to 278 million euro (205 million euro at 31 December 2016) and 215 million euro (173 million euro at 31 December 2016), respectively. As at 31 December 2017 assets managed amounted to 40.2 billion euro, up by 4.4 billion euro on 2016 (+12%), generating fixed management fees of 607 million euro, in addition to variable management fees of 136 million euro. The trend of acquisition costs reflects the recruitment of financial advisors and private bankers during the year, in line with the previous year. In 2017, overheads increased on the previous year due to the consolidation of more foreign equity investments and charges related to investments made to keep up with the growth of the Group. The increase in net financial income is mainly due to the charges incurred for the early repayment of the 2013-2020 convertible bond.

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MAIN BALANCE SHEET FIGURES

The Group's main balance sheet figures are shown in the table below.

Euro/000 31/12/2017 31/12/2016 Financial assets measured at fair value 6,700,283 6,447,427 Available-for-sale financial assets 286,957 276,963 Receivables and equity investments 265,133 190,240 Tangible and intangible assets 565,513 524,535 Other assets 288,721 288,111 Total assets 8,106,607 7,727,276 Payables and outstanding securities 374,069 254,806 Technical reserves 227,857 251,324 Financial liabilities measured at fair value 6,605,461 6,299,036 Other liabilities and provisions 287,032 277,044 Shareholders’ equity 612,188 645,066 Total liabilities and shareholders’ equity 8,106,607 7,727,276

Financial assets and liabilities measured at fair value rose by approximately 4% on 31 December 2016. These items mainly refer to the insurance activities carried out by AZ Life dac: assets mainly relate to investments in unit-linked policies where the investment risk is borne by policyholders, while liabilities mainly relate to commitments from unit-linked policies classified as investment contracts. "Available-for-sale" financial assets, which mainly reflect the investment of the excess liquidity of operations in UCI units managed by the Group, increased by 4% from 277 million euro to 287 million euro. Cash and cash equivalents with bank current accounts held by Group companies increased from 82 million euro to 158 million euro. Tangible and intangible assets increased as a consequence of the rise in goodwill due to the acquisitions of the year and the increase in intangible assets with a finite useful life due to the investments in software of the year. CONSOLIDATED FINANCIAL POSITION

The Group's net financial position was 134.9 million euro at 31 December 2017 (192.3 million euro at 31 December 2016).

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Euro/000 31/12/2017 31/12/2016 A Cash 28 21 B Cash equivalents: 232,441 171,978 Due from banks 157,945 81,759 Due from managed funds 74,496 90,219 C Available-for-sale financial assets 266,218 266,832

D Total cash A+B+C 498,687 438,832 E Short-term financial receivables - - F Short-term bank loans - -

G Current portion of long-term debt: (15,351) (10,575) Bonds (Azimut '13-'20 Convertible) (524) Bonds (Azimut '17-'22 Non-convertible) (5,351) - Due to banks (Banco BPM loan) (10,000) (10,051) H Other short-term financial payables - - I Short-term financial debt F+G+H (15,351) (10,575)

J Short-term financial debt (net) I-E-D 483,336 428,257 K Long-term bank loans: (10,000) Due to banks (Banco BPM loan) (10,000) L Bonds (348,465) (225,998) Azimut '13-'20 Convertible Bond (225,998) Azimut '17-'22 Non-convertible Bond (348,465) M Other long-term payables N Long-term financial debt K+L+M (348,465) (235,998)

O Net financial position J+N 134,871 192,259 With regard to the methods used to assess net financial position, reference was made to the recommendation issued by CESR (Committee of European Securities Regulators) dated 10 February 2005, and more specifically to the paragraph on “Capitalisation and indebtedness” in chapter II.

Receivables and payables include those of a financial nature only, whereas trade receivables and payables have been excluded. Receivables in the form of fees and commissions for managed funds and discretionary portfolios are also included and are considered as cash equivalents given that they are collected by the Group during the first few working days after the reporting date.

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The results were impacted by the liquidity generated by operations, as well as by 157 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 27 April 2017. For additional information about the other significant transactions of the year, reference should be made to the section “Significant events of the year”.

LOANS RAISED AND REPAID DURING THE YEAR The changes in financial debt items during 2017 are shown in the following table:

Interest rate Nominal Euro/000 Currency Nominal Effective amount Expiry

Balance at 01.01.2017 Of which: BPN loan - Line B Euro 3-month Euribor +1.25 3-month Euribor +1.25 50,000 2018

“Azimut 2013-2020” Euro 2.13% 4.91% 250,000 2020 Subordinated Bond

Issues: Of which: "Azimut 2017-2022” Bond Euro 2% 2.11% 350,000 2022 "Azimut 2017-2022” Bond Euro 2% 2.00% 5,351 2018

Redemptions Of which: BPN loan - Line B Euro 3-month Euribor +1.25 3-month Euribor +1.25 -10,000 2018

“Azimut 2013-2020” Euro 2.50% 3.06% -250,000 2020 Subordinated Bond

As of 27 March 2017, Azimut Holding S.p.A. completed the issue of the 2017-2022 bond (Azimut 2017-2022 2.000%) for a nominal amount of 350 million euro.

On 10 May 2017, Azimut Holding S.p.A. carried out the early redemption of the 2013-2020 subordinated convertible bond (Azimut 2013–2020 convertibile subordinato 2.125%), for a consideration of 279 million euro against the recognition of liabilities of roughly 227 million

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euro at 31 December and the corresponding equity portion of about 35 million euro. The redemption also led to the recognition of a loss of approximately 8 million euro.

The instalment of the loan granted by Banco Bpm S.p.A. relating to Line B and totalling 10 million euro was repaid on 30 June 2017.

TREASURY SHARES At 31 December 2017, 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.

During the year, transactions involving treasury shares led to an increase of 2,926,848 treasury shares for a total of approximately 49 million euro.

At 31 December 2017, Azimut Holding S.p.A.’s treasury share portfolio therefore stood at 13,314,037 shares, or 9,294% of share capital.

With respect to transactions carried out between the reporting date and the approval date of this report, 1,735,200 treasury shares were purchased for a total of approximately 30 million euro, completing the third tranche of the buy-back disclosed in December 2017 and 2,227,969 treasury shares were used for a total of about 37 million euro, completing the acquisition of 100% of Compagnie de Gestion Privée Monégasque which took place in 2018.

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RECONCILIATION OF AZIMUT HOLDING S.P.A.'S SHAREHOLDERS' EQUITY AND NET PROFIT TO CONSOLIDATED SHAREHOLDERS' EQUITY AND NET PROFIT

Shareholders’ of which

equity Result at 31/12/2017 for the year

Holding opening balance 575,048 208,842 Adjustments due to changes in calendar year 2,106 Total Holding shareholders’ equity 577,154 208,842

Adjustments: Results of consolidated companies 387,036 387,036 Subsidiary consolidation effects 115,634 1,258 Azimut Holding S.p.A. dividend cancellation (240,199) (240,200) Cancellation of subsidiaries' dividends (132,066) (132,066) AZ International Holdings SA Group dividend cancellation (7,413) (7,413) Equity accounted investments 1,624 (8) Liabilities measured at fair value (105,165) 429 Tax adjustments (4,009) (3,092) Total Group shareholders’ equity 592,596 214,786

Minority interest 19,592 11,123

Total SHAREHOLDERS’ EQUITY 612,188 225,909

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INFORMATION ABOUT MAIN AZIMUT GROUP COMPANIES

The following information is given about the business activities and the financial performance of the companies directly controlled by the parent company in accordance with the Group's accounting policies.

- AZ Fund Management SA, 100% owned, carries out mutual fund management activities. During the year, it achieved a profit of 226 million euro compared to a profit of approximately 223 million in 2016. At 31 December 2017, total assets under management stood at approximately 29.8 billion euro.

- AZ Life dac, wholly owned, carries out insurance activities. During the year, it achieved a profit of 26 million euro compared to a profit of approximately 21 million in 2016.

- Azimut Capital Management SGR S.p.A., wholly owned, manages harmonised Italian funds, pension funds, alternative funds and discretionary funds. The net profit for 2017 amounts to 16 million euro (2016: 27 million euro). On 1 December 2017, it merged Augustum Opus Sim S.p.A. At 31 December 2017, total assets under management stood at approximately 5.9 billion euro, of which 1.5 billion euro related to mutual funds and 4.4 billion euro to discretionary funds.

- Azimut Partecipazioni S.r.l., wholly owned, is a holding company focusing on unlisted companies. On 1 October 2017, following the demerger to Azimut Financial Insurance S.p.A., it sold 19% of the investment held in AZ Fund Management SA. On 31 December 2017, Bank of Italy authorised the merger into Azimut Capital Management SGR S.p.A. with effect from 1 January 2018. During the year, it achieved a profit of 93 million euro compared to a profit of 74 million in 2016. - Azimut Financial Insurance S.p.A., wholly owned, carries out insurance mediation, except for reinsurance mediation, and bank products' placement and distribution activities. In 2017, it achieved a profit of 28 million euro compared to a loss of 6 million euro in 2016. - AZ International Holdings SA, wholly owned, is a Luxembourg-based holding company through which the Group continued its research, development, acquisition and management of foreign partnerships. Through this company, the Group is present in 15 countries, including Luxembourg, Ireland, China (Hong Kong and Shanghai),

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Monaco, Switzerland, Singapore, Brazil, Mexico, Taiwan, Chile, Australia, Turkey, the United States, Dubai and Iran. In 2017, it incurred a loss of 1,353 thousand euro compared to a loss of 1,167 thousand euro in 2016. - Azimut Libera Impresa SGR S.p.A. (formerly Futurimpresa SGR S.p.A.), wholly owned, manages private equity funds. In 2017, it launched the IPO Club fund specialised in SPAC and Prebooking Company investments, supporting Italy’s SMEs. In July 2017, Azimut Holding S.p.A. acquired the additional 45% investment therein. In 2017, it achieved a profit of 675 thousand euro compared to a profit of 244 thousand euro in 2016.

- Azimut Enterprises Holding S.r.l., wholly owned, is a holding company focusing on unlisted companies, including Programma 101 Sicaf S.p.A., Siamosoci S.r.l. and Cofircont Compagnia Fiduciaria S.r.l. which contribute to diversifying the Group's business. Programma 101 Sicaf S.p.A. is a venture capital company specialised in early stage investments in the digital sector, while Siamosoci S.r.l. acts as start-up incubator. Cofircont Compagnia Fiduciaria S.r.l. is a fiduciary company. During the year, the company set up Azimut Analitycs S.r.l., paying in 6,000 euro and holding 60% of its quota capital. In 2017, it incurred a loss of 169 thousand euro compared to a loss of 801 thousand euro in 2016.

- Azimut Global Counseling S.r.l., wholly owned, provides financial planning consultancy services, in addition to company restructuring, market research and marketing activities, financial information and data collection and processing. In 2017, it incurred a loss of 45 thousand euro compared to a loss of 402 thousand euro in 2016. - Azimut Analitycs S.r.l. was set up on 25 May 2017 by Azimut Enterprises Holding S.r.l. which paid in 6,000 euro and holds 60% of its quota capital. Its main business object is data collection, analysis, mining and management and the conception, creation, development, design and implementation and management, including on behalf of third parties, of information systems and/or application software. In 2017, it incurred a loss of 158 thousand euro.

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Specifically, through the subsidiary AZ International Holdings SA, the Azimut Group is pursuing an international growth strategy which mainly translates into partnerships with local operators, the acquisition of majority investments in asset management and/or advisory and distribution companies.

The list of AZ International Holdings SA's partnerships is given below, broken down by geographical area:

Europe

- Katarsis Capital Advisors SA, wholly owned, which carries out actuarial and financial advisory activities.

- Eskatos Capital Management SARL, wholly owned through Katarsis Capital Advisors SA, which carries out fund management activities.

- AZ Swiss & Partners, 51% owned, which carries out advisory and assistance activities with respect to investments and vis-à-vis authorised intermediaries and institutional investors.

- Compagnie de Gestion Privée Monégasque, 51% owned, which carries out asset management, financial advisory and order receipt and transmission activities.

- CGM Italia SGR S.p.A., 51% owned through Compagnie de Gestion Privée Monégasque, which carries out asset management, order receipt and transmission, placement and advisory activities.

Turkey

- Azimut Portfoy (formerly AZ Global Portfoy Yonetimi), wholly owned, which carries out asset management activities.

South East Asia

- AN Zhong (AZ) IM Limited, wholly owned, which carries out equity investment management activities.

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- AN Zhong (AZ) IM HK Limited, wholly owned through AN Zhong (AZ) IM Limited, is a financial advisory company based in Hong Kong.

- AZ Investment Management, wholly owned through AN Zhong (AZ) IM Limited, is a financial advisory company operating in the Chinese market.

- AZ Sinopro Financial Planning Ltd, 51% owned, is a holding company.

- AZ Sinopro Insurance Planning Ltd, 51% owned through AZ Sinopro Investment Planning (51% owned, in turn, through AZ Sinopro Financial Planning), is a securities investment consulting enterprise which distributes asset management products in Taiwan.

- Athenaeum Ltd, 100% owned, is an independent company based in Singapore which provides advisory services.

Latin America

- AZ Brasil Holdings Ltda, wholly owned, is a Brazilian company which carries out equity investment management activities.

- AZ Quest Partecipacoe SA, 66% owned through AZ Brasil Holdings Ltda, is a Brazilian independent company which carries out asset management activities.

- AZ Quest Investimentos Ltda, 65.37% owned through AZ Brasil Holdings Ltda, is a Brazilian independent company which carries out asset management activities.

- AZ Brasil Wealth Management Holding SA (formerly AZ FI Holdings), 95.80% owned by AZ Brasil Holdings Ltda, is an asset management company.

- M&O Consultoria Ltda, 95.71% owned through AZ Brasil Holdings Wealth Management Holding SA, is a company operating in the asset and wealth management sectors.

- AZ Brasil Wealth Management Ltda, 90.41% owned through AZ Brasil Wealth Management Holding SA, is a company operating in the asset and wealth management sectors.

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- AZ & Partners BRZ, wholly owned through Azimut Brasil Wealth Management Holding SA, is a Brazilian wealth management company specialised in the development of tailor-made investment strategies for Brazilian private investors.

- Futurainvest Holding SA, wholly owned through Azimut Brasil Holdings Ltda, is a Brazilian-based holding company.

- Azimut Brasil DTVM Ltda, wholly owned through Futurainvest Holding SA, is a financial institution, regulated by Banco Central, which is authorised to distribute financial products.

- AZ México Holdings S.A. de CV, 94.79% owned, is a Mexican holding company.

- Mas Fondos SA, 94.79% owned through Profie SA, carries out distribution activities in the asset management sector.

- AZ Andes SA, 92% owned, is a Chilean advisory company.

Australia Next Generation Advisory PTY Ltd, 52.42% owned, is a financial advisory company which acts as the holding company for the investments carried out by the Group in the following financial advisory and asset allocation companies: Eureka Whittaker Macnaught Pty Ltd, Eureka Financial Group Pty Ltd, Pride Advise Pty Ltd, Lifestyle Financial Planning Services Pty Ltd, Financial Lifestyle Partners Pty Ltd, Wise Planners Pty Ltd, Harvest Wealth Pty Ltd, Pride Financial Pty Ltd, Domane Financial Advisers Pty Ltd, RI Toowoomba Pty Ltd, Empowered Financial Partners Pty Ltd, Wealthwise Pty Ltd, Priority Advisory Group Pty Ltd, Sterling Planners Pty Ltd, Logiro Unchartered Pty Ltd, Aspire Pty Ltd e On-Track Financial Solutions Pty Ltd, Pride SMSF PTY Ltd, Priority Advisory Trust Pty Ltd, Priority Lifestile Advice Pty Ltd, Peters & Partners PTY Ltd, Menico Tuck Parrish Financial Solution Pty Ltd, AZ Next Generation Accounting PTY Ltd, Wealthmed Australia Pty Ltd, Wealthmed Accounting Pty Ltd, Wealthmed Property Pty Ltd, Wealthmed Financial Planning Pty Ltd, Farrow Hughes Mulcahy Financial Services Pty Ltd, H&H Wealth Management Pty Ltd, Menico Tuck Parish Pty Ltd, Henderson Maxwel No.2 Pty Ltd, Henderson Maxwell Financial Planning Pty Ltd, Henderson Maxwell Accounting Pty Ltd, Hurwitz Geller Pty Ltd, Dunsford Financial Plannings Pty Ltd.

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AZ Sestante (formerly Ironbark), directly controlled by AZ International Holdings SA which owns 100% thereof (the option to increase to 100% the investment in AZ Sestante was exercised in 2017), acts as a trustee and manager of mutual funds in Australia. The company was set up to launch and offer funds locally.

United States AZ US Holdings LLC was incorporated by AZ International Holdings S.A. In 2016 and is wholly owned by it. AZ US Holdings LLC set up, in turn, AZ Apice Capital Management Ltd in which it holds a 70% equity investment. This company, in the start-up phase, carries out financial planning and portfolio management activities for non-resident US citizens.

Dubai AZ New Horizon Ltd is directly controlled by AZ International Holdings SA which owns 80% thereof. The company allows to operate locally through a “class 3” license granted by the Dubai Financial Services Authority (“DFSA”). Consequently, it offers a wide range of financial services, including collective investment plans, discretionary portfolios and financial advisory.

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KEY RISKS AND UNCERTAINTIES

KEY RISKS For the purposes of risk monitoring, the Group has identified the key risks as follows:

Strategic risk

Strategic risk is defined as a current or potential risk of a reduction in earnings or capital as a result of changes in operations or of incorrect, inadequate decision-making and failure to respond to the competitive scenario. This risk depends firstly on the profitability 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 customers and products to be placed. Sales activity is monitored through reports on the sales performance by geographic area and by financial products sold. Financial advisors and their respective Managing Directors (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 are used to compare results to those of Azimut’s competitors and monitor the performance of funds. The periodic reporting of the results achieved, specifically about the financial position and results of operations, plays a fundamental role in monitoring the impact of the strategic decisions taken by governance bodies, identifying any necessary corrective measures.

Sales network risks

The Group’s companies mainly recruit financial advisors with years of experience in the field, gained while working for rival companies or in bank retail services. The process of recruiting individual financial advisors is strict and involves both local branches and the marketing departments of the Group. Moreover, in addition to past experience, qualifications and 37

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references gained on the market are also considered. In the case of the subsidiary Azimut Capital Management, 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. In order to limit the risks arising from any fraudulent action taken by financial advisors in the performance of their duties, the Group purposely entered into insurance policies 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 department works 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-à-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 managers are asked to prepare a specific report to give 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 events. 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: 38

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 mapping of main company procedures, by means of an analysis of existing procedures and interviews with the managers of the various departments;

 identifying the significant risks within the mapped procedures;

 evaluation of control measures (primary or secondary level) in respect of risk areas, highlighting any unmonitored situations;

 defining and implementing 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 risks The administrative and IT activities of the Italian operating companies of the Group are outsourced. When the contracts with Objectway Financial Software S.p.A. and Deloitte Enterprise Risk Service S.r.l. (the Group’s main outsourcers) were signed, establishing the method used in the performance of the outsourced services, purposely created service level agreements (SLA) were also drawn up to guarantee the adequacy of the services provided and allow group Companies 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.

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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 its cause and effect, the most important aspects being:

 complaints received by Group companies are monitored constantly, so as to analyse any problems caused by management activities, consultancies, placement and distribution activities and/or operating errors and the effects that these may have on the company’s reputation;

 a mapping of corporate risks of all Group companies is constantly updated, in order to identify which departments, procedures and activities are most subject to reputational risks;

 the monitoring of 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 such regulations. In accordance with the regulations for the treatment of privileged information pursuant to Article 115-bis of Italian Legislative Decree No. 58/98 (TUF - Consolidated Law on Finance), Azimut Holding S.p.A. established a register for the management of such information, 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.

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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 function, centralised within Azimut Holding S.p.A., ensures that internal procedures are in line with the objective to prevent any breaches of current law or internal regulations. 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 Internal 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 risks 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 flexible and money market 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.

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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 Group has no liquidity issues. In order to mitigate this risk, it adopted a policy for the optimisation of financial resources management. Specifically, the Group maintains an adequate level of liquidity available thanks to constant cash flow generation and by monitoring forecast needs based on financial planning.

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 management of listed products and the performance in terms of capital inflow. The generation of these revenues and their amount are by nature volatile and heavily influenced by any fund return and the risk appetite of the customers during the period considered. These factors 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's revenues and operating results may be negatively affected by prolonged financial market crises.

RELATED-PARTY TRANSACTIONS

Pursuant to Consob Regulation on Related parties1, on 22 November 2010 the Board of Directors of Azimut Holding S.p.A. approved the procedures that ensure transparency and fairness of related-party transactions (“Related-Party Transaction Procedure” available on Azimut’s website at www.azimut-group.com).

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 2017.

No other atypical or unusual transactions were performed.

1 Consob resolution No. 17221 of 12 March 2010 as subsequently amended. 42

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Disclosures on other related-party transactions are provided in paragraph “Related-Party Transactions” in Part D, Section 5 of the Notes to the consolidated financial statements.

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ORGANISATIONAL STRUCTURE AND CORPORATE GOVERNANCE

Azimut Holding S.p.A. complies with corporate governance regulations in force in Italy. Moreover, the corporate governance structure partially reflects the recommendations 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 structure prepared pursuant to Article 123-bis of the Consolidated Law on Finance (TUF).

Azimut Holding S.p.A. has established a risk management and internal control system over 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 system over financial reporting are described in the Report on corporate governance and ownership structure.

HUMAN RESOURCES

At 31 December 2017, Group personnel amounted to 830 employees, broken down as follows: Position 2017 2016 Managers 157 93 Middle managers 153 143 Office staff 520 345 Total 830 581

The increase in the number of employees at 31 December 2017 over the previous year mainly reflects the consolidation of recently acquired companies.

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RESEARCH AND DEVELOPMENT

The research and development activities undertaken by the Azimut Group focus exclusively on the “research” of investment instruments and services and on the sale of these products. The Group is constantly committed to designing and implementing investment tools that meet the increasingly sophisticated needs of current and potential customers (see also the section on “Significant events of the year”).

SIGNIFICANT EVENTS AFTER THE REPORTING DATE

The main events that occurred after 31 December 2017, the reporting date of the consolidated financial statements, until 8 March 2018, the date on which the Board of Directors approved the draft financial statements, are as follows:  On 1 January 2018, Azimut Partecipazioni S.r.l. merged into Azimut Capital Management SGR S.p.A.  The closing of the transaction envisaging the acquisition of SDB Financial Solutions SA took place on 8 January 2018.  The purchase of the additional tranche of treasury shares, approved by the company’s Board of Directors on 12 December 2017, was completed on 26 January 2018, based on the authorisation issued pursuant to Article 2357 of the Italian Civil Code by the shareholders in their meeting of 27 April 2017. In January 2018, 1,735,200 treasury shares were purchased, for a total of 30 million euro.  In January and February 2018, the Company made a capital injection of 4 million euro to increase the share capital of the subsidiary AZ International Holdings SA.  The acquisition of the additional 49% of Compagnie de Gestion Privée Monégasque SAM was completed on 31 January 2018.  On 20 February 2018, Azimut Holding S.p.A., through the subsidiary Azimut Capital Management SGR S.p.A. (“Azimut SGR”), entered into an agreement with Sofia Gestione del Patrimonio SGR S.p.A. under extraordinary administration (“Sofia SGR”) and Sofia Partners S.p.A. (“Sofia Partners”), as the majority shareholder of Sofia SGR, whereby Azimut SGR acquires Sofia SGR’s assets (the “Business Unit”). The Business Unit will mainly provide the following services: (i) collective portfolio management, (ii) 45

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investment portfolio individual management on behalf of third parties, (iii) discretionary management arrangements assigned by parties providing investment portfolio management services and Italian and/or foreign UCI and (iv) consultancies for investments in financial instruments. By purchasing the Business Unit, Azimut Capital Management SGR will take over, inter alia, four open-ended mutual funds set up, promoted and currently managed by Sofia SGR, and will increase its network by adding Sofia SGR’s 47 financial advisors who, at 31 December 2017, were in charge of assets under management worth approximately 800 million euro. Concurrently with the Business Unit’s transfer, Azimut Capital Management SGR will pay Sofia SGR a base consideration of 3 million euro and, after 24 months, the residual amount, if any, of the variable portion of the price to be calculated based on the performance of the assets under management transferred to Azimut Capital Management SGR and their net profitability. Under the agreement, Azimut Capital Management SGR will obtain a series of representations and guarantees on the Business Unit's risks until its transfer, which are typical for similar transactions. The completion of this transaction also depends on obtaining of Bank of Italy’s necessary authorisations, approvals and/or clearances.

BUSINESS OUTLOOK

Given the positive results of the subsidiaries in early months of the year, consolidated performance is expected to be positive this year. This year’s financial position and results of operations will also be affected by financial market trends.

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NON-FINANCIAL DISCLOSURE

Methodology This document is Azimut Group’s first Non-financial Disclosure (the “Disclosure”) prepared pursuant to Italian Legislative Decree No. 254 of 30 December 2016. The reporting scope comprises Azimut Holding S.p.A. and its subsidiaries and companies consolidated on a line-by-line basis at 31 December 2017, net of the following companies which are excluded from the consolidation scope:  AZ Andes S.p.A. – Chile  AZ US Holding Inc. – USA  AZ Apice Capital Management LLC - USA  An Zhong (AZ) IM – Hong Kong  An Zhong (AZ) IM HK – Hong Kong  An Zhong (AZ) IM HK – Shanghai  AZ Sinopro Financial Planning Ltd – Taiwan  AZ Sinopro Investment Planning Ltd – Taiwan  AZ Sinopro Insurance Planning Ltd – Taiwan  Atheneaum Ltd – Singapore  New Horizon Capital Management Ltd – United Arab Emirates – acquired (80%) in June 2017, with effect from 1 July 2017 These companies have been excluded from the Disclosure’s reporting scope given their poor relevance in terms of assets under management and number of employees. These limitations do not affect the presentation of the Group’s results and business pursuant to Italian Legislative Decree No. 254/2016. The reporting scope is consistent with the above, unless subject to further restrictions for some data and information, explicitly indicated in the document. The ownership structure is unchanged in terms of scope and reporting period. The Disclosure describes the non-financial information that was considered material for the Group, its business model and how it creates and maintains the value generated by its services in the medium and long term. All Corporate functions participated in the process to identify stakeholders, in the definition of material topics and in the drafting of the Disclosure.

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The results were consolidated by the relevant internal Work Group and subsequently validated by Top Management. With respect to environmental figures, although this topic is not relevant to the Business Model and the current strategies, the Group has reported on these figures for the first time only to the extent of Azimut Holding S.p.A. and it committed to considering expanding the reporting scope on this topic in the next few years. Finally, the information about Fondazione Azimut, an entity not included in the Group’s consolidation scope, is a quality aspect necessary to understand the focus on the social framework although it does not form part of the consolidation scope of the Disclosure’s quantitative information. The data and the information provided cover 2017 (from 1 January to 31 December 2017). In order to provide a comparison and a description of the changes, 2016 data and information are also provided, where available. The elements necessary to understand the performance for the two years are included in specific notes within the document. The following GRI standards were considered when preparing the Disclosure in order to define the content and the quality of the document: Stakeholder Inclusiveness, Sustainability Context, Materiality, Completeness, Balance, Comparability, Accuracy, Timeliness, Clarity and Reliability, as per GRI 101: Foundation 2016 Standard. The document does not intend to comply with the Sustainability Reporting Standards issued by the Global Reporting Initiative (“GRI”) under the Core or the Comprehensive option. Rather, it is based on these Standards, using the GRI-Referenced claims.

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Specifically, reference was made to the following GRI Standards: GRI- Referenced Reference GRI-Referenced Topic-Specific Notes chapter/paragraph Topic-Specific Disclosure Standards (2016) Methodology This content Disclosure 102-50: - refers to GRI Reporting period 102: General Disclosure 102-52: - Disclosures Reporting cycle Disclosure 102-53: - Contact point for questions regarding the report Disclosure 102-56: - External assurance Business Model This content Disclosure 102-2: - refers to GRI Activities, brands, 102: General products, and services Disclosures Disclosure 102-6: Markets Reporting on the served requirements under point a.i. (“Markets served, including the geographical locations where products and services are offered”). The Group’s This content Disclosure 102-13: - stakeholders refers to GRI Membership of 102: General associations Disclosures Disclosure 102-40: List of - stakeholder groups Disclosure 102-42: -

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Identifying and selecting stakeholders Disclosure 102-43: - Approach to stakeholder engagement Material non- This content Disclosure 102-47: List of - financial topics refers to GRI material topics 102: General Disclosures Governance and This content Disclosure 102-5: - business ethics refers to GRI Ownership and legal form 102: General Disclosure 102-18: - Disclosures Governance structure Disclosure 102-17: - Mechanisms for advice and concerns about ethics This content Disclosure 418-1: - refers to GRI Complaints regarding 418: losses of customer data Customer Privacy and GRI 103 Management Approach Personnel size – This content Disclosure 102-16: - employees and refers to GRI Values, principles, financial advisors 102: General standards, and norms of Disclosures behaviour Disclosure 102-7: Scale of Reporting on the requirements under the organization point a.i (“Scale of the organization, including: total employees”) 50

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Disclosure 102-8: Reporting on the requirements under Information on employees point a. (“Total and other workers employees by employment contract (permanent and temporary), by gender”) and point c. (“Total employees by employment type (full- time and part-time), by gender”) This content Disclosure 401-1: Total Reporting on the requirements under refers to GRI number and new employee point a. (“Total number 401: hires and employee and new employee hires during the Employment turnover by age, gender reporting period, by and GRI 103: and geographical area age, gender and geographical area”) and Management Disclosure 103-1; 103-2 point b. (“Total number Approach of the management and new employee turnover during the approach reporting period, by age, gender and geographical area”) in absolute values and not as a percentage, excluding the geographical area This content Disclosure 405-1: Reporting on the requirements under refers to GRI Diversity of governance point b.i (“Percentage 405: Diversity bodies and employees of employees by employment contract and Equal Disclosure 103-1; 103-2; and gender”) and point Opportunity 103-2 of the management b.ii (Percentage of employees by and GRI 103: approach employment contract Management and age”) in absolute values and not as a Approach percentage The social side – This content Disclosure 102-12: See Fondazione Azimut’s activities Customers and refers to GRI External initiatives local communities 102: General Disclosure 102-43: See customer satisfaction initiatives 51

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Disclosures Approach to stakeholder engagement The environmental This content Disclosure 302-1: Energy Reporting on the requirements under side refers to GRI consumption within the point e. (“Total energy 302: Energy organization consumption within the organization”) in MWh. GRI 103: Management Approach omitted since the topic is immaterial

In order to collect the information necessary for the Disclosure’s reporting scope, the Work Group used data collection sheets which were distributed to the heads of the corporate functions involved. The data about Italy were provided by the Corporate functions, while those related to each country were collected under the responsibility of each Country Manager. They were subsequently processed and checked by the heads of the Corporate functions. Since 2017 is the first reporting year, the processes underlying the collection and the calculation of non-financial data and information will be fine-tuned and strengthened over the next few years. This document was approved by Azimut Holding S.p.A.’s Board of Directors.

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1. Business Model With a portfolio (assets under management and custody) worth over 50 billion euro, Azimut is Italy’s main independent Group operating in the asset management sector since 1989. The Parent Company, Azimut Holding S.p.A., has been listed on the Milan stock exchange since 7 July 2004 (AZM.IM) and is included, inter alia, in the FTSE MIB and the Euro Stoxx 600 indices. The Group is comprised of many companies which distribute, manage and promote financial and insurance products in Italy, Luxembourg, Ireland, China (Hong Kong and Shanghai), Monaco, Switzerland, Singapore, Brazil, Mexico, Taiwan, Chile, the United States, Australia, Turkey and the United Arab Emirates. Furthermore, in 2017, the Group signed an agreement to acquire 20% of Mofid Entekhab, Iran’s largest independent asset management company.

In Italy, Azimut Capital Management SGR S.p.A. promotes and manages Italian mutual funds, Italian alternative investment funds and provides investment portfolio individual management services on behalf of third parties. Furthermore, as of 1 October 2016, following the demerger and merger of Azimut Consulenza SIM S.p.A., Azimut Capital Management has distributed the Group’s and third parties’ products through its network of financial advisors, while Azimut Financial Insurance S.p.A. has placed insurance and banking products. Azimut Global Counseling provides corporate consultancy services, while LiberaImpresa SGR S.p.A. is specialised in the management of alternative funds. The main foreign companies are AZ Fund Management SA (founded in Luxembourg in 1999), which manages the AZ Fund 1 and AZ

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Multi Asset umbrella funds, and the Irish-based AZ Life DAC, which provides life insurance products. The Group was set up and developed based on some distinctive features which contributed significantly to its success:

Independence. Azimut is wholly independent of banks, insurance companies or industrial groups, ensuring free operations. With a float equal to approximately 75% of capital, the Group’s Holding Company is one of the few real public companies in the Italian stock exchange. Integration. The Group’s core activities (management and distribution) operate in strict synergy to respond in a coordinated manner to customers’ needs. Product design, management and consultancy are part of the same process whose definitive goal is customer satisfaction. Involvement. Most financial advisors, employees and managers (1600 at 2017 year end) are also the Parent Company’s shareholders, with a 15% investment therein. In accordance with a Shareholders’ Agreement, shareholders/collaborators are fundamental in ensuring the Group’s driving stability and the alignment of interests among all stakeholders. This significant involvement of staff in the control of the companies for which they work is almost unique in Italy’s financial sector. Internationalisation. Again with a view to diversification and development, an expansion strategy began in 2010 in geographical areas which could be of interest in many respects. In 54

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these areas, Azimut identified local partners with the same characteristics as the Group (independence, professionalism, expertise) and built a network of companies to place the products of the Parent Company and/or its product companies, while providing the Group with management skills in specific markets. This resulted in a management team made up of 90 managers and analysts, based in 14 countries and 4 continents, therefore active around the clock and able to monitor over 1,300 companies which may become the object of investment. The average seniority of the team members is 16 years.

Innovation. The commitment to provide customers with appealing investment instruments not yet available on the market has characterised Azimut’s entire history with the launch of many types of unique funds.

Product innovation has always been present in the company’s business, with the launch of several tactical and strategic products which met the needs of different types of domestic and international customers.

The development abroad further stimulated the Group’s drive for innovation. This is confirmed, for example, by AZ Fund 1 Renminbi Opportunities, the world’s largest UCITS IV fund specialised in investments in Off-shore Renminbi and AZ Fund 1 Cat Bond, which invests in instruments exposed to catastrophe insurance risks, launched in 2011, after the 55

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acquisitions in China and Switzerland, typical for investors with a high risk profile. In autumn 2013, the implementation of the Group development strategy abroad also led to the launch of AZ Multi Asset Global Sukuk, a UCITS IV-compliant product which invests in an emerging asset class, the sukuk (bonds which generate pre-determined profits according to the principles of Shariah), which configure a new type of fixed income instruments.

In the 2016/2017 two-year period, Azimut also launched, inter alia, some extremely innovative products:  AZ Multi Asset Sustainable Equity Trend – part of the AZ Multi Asset mutual fund, with an investment policy focused on issuers adopting the ESG (Environmental, Social and Governance) sustainability standards. With respect to the AZ Multi Asset Sustainable Equity Trend fund, AZ Fund Management’s investment process provides for the identification (assisted by Vontobel AM acting as the advisor) of a basket of ESG sustainable equities, followed by the manager's selection of those to be invested in. In other cases, the manager chooses the financial instrument to be included in the sub- fund’s portfolio and subsequently asks the advisor to check the sustainability of the investment, using ESG criteria.  Munis Yield – a sub-fund of the Luxembourg fund AZ Fund 1 which mainly invests in US municipal bonds and/or US treasuries.  Global Infrastructure – a sub-fund of the Luxembourg fund AZ Fund 1 which mainly invests in securities issued by global companies which own and/or manage infrastructural activities, such as utilities (water, electricity, gas, waste collection), transport and storage of raw materials, toll roads, airports, telecommunications, ports, railway networks and other socio-economic infrastructures. This instrument provides individual savers with a type of management that is usually reserved to institutional investors.

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The distribution of the portfolio under management among the products which are progressively launched on the market was well received and raised customers’ interest.

Furthermore, starting from 2014, the Group began diversifying its activities with the launch of the Libera Impresa project, which comprises a group of investments in companies focused on the development of new entrepreneurship through incubators (SiamoSoci), venture capital 57

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initiatives (P101), minibond issues (Antares AZ I), investment banking (Azimut Global Counseling), private equity (Futurimpresa, now Libera Impresa SGR) and pre-IPO/ SPAC (Ipo Club). This project has a significant social impact since its main goals include supporting new entrepreneurship focused on innovation and the creation of job opportunities.

2. The Group’s stakeholders

As part of its activities, the Group interacts with a series of internal and external stakeholders who are subject to specific relationship guidelines. The dialogue with stakeholders is extremely important since the “product” placed (asset management) is intangible on the one hand, and totally relevant to customers and the collectivity on the other. Azimut Group's stakeholder map is given below:

The main stakeholders were identified by assessing the importance of each category for the Group's business, and based on the judgement (which derives from experience) about the term and the stability of the relationship with the stakeholders. Other important business partners, such as suppliers and outsourcers, have not been included in the stakeholders’ list since they are selected from time to time based on current needs and using specific procedures. Furthermore, their activities are governed and monitored by specific contractual arrangements. 58

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CUSTOMERS

The parties to which the company offers investment solutions and ongoing consultancies to maintain the investment portfolio.

Relationship

Customers are assisted by financial advisors based on a customised relationship and ongoing support. Every day, through the company intranet site, Azimut Capital Management SGR S.p.A. provides the financial advisors with documents and information which may be used to support customer relationships.

Therefore, customers can also access directly via the web the data about their investments and assess over time the characteristics of the products acquired, the returns and the market risk to which they are exposed.

FINANCIAL ADVISORS

The parties providing financial instrument consultancy services to third parties on behalf of the company. They enter into an agency contract with Azimut Capital Management SGR S.p.A.

Relationship

Financial advisors are carefully selected as they represent the Group before customers. They are constantly trained and informed about the markets through a dedicated intranet site. They also benefit from a company TV which broadcasts interviews and communications about the investment sector.

All financial advisors participate in an annual meeting and in specific meetings throughout the year, divided by area groups or categories. Considerable attention is given to the possibilities for regular opinion exchanges in order to monitor their level of satisfaction.

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Human resources are the heart of Azimut’s operations. Group companies’ employees, regardless of their level, are carefully selected and assisted throughout their career path. At 31 December 2017, the Group had 731 employees (to the extent of the scope considered). This figure does not include 1,638 financial advisors operating in Italy, who are not employees.

Relationship

Internal communication is important in order to involve employees and collaborators. Employees receive the main information about employee benefits and the company through a dedicated intranet site and may also access a detailed daily press review which, in addition to Azimut’s news on digital and print media, covers the main issues of the financial market, focusing, in particular, on the assets under management industry.

Italian and foreign employees also receive directly by e-mail financial press releases from the Corporate Communications unit, covering, for example, acquisitions, monthly inflows, consolidated results and significant events, as well as the main communications, including the message of the Group’s CEO.

FINANCIAL COMMUNITY/SHAREHOLDERS

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The parties with whom the company creates a continued dialogue to create value in the medium/long-term.

Relationship

Investor Relations’ and Media Relations’ activities are entirely focused on providing the financial community and shareholders with information about the Holding Company and the Group.

In 2017, 45 press releases were published, covering the monthly performance of inflows, the news for the Group and periodic financial reporting.

Institutional shareholders, analysts and potential investors participate in periodic meetings held through the internet and specific road shows on invitation. In 2017, 150 conference calls were held with analysts and institutional investors, and over 100 direct meetings were held in the world’s main financial centres, specifically in Northern America and Northern Europe.

INSTITUTIONS AND REGULATORS

The parties which perform representation, supervisory and regulatory activities in the industry in which the company operates.

Relationship

The Group has regular contacts with the supervisory authorities of all the countries in which it operates, which go beyond regulatory obligations.

In Italy, where the Group has been operating for a long time, Azimut Capital Management SGR S.p.A. actively participates in the initiatives launched by industry associations (Assogestioni and Assoreti) and the financial advisors are members of the Anasf trade association.

COLLECTIVITY

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The parties included in social and cultural situations with whom the company interacts while performing its activities.

Relationship

The widespread presence of financial advisors and customers in the area creates relationships with different local collectivities (associations, bodies representing the interests of the local and social context) which result, above all, in the organisation of meetings which mainly provide training and information about financial market-related issues, savings and investments.

The participation in local life also supports cultural and sports initiatives. Fondazione Azimut’s activities, which are clearly separated from the Group’s business, focus on poverty and social exclusion issues and inevitably entail interacting with the local institutions which pursue the same goals (church or municipal bodies).

3. Material non-financial topics

The Group carried out a materiality analysis to identify the material non-financial issues. The process consisted of the following stages:

1. mapping of stakeholders: identification of the parties that influence and are influenced by the company, considering the reference industry, the practices in place among peers and competitors, and the Group’s business model and characteristics;

2. identifying economic, environmental and social sustainability topics which may be potentially relevant to the Group's business and its stakeholders;

3. management's assessment and validation of the potentially material non-financial topics;

4. validation of the analysis carried out with top management.

The process identified the factors which have a significant impact on the organisation and which considerably influence the Group's ability to create value in the short, medium and long-term and a list of material non-financial topics:

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 Business ethics, anti-money laundering and fight against corruption

 Product portfolio innovation

 Customer satisfaction

 Human capital management and development

 Financial advisors’ training and network management

 Financial education and development of local communities

The relationship between Azimut’s material non-financial topics, the scope of the Decree and the stakeholders involved is described below:

Scope of the Decree Material topic for Azimut Stakeholders involved Fight against active  Business ethics, anti-money Institutions and and passive laundering and fight against regulators corruption corruption Financial community/shareholders Social and employee-  Human capital management and Collectivity related topics development Customers  Financial advisors’ training and Employees network management Financial advisors  Product portfolio innovation  Customer satisfaction  Financial education and development of local communities Respect for human  Immaterial topic given the - rights industry in which the Group operates and its business strategies Environmental issues  Immaterial topic given the -

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industry in which the Group operates and its business strategies

Some topics covered by the Disclosure have been part of Azimut’s distinctive features well before the implementation of the obligation to provide public statements thereon. The focus on employees’ and advisors’ involvement in company management resulted, for example, in a broad shareholder base since the set-up of the network comprised of regional stock brokerage companies (SIM) (1989) and in the subsequent management buy-out (2001) which led to the flotation in 2004. Employees, managers and financial advisors have been and remain a significant part of the shareholder base and are unique in this industry.

Azimut has also always focused on social issues: it was one of the first asset management companies to launch on the Italian market a fund which allocated the returns of the invested money to the humanitarian organisations selected by customers (1995 Fondo Azimut Solidarietà). This direction was confirmed by the launch of the AZ Multiasset Sustainable Equity Trend which, in addition to the selection of securities, provides an analysis based on ESG sustainability criteria.

The initiative launched by the Brazilian Group companies forms part of the investments which also consider the environmental and social impact. AZ Quest Azimut Impacto was launched in November 2016, investing in low volatility traditional securities and paying customers 100% of the returns obtained. Furthermore, the asset management company assigns 30% of the management fees received to social initiatives (environment, education, development of communities’ health care). AZ Quest Azimut Impacto is the first instrument launched in Brazil available to retail investors who intend to participate in initiatives with a social impact.

4. Risks and policies

The Azimut Group has in place a risk management system which identifies, assesses and controls the risks to which it is exposed in all areas of activity. The risks identified are 64

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regularly monitored to ensure ongoing operations and the achievement of corporate goals. For additional information about the risk and internal control management structure adopted by the Group, reference should be made to the Report on corporate governance and ownership structure prepared pursuant to Article 123-bis of the Consolidated Law on Finance. For additional information about the main risks identified and how they are monitored, reference should be made to the “Key risks and uncertainties” section of the Management Report.

In the fourth quarter of 2017, Azimut Holding S.p.A. strengthened its governance system by introducing the Operational & Reputational Risk Management function alongside the Risk Management department.

The control process over operational risks relies on a monitoring cyclical pattern based on:

 Risk identification

 Risk assessment and measurement

 Control implementation

Which entails the following:

 Determining the acceptable level of risk

 Risk mitigation and management

 Transfer of risk (where possible)

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Risks and related event types are mapped for all business areas in accordance with the Basel II framework, analysing, for each process and activity, the procedures in place and performing assessments with the managers.

The consolidation of the Operational Risk reporting flow from the entire Group was successfully completed, achieving the Group’s full scope in 2017. No material risks were identified for the companies based on the analysis methodology adopted, confirming the adequacy of controls and risk-mitigation activities.

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The table below provides information about risk-specific areas in relation to the scope of the Decree and the related management approach applied to the related topics and risks implemented by the Group.

Scope of the Risks identified Management approach/Policy Decree

Risks are mitigated thanks to the following management tools and policies implemented by the Group:

- Organisational, management and control model pursuant to Italian Legislative Decree No. 231/2001

The Group’s current risk - Code of ethics (Italian Legislative Fight against management system identifies the Decree No. 231/2001) active and corruption risks mainly related to passive - AML and combating the financing of possible instances of active corruption terrorism policy corruption. - Whistleblowing policy

These documents, which apply to the Parent Company, the Italian investees and the individual countries in accordance with local laws, have a legislative meaning and constitute an operational tool.

Personnel- By mapping the risks in The risks identified show a low risk related issues, accordance with Basel II profile. Risk mitigation activities are including framework in 2017, the Group accurately monitored. The main tools occupational identified some potential risks implemented are as follows: health and related to personnel relationships.

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Scope of the Risks identified Management approach/Policy Decree safety, and Specifically: - Remuneration policy actions - Employees’ hiring and - Code of ethics (Italian Legislative implemented to termination Decree No. 231/2001) ensure gender equality - Remuneration No further personnel or gender equality policies were defined. Indeed, - Wrong selection of resources this was not deemed necessary based The risks related to health and on the risks identified and the safety are analysed in accordance corporate business strategies. with the applicable ruling legislation. The Group’s current risk The Management Report also provides management system analyses the detailed information about the Trade, supply or main risks related to outsourced approach used to manage the risks sub-contracting functions and those related to the related to outsourced functions and relationships trade network’s conduct. those related to the trade network’ and other social Reference should be made to the conduct. These aspects are governed impacts Management Report for by Bank of Italy’s and Consob’s additional information thereon. regulations. These risks are not analysed in The topic is immaterial given the the Group’s current risk industry in which the Group operates Respect for management systems as they are and its business strategies human rights not deemed material to the Consequently, at present, there are no Group’s activities and its business formal management policies or tools to industry. mitigate any risks. These risks are not analysed in The topic is immaterial given the Environmental the Group’s current risk industry in which the Group operates issues management systems as they are and its business strategies not deemed material to the Consequently, at present, there are no 68

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Scope of the Risks identified Management approach/Policy Decree

Group’s activities and its business formal management policies or tools to industry. mitigate any risks.

5. Governance and business ethics

Corporate Governance The parent company Azimut Holding S.p.A. has a traditional governance structure which comprises a Shareholders’ Meetings, a Board of Directors (BoD) with administrative functions and a Board of Statutory Auditors which controls administration activities. The Board of Directors has the widest ordinary and extraordinary powers to manage the Company (except for those reserved to the Shareholders as per the law). It comprises 12 members appointed by the Shareholders’ Meeting, of whom four are independent. Furthermore, in line with the Code of Conduct for Listed Companies, Azimut Holding S.p.A. formed two committees: the Risk and Control Committee, and the Remuneration Committee which assist the Board in the relevant specific topics. The governance rules are those set by industry legislation which, in this case, is extremely pervasive. For more information, reference should be made to the Report on corporate governance and ownership structure prepared pursuant to Article 123-bis of the Consolidated Law on Finance attached to the Separate Financial Statements.

BoD members at 31 December 2017 by age bracket Women Men Total

30-50 years 2 3 5 More than or equal to 51 years 2 5 7 Total 4 8 12

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With respect to the Board composition, the presence of four independent members plays an important role. This number is in line with that set out in the Code of Conduct for Listed Companies.

Ethics and fight against corruption With respect to ethics, all personnel (management, middle management, staff and financial advisors) are required to comply with a Code of Ethics posted on the Group's website. Furthermore, the subsidiaries adopt further Codes of Conduct, where necessary and in line with specific business needs and applicable local legislation. The Code of Ethics sets out the general principles which must be complied with by all Group companies’ collaborators in several business areas. The breach of the principles of the Code of Ethics is punished at corporate level regardless of the disciplinary actions taken by the supervisory authority and/or the courts about the public consequences of inappropriate behaviour. The Code of Ethics sets out the general principles which characterise all Group’s operations and the obvious and imperative compliance with industry regulations. It describes the standards of behaviour in several areas, including human resources and employment policies, conflicts of interest, compliance with operational procedures, safeguarding the company’s assets, the Supervisory Body’s functions, external relationships and, specifically, with the media. It is binding also for Azimut’s suppliers and outsourcers. The standards of behaviour to be complied with are subsequently analysed in detail in specific codes: - An Internal code of conduct for employees, collaborators, directors and statutory auditors - An Internal code of conduct for financial advisors and their collaborators - An AML and combating the financing of terrorism policy - A Policy on media relationships - A Policy on social media - A Policy about the whistleblowing mechanism - A Policy about reputational risks.

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All these internal documents apply the general principles of the Code of Ethics (loyalty, seriousness, honesty, ability, transparency) to specific environments. Each code also includes the rules of behaviour applicable to different areas of legislation. Two chapters of the Internal code of conduct for employees, collaborators, directors and statutory auditors, for example, focus on insider dealing and the management of personal transactions. Other provisions prevent potential fraud risks (settlement of claims, proxies, correspondence address) or corruption risks (rules on presents and gifts). The Internal code of conduct for financial advisors and their collaborators describes in detail the rules of conduct applicable to off-premises financial advisors, focusing, in particular, on the confidentiality obligations, insider dealing, personal transactions and conflicts of interest. Specific rules are established in terms of proxies, registrations in more than one name and customers’ correspondence address, which are considered hot issues when preventing fraud against customers. The policy on reputational risks is particularly important since this aspect, inter alia, is closely related to the policies on media relationships and social media. Azimut has committed to steer the behaviour and act transparently vis-à-vis the employees and financial advisors, to the benefit of all stakeholders. Finally, in 2017, this corporate regulatory framework was completed with the introduction of the whistleblowing policy with enables all employees, financial advisors and collaborators to report unlawful behaviour within the Group. In practice, Azimut provides an IT, web-based tool called Company Protection which enables user to report unlawful behaviour, including anonymously, and allows direct communication through a chat with the Whistleblowing managers. After the reporting, the whistleblower obtains a unique personal code which must be used to receive updates on the reported facts and to provide additional information. The whistleblower is adequately protected, while complying with the rights of defence of the party who allegedly acted unlawfully. At the same time, Azimut appointed the Parent Company’s Internal Audit manager and the chairman of the Board of Statutory Auditors as managers of the Whistleblowing units.

Anti-money Laundering (AML) The Group adopted a policy which sets out the general guidelines and each company's roles and responsibilities in terms of AML and combating the financing of terrorism. 71

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The AML department centrally supervises the operations of the functions in charge of this activity for each company, including through periodic verification visits to check compliance with the guidelines and the company policy. The functions in charge of this activity in each Group company report to the central manager every quarter. The central manager, in turn, assesses the reliability, suitability and awareness of each entity in dealing with the AML risk and combating the financing of terrorism. The results of the assessment are sent to the Parent Company's Board of Statutory Auditors, the Risk and Control Committee and the Board of Directors. Reference should be made to the Management Report for additional information about the organisational model adopted by the Group in respect of AML issues.

Privacy Given the sensitivity of the issue (customers’ savings), the Group adopted a data protection policy which also covers all customers’ information. Customers are provided with information about the processing of their data before signing a contract and, where permitted by law, customers must give their consent to data processing. Azimut avails itself of an international company (EY S.p.A.) for certification of privacy-related issues and in order to be ready to launch new risk management initiatives in this respect in the event of weaknesses related to the General Data Protection Regulation (GDPR) - Regulation (EU) 2016/679, which will be implemented in Italy as of 25 May 2018. The Group’s foreign units adopted privacy policies in line with the relevant regulations in force in each country. In 2017, there were no privacy infringements.

6. Personnel size – employees and financial advisors

EMPLOYEES

Management quality (managers’ performance), transparent and effective communication to the market, the accuracy of the support provided to financial advisors and the service provided to customers are fundamental to business stability and growth. People who, in the various functions and in all geographical areas, work to achieve these results are committed to ongoing assessment and enhancement. 72

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Employees’ selection and development

Employees are selected carefully as they represent a crucial factor in the quality of the service provided. They are specifically trained and informed regularly.

The Group carries out a series of personnel selection procedures which ensure that candidates are selected based on corporate needs and technical expertise and skills, transparently and in compliance with the following criteria:

 specific professional skills with respect to the position or the duties;

 fair treatment;

 economic conditions in line with the position held and the roles and responsibilities given;

 reliability.

Furthermore, the Group makes sure that, in each Company, work conditions respect individual dignity and equal opportunities and work environment is adequate.

Azimut is currently committed to a project whose aim is to implement an IT platform to manage personnel development plans in all countries where it operates in order to develop consistently the initiatives targeting its employees all over the world.

It adopted a protocol to define roles, operational responsibilities, rules of conduct and control that Azimut Holding S.p.A. intends to observe, in relation to the various operations related to the “Employees’ selection, hiring and management” risk area, in accordance with ruling legislation and the principles of transparency, objectivity, truthfulness of the information and the aim of preventing the following crimes: corruption, judicial corruption, bribery among individuals and fraud, when performing said activities.

Remuneration policy

Azimut Group’s remuneration policy rests on the values, principles and benchmarks that drove its development, and that will continue to guide its mission with the aim of ongoing growth: integrity, balance, meritocracy and value generation. The implementation of these

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values in Group companies is fundamental in order to better meet all needs of stakeholders around Azimut, both internally and externally.

The remuneration policy first and foremost motivates, encourages and rewards those who, for several reasons, profitably share their experience and skills with the Group, so that they participate directly in its development. Meanwhile, an adequate and balanced remuneration structure is a necessary part of the complex governance structure: a fundamental role for all those who see the Group as a landmark in ensuring the quality of the wide range of services currently available, based on an interpretation that revolves around customer safeguard, satisfaction and protection, and increasingly more dedicated to insourcing.

In a highly competitive scenario, such as that of the investment industry, the remuneration policy is clearly a factor of interest which attracts the best skills. Therefore, it is carefully considered also from this point of view.

Employees by country – worldwide ongoing expansion

Employees by country 31/12/2016 31/12/2017 No. Women Men Total Women Men Total Italy 44 73 117 57 90 147 Australia 90 80 170 155 131 286 Brazil 38 43 81 33 49 82 Ireland 4 8 12 2 8 10 Luxembourg 4 20 24 4 21 25 Mexico 43 51 94 40 51 91 Principality of Monaco 6 22 28 5 22 27 Switzerland 5 7 12 8 19 27 Turkey 19 21 40 21 15 36 Total 253 325 578 325 406 731

Despite the still considerable importance of employees in Italy, where the Group has been active for almost 30 years, and in Europe, where the development in Luxembourg and Ireland

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began 10 years ago, the number of employees in other countries and continents is growing rapidly as a consequence of the internationalisation effort. Overall, between 2016 and 2017, employees rose by 26%. Placement systems for asset management services have different organisational structures in the various geographical areas. In Italy, placement is the responsibility of personnel other than employees, i.e., authorised off-premises financial advisors, while in some countries it is the responsibility of employees. Also with a view to increasing gender balance, the Group began studying the feasibility of smart working mechanisms which reconcile private and work life. Indeed, according to the Group, this is a key to a quicker rebalance of opportunities.

Employees by category broken down by gender 31/12/2016 31/12/2017 No. Women Men Total Women Men Total Top Management/Directors 14 78 92 16 107 123 Middle Management 72 96 168 80 114 194 Staff 167 151 318 229 185 414 Total 253 325 578 325 406 731

The balance of middle and top management (more than 40% of the total) reveals the Group’s commitment to select skilled professionals and is also the result of the decision to outsource a series of back-office activities to specialist companies which perform these activities with considerable expertise and significant economies of scale.

Employees by age bracket 2016 2017 Less More Less More than or than than No. 30-50 30-50 or equal Total or or Total years years equa to 51 equal equal l to years to 29 to 51

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29 years years years Top 0 68 24 92 0 91 32 123 Management/Directors Middle Management 16 133 19 168 20 144 30 194 Staff 109 176 33 318 142 223 49 414 Total 125 377 76 578 162 458 111 731

The breakdown of employees by age bracket is relevant for the purposes of growth outlook (employees below 29), compared to long-standing presence (30-50 years old) and expected generational turnover (over 51).

Employees by employment contract (temporary/permanent) 31/12/2016 31/12/2017 No. Women Men Total Women Men Total Permanent contract 246 317 563 311 391 702 Temporary contract 7 8 15 14 15 29 Total 253 325 578 325 406 731

Almost all employees have a permanent contract. The small percentage of employees with temporary contracts usually refers to employees at the beginning of their employment, which requires a period to mutually assess suitability.

Personnel loyalty Once the employment relationship has been consolidated, Azimut’s policy promotes long- term relationships which result in average corporate seniority of about 10 years (this figure refers to Italian companies since it is too early to make similar estimates for the foreign companies which joined the Group too recently). This is a significant figure considering that the Company grew significantly especially since the Parent Company’s flotation in 2014.

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Another fundamental element of personnel’s and management’s stability was and still is the fact that the founding members are still at the head of the Group.

Every year, during the traditional Christmas party for all employees of the headquarters, the employees who celebrate 10, 20 and 30 years with the Company receive an award.

The stability of the contractual relationships confirms the employees’ satisfaction with the work environment and the remuneration system. Internal career is also a decisive factor in personnel retention. Indeed, some top positions in the Group, e.g., the CFO and the Head of Risk, have been selected among the Group’s personnel.

Employees’ loyalty and satisfaction are the responsibility of the Human resources department, which also use training tools, such as weekly in-house English courses, agreements with external bodies to the benefit of all employees (e.g., reduced rates to use public means of transport in Milan).

Incoming employees by age bracket 2016 2017 No. Women Men Total Women Men Total Less than or equal to 29 years 11 18 29 18 22 40 30-50 years 47 49 96 49 57 106 More than or equal to 51 years 9 22 31 17 28 45 Total 67 89 156 84 107 191

Young employees to join the Group are selected, inter alia, with the collaboration of the best Italian universities and the organisation of internships for both students and new graduates. Trainees are present in different corporate areas and are one of the recruitment bases of new employees, when necessary. Group companies also collaborate with dual-training initiatives (learning and working), to the extent of compatible studies. In 2017, highly experienced employees joined the Group in order to balance young people and new graduates who are at the beginning of their career.

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With respect to the overall composition of employees by gender at the end of 2017, new recruits point to an improvement in the rebalancing of numbers, to which the Group pays attention.

Outgoing employees by age bracket 2016 2017 No. Women Men Total Women Men Total Less than or equal to 29 years 19 18 37 18 18 36 30-50 years 26 32 58 21 48 69 More than or equal to 51 years 2 1 3 6 4 10 Total 47 51 98 45 70 115

Outgoing employees (voluntary resignations and retirement) are typical of a highly competitive industry, as that in which the Group operates.

Health and safety

The Group complies with legal obligations about health and safety. However, because of the nature of its operations, this aspect is not highly relevant to the Group. In Italy, it applies an internal protocol whose aim is to define the roles, operational responsibilities, rules of conduct and control that Azimut must comply with, in relation to the “Fulfilment of occupational health and safety obligations” risk area, in accordance with the law.

FINANCIAL ADVISORS Authorised off-premises financial advisors, who account for most of the Group's placement activities, are typical of Italy’s financial market. They must pass an exam to enter on a Register managed and monitored by a specific Public Body (the Financial advisors’ single register), are subject to very stringent rules of conduct and the breach of said rules of conduct is punished with different types of penalties, up to the removal from the Register and, consequently, disqualification.

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In the other countries where the Group operates, financial advisors are governed by different regulations and the employment relationships with the companies managing and providing investment services are also different.

In Italy, Azimut’s over 1,600 financial advisors have an agency contract with Azimut Capital Management SGR S.p.A. They are not employees but must work exclusively for Azimut.

In Italy, financial advisors are grouped into six local areas locally coordinated by a manager (Managing Director) and several area managers, assisted by various team managers. All these coordination levels have an agency relationship with Azimut Capital Management SGR S.p.A. and their remuneration is based on fees. Managing directors report directly to the commercial department with which they meet every week to plan and monitor the main results achieved and comment on any feedback from customers and the degree of achievement of corporate targets.

The 1,638 financial advisors include approximately 220 resources who make up the Wealth Management division, i.e., professionals specialised in dealing with high-end customers.

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Financial advisors by gender2 31/12/2016 31/12/2017 No. Women Men Total Women Men Total Financial advisors 272 1,365 1,637 288 1,350 1,638

At the end of 2017, authorised off-premises financial advisors, entered on the Register managed by the specific Supervisory Body, total 55,894, of whom 36,389 are active. Of these, 22,127 operate for Assoreti system companies, i.e., companies (banks, stock brokerage and asset management companies), similar to Azimut in terms of market operations.

According to the information provided in the website of the Supervisory Body which holds the Single Register of Financial Advisors (www.organismocf.it), women account for approximately 20% of the members, while no percentage is available about the women actually in operation.

The percentage of women operating as Azimut’s financial advisors (a total of 16.6% in 2016; 17.6% in 2017) is in line with Italy’s figures on gender balance. However, this trend is growing, as confirmed by the two years considered. In Italy, the quality of financial advisors’ work results from objective and numerical figures, such as the average amount of assets under management assigned to the company, via the same, and the stability of the relationship (when financial advisors move to a new company, usually, customers follow them, clearly with negative consequences for the previous company, but also for the customer, in the case of disinvestment penalties). In Azimut, the broad shareholder base and the provisions of the shareholders’ agreement create stability among financial advisors, generating major advantages for the Group and, in general, customers.

Financial advisors’ loyalty policies non only provide for the participation and avoidance of commercial pressure as per the above corporate structure, but are also aimed at creating a positive environment which promotes economic and professional satisfaction.

Every year, a leading research company (GFK Eurisko) carries out a survey among financial advisors and the so-called private bankers (in Azimut they represented by the Wealth

2 Figures related to Italy. 80

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Manager segment) to assess the principal company and provide for actions to resolve any critical issues.

In the 2017 survey among financial advisors, 55% of Azimut interviewees stated they were utterly satisfied of their relationship with the principal company, 44% was partially satisfied and 2% was partially dissatisfied. Overall, in a panel comprised of 12 companies, Azimut ranks third in terms of satisfaction.

The degree of satisfaction of those who opted for a career as WMs even exceeds that of financial advisors (73% utterly satisfied; 27% partially satisfied), with Azimut ranking first among its collaborators in terms of satisfaction.

The survey also reveals the opinions by topic and identifies areas for improvement which are carefully considered by the Group’s central management.

Financial advisors’ training In Azimut, training has always been considered a fundamental driver for development which enables financial advisors to obtain and develop the skills necessary to meet the many and complex needs of customers in a context where assets, as a whole, are the object of the consultancy. Therefore, great attention is paid to the design of new specific training paths according to the characteristics of the financial advisors and the new requests from the market and the context in which they operate.

In 2017, 73,742 man/hour were provided, of which 55,350 were focused on mandatory training (maintaining or registration with the Single Register of Intermediaries and the Body Register of Agents and Mediators) and 18,392 related to non-mandatory training (specialisations).

Specialisation covered wealth planning and private insurance, corporate, social security and corporate welfare, and advisory topics. All courses were held by industry specialists or leading training companies and were intended to implement the skills necessary to operate at best, with additional information about technical, trade and relationship issues.

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Assessing financial advisors’ performance In Italy, financial advisors’ performance is monitored using quantitative-qualitative parameters. Inflows are monitored as an indicator of customers’ confidence as well as the quality of confidence. Furthermore, several indicators produce a profile on the behaviour of the financial advisor.

The latter is subsequently monitored using specific irregularity indicators developed by Assoreti trade association. In the event of doubts about the behaviour of a financial advisor, the Sales department reports the fact to the Internal Audit function which acts in order to guarantee utmost fairness, moral integrity and compliance with the applicable laws and internal and external provisions in force.

In order to ensure that monitoring of the commercial network carried out by the function is fully effective, the entire process is designed and implemented using also a risk-based approach which, on the one hand, identifies the main risks inherent in financial advisors’ operations (where present) as part of the definition of controls and the tools and methodologies to be used, and, on the other, focuses control activities on the issues and the financial advisors who are potentially most at risk, including from a reputational viewpoint, for Azimut Group companies. Specifically, controls are performed through the following activities:

 definition of financial advisors’ risk profiles;

 on-site inspections;

 analysis of irregularity indicators;

 analysis of customers’ claims.

Azimut’s financial advisors’ good reputation is confirmed by the very low number of complaints. The Audit department regularly checks financial advisors’ operations and behaviour, and systematically plans visits to the offices.

Attracting and developing talents Azimut attracts and develops talents though the many projects focused on young advisors it implements over time . In 2017, Azimut launched a project for young advisors with a high 82

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potential. The project involves those already operating in the investment advisory industry and willing to start a professional career path with an independent player. It focuses on training new professionals with dedicated technical and commercial training paths, using rewarding systems and a pre-defined career path. At the end of the 2017, this structure had 50 young talents, in addition to the hires of the three-year recruitment plan.

Incoming financial advisors broken down by gender3 31/12/2016 31/12/2017 No. Women Men Total Women Men Total Financial advisors 27 114 141 28 66 94

The percentage growth of women to total advisors, which was already highlighted in the table “Financial advisors by gender”, is confirmed by the hiring of new figures where women account for 19% of incoming advisors in 2016 and for 29.8% in 2017. This is a considerable increase in gender balance, considering that this industry is historically male-oriented.

7. The social side – Customers and local communities

Customers4 Customers are the Group’s main asset. Efforts are all for customers, in terms of both management (performance, innovation and product range) and consultancies (long-term tailor-made support by experienced professionals).

Customers’ growth and loyalty are the Group’s common goals, at all levels. Customer satisfaction is monitored above all by analysing data (investments/divestments) for each customer, by number and type of complaint.

In 2017, complaints from Italian customers (the main group in quantitative terms given the Group’s recent development abroad) accounted for 0.0475% of the entire customer base.

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Furthermore, the Internal Audit function checked Italian customers’ degree of satisfaction through a specific questionnaire. According to this project, called "Customer Satisfaction", an area manager, in collaboration with a reference advisor, visits a customer and invites him/her to fill in an 11-question questionnaire which measures the degree of satisfaction and checks that the financial advisor did not engage in any behaviour which violates the internal code of conduct and/or industry regulations.

The first “pilot” survey was launched in 2016 and involved 305 customers and 305 financial advisors. The results were processed and presented to the BoD on 26 July 2016.

Given the successful outcome of the survey, in 2016, the questionnaire was submitted to 915 customers and 674 financial advisors, selected according to the following criteria: 3 customers were extracted for advisors with assets worth less than 3 million euro, while one customer was selected for advisors with assets up to 10 million euro. The results were presented to the BoD on 16 May 2017.

Both surveys received a high response rate (85%). More importantly, the feedback received did not show any irregularities and all “uncertain” answers were subject to further analyses. The financial advisors who did not send the survey or failed to meet the deadline for receipt were selected for a future inspection.

Financial advisors are chosen using a specific IT tool which was subsequently used to manage and report the results.

The survey will be repeated in 2018 involving the same number of customers as in 2016 (i.e., approximately one thousand), and is expected to begin in the second quarter of the year. The aim is to carry out a survey every year.

Local communities

In Italy, customers and financial advisors are based in thousands of towns and in several regions. The context in which they live is important to the Group which must know and acknowledge it in order to grow and provide services to an increasingly large number of potential customers.

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The Company and each financial advisor work to promote the name and the visibility of Azimut Group based on its characteristics.

Financial advisors are the first to participate in the life of the communities where they operate, by actively participating in the organisation of a number of social initiatives in collaboration with the central Marketing department.

In 2017, Azimut Capital Management SGR S.p.A., through its network of local relationships with financial advisors, promoted and organised 330 events in Italy, of which 20 of a cultural nature (cultural sponsorships, exhibitions, concerts) and 7 with non-profit-making organisations (Onlus) to promote the AZ Multi Asset Sustainable Equity Trend system, i.e., an ethical investment tool in both management decisions and possible allocation of returns.

The Italian launch of this Luxembourg product, AZ Multi Asset Sustainable Equity Trend, is combined with the option, for customer, to activate the solidarity service. Thanks to this service, customers can allocate part of the income periodically distributed by the Sub-fund to a non-profit-making organisation ( Onlus).

Fondazione Azimut

Fondazione Azimut was formally set up in 2008 and obtained the first licence to operate in Lombardy in March 2010. Its operational area was subsequently extended to Italy as a whole in 2012.

Azimut Holding S.p.A. supports the Fondazione and finances it by allocating to it 1% of its consolidated gross profit every year (Article 32 of the By-laws).

Set up as a non-profit-making organisation, the Fondazione will be classified as a third sector organisation once the Single National Register comes into force pursuant to the Italian Legislative Decree No. 117 of 3 July 2017 (Third Sector Code).

According to its By-laws, Fondazione Azimut’s operations are limited to the economic and social distress area. The Board of Directors has immediately approved that the resources of the Fondazione were to be entirely allocated to charitable activities, excluding any operating costs (personnel, office, etc.).

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The first initiatives were launched in 2011 in Lombardy and financed the projects proposed by several organisations, including:

- Banco Alimentare (grant)

- Nemo Clinical Centre (restructuring 1000 m2 of the Niguarda hospital for patients affected by neuromuscular diseases)

- Residential community for people suffering from psychic conditions (Church of San Pietro in Sala, Milan)

- Restructuring of an area granted by the Milan municipality to Cooperativa sociale Zero5 in order to transform it into a support centre for prevention of early school leaving in the Barona, Gratosoglio and Stadera areas

- Support to an association based in Mandello Lario (Lecco) which assists disabled families.

From 2012 to the end of 2015, the Fondazione decided to act directly in the risk of poverty area which, following the employment crisis, was also expanding to other workers’ levels. Group companies’ collaborators (employees, managers, financial advisors) were invited to become volunteers by reporting families which were temporarily in need of financial help and to commit to support them until the emergency is over. The idea was to act in the risk of poverty area (job loss), rather than in the more serious social exclusion area where dedicated public associations (public service local departments) and religious organisations (Caritas, San Vincenzo) are already active.

Approximately 150 Azimut’s collaborators participated in the initiative and submitted to the Fondazione detailed proposals concerning 400/600 people. The people considered aid- worthy received a spending voucher (“Ticket Services” issued by Edenred) ranging between 100 and 300 euro per month for 18/24 months. Every quarter, Azimut’s volunteers reported on the progress of the situation.

The analysis of the results of this initiative showed that the direct economic support could only marginally help those people to regain economic self-sufficiency.

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The reported cases were too often related to severe social exclusion, and included several aspects, such as unemployment, housing and health problems, cultural fragility, etc.

Therefore, in 2016, the Fondazione invited all the Group’s collaborators to think about new ways of using resources and implementing projects which can structurally improve the life of the beneficiaries of the initiatives.

Collaborators were asked to submit projects and, in 2016 and 2017, the Fondazione’s BoD examined approximately one hundred proposals. Some of them were selected and will be launched in 2018.

The approved proposals include those related to housing issues (Brescia and Savona); the recovery of abandoned land (Sicily) and female small entrepreneurship (Reggio Emilia).

These are pilot projects which may be repeated.

The Fondazione is also working on possible innovations for services for the elderly and began discussing this issue with several stakeholders. The aim is to launch (almost certainly in Milan) a pilot project which may be the head of other projects in other locations.

From 2011 to 2017, the Fondazione allocated over 4.5 million euro to the above initiatives.

8. The environmental side This topic is highly marginal to the Group since its “products” (i.e., asset management) are totally intangible. However, as the environment is one of the pillars of the regulation which requires the preparation of this document, the impact of the Group’s operations is considered in terms of:

 Paper consumption: excluding the documentation which must be made available to customers in hard copy and the reports to be sent to customers, the Group promotes communication standards mainly based on digital and IT tools.

 Specifically, financial advisors were asked to use and assisted in the use of tablets to communicate with customers in order to avoid printing, where possible.

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 Water consumption: water consumption is related to the personnel in the offices. Therefore, this aspect is not relevant.

 IT asset management: the parent company has a document for the selection of IT assets which governs the choice of low energy impact devices (AAA) and checks that the selected housing or hosting meets specific energy consumption requirements.

Following the coming into force of Italian Legislative Decree No. 231 of 8 June 2001 on administrative liability, as amended by Italian Legislative Decree No. 152 of 3 April 2006 (environmental regulations), Azimut adopted a Protocol to manage environmental requirements (Protocol 18) which mainly covers:

 Unauthorised waste management

 Breach of environmental reporting requirements, record keeping and forms

 Breach of the waste tracking control system (SISTRI)

 Installation or operation of plants without the required authorisation and exceeding the emission limit values

 Use of ozone layer and environmental depleting substances

 Fraud to the detriment of the State by altering the documentation for competent Public Bodies

 Bribery of public officials in charge of environmental audits

Energy consumption5

UM 31/12/2016 31/12/2017

Electricity MWh 663 675

5 Energy consumption related to Azimut Holding S.p.A.’s headquarters in Milan. 88

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The volume of copy paper, forms, envelopes and letterhead paper purchased by the Milan headquarters is given below.

Paper consumed6

UM 31/12/2016 31/12/2017

Paper produced from virgin pulp Kg 12,765 13,025

Final notes

Contacts

This document has been prepared by the Group's Corporate Communications department. For additional information, comments or requests, please write to [email protected]

Milan, 8 March 2018

On behalf of the Board of Directors Chief Executive Officer (Sergio Albarelli)

6 Paper purchased by Azimut Holding S.p.A.’s headquarters in Milan. 89

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FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2017

Assets 31/12/2017 31/12/2016

Cash and cash equivalents 28 21

Financial assets measured at fair value 6,700,283 6,447,427

Available-for-sale financial assets 286,957 276,963

Receivables 263,790 189,305

a) for portfolio management 74,496 90,219

b) other receivables 189,294 99,086

Equity investments 1,343 935

Tangible assets 8,103 7,219

Intangible assets 557,410 517,315

Tax assets 80,219 78,976

a) current 29,560 32,905

b) deferred 50,659 46,071

Other assets 208,474 209,115 TOTAL ASSETS 8,106,607 7,727,276

On behalf of the Board of Directors Chief Executive Officer (Sergio Albarelli)

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Liabilities and Shareholders’ Equity 31/12/2017 31/12/2016

Payables 20,253 28,283

Outstanding securities 353,816 226,522 Technical reserves where the investment risk is borne by policyholders 227,857 250,974

Other technical reserves - 350

Financial liabilities measured at fair value 6,605,461 6,299,036

Tax liabilities: 68,151 59,401

a) current 6,462 1,443

b) deferred 61,689 57,958

Other liabilities 180,539 182,975

Staff severance pay (TFR) 2,965 3,403

Provisions for risks and charges: 35,377 31,265

b) other provisions 35,377 31,265

Share capital 32,324 32,324 Treasury shares (-) - 130,028 - 81,288

Equity instruments 36,000 70,951

Share premium reserve 173,987 173,987

Reserves 279,069 263,107 Valuation reserves - 13,542 - 4,674 Profit for the year 214,786 172,685 Minority interest 19,592 17,975 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 8,106,607 7,727,276

On behalf of the Board of Directors Chief Executive Officer (Sergio Albarelli)

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CONSOLIDATED INCOME STATEMENTS AT 31 DECEMBER 2017

Items 31/12/2017 31/12/2016

Fee and commission income 774,331 675,633 Fee and commission expense (311,345) (293,897) NET FEE AND COMMISSION INCOME 462,986 381,736

Dividends and similar income 258 257

Interest income and similar income 1,071 1,509 Interest expense and similar charges (10,725) (11,723) Net trading income (expense) Profits (losses) on disposal or repurchase of: (9,721) 1,733 a) financial assets (1,804) 1,739 b) financial liabilities (7,917) (6) Net hedging income (expense) Net result of financial assets and financial liabilities measured at fair value (4,421) (4,851)

Net premiums 3,531 2,618 Net profits (losses) on financial instruments at fair value through profit or loss 184,679 132,815 Change in technical reserves where the investment risk is borne by 23,467 29,885 policyholders Redemptions and claims (172,924) (134,445) TOTAL INCOME 478,201 399,533 Administrative costs: (210,557) (192,513) a) personnel costs (83,255) (72,485) b) other administrative costs (127,302) (120,028) Net impairment losses/reversals of impairment losses on tangible assets (2,414) (2,508) Net impairment losses/reversals of impairment losses on intangible assets (13,444) (13,655) Net accruals to the provisions for risks and charges (6,383) (5,844) Other operating income and costs 1,877 564 OPERATING PROFIT 247,280 185,578 Profits (losses) on equity investments (8) (689) Profits (losses) on disposal of investments PRE-TAX PROFIT (LOSS) FROM CONTINUING OPERATIONS 247,272 184,889 Income tax on profit from continuing operations (21,363) (7,586) NET PROFIT (LOSS) FROM CONTINUING OPERATIONS 225,909 177,304

Profit (loss) for the year attributable to minority interest 11,123 4,619 PARENT COMPANY PROFIT FOR THE YEAR 214,786 172,685 On behalf of the Board of Directors Chief Executive Officer (Sergio Albarelli)

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

31/12/2017 31/12/2016

Items Profit for the year 225,909 177,304 Other comprehensive income, net of taxes, not transferred to profit or loss Tangible assets Intangible assets Defined benefit plans 234 18 Non-current assets held for sale Share of valuation reserves of investments measured at equity Other comprehensive income, net of taxes, transferred to profit or loss Foreign investment hedge Exchange rate differences (7,113) (2,347) Cash flow hedge Available-for-sale financial assets (1,989) 5,431 Non-current assets held for sale Share of valuation reserves of investments measured at equity Total other comprehensive income (expense), net of taxes (8,868) 3,102 Comprehensive income 217,041 180,406 Consolidated comprehensive income attributable to minority interest 11,123 4,619 Consolidated comprehensive income attributable to the parent company 205,918 175,787

On behalf of the Board of Directors Chief Executive Officer (Sergio Albarelli)

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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY AT 31 DECEMBER 2017 Allocation of prior Changes during the year

year profit (loss) Shareholders’ equity transactions

Items 31/12/2017

in opening balance in opening

31/12/2017

Reserves

in equity equity instruments in

Other Other changes

Changes in reserves Changes in

Balance at 31/12/2016 Balance at 01/01/2017 Balance at interest at

Issue of new shares new Issue of

Changes Changes

Treasury share purchases purchases share Treasury

Changes Changes

Group shareholders’ equity at 31.12.17 equity at shareholders’ Group

Consolidated comprehensive income at income comprehensive Consolidated

Dividends and other distributions and other Dividends

Extraordinary dividend distribution Extraordinary dividend

Shareholders’ equity attributable to minority to minority equity attributable Shareholders’

Share capital 32,324 32,324 32,324 63,235 Share premium reserve 173,987 173,987 173,987 Reserves: a) income-related 369,176 369,176 14,302 383,478 (51,736) b) other (106,069) (106,069) 1,660 (104,409)

Valuation reserves (4,674) (4,674) (8,868) (13,542) (3,030) Equity instruments 70,951 70,951 (34,951) 36,000

Treasury shares (81,288) (81,288) (69,713) 20,972 (130,028) Profit (loss) for the year 172,685 172,685 (14,302) (158,383) 214,786 214,786 11,123 Group shareholders’ equity 627,092 627,092 - (158,383) (69,713) (34,951) 22,632 205,918 592,596 Shareholders’ equity attributable to minority interest 17,975 17,975 (9,506) 11,123 19,592 On behalf of the Board of Directors Chief Executive Officer (Sergio Albarelli)

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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY AT 31 December 2016

Changes during the year Allocation of prior year Shareholders’ equity

profit (loss) transactions

Items

31/12/2016

Reserves

Other Other changes

Changes in reserves Changes in 31/12/2016 interest at

Balance at 31/12/2015 Balance at 01/01/2016 Balance at

Changes in opening balance Changes in opening

Issue of new shares new Issue of

Treasury share purchases purchases share Treasury

Changes in equity equity instruments Changes in

Consolidated comprehensive income at income comprehensive Consolidated

Dividends and other distributions and other Dividends

Group shareholders’ equity at 31/12/2016 equity at shareholders’ Group

Extraordinary dividend distribution Extraordinary dividend

Shareholders’ equity attributable to minority to minority equity attributable Shareholders’

Share capital 32,324 32,324 32,324 39,209

Share premium reserve 173,987 173,987 173,987 Reserves: a) income-related 360,354 360,354 141,689 (132,867) 369,176 (27,337) b) other (80,173) (80,173) 508 (26,404) (106,069)

Valuation reserves (7,776) (7,776) 3,102 (4,674) 1,484 Equity instruments 71,459 71,459 (508) 70,951

Treasury shares (80,727) (80,727) (1,791) 1,230 (81,288) (141,689 Profit (loss) for the year 247,421 247,421 ) (105,732) 172,685 172,685 4,619 Group shareholders’ equity 716,869 716,869 - (238,599) (1,791) - (25,174) 175,787 627,092 Shareholders’ equity attributable to minority interest 10,348 10,348 3,008 4,619 17,975 On behalf of the Board of Directors Chief Executive Officer (Sergio Albarelli) 95

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CONSOLIDATED CASH FLOW STATEMENT Indirect method

A. OPERATING ACTIVITIES 2017 2016 1. Operations 280,794 134,755 - profit (loss) for the year (+/-) 214,786 172,685 - gains/losses on held-for-trading financial assets and financial assets/liabilities measured at fair value (-/+) 28,548 (58,942) - gains/losses on hedging activities (-/+) 0 0 - net impairment losses (+/-) 0 0 - net impairment losses on tangible and intangible assets (+/-) 15,858 16,163 - net accruals to provisions for risks and charges and other expenses/income (+/-) 6,383 5,844 - tax and duties still to be paid (+) 10,443 (1,702) - net impairment losses on assets held for sale, net of tax (+/-) 0 0 - other changes (+/-) 4,776 707 2. Cash generated from or used by financial assets (295,832) (787,765) - held-for-trading financial assets 0 0 - financial assets measured at fair value (276,983) (730,163) - available-for-sale financial assets (10,609) (3,052) - due from banks (427) (1,225) - due from financial institutions (141) 1,056 - due from customers (11,491) (3,716) - other assets 3,819 (50,665) 3. Cash generated from or used by financial liabilities 379,812 839,055 - due to banks (10,584) (6,625) - due to financial institutions 344 (8) - due to customers 298 (27) - outstanding securities 122,467 4,679 - held-for-trading financial liabilities 0 0 - financial liabilities measured at fair value 302,004 859,173 - technical reserves (23,467) (29,885) - other liabilities (11,250) 11,748 Net cash generated from or used by operating activities 364,774 186,045

B. INVESTMENT ACTIVITIES

1. Cash generated from 0 0 - disposal of equity investments 0 0 - dividends from equity investments 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 (57,254) (80,593) - purchase of equity investments (417) (821) - purchase of held-to-maturity financial assets - purchase of tangible assets (3,298) (3,528) - purchase of intangible assets (15,653) (16,069) - purchase of subsidiaries and business units (37,886) (60,175) Net cash generated from or used by investment activities (57,254) (80,593)

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C. FINANCING ACTIVITIES - issue/purchase of treasury shares (69,713) (1,791) - change in other reserves 13,764 (21,564) - change in capital and reserves attributable to minority interest 1,617 7,627 - issue/purchase of equity instruments (34,951) (508) - dividends and other distributions (158,383) (238,599) Net cash generated from or used by financing activities (247,666) (254,835)

NET CASH GENERATED OR USED FOR THE YEAR 59,854 (149,383)

RECONCILIATION

2017 2016

Opening cash and cash equivalents 438,832 588,215

Total net cash generated or used for the year 59,854 (149,383)

Closing cash and cash equivalents 498,687 438,832 Reference should be made to the paragraph on the “Consolidated financial position” of the Management Report for a breakdown of “Cash and cash equivalents”. On behalf of the Board of Directors Chief Executive Officer (Sergio Albarelli)

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

PART A – ACCOUNTING POLICIES

A.1 General information

Section 1 – Statement of compliance with IAS/IFRS

The consolidated financial statements comply with the International Accounting Standards (IAS) / International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and the related interpretations of the IFRS Interpretations Committee, endorsed by the European Commission and in force on 31 December 2017, implementing Italian Legislative Decree No. 38/2005 and Regulation (EC) No. 1606/2002. There were no departures from IAS/IFRS. For information about the standards that came into force in 2017, reference should be made to “Section 2 – General reporting criteria” which also describes the impacts, if any, on the Group.

Section 2 – General reporting criteria

The consolidated financial statements have been drawn up in accordance with the instructions issued by the Bank of Italy for the preparation of “financial statements of IFRS financial intermediaries, other than banking intermediaries” on 9 December 2016. The Instructions lay down the mandatory financial statement schedules and how they must be filled in, and the content of the notes thereto for asset management companies that were adequately adjusted to better represent the Group's financial position and business activities, which include the Irish insurance company AZ Life Dac. In particular, 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 governing the consolidated financial statements of insurance companies drawn up on the basis of IAS/IFRS.

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The consolidated financial statements have also been drawn up based on the interpretative documents on the application of IAS/IFRS in Italy prepared by the Italian Accounting Standard Setter (OIC), and the European Securities and Markets Authority (ESMA) and Consob (the Italian Commission for Listed Companies and the Stock Exchange) documents which refer to specific IAS/IFRS.

The consolidated financial statements comprise the balance sheet, the income statement, the statement of comprehensive income, the statement of changes in shareholders’ equity, the cash flow statement and these notes and are accompanied by the management report on the performance of the companies included in the scope of consolidation. These notes are comprised of four parts: A – Accounting policies, B – Notes to the balance sheet, C – Notes to the income statement, D – Other information. In accordance with the provisions set forth in Article 5, paragraph 2 of Italian Legislative Decree No. 38/2005, the consolidated financial statements have been drawn up by adopting the euro as the reporting currency. Unless otherwise specified, the amounts shown in the financial statements and the notes thereto, as well as those presented in the management report, are in thousands of euro

The consolidated financial statements have been prepared clearly and give a true and fair view of the Group's financial position, results of operations, changes in shareholders' equity and cash flows.

The consolidated financial statements have been prepared in accordance with IAS 1 “Presentation of financial statements” and in line with the general assumptions of the “Framework for the preparation and presentation of financial statements” (the “framework”) prepared by the IASB, specifically with respect to the fundamental principle of substance over form7, the relevance and materiality of financial information, the accruals basis of accounting and the going concern assumption. Except for that provided for or permitted by IAS/IFRS or one of their interpretations or Bank of Italy's provisions on the financial statements of asset management companies, assets and liabilities and costs and revenue are not offset.

7 Transactions and other corporate events have been recognised and presented in accordance with the principle of substance over form.

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These consolidated financial statements have been prepared based on the going concern assumption. Financial, operating and other indicators8 have been considered which, as also shown in the joint 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 remains 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 exposed9, leads us to believe that there is no doubt that the Group can continue to operate on a going concern basis for the foreseeable future.

Accounting standards, amendments and interpretations endorsed by the European Union and in force from 1 January 2017.

The IAS/IFRS applied to prepare the Azimut Group's consolidated financial statements, governing the classification, recognition, measurement and derecognition criteria of asset and liability items and the recognition of income and expense are those in force at the drafting date of these consolidated financial statements, as endorsed by the European Union.

For information on the classification, recognition, measurement and derecognition criteria of the main items, reference should be made to that set out in Part A.2 of the Notes to the financial statements at 31 December 2017. In addition to that set out in Part A.2, following the completion of the endorsement procedure, the following amendments to IAS/IFRS became effective on 1 January 2017.

8 Examples of which are shown in audit standard No. 570 on “Going Concerns”. 9 As described in this Management Report.

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Amendments IASB publication Endorsement Date of coming date date into force

Amendments to IAS 12 11 January 2016 6 November 2017 1 January 2017 “Recognition of deferred tax assets for unrealised losses”

Amendments to IAS 7 29 January 2016 6 November 2017 1 January 2017 “Disclosure initiative”

The adoption of the above amendments has had no impact on the consolidated companies' financial position and results of operations.

Accounting standards, amendments and interpretations which will come into force. Standards IASB publication Endorsement Date of coming date date into force

IFRS 14 “Regulatory deferral 30 January 2014 n.a.* n.a. * accounts”

24 July 2014 22 November 1 January 2018 IFRS 9 “Financial instruments” 2016

IFRS 16 “Leases” 13 January 2016 31 October 2016 1 January 2019

IFRS 15 “Revenue from 28 May 2014 and 22 September 1 January 2018 contracts with customers” and 11 September 2016 amendments 2015

IFRS 17 "Insurance contracts" 18 May 2017 --- 1 January 2021

IFRIC 22 “Foreign currency 17 February 2017 --- 1 January 2018** transactions and advance consideration”

IFRIC 23 “Uncertainty over 7 June 2017 --- 1 January 2019** income tax treatments”

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Amendments IASB publication Endorsement Date of coming date date into force

Amendments to IFRS 2 20 June 2016 26 February 2018 1 January 2018 “Classification and measurement of share-based payment transactions”

Amendments to IFRS 4 12 September 3 November 2017 1 January 2018 “Applying IFRS 9 – Financial 2016 instruments”

Amendments to IAS 40 8 December 2016 --- 1 January 2018** “Transfers of investment property”

Annual improvements to IFRSs 6 February 2017 7 February 2018 1 January 2018 2014-2016 cycle

Amendments to IFRS 9 12 October 2017 --- 1 January 2019** “Prepayment features with negative compensation”

Amendments to IAS 28 “Long- 12 October 2017 --- 1 January 2019** term interests in associates and joint ventures”

Annual improvements to IFRSs 12 December 2017 --- 1 January 2019** 2015-2017 cycle

Amendments to IAS 19 “Plan 7 February 2018 --- 1 January 2019** amendments, curtailments, and settlements”

Clarifications IASB publication Endorsement Date of coming date date into force

Clarifications to IFRS 15 12 April 2016 31 October 2017 1 January 2018 “Revenue from contracts with customers”

* The European Commission does not intend to start the endorsement process concerning IFRS 14 (interim standard) pending the publication of the final standard governing tariff-regulated activities. ** Date identified by IASB. Confirmation of the European Union's competent bodies is pending.

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Following the European Community’s endorsement of the new standards IFRS 9 and IFRS 15, which became effective in 2018, the company carried out an in-depth analysis of the areas affected by the new standards, defining their qualitative and quantitative impacts.

This in-depth analysis highlighted the main potential impacts arising from the first-time adoption (2018) of said standards.

IFRS 9 – Financial Instruments (issued on 24 July 2014). This document includes the results of the IASB project to replace IAS 39:

- it introduces new criteria for the classification and measurement of financial assets and financial liabilities;

- with respect to the impairment model, under the new standard, expected credit losses are estimated using the expected losses model (instead of the incurred losses model used by IAS 39), using supportable information that is available without undue cost or effort and that includes historical, current and forward-looking data;

- it introduces a new hedge accounting model (increase of the type of transactions eligible for hedge accounting purposes, change in the accounting treatment of forward contracts and options when they form part of a hedge accounting relationship, changes to the test of effectiveness).

The impacts on the consolidated financial statements may arise mainly from the classification and measurement of the financial instruments which, up to now, were classified under “Available-for-sale financial assets” (currently comprised of UCI units and Equity securities). With respect to UCI units, not held for trading, the new standard confirms the fair value measurement, but takes the related changes to profit or loss, rather than to a specific Equity reserve. Upon first-time adoption, the fair value changes recognised up to such date (31 December 2017) will be maintained in Equity and will never be transferred to profit or loss, including in the case of sale of the financial instrument which generated them. With respect to Equity instruments, not held for trading, in which the Group holds an equity investment of below 20%, the fair value measurement will be applied with a balancing entry in a specific

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Equity reserve. Fair value changes will never be transferred to profit or loss, including in the case of sale of the equity instruments. Finally, financial instruments comprised of government securities will be measured at amortised cost.

At 31 December 2017, the Equity valuation reserve was negative by 3.9 million euro.

IFRS 15 – Revenue from Contracts with Customers (issued on 28 May 2014 and integrated with additional clarifications issued on 12 April 2016). This document will replace IAS 18 – Revenue and IAS 11 – Construction Contracts, and the interpretations IFRIC 13 – Customer Loyalty Programmes, IFRIC 15 – Agreements for the Construction of Real Estate, IFRIC 18 – Transfers of Assets from Customers and SIC 31 Revenues-Barter Transactions Involving Advertising Services.

The standard introduces a new revenue recognition model which will apply to all contracts entered into with customers, except for those which fall in the scope of other IAS/IFRS, such as leases, insurance contracts and financial instruments. Under the new model, revenue is to be recognised in accordance with the following steps:

- identify the contract with a customer;

- identify the performance obligations in the contract;

- determine the price;

- allocate the price to the performance obligations in the contract;

- recognise revenue when the entity satisfies each performance obligation.

Given the current characteristic of the Group’s accounting components, the application of this standard may only result in a higher degree of disclosure, without significant quantitative accounting variations. The only impact may arise from the recognition of contract costs, if any, paid to the network and incurred to obtain new contracts and new assets. The Group is currently investigating this aspect.

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related to the leased assets), (iii) a decrease in operating costs (lease payments) and (iv) an increase in finance costs (to repay and remunerate the recognised liability).

Section 3 – Significant events after the reporting date

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up, promoted and currently managed by Sofia SGR, and will increase its network by adding Sofia SGR’s 47 financial advisors who, at 31 December 2017, were in charge of assets under management worth approximately 800 million euro. Concurrently with the Business Unit’s transfer, Azimut Capital Management SGR will pay Sofia SGR a base consideration of 3 million euro and, after 24 months, the residual amount, if any, of the variable portion of the price to be calculated based on the performance of the assets under management transferred to Azimut Capital Management SGR and their net profitability. Under the agreement, Azimut Capital Management SGR will obtain a series of representations and guarantees on the Business Unit's risks until its transfer, which are typical for similar transactions. The completion of this transaction also depends on obtaining of Bank of Italy’s necessary authorisations, approvals and/or clearances. The consolidated financial statements were authorised for publication by Azimut Holding S.p.A.’s Board of Directors on 8 March 2018.

Section 4 – Other information

Risks and uncertainties related to estimates The preparation of the consolidated financial statements also entails the use of estimates and assumptions that may have a significant impact on the carrying amounts recognised in the balance sheet and the income statement, and on the disclosure about contingent assets and liabilities. The computation of such estimates is based on the use of available information and the adoption of subjective assessments, also based on historical experience, used to develop reasonable assumptions underlying the recognition of operations. Because of their nature, the estimates and assumptions used may change from year to year. Consequently, it cannot be excluded that the currently reported amounts may differ, also significantly, in the next few years following the change in the subjective assessments used. These estimates mainly relate to: - the estimates and assumptions underlying the valuation models for the fair value recognition of financial instruments not listed on active markets (level 2 and 3 of the fair value hierarchy);

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- the identification of loss events pursuant to IAS 39; - the assumptions used to identify impairment losses, if any, on intangible assets and reported equity investments (IAS 36).

Section 5 – Consolidation scope and methods

The consolidated financial statements include the balance sheet and income statement figures of Azimut Holding S.p.A. and the companies directly or indirectly controlled by the latter.

Subsidiaries The Azimut Group consolidation scope has been established in accordance with IFRS 10. Specifically, subsidiaries are those companies in respect of which the Azimut Group is exposed, or has rights, to variable returns from its involvement with the investees and has the ability to affect those returns through its power over the investees. Control exists only when the following elements simultaneously exist: (i) the power to direct the relevant activities; (ii) exposure, or rights, to variable returns from involvement with the investee; (iii) the ability to use its power over the investee to affect the amount of its returns. Subsidiaries consolidated on a line-by-line basis as of the acquisition date, i.e., the date on which the Group acquires control in accordance with IFRS 10. They are deconsolidated when the Group no longer controls them.

Associates Associates are those companies subject to significant influence, i.e. companies in which the Azimut Group, either directly or indirectly, holds at least 20% of the voting rights (including “potential” voting rights) or in which – despite holding a smaller percentage of voting rights – has the power to participate in the financial and operating policy decisions, such as the participation in shareholders' agreements, due to specific legal relationships. These companies are consolidated using the equity method whereby on initial recognition the investment is recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the equity of the investee after the date of acquisition, using the most recently approved financial statements of the companies. The difference between

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the carrying amount of the equity investment and the investee's share of equity is included in the carrying amount of the investee.

Changes to the consolidation scope

Compared to 31 December 2016, the consolidation scope saw the entry of the following companies: a) the consolidation of New Horizon Capital Management Ltd, based in Dubai, in which AZ International Holdings SA has an 80% investment. The difference between the fair value of the assets and liabilities purchased and the consideration paid to purchase the equity investments, totalling 0.3 million euro, was allocated to goodwill. b) The consolidation of the following Australian companies: Peters & Partners Pty Ltd, Menico Tuck Parrish Financial Solutions Pty Ltd, Wealthmed Australia Pty Ltd, Farrow Hughes Mulcany Financial Services Pty Ltd, Henderson Maxwell Accounting Pty Ltd and Dunsford Financial Plannings Pty Ltd (acquired through the Australian subsidiary AZ NGA). The purchase agreements of the six companies provided for the exchange of the shares of each company purchased with AZ NGA shares and the progressive repurchase of these shares over the next ten years. The residual 51% was paid in cash to the founding members. The difference between the fair value of the assets and liabilities purchased and the consideration paid to purchase the equity investments, totalling 34.8 million euro, was allocated to goodwill. Specifically: • the acquisition of Peters & Partners Pty Ltd led to the recognition of goodwill of 2,702 thousand euro; • the acquisition of Menico Tuck Parrish Financial Solutions Pty Ltd led to the recognition of goodwill of 3,418 thousand euro; • the acquisition of Wealthmed Australia Pty Ltd led to the recognition of goodwill of 4,635 thousand euro; • the acquisition of Farrow Hughes Mulcany Financial Services Pty Ltd led to the recognition of goodwill of 8,426 thousand euro; • the acquisition of Henderson Maxwell Accounting Pty Ltd led to the recognition of goodwill of 7,263 thousand euro;

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• the acquisition of Dunsford Financial Plannings Pty Ltd led to the recognition of goodwill of 5,124 thousand euro; • the acquisition of Hurvitz Geller Pty Ltd led to the recognition of goodwill of 3,203 thousand euro. c) The consolidation of the newco Azimut Analytics S.r.l., in which Azimut Holding S.p.A. has a 60% investment. The residual portion is held by third parties. d) The consolidation of Futurainvest Holding SA, which wholly owns Azimut Brasil DTVM Ltda, led to the recognition of goodwill of 1,259 thousand euro.

Azimut Holding S.p.A.’s direct and indirect subsidiaries are listed below.

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1. Wholly-owned subsidiaries

Type of Stake Registered Name ownership Voting office Shareholder % stake (*) rights % A. Wholly-owned companies consolidated on a

line-by-line basis 1 Azimut Capital Management Sgr S.p.A. Italy 1 Azimut Holding S.p.A. 100 100 Azimut Holding S.p.A. 51 51 2 AZ Fund Management SA Luxembourg 1 Azimut Partecipazioni S.r.l. 30 30 Azimut Financial Insurance S.p.A. 19 19 3 AZ Life dac Ireland 1 Azimut Holding S.p.A. 100 100 4 Azimut Global Counseling S.r.l. Italy 1 Azimut Holding S.p.A. 100 100 5 Azimut Enterprises Holding S.r.l. Italy 1 Azimut Holding S.p.A. 100 100 6 Azimut Analytics S.r.l. (**) Italy 1 Azimut Enterprises Holding S.r.l. 60 60 7 Azimut Libera Impresa Sgr S.p.A. Italy 1 Azimut Holding S.p.A. 100 100 8 Azimut Financial Insurance S.p.A. Italy 1 Azimut Holding S.p.A. 100 100 9 Azimut Partecipazioni S.r.l. Italy 1 Azimut Holding S.p.A. 100 100 10 AZ International Holdings SA Luxembourg 1 Azimut Holding S.p.A. 100 100 11 An Zhong (AZ) Investment Management Hong Kong 1 AZ International Holdings SA 100 100 An Zhong (AZ) Investment Management Hong Kong 12 Hong Kong 1 An Zhong (AZ) Investment Management 100 100 Ltd An Zhong Investment Management (Shanghai) Co. An Zhong (AZ) Investment Management Hong 13 Shanghai 1 100 100 Ltd. Kong Ltd 14 Compagnie de Gestion Privée Monégasque Monaco 1 AZ International Holdings SA 51 51 15 CGM Italia SGR S.p.A. Italy 1 Compagnie de Gestion Privée Monégasque 51 51 16 Katarsis Capital Advisors SA Switzerland 1 AZ International Holdings SA 100 100 17 Eskatos Capital Management Sarl Luxembourg 1 Katarsis Capital Advisors SA 100 100 18 AZ Swiss & Partners SA Switzerland 1 AZ International Holdings SA 51 51 19 AZ Sinopro Financial Planning Ltd Taiwan 1 AZ International Holdings SA 51 51

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Type of Stake Registered Name ownership Voting office Shareholder % stake (*) rights % A. Wholly-owned companies consolidated on a

line-by-line basis 20 AZ Sinopro Investment Planning Ltd Taiwan 1 AZ Sinopro Financial Planning Ltd 51 51 21 AZ Sinopro Insurance Planning Ltd Taiwan 1 AZ Sinopro Investment Planning Ltd 51 51 22 AZ Investment Management Singapore Ltd Singapore 1 AZ International Holdings SA 100 100 23 AZ Brasil Holdings Ltda Brazil 1 AZ International Holdings SA 99.9 99.9 24 AZ Quest Participações SA Brazil 1 AZ Brasil Holdings Ltda 65.4345 65.43 25 AZ Quest Investimentos Ltda Brazil 1 AZ Quest Participações SA 65.37 65.37 26 Azimut Brasil Wealth Management Holding SA Brazil 1 AZ Brasil Holdings Ltda 95.80 95.80 M&O Consultoria, Planejamento e Análise de Valores Azimut Brasil Wealth Management Holding 27 Brazil 1 95.71 95.71 Mobiliários Ltda S.A. Azimut Brasil Wealth Management Holding 28 Futurainvest Investimentos e Participações Ltda Brazil 1 95.71 95.71 S.A. Azimut Brasil Wealth Management Holding AZ & Partners Gestão de Recursos Ltda Brazil 1 100 100 S.A. Azimut Brasil Wealth Management Holding 29 Azimut Brasil Wealth Management Ltda Brazil 1 90.41 90.41 S.A. 30 Futurainvest Holding SA Brazil 1 AZ Brasil Holdings Ltda 99.9 99.9 31 Azimut Brasil DTVM Ltda Brazil 1 Futurainvest Holding SA 99.9 99.9 32 Azimut Portföy Yönetimi A.Ş. Turkey 1 AZ International Holdings SA 100 100 33 AZ Mexico Holdings S.A. de CV Mexico 1 AZ International Holdings SA 94.79 94.79 34 Mas Fondos SA Mexico 1 AZ Mexico Holdings S.A. de CV 94.79 94.79 35 AZ Next Generation Advisory PTY Ltd Australia 1 AZ International Holdings SA 52.42 52.42 36 Eureka Whittaker Macnaught PTY Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 37 Pride Advice PTY Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 38 Lifestyle Financial Planning Services (LFPS) PTY Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 39 Eureka Financial Group PTY Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 40 Pride Financial PTY Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42

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Type of Stake Registered Name ownership Voting office Shareholder % stake (*) rights % A. Wholly-owned companies consolidated on a

line-by-line basis 41 Wise Planners PTY Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 42 Domane Financial Advisers PTY Ltd Australia 1 Wise Planners PTY Ltd 52.42 52.42 43 Financial Lifestyle Partners PTY Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 44 Harvest Wealth PTY Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 45 RI Toowoomba PTY Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 46 Empowered Financial Partners PTY Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 47 Wealthwise PTY Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 48 Priority Advisory Group PTY Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 49 Sterling Planners PTY Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 50 Logiro Unchartered PTY Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 51 Aspire Pty Ltd Australia 1 Logiro Unchartered PTY Ltd 52.42 52.42 52 On-Track Financial Solutions Pty Ltd Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 53 AZ Sestante Ltd Australia 1 AZ International Holdings SA 100 100 54 AZ Andes S.p.A. Chile 1 AZ International Holdings SA 92 92 55 Sigma Funds Management PTY Ltd Australia 1 AZ International Holdings SA 51 51 56 AZ US Holding Inc. United States 1 AZ International Holdings SA 100 100 57 AZ Apice Capital Management LLC United States 1 AZ US Holding Inc. 70 70 58 Pride SMSF PTY Ltd Australia 1 Pride Financial Pty Ltd 52.42 52.42 59 Priority Advisory Trust Australia 1 Priority Advisory Group PTY Ltd 52.42 52.42 Wise Planners Pty Ltd 52.42 52.42 60 Priority Lifestile Advice Pty Ltd Australia 1 Priority Advisory Group Pty Ltd 52.42 52.42

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Type of Stake Registered Name ownership Voting office Shareholder % stake (*) rights % A. Wholly-owned companies consolidated on a

line-by-line basis AZ Next Generation Advisory Accounting PTY 61 Peters & Partners Pty Ltd (**) Australia 1 52.42 52.42 Ltd 62 Menico Tuck Parrish Financial Solution Pty Ltd (**) Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 63 AZ Next Generation Accounting Pty Ltd (**) Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 United Arab 64 AZ New Horizon Ltd (**) 1 AZ International Holdings SA 80 80 Emirates 65 Wealthmed Australia Pty Ltd (**) Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 66 Wealthmed Accounting Pty Ltd (**) Australia 1 Wealthmed Australia Pty Ltd 52.42 52.42 67 Wealthmed Property Pty Ltd (**) Australia 1 Wealthmed Australia Pty Ltd 52.42 52.42 68 Wealthmed Financial Planning Pty Ltd (**) Australia 1 Wealthmed Australia Pty Ltd 52.42 52.42 Farrow Hughes Mulcahy Financial Services Pty Ltd 69 Australia 1 52.42 52.42 (**) AZ Next Generation Advisory PTY Ltd 70 H&H Wealth Management Pty Ltd (**) Australia 1 Priority Advisory Group Pty Ltd 52.42 52.42 71 Menico Tuck Parish Pty Ltd (**) Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 72 Henderson Maxwel No.2 Pty Ltd (**) Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42 73 Henderson Maxwell Financial Planning Pty Ltd (**) Australia 1 Henderson Maxwel No.2 Pty Ltd 52.42 52.42 74 Henderson Maxwell Accounting Pty Ltd (**) Australia 1 Henderson Maxwel No.2 Pty Ltd 52.42 52.42 75 Hurwitz Geller Pty Ltd (**) Australia 1 AZ Next Generation Accounting Pty Ltd 52.42 52.42 76 Dunsford Financial Plannings Pty Ltd (**) Australia 1 AZ Next Generation Advisory PTY Ltd 52.42 52.42

(*) Type of ownership (**) Newly consolidation compared to 31/12/2016 (1) Majority of voting rights at ordinary shareholders’ meetings

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Investments measured at equity

Stake Registered Voting Name office Shareholder % Stake rights % Companies measured at equity 1. Cofircont Compagnia Azimut Enterprises Italy 30 30 Fiduciaria S.r.l. Holding S.r.l. Azimut Enterprises 2. SiamoSoci S.r.l. Italy 22 22 Holding S.r.l. Azimut Global Counseling 3. Ipo Challenger 1 S.p.A. Italy 31 31 S.r.l./ Ipo Club 4. Sterling Planners WA Australia Sterling Planners Pty Ltd 26.21 26.21 (*) (*) Newly consolidation compared to 31/12/2016

2. Significant assessments and assumptions used to determine the consolidation scope

Unit linked Furthermore, the line-by-line consolidation scope excludes the Unit-Linked Funds (insurance internal funds) ("Unit linked") in which the Azimut Group does not hold any equity investment and to which the IFRS 10 definition of control does not apply. Indeed, these are negligible investments in terms of company capitalisation. With respect to the mutual funds underlying the Unit-Linked Funds, the Azimut Group considers that these conditions do not apply. Indeed, it believes that: - it does not hold the outstanding majority units; - it does not have full power over the investment entity (funds), since it is limited by funds' regulations governing asset allocation and management policies; - it is not significantly exposed to the variable returns from the investment entity, since the profits or losses from the measurement of Unit Linked assets are entirely paid to policyholders by adjusting the mathematical reserve. The exposure to the changes in the value of the Group's funds is limited to the change in terms of fee impact. Specifically, the Group is exposed to the risk of changes in entry fees and charges on premiums, linked to the performance of inflows, the management fees related to

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assets under management and the incentive fees linked to the performance of the managed funds.

3. Wholly-owned subsidiaries with significant non-controlling interests In 2015, the Azimut Group, through AZ NGA, the holding company incorporated in November 2014, began a series of acquisitions in Australia. The relevant agreements provide for the following: (i) the exchange of shares with AZ NGA shares and the progressive repurchase of said shares in the next ten years, equal to 49% of each company and (ii) a cash payment to founding members over two years for the residual 51%.

4. Significant restrictions There are no significant legal, contractual or regulatory restrictions within the Azimut Group which may limit the Parent Company's ability to transfer cash and cash equivalents or other assets to other Group companies, or guarantees which may limit the distribution of dividends, capital or loans and advances granted or repaid to other Group companies.

5. Other information Basis of consolidation Investments in subsidiaries are consolidated on a line-by-line basis, while interests in jointly- controlled entities and associates are measured using the equity method. Line-by-line method – Under this consolidation method, the companies' balance sheet and income statements figures are consolidated line-by-line. The carrying amount of equity investments is offset against the residual equity of the subsidiary after allocating the relevant portions of equity and profit or loss to non-controlling interests. Positive differences are recognised under "Intangible assets” as goodwill, after allocation to the subsidiary's asset or liability items measured at fair value, upon acquisition and first-time consolidation. Conversely, negative differences are taken to profit or loss.

For the purposes of consolidation, the financial statements at 31 December 2017 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 data about individual financial statements

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are obtained through the information included in the reporting packages of the consolidated companies at 31 December 2017. The Parent Company’s 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 carrying amount 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 positive differences between the carrying amount of 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 on consolidation and tested for impairment to check the adequacy of the amount recognised. For consolidated companies that prepare their financial statements in a functional currency different from that of the Parent company, the amounts expressed in currencies 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 for the year are classified under the specific item Exchange rate differences in the Valuation reserve. Equity method – The equity investment over which the Group has significant influence or has joint control, as defined by IAS 28, are measured using the equity method. Under this method, the equity investment is initially recognised at cost and the carrying amount is increased or decreased to reflect the parent's share of profit or loss earned/incurred after the acquisition date. The share of the profit (loss) for the year attributable to the parent is recognised in the latter's income statement. The dividends received from an investee decrease the carrying amount of the equity investment. Furthermore, the carrying amount may be adjusted also following the change in the percentage of investment in the investee, due to changes in the latter's equity not recognised in the income statement. These changes include those arising from the translation of foreign currency items. The portion related to these changes is recognised directly in equity. When the investee incurs

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losses and these losses exceed the carrying amount of the investment, the latter's carrying amount is zeroed and any further losses are recognised only when the parent has legal or constructive obligations or has made payments on behalf of the investee. If the investee subsequently earns a profit, the parent recognises the share of profit attributable to it only when it has reached the same amount of the previously unrecognised loss. The consolidation of associates and/or jointly-controlled entities considers the financial statements prepared and approved by the board of directors of each company.

Compagnie de Gestion Privée Monégasque SAM and CGM Italia Sim S.p.A. With respect to the consolidation of Compagnie de Gestion Privée Monégasque SAM and CGM Italia Sim S.p.A., in accordance with IFRS 10, 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 Compagnie de Gestion Privée Monégasque 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).

Business combinations carried out in 2017 With respect to the adoption of IFRS 3 and the fair value measurement of the assets and liabilities of the companies acquired in 2017, the relevant standard provides for the temporary allocation of the acquisition cost, to be finalised within 12 months of the acquisition date. At the reporting date, this process is still underway for the companies acquired after July 2017.

A.2 Key financial statements items

This section describes the accounting standards used to prepare the consolidated financial statements at 31 December 2017, specifically the classification, recognition, measurement and derecognition of assets and liabilities items, and the recognition of income and expense. The accounting standards have been applied consistently in the current and previous years.

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1 – Financial assets measured at fair value Classification – This category includes investments relating to insurance contracts (unit- linked policies) issued by the Irish subsidiary AZ Life Dac where the investment risk is borne by policyholders and comprise UCI units. Measurement – 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 carrying amounts, corresponding to the purchase cost, are taken to profit or loss. Derecognition – 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.

2 – Available-for-sale financial assets Classification – Financial assets held by the Group companies are classified in this category in the context of liquidity management policies. This category also includes equity investments, which do not qualify as subsidiaries, associates or jointly-controlled entities. Recognition – 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. Measurement – They are subsequently recognised at their fair value, recognising any fair value gains or losses in the specific 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/depreciation, exceeds fair value significantly or in a prolonged way. With respect to impairment testing, the Company employs a specific policy that sets the impairment thresholds in terms of severity and of durability, both according to the type of financial instrument.

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Specifically, the impairment thresholds include, in terms of severity, a loss of 20% for “debt instruments10” and a loss of 30% for the “other financial instruments11”. 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. The cumulative profit 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. Equity investments 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. For the purposes of applying IAS 39.61, the Group identified the following impairment thresholds beyond which the fair value (FV) decrease of an equity instrument listed on an active market classified as AFS is deemed significant or prolonged, therefore indicating an impairment loss. Derecognition – 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 their ownership.

3 – Receivables Receivables include the amounts due from banks, from financial institutions, from customers and managed funds, or all receivables involving fixed payments or in any case payments which are definable and are not listed on an active market. Recognition and measurement – As this item 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

10 Money market instruments, bonds, money market and bond mutual funds. 11 Securities, equity, balanced and flexible mutual funds, private equity and hedge funds.

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that coincides with the initial value “net of any write-downs”, since no additional transaction costs are expected and since such loans are granted at market rates (Euribor plus spread). Derecognition – They are derecognised once settled.

4 – Equity investments Classification – Equity investments include equity investments that are deemed to be strategic investments. Companies are classified as associates when the Group has significant influence thereon, but not control or joint control over their financial and operating policies. The Group has a significant influence on a company when it holds at least 20% of the voting power, unless it can be clearly demonstrated that this is not the case. The possible exercise or conversion of potential voting rights is a factor to be considered in deciding whether significant influence exists. Recognition and measurement – Equity investments in associates are recognised using the equity method which provides for initial recognition at cost. The equity investment is subsequently adjusted to reflect the share of the profit (or loss) of the associate after the date of acquisition. Minority interest does not include any potential voting rights. Since goodwill included in the carrying amount 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 carrying amount is tested for impairment pursuant to IAS 36, by comparing its recoverable amount – calculated based on the value in use – and its corresponding carrying amount, whenever the application of the provisions set forth in IAS 36 indicates a potential impairment. The differences between the value of the equity investment and the associate’s shareholders’ equity are included in the associate’s carrying amount, whereas the share of the profits/(losses) generated during the year by the associate in question is recognised in the consolidated income statement. Any impairment losses on the equity investment pursuant to IAS 36 are recognised in the income statement.

5 – Tangible assets Classification – They include business properties, technical plant, furniture and fixtures, other machinery and equipment of any kind and leasehold improvements.

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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. Recognition and measurement – They are initially recognised at cost, including the additional 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. Derecognition – Tangible assets are derecognised upon disposal or when the asset has been retired and future benefits are not expected from its disposal.

6 – Intangible assets Classification – Intangible assets include goodwill, goodwill on consolidation and application software for long-term use. Recognition – Goodwill on consolidation is determined, on first-time consolidation, based on the difference between the fair value of the subsidiaries’ shareholders’ equity and the carrying amount of the investments. Measurement – Goodwill and goodwill on consolidation are not amortised systematically, but are tested for impairment annually to check the adequacy of the carrying amount in accordance with that set out in IAS 36 Impairment of assets. Software is recognised at cost, net of amortisation and impairment losses. Such assets are amortised based on their estimated residual useful life. Recognition of income components – The amount of the impairment, determined on the basis of the difference between the carrying amount and its recoverable amount, if lower, is recognised in the income statement.

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Derecognition – Intangible assets are derecognised at the date of disposal and when no future economic benefits are expected.

7 – Tax assets and liabilities Current taxes are calculated in accordance with ruling tax rates and legislation. When they are not paid, they are recognised under liabilities. Income taxes are recognised in the income statement, except for those related to items directly credited or debited to equity. The provision for taxes is recognised based on a prudent estimate of the current and deferred tax charge. The balance-sheet liability method is applied to deferred taxes. Specifically, deferred tax assets and liabilities are calculated in respect of the temporary differences – without time limits – arising between the value of assets and liabilities according to statutory criteria and their value for tax purposes. Deferred tax assets are recognised to the extent their recovery is probable, based on the company's ability to generate ongoing positive taxable income.

8 – Other assets This item includes assets which are not ascribable to other assets items. It also comprises receivables from financial advisors. This item also includes prepayments 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.

9 – Payables Recognition and measurement – Short-term trade payables (due within 12 months) are recognised at their par value. Payables in the form of medium/long-term loans, initially recognised at the amount collected, are subsequently measured at amortised cost using the effective interest rate method. The

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amortised cost corresponds to the initial carrying amount, since no transaction costs are applicable and since the nominal interest rate of such liabilities is in line with market rates. Derecognition – Payables are derecognised once settled.

10 – Outstanding securities This item includes the bond issued by Azimut Holding S.p.A. For the purposes of the accounting treatment of the issue of the Azimut ’17-22 non-convertible bond and subsequent early redemption through the repurchase of the Azimut ’13-20 convertible bond, as per IAS 32.40, the company recognised the transaction as a settlement of an original financial liability and recognised a new financial liability which is “substantially different” from the previous one. In order to determine whether a new financial liability is “substantially different” from the previous one, the company decided to adopt an accounting policy which uses both qualitative (through the analysis of contractual terms and conditions such as expiry date, rate, type of seniority, existence of embedded options, etc.) and quantitative criteria (AG 62 of IAS 32). According to this policy, the terms and conditions are deemed substantially different when the present value of cash flows under the new terms and conditions, including any fee paid, net of any fee received and discounted using the original effective interest rate, differs by at least 10% from the discounted value of the residual cash flows of the original financial liability. Recognition – Outstanding securities are recognised when issued or when a new placement takes place based on the "settlement date” principle. They are initially recognised at fair value which usually corresponds with the collected amount or the issue price, adjusted to reflect any additional cost and income directly attributable to funding or issue transactions. Internal administrative costs are not included. The fair value of outstanding securities issued at below- the-market conditions is subject to a specific estimate and the difference with respect to market value is taken directly to income statement. The costs borne for the bond issue are allocated proportionally to the debt component and the equity component, in the case of convertible debt instrument. Measurement – Subsequent to initial recognition, this debt component is measured at amortised cost, using the effective interest rate method. Derecognition – Outstanding securities are derecognised after expiry or settlement. They are derecognised also when previously issued securities are repurchased. The difference between

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the carrying amount of the security and the amount paid to repurchase it is taken to the income statement. A new placement of own securities subsequent to their repurchase is considered a new issue with the recognition of the new placement price, with no impact on the income statement. Recognition of income components – Interest expense is recognised under the item Interest expense and similar charges in the income statement, using the effective interest rate method.

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

12 – Financial liabilities measured at fair value This item includes: (i) the commitments to policyholders arising from the unit-linked policies issued by AZ Life Dac, classified as investment contracts where the investment risk is borne by policyholders; (ii) the liabilities arising from the future exercise of the call options of the residual portion of share capital of some recently acquired companies; (iii) the covered warrant which provides for the subscription of the purchase or sale of a specific underlying financial asset at a pre-established price and date. Recognition and measurement – The measurement of call options reflects the amount 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 the income statement. The covered warrant is defined as a derivative financial instrument and recognised at fair value upon initial recognition. Any subsequent changes in fair value will be recognised with a balancing entry in profit or loss. Derecognition – Financial liabilities are derecognised once settled.

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13 – Other liabilities Classification – This item includes liabilities that are not ascribable to other liability items. This item includes: (i) the financial liabilities related to outstanding commitments for the purchase of residual equity investments in some subsidiaries, as per the relevant agreements. 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; (ii) the 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), calculated on the basis of actuarial criteria and representing the best estimate of the expense required to settle the foregoing liabilities. Recognition – Short-term liabilities (due within 12 months) and trade payables are recognised at their par value. Derecognition – Other liabilities are derecognised once settled.

14 – Staff severance pay (TFR) In accordance with the legislation governing TFR introduced by Italian Legislative Decree dated 5 December 2005, the staff severance pay (TFR), recognised under liability item 100 to the extent of the portion accrued until 31 December 2007, qualifies as a defined benefit plan and is therefore subject to actuarial measurement, using the Projected Unit Credit Method (PUCM) which projects future cash flows based on historical, statistic and probabilistic analyses and applying adequate demographic techniques. Cash flows are discounted using the market interest rate. Actuarial calculations are performed by independent actuaries. The costs arising from the plan are reported under personnel costs item Administrative costs; a) personnel costs, net of the contributions paid, those pertaining to prior years not yet recognised, interest accrued and expected income arising from plan assets. In accordance with IAS 19, actuarial gains and losses are recognised in a specific Valuation reserve.

15 – Provisions for risks and charges Recognition – Accruals to provisions for risks and charges are recognised if, and only if: - there is a present obligation (legal or constructive) as a result of past events; - it is probable that an outflow of resources will be required to generate economic benefits; and

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- a reliable estimate can be made of the amount of the obligation. Measurement – The amount accrued is the best estimate of the expense required to settle the obligation at the reporting date and reflects the risks and uncertainties that inevitably characterise many facts and circumstances. The amount accrued is equal to the present value of the expense required to settle the obligation where the effect of the present value is a significant aspect. The future facts which may affect the expense required to settle the obligation are considered only when there is objective evidence that they will take place. The accruals to the provisions for risks and charges include the risk arising from tax disputes, if any. Derecognition – Accruals are derecognised when the use of resources that generate economic benefits to settle the obligation becomes improbable.

16 – Costs and income They are recognised on an accrual basis. Costs are recognised when incurred. Those directly related to financial instruments measured at amortised cost and which can be determined since the beginning, regardless of the moment they are paid, are taken to the income statement using the effective interest rate. Income is recognised when received, or when it is probable it will be received and when it can be reliably calculated. Fees, commissions and other income from services offered to customers are included in the income statement at the time the services are provided. Financial income and charges are recognised on an accrual basis, based on accrued interest and applying the effective interest rate method.

17 – Treasury shares They are recognised as a decrease in equity. Profits or losses arising from the purchase, sale, issue or elimination of treasury shares are not recognised in the income statement, but in equity.

18 – Profit-participating financial instruments The profit-participating financial instruments issued by Azimut Holding S.p.A. as per the Shareholders' resolution of 29 April 2010 and subsequent resolutions of the Parent

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Company's Board of Directors are recognised under Equity instruments at the subscription amount, equal to their fair value, increasing shareholders’ equity. Indeed, under the By-laws, they have an indefinite life, are issued with no obligation for the Parent Company to repay the amount paid by investors, participate in the allocation of the Parent Company's residual assets in case of liquidation, in subordination to the creditors and shareholders. These instruments are not transferable, except to the Parent 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.

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19 – Business combinations and changes in equity investments Business combinations are recognised in accordance with the acquisition method (IFRS 3) whereby the identifiable acquired assets and assumed liabilities, including contingent ones, are recognised at their fair value at the acquisition date (i.e., the date on which the Group obtains effective control of the company). The fair value of acquired assets and assumed liabilities is calculated within one year of the acquisition.

For each business combination, minority interests in the acquiree, if any, are recognised at fair value or in proportion to the minority interests' percentage in the net identifiable assets of the acquiree. Goodwill is initially measured at cost, being the excess amount of the sum of the consideration paid and the minority interests over the fair value of the net assets acquired by the Group (net of assumed liabilities). When the sum is below the fair value of the net assets of the acquiree, the difference is taken to the income statement.

In a business combination achieved in stages, the Group recalculates the interest it already held in the company owned prior to obtaining control at the respective fair value calculated at the date control was acquired, recognising any resulting gain or loss in the income statement. Changes in the investment held in a subsidiary that do not entail the loss of control are recognised as Group's equity transactions. Acquisition-related costs are recognised in the income statement of the year in which they are incurred.

Transactions carried out among two or more Group companies for reorganisation purposes are not considered business combinations. Transactions between jointly-controlled entities are recognised in the Group's financial statements using the acquiree's consistent amounts when they do not have a significant impact on the future cash flows.

20 – Share-based payments Classification – Share-based payments are settled by granting Azimut Holding S.p.A. ordinary shares (granting of rights to freely subscribe the shares when specific performance targets are achieved), against the services performed by the financial advisors to the subsidiaries, over a five-year plan.

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Recognition – Given the difficulties in reliably determining the fair value of the services received against the equity instruments, the cost allocated to subsidiaries is the best possible estimate of fair value, considering the performance targets at 31 December 2017. Measurement and recognition of income components – With respect to equity-settled share-based payments, the liabilities assumed are measured at the fair value of the latter and recognised under item 160. Reserves – Other equity reserves. The balancing entry is recognised under item 20. Fee and commission expense.

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A.3 Disclosure about financial asset transfers between portfolios

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

A.4. Fair value disclosure Quantitative information A.4.5 Fair value hierarchy 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 measurement;  Level 2: inputs other than unadjusted quoted prices (as per level 1) that are directly (as in the case of prices) or indirectly (deriving from prices) observable market data;  Level 3: inputs based on unobservable market data.

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 financial 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 policies and financial liabilities issued, according to the Group's main policies:  government bonds and open-ended mutual 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

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and Exchange Traded 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;  the equity securities reported as Available-for-sale financial assets measured at cost and financial liabilities related to the commitments to purchase the residual equity investments in some subsidiaries in accordance with ruling contractual agreements fall under level 3. With respect to liabilities, 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 the income statement. The liabilities also include the covered warrant issued by Azimut Capital Management Sgr S.p.A. to some employees (managers) which provides for the subscription of the purchase or sale of a specific underlying financial asset at a pre-established price and date. Financial liabilities are derecognised once settled.

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A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: 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 1,051,698 5,648,585 6,700,283 3. Available-for-sale financial assets 275,169 11,788 286,957 4. Hedging derivatives

Total 1,326,867 5,648,585 11,788 6,987,240

1. Held-for-trading financial liabilities 2. Financial liabilities measured at fair value 6,605,461 133,118 6,738,579 3. Hedging derivatives

Total 6,605,461 133,118 6,738,579

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A.4.5.2 Annual change in financial assets measured at Level 3 fair value on a recurring basis

FINANCIAL ASSETS Assets Held-for- measured Available-for- Hedging Tangible Intangible trading at fair sale assets assets assets assets assets value 1. Opening balance 9,503 2. Increases 2,285 2.1. Purchases 2,285 2.2. Profits allocated to: - 2.2.1 Profit or loss of which: gains 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 of which: losses 3.3.2 Shareholders’ equity 3.4. Transfers from other levels 3.5. Other decreases 4. Closing balance 11,788

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A.4.5.3 Annual changes in liabilities measured at Level 3 fair value on a recurring basis

Financial liabilities Held-for-trading measured at fair Hedging derivatives financial liabilities value

1. Opening balance 104,035 2. Increases 41,943 2.1. Purchases 18,763 2.2. Losses charged to: 23,180 2.2.1 Profit or loss 11,523 of which: losses - 2.2.2 Shareholders’ equity 11,657 2.3. Transfers from other levels 2.4. Other increases 3. Decreases 12,859 3.1. Sales 3.2. Redemptions 16 3.3. Profits allocated to: 12,843 3.3.1 Profit or loss 7,146 of which: gains - 3.3.2 Shareholders’ equity 5,698 3.4. Transfers from other levels 3.5. Other decreases 4. Closing balance 133,119

A.5 – Disclosure about the so-called “Day one profit/loss” The Group did not carry out transactions which entailed recognition of the so-called “day one profit/loss”.

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Operating segment disclosure (IFRS 8) Despite being performed via various companies, each specialising in the sale, marketing, and management of financial and insurance products (essentially unit-linked), the activity of the Azimut Group falls within a single operating segment. As a matter of fact, the nature of the various products and services offered, the structure of the management and operating processes, the type of customers, as well as the methods adopted for the distribution of products and services are sufficiently similar as to ensure that the risks and benefits of the various Group companies do not differ to any great extent but, on the contrary, have many comparable features. Furthermore, the business model of the operating companies directly and indirectly controlled by Azimut Holding S.p.A. is distinguished by the strong interaction between management and distribution activities. The distribution network is able to steer customers towards products that enable the management team to best exploit the market time and, on 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 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 IAS/IFRS. Similarly, no information is provided on income per customer, profits and assets in the form of breakdown by geographical area as IFRS 8 disclosure requirements are not currently met. Therefore, given that there is only one operating segment subject to disclosure, as regards information on income from customers by product/service, please see the details on fee income and net premiums reported with data from the income statement included in these consolidated notes.

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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 2017.

2017 2016 Basic earnings per share 1.639 1.300 Average number of outstanding shares (*) 131,080,195 132,860,826 Diluted earnings per share 1.639 1.300 Average number of outstanding shares (*) 131,080,195 132,860,826 * Outstanding shares are calculated net of treasury shares held by Azimut Holding S.p.A. at the reporting date.

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PART B – NOTES TO THE BALANCE SHEET

ASSETS

Section 1 – Cash and cash equivalents

“Cash and cash equivalents” amount to 28 thousand euro and refer to cash on hand.

Section 3 – Financial assets measured at fair value

The item amounts to 6,700,283 thousand euro (6,447,427 thousand euro at 31 December 2016).

3.1 Breakdown of “Financial assets measured at fair value”

Total 31/12/2017 Total 31/12/2016 Items/Value Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

1. Debt securities 7,274 30,304 56,352 12,037 - - - of which: government 7,274 - 56,352 - securities - - 2. Equity securities and UCI 535,550 5,618,281 55,004 6,221,924 units - -

3. Other assets 508,874 - 102,110 - - -

Total 1,051,698 5,648,585 - 213,466 6,233,961 -

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

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3.2 Financial assets measured at fair value: breakdown by debtor/issuer

Items/Value Total 31/12/2017 Total 31/12/2016

1. Financial assets 6,700,283 6,447,427 a) Governments and central banks 7,274 56,352 b) Other public bodies - - c) Banks 508,874 102,110 d) Financial institutions - - e) Other issuers 6,184,135 6,288,965

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Section 4 – Available-for-sale financial assets

This item amounts to 286,957 thousand euro (276,963 thousand euro at 31 December 2016). The breakdown is as follows:

4.1 Breakdown of “Available-for-sale financial assets”

Total 31/12/2017 Total 31/12/2016 Items/Value Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

1. Debt securities 1,421 - - 1,014 - - - of which: government securities ------2. Equity securities and UCI units 273,748 - 11,788 266,446 - 9,503 3. Other assets ------

Total 275,169 - 11,788 267,460 - 9,503

“UCI units” (Level 1) refer to the units in mutual funds managed by the Azimut Group as part of the Group’s liquidity management policies.

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4.2 Available-for-sale financial assets: breakdown by debtor/issuer

Items/Value Total 31/12/2017 Total 31/12/2016

1. Financial assets 286,957 276,963 a) Governments and central banks 1,421 1,014 b) Other public bodies - - c) Banks 787 1,398 d) Financial institutions - - e) Other issuers 284,749 274,551

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Section 6 – Receivables

6.1 Receivables The item amounts to 263,790 thousand euro (189,305 thousand euro at 31 December 2016).

The breakdown is as follows:

Total 31/12/2017 Total 31/12/2016

Fair value Fair value Breakdown Carrying Carrying amount amount Level Level Level Level Level 1 Level 1 2 3 2 3

1. Receivables for portfolio 90,219 management services 74,496 74,496 90,219 - -

1.1. UCI units 85,614 68,279 68,279 85,614 - -

1.2 individual portfolio management 3,037 4,466 4,466 3,037 - -

1.3 pension fund management 1,569 1,751 1,751 1,569 - -

2. Receivables for other services: 17,286 29,387 29,387 17,286 - -

2.1 advisory services ------

2.2 outsourced corporate functions ------

2.3 other 29,387 29,387 17,286 17,286 - -

3. Other receivables 159,907 159,907 81,800 81,800 - -

3.1 repurchase agreements ------

of which: for government securities ------

of which: for other debt securities ------of which: for equity securities and - - units - - - -

3.2 deposits and current accounts 159,907 159,907 81,800 81,800 - -

3.3 other - - - - -

4. Debt securities - - - - -

Total 263,790 263,790 - - 189,305 189,305 - -

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

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“Receivables for other services” mainly include 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.

“Receivables for portfolio management services” include receivables in the form of fee and commission income on mutual funds and discretionary portfolios accrued during December 2017 and collected the following month.

6.2 Receivables: breakdown by counterparty

Banks Financial institutions Customers

Breakdown/Counterparty of which: of which: of which:

Group Group Group

1. Receivables for portfolio management services - - - - 74,496 - 1.1. UCI units - - - - 68,279 - 1.2 individual portfolio management - - - - 4,466 - 1.3 pension fund management - - - - 1,751 - 2. Receivables for other services: 2,534 - 6,405 - 20,448 - 2.1 advisory services ------2.2 outsourced corporate functions ------2.3 other 2,534 - 6,405 - 20,448 - 3. Other receivables 159,907 - - - - - 3.1 repurchase agreements ------of which: for government securities ------of which: for other debt securities ------of which: for equity securities and units ------3.2 deposits and current accounts 159,907 - - - - - 3.3 other ------4. Debt securities

Total 31.12.2017 162,441 - 6,405 - 94,944 - Total 31.12.2016 83,872 - 6,258 - 99,175 -

Section 9 – Equity investments

9.1 Equity investments: information

This item amounts to 1,343 thousand euro (935 thousand euro at 31 December 2016). It comprises equity investments in associates.

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Stake Registered Voting rights Name office % Shareholder % Stake

Companies measured at equity

1. Cofircont Compagnia Fiduciaria Italy Azimut Enterprises Holding S.r.l. 30 30 S.r.l. 2. SiamoSoci S.r.l. Italy Azimut Enterprises Holding S.r.l. 22 22 Azimut Global Counseling S.r.l./ Ipo 3. Ipo Challenger 1 S.p.A. Italy 31 31 Club 4. Sterling Planners WA Australia Sterling Planners Pty Ltd 26.21 26.21

9.2 Annual changes in equity investments

Total value

A. Opening balance 935 B. Increases 501 B.1 Purchases 417 B.2 Reversals of impairment losses B.3 Revaluations 84 B.4 Other changes C. Decreases 93 C.1 Sales C.2 Impairment losses 93 C.3 Other changes

D. Closing balance 1,343

9.3 Significant equity investments: accounting figures

Name Carrying Fair value (*) Dividends amount received 1. Cofircont Compagnia Fiduciaria S.r.l. 905 905 - 2. SiamoSoci S.r.l. 438 438 (*) As these companies are not listed, fair value coincides with the carrying amount.

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Section 10 – Tangible assets

The item amounts to 8,103 thousand euro (7,219 thousand euro at 31 December 2016).

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

Items/Value Total 31/12/2017 Total 31/12/2016

1. Company-owned 8,103 7,219 a) land - - b) buildings 148 157 c) furniture & fixtures 1,521 1,903 d) electronic systems -

e) other 6,434 5,159

2. Under finance lease - - a) land - - b) buildings - - c) furniture & fixtures - - d) electronic systems - - e) other - -

Total 8,103 7,219

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10.5 Tangible assets – business purposes: annual changes

Furniture & Electronic Land Buildings Other Total fixtures systems A. Opening gross balance - 311 8,697 0 20,448 29,456 - - - - A.1 Total net impairment losses - 154 6,794 15,289 22,237 A.2 Opening net balances 157 1,903 0 5,159 7,219 B. Increases 19 3,299 3,318 B.1 Purchases 19 3,299 3,318 B.2 Leasehold improvements B.3 Reversals of impairment losses B.4 Increases in fair value taken to: a) shareholders’ equity b) profit or loss B.5 Exchange rate gains

B.6 Transfers from investment property

B.7 Other changes C. Decreases -9 -401 -2,024 -2,434 C.1 Sales -20 -20 C.2 Depreciation -9 -401 -2,004 -2,414

C.3 Impairment losses 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) tangible assets held for investment purposes b) assets held for sale C.7 Other changes

D. Gross closing balance - 311 8,716 23,747 32,774 - - - - - D.1 Total net impairment losses - 163 7,195 17,313 24,671

D.2 Net closing balance 148 1,521 6,434 8,103 -

E. Measurement at cost 148 1,521 6,434 8,103 -

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Depreciation rates are as follows:

Description % rate Buildings 3% Furniture & fixtures 12% Other: Systems 15%-20-25% Motor vehicles 25% Electronic office equipment 20% Leasehold improvements based on the remaining duration of the lease

Sector 11 – Intangible assets

The item amounts to 557,410 thousand euro (517,315 thousand euro at 31 December 2016).

11.1 Breakdown of “Intangible assets”

Total 31/12/2017 Total 31/12/2016 Assets at Assets at Assets at Assets at cost fair value cost fair value

1. Goodwill 499,304 - 461,418 -

2. Other intangible assets 58,106 - 55,897 - 2.1 generated internally - - - - 2.2 other 58,106 - 55,897 -

Total 557,410 - 517,315 -

 “Goodwill” refers to: o the acquisition by Azimut Holding S.p.A. (formerly Tumiza S.p.A.) of the merged company Azimut Holding S.p.A., completed on 12 February 2002. This company wholly owned (directly or indirectly) all the companies of the Azimut Group. This item was calculated as the difference between the initial cost of the equity investment, at acquisition date, and the shareholders’ equity of the subsidiaries at 31 December 2001. Following the merger by incorporation of Azimut Holding S.p.A. into Tumiza S.p.A., with accounting effects on 1 July 2002, a portion of

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goodwill on consolidation, equal to 176.3 million euro amortised by 26.4 million euro prior to the adoption of IFRS, was included in “Goodwill" in the separate financial statements of Azimut Holding S.p.A.; o the acquisitions carried out through the subsidiary AZ international Holding SA to expand the Group abroad.

Recognised goodwill is shown below:

Total Total Company 31/12/2017 31/12/2016 Azimut Holding S.p.A. (formerly Tumiza S.p.A.) 283,252 283,252 Augustum Opus SIM 8,893 8,893 Futurimpresa SGR 173 173 - Total Azimut CGU 292,318 292,318 AZ NGA and subsidiaries 105,072 66,153 Compagnie de Gestion Monégasque 31,425 31,425 Azimut Brasil Holdings and subsidiaries 30,438 30,438 AZ Swiss & Partners - Sogenel acquisition 14,356 15,644 Azimut Portföy 9,232 9,232 Katarsis 6,756 6,756 Mas Fondos 6,122 6,122 Sigma Funds Management 1,442 1,442 AZ Sinopro Financial Planning 1,247 1,247 Athenaeum 592 592 AZ Sestante 49 49 AZ New Horizon 255 - 206,986 - Total AZ International CGU 169,100 Total 499,304 461,418

With respect to the equity investments acquired during the year, goodwill calculated as the difference between the net fair value of the assets and liabilities acquired and the carrying amount of the equity investment at the acquisition date relates to: • the acquisition of Peters & Partners Pty Ltd led to the recognition of goodwill of 2,702 thousand euro; • the acquisition of Menico Tuck Parrish Financial Solutions Pty Ltd led to the recognition of goodwill of 3,418 thousand euro;

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• the acquisition of Wealthmed Australia Pty Ltd led to the recognition of goodwill of 4,635 thousand euro; • the acquisition of Farrow Hughes Mulcany Financial Services Pty Ltd led to the recognition of goodwill of 8,426 thousand euro; • the acquisition of Henderson Maxwell Accounting Pty Ltd led to the recognition of goodwill of 7,263 thousand euro; • the acquisition of Dunsford Financial Plannings Pty Ltd led to the recognition of goodwill of 5,124 thousand euro; • the acquisition of Hurvitz Geller Pty Ltd led to the recognition of goodwill of 3,203 thousand euro.

“Other intangible assets – Other” refer to:  Trademarks of 42,632 thousand euro, of which the “Azimut” trademark amounting to 35,338 thousand euro.  Software totalling 15,474 thousand euro.

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11.2 Intangible assets: annual changes Total A. Opening balance 517,315 B. Increases 53,539 B.1 Purchases 15,653 B.2 Reversals of impairment losses B.3 Increases in fair value taken to: - shareholders’ equity - profit or loss B.4 Other changes 37,886

C. Decreases 13,444 C.1 Sales C.2 Amortisation 11,760 C.3 Impairment losses charged to: 1,684 - shareholders’ equity - profit or loss 1,684 C.4 Decreases in fair value charged to: - shareholders’ equity - profit or loss C.5 Other changes D. Closing balance 557,410

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

Description % rate Application software 33%

Impairment test With respect to "goodwill and goodwill on consolidation" and "trademarks" (when recognised as an intangible asset with an indefinite useful life), the international accounting standards, specifically IAS 36 “Impairment of assets”, stipulate that the company must perform annual impairment tests to check the adequacy of the amounts recognised during the drafting of the financial statements. 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.

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For the purposes of impairment testing, two cash generating units (CGUs) have been identified that basically reflect the Azimut Group’s business and to which the above intangible assets have been allocated. The first CGU reflects the activity carried out by the companies directly controlled by Azimut Holding S.p.A., 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 belonging to the Luxembourg company AZ International Holdings SA, wholly owned by Azimut Holding S.p.A. Foreign companies are also specialised in the management, promotion and distribution of financial and asset management products, each in the relevant geographical area and in accordance with the same integrated business model of the above-mentioned CGU. Therefore, management has set out a consolidated reporting system for AZ International Holdings SA which, in turn, must send the Parent Company Azimut Holding a consolidated reporting package for all foreign companies.

CGU AZ International

The impairment test for this CGU checks for impairment indicators on intangible assets allocated to the same CGU of 207 million euro. The companies which comprise the “CGU AZ International” are all the direct and indirect subsidiaries of AZ International Holdings SA listed in the “Consolidation scope” section of these notes.

CGU Azimut

The CGU of Azimut Holding S.p.A. is comprised of the following companies, that are focussed on management and distribution:

 Azimut Capital Management Sgr S.p.A.;

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 AZ Fund Management SA;  AZ Life Dac;  Azimut Global Counseling S.r.l.;  Azimut Enterprises Holding S.r.l.;  Azimut Libera Impresa Sgr S.p.A. (formerly Futurimpresa Sgr S.p.A.);  Azimut Financial Insurance S.p.A.

Again, the impairment test conducted on this CGU checks for impairment indicators on intangible assets of 292 million euro related to the CGU (including goodwill of 149.8 million and trademark of 35.3 million euro related to the Parent Company). For the purposes of the impairment test of intangible assets, management calculated the recoverable amount, based on the value in use, of each CGU identified using the Discounted Cash Flow (“DCF”) method and comparing such value in use with the carrying amount of the CGUs, inclusive of the above intangible assets. Value in use calculated using the DCF method is as follows: - calculation of unlevered cash flows for each CGU. For the purposes of this calculation, the expected cash flow was approximated to the net profit for the year. Profits for the first five years were therefore based on the “2015 – 2019 to 2022 Extended Business Plan”. The underlying assumptions are as follows: • average net inflows of 2.5 billion euro per year; • weighted average performance of 2.5%; • increase in overheads in line with forecast growth of personnel and structure; • increase in costs and income after 2022 steady at 2%. - Calculation of the weighted average cost of capital (“WACC”), equal to 8.14%, based on the following parameters: • risk free: 10-year Italian government bonds, average 2017; • Azimut beta: calculated on a five-year timescale with daily readings (source: Bloomberg); • market risk premium: extra return required for investments in shares rather than risk- free securities (Source: Credit Suisse Global Equity Strategy).

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Cost of capital calculation: WACC 31/12/2017 Risk-free rate 1.87% Market risk premium 5.60% Beta Unlevered 1.121 Risk premium 5.60% Cost of equity (Ke) 8.14% D / (D+E) 0% E / (D+E) 100% WACC 8.14%

Discounting cash flows over the five-year timescale and cash flow calculated for terminal value purposes at the WACC to estimate the Enterprise Value of the CGU and calculating the value in use of the CGU, adjusted to reflect the net financial position at 31 December 2017. Based on the above, management calculated Azimut CGU's and AZ International CGU's value in use at 5,227 million euro and 471 million euro, respectively. These amounts are greater than the CGUs' carrying amounts of 448 million euro and 280 million euro, respectively; therefore, no impairment losses were recognised. Furthermore, the two CGUs’ 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 losses.

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Impairment test on the Azimut CGU

Sensitivity Analysis

Differenza tra Valore d'uso e Valore contabile della CGU WACC 4.778,9 5,8% 6,3% 6,8% 7,3% 7,8% 8,3% 8,8% 9,3% 0,0% 4.932,5 4.611,7 4.338,1 4.102,0 3.896,2 3.715,2 3.554,8 3.411,6 0,5% 5.336,0 4.952,7 4.630,3 4.355,3 4.118,0 3.911,2 3.729,3 3.568,1 1,0% 5.823,7 5.358,1 4.972,9 4.648,8 4.372,5 4.134,1 3.926,2 3.743,4 G 1,5% 6.425,0 5.848,1 5.380,2 4.993,1 4.667,4 4.389,7 4.150,1 3.941,2 2,0% 7.184,8 6.452,3 5.872,5 5.402,3 5.013,3 4.686,0 4.406,9 4.166,1 2,5% 8.175,2 7.215,6 6.479,5 5.896,9 5.424,4 5.033,5 4.704,6 4.424,2 3,0% 9.520,1 8.210,7 7.246,4 6.506,7 5.921,3 5.446,5 5.053,7 4.723,2 3,5% 11.451,2 9.561,9 8.246,2 7.277,3 6.534,0 5.945,8 5.468,6 5.073,8

Differenza tra Valore d'uso e Valore contabile della CGU - Diminuzione dei Flussi -17,5% -15,0% -12,5% -10,0% -7,5% -5,0% -2,5% 2% 4.566,58 4.596,90 4.627,23 4.657,56 4.687,88 4.718,21 4.748,53 4778,9

Impairment test on the AZ International Holdings CGU

Sensitivity Analysis

Differenza tra Valore d'uso e Valore contabile della CGU WACC 191,4 5,8% 6,3% 6,8% 7,3% 7,8% 8,3% 8,8% 9,3% 0,0% 205,9 175,7 150,0 127,8 108,5 91,4 76,4 62,9 0,5% 243,8 207,8 177,5 151,6 129,3 109,9 92,8 77,6 1,0% 289,7 245,9 209,7 179,2 153,2 130,8 111,3 94,1 G 1,5% 346,2 292,0 248,0 211,6 181,0 154,9 132,3 112,7 2,0% 417,6 348,8 294,3 250,1 213,5 182,7 156,5 133,8 2,5% 510,8 420,5 351,3 296,6 252,1 215,4 184,5 158,1 3,0% 637,2 514,1 423,4 353,9 298,9 254,2 217,3 186,2 3,5% 818,8 641,1 517,4 426,3 356,5 301,2 256,3 219,2

Differenza tra Valore d'uso e Valore contabile della CGU - Diminuzione dei Flussi -17,5% -15,0% -12,5% -10,0% -7,5% -5,0% -2,5% 191,4 82,50% 85,00% 87,50% 90,00% 92,50% 95,00% 97,50% 100% 2% 110,0 121,7 133,3 144,9 156,6 168,2 179,8 191,4

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 596 million euro, the Company's market cap at 31 December 2017 was equal to 2.3 billion euro.

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Section 12 – Tax assets and tax liabilities

Tax assets

This item amounts to 80,219 thousand euro (78,976 thousand euro at 31 December 2016). The breakdown is as follows:

12.1 Breakdown of “Tax assets: current and deferred”

Breakdown Total 31/12/2017 Total 31/12/2016 Current 29,560 32,905 Deferred 50,659 46,071 Total 80,219 78,976

“Deferred tax assets” mainly include:  5,726 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;  25,371 thousand euro of deferred tax assets relating to tax losses;  1,693 thousand euro of deferred tax assets relating to the adjustment of the book and tax value (Italian regional production tax, IRAP) of the trademark and goodwill pursuant to Article 1, paragraph 51 of Italian Law 244/2007 (2008 Budget Law) and offset against future tax liabilities arising from amortisation/depreciation 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;  the remaining portion, i.e. the temporary differences resulting from the different timing criteria of IRES (Italian corporate income tax) 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, the probability of these losses being recovered in subsequent tax years was assessed. 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

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the tax consolidation regime, was assessed, generating the recognition of deferred tax assets on losses.

Tax liabilities This item amounts to 68,151 thousand euro (59,401 thousand euro at 31 December 2016). The breakdown is as follows:

12.2 Breakdown of “Tax liabilities: current and deferred”:

Breakdown Total 31/12/2017 Total 31/12/2016 Current 6,462 1,443 Deferred 61,689 57,958 Total 68,151 59,401

“Deferred tax liabilities” mainly include deferred tax liabilities relating to the temporary difference between the carrying amount and tax value of the trademark amounting to 11,686 thousand euro and the deferred tax liabilities recognised on the temporary difference between the carrying amount and tax value of goodwill of 40,847 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 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 taxes on unallocated earnings of the subsidiaries at 31 December 2017.

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12.3 Changes in deferred tax assets (balancing entry in income statement)

Total 31/12/2017 Total 31/12/2016 1. Opening balance 45,077 26,206 2. Increases 12,562 30,796 2.1 Deferred tax assets recognised in the year: 12,562 21,320 a) from previous years b) due to changes in accounting policies d) other 12,562 21,320 2.2 New taxes or increased tax rates 2.3 Other increases 9,475 3. Decreases 8,632 11,924 3.1 Deferred tax assets eliminated during the year 8,118 3,792 a) reversals 8,118 3,792 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 514 8,133 4. Closing balance 49,007 45,077

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12.4 Changes in deferred tax liabilities (balancing entry in income statement)

Total 31/12/2017 Total 31/12/2016 1. Opening balance 52,178 53,577 2. Increases 7,662 5,182 2.1 Deferred tax liabilities recognised in the year: 7,662 5,182 a) from previous years b) due to changes in accounting policies c) other 7,662 5,182 2.2 New taxes or increased tax rates 2.3 Other increases 0 0 3. Decreases 3,417 6,581 3.1 Deferred tax liabilities eliminated during the year 3,417 6,502 a) reversals 3,417 6,502 b) due to changes in accounting policies c) other 3.2 Decreases in tax rates 79 3.3 Other decreases 4. Closing balance 56,423 52,178

12.5 Changes in deferred tax assets (balancing entry in shareholders’ equity)

Total 31/12/2017 Total 31/12/2016 1. Opening balance 993 1,619 2. Increases 667 28 2.1 Deferred tax liabilities recognised in the year: a) from previous years b) due to changes in accounting policies d) other 664 28 2.2 New taxes or increased tax rates 2.3 Other increases 3 3. Decreases 8 654 3.1 Deferred tax liabilities 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 8 654 4. Closing balance 1,652 993

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12.6 Changes in deferred tax liabilities (balancing entry in shareholders’ equity)

Total 31/12/2017 Total 31/12/2016 1. Opening balance 5,780 4,857 2. Increases 254 986 2.1 Deferred tax liabilities recognised in the year: 254 899 a) from previous years b) due to changes in accounting policies d) other 254 899 2.2 New taxes or increased tax rates 2.3 Other increases 87 3. Decreases 768 63 3.1 Deferred tax liabilities eliminated during the year - 0 a) from previous years b) due to changes in accounting policies d) other 3.2 Decreases in tax rates 56 3.3 Other decreases 768 7 4. Closing balance 5,266 5,780

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Section 14 – Other assets This item amounts to 208,474 thousand euro (209,114 thousand euro at 31 December 2016).

14.1 Breakdown of “Other assets”

Total 31/12/2017 Total 31/12/2016 Due from Inland Revenue 84,822 65,384 Due from financial advisors 15,424 13,655 Other receivables 101,637 122,042 Prepayments 6,591 8,033 Total 208,474 209,114

“Due from Inland Revenue” includes VAT credits of 4,575 thousand euro and amounts related to mathematical reserves of 79,918 thousand euro. “Prepayments” also include the assets generated via the deferral of acquisition costs for the unit-linked policies issued by the Group’s Irish insurance company, classified as investment contracts. “Due from financial advisors” mainly includes loans granted to financial advisors amounting to 10,508 thousand euro, which generate interest income in line with the Euribor plus spread, in addition to advance commissions paid to the same financial advisors for the amount of 3,641 thousand euro. The terms for repayment of these loans vary on average from 12 to 36 months. "Other receivables" mainly comprise tax assets for virtual stamp duties of 27,319 thousand euro and receivables related to the payment of capital gain tax advances of 40,812 thousand euro.

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LIABILITIES

Section 1 – Payables

This item amounts to 20,253 thousand euro (28,283 thousand euro at 31 December 2016). The breakdown is as follows:

1.1 Breakdown of “Payables”

Breakdown/Value Total 31/12/2017 Total 31/12/2016

1. Due to sales networks: 7,364 6,963 1.1 for UCI sales 7,364 6,963 1.2 for individual portfolio management sales - - 1.3 for pension fund sales - - 2. Payables for asset management services: 424 588 2.1 for proprietary portfolio management 424 588 2.2 for discretionary portfolio management - - 2.3 for other - - 3. Payables for other services: 503 681 3.1 advisory services - - 3.2 outsourced corporate functions - - 3.3 other 503 681 4. Other payables 11,962 20,051 4.1 repurchase agreements - - of which: for government securities - - of which: for other debt securities - - of which: for equity securities and units - - 4.2 other 11,962 20,051

Total 20,253 28,283

Fair value – Level 1 - - Fair value – Level 2 - - Fair value – Level 3 20,253 28,283

Total fair value 20,253 28,283

“Other payables” include:

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 a loan of 10,000 thousand euro granted by Banco Bpm S.p.A. 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 tranches 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 nor express termination clause.

“Other payables” mainly include commissions accrued and to be settled for the sale of fund units.

1.2 "Payables": breakdown by counterparty

Banks Financial institutions Customers

Breakdown/Counterparty of which: of which: of which:

Group Group Group

1. Due to sales networks: 6,033 - 394 - 936 - 1.1 for UCI sales 6,033 - 394 - 936 - 1.2 for individual portfolio management sales ------1.3 for pension fund sales ------2. Payables for asset management services: - - - - 424 - 2.1 for proprietary portfolio management - - - - 424 - 2.2 for discretionary portfolio management ------2.3 for other ------3. Payables for other services: ------3.1 advisory services received ------3.2 outsourced corporate functions ------3.3 other ------4. Other payables 11,973 - 492 - - - 4.1 repurchase agreements ------of which: for government securities ------of which: for other debt securities ------of which: for equity securities and units ------4.2 other 11,973 - 492 - - - Total 31.12.2017 18,007 - 886 - 1,360 - Total 31.12.2016 26,679 - 1,016 - 588 -

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Section 2 – Outstanding securities

2.1 Breakdown of "Outstanding securities"

Total 31/12/2017 Total 31/12/2016

Breakdown Carrying Fair value Carrying Fair value amount amount Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

1. Securities

Bonds 353,816 - - 226,522 - 226,522 - 353,816 Other securities ------

Total 353,816 - 353,816 - - - 226,522 226,522

The item is entirely comprised of:

1. the “Azimut 2017-2022 2.000%” bond amounting to 355,815,985 euro originally composed of 3,500 bonds for a nominal amount of 100,000 euro, with a duration of five years and issued on 27 March 2017. For additional information about the transaction, reference should be made to the paragraph “Significant events of the year”. 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 2017 which will be paid on the pre-established date. The bond bears annual fixed interest of 2.000%. In May 2017, the company repurchased its “euro 250,000,000 2.125% Subordinated Convertible Bonds due 2020” issued in November 2013 through a reverse bookbuilding process.

Subordinated securities

The company has no subordinated securities.

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Section 3 – Technical reserves where the investment risk is borne by policyholders

Technical reserves where the investment risk is borne by policyholders amount to 227,857 thousand euro (250,974 thousand euro at 31 December 2016) and refer to the commitments arising from the unit-linked policies issued by the subsidiary AZ Life Dac, classified as insurance contracts.

Section 4 – Financial liabilities measured at fair value

This item amounts to 6,605,461 thousand euro (6,299,036 thousand euro at 31 December 2016) and mainly includes the commitments arising from the unit-linked policies issued by the subsidiary AZ Life Dac (6,472,343 thousand euro), classified as investment contracts (level 2). At 31 December 2017 the fair value measurement of financial liabilities measured at fair value generated losses for a total of 4,421 thousand euro which were recognised in the income statement caption “Net result of financial assets and financial liabilities measured at fair value”.

4.1 Breakdown of “Financial liabilities measured at fair value”

Total 31/12/2017 Total 31/12/2016

Liabilities Fair value Fair value Carrying Carrying amount amount L1 L2 L3 L1 L2 L3

1. Payables 6,605,461 - 6,472,343 133,118 6,299,036 - 6,195,001 104,035 2. Debt securities ------bonds ------other securities ------

Total 6,605,461 - 6,472,343 133,118 6,299,036 - 6,195,001 104,035

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In addition to financial liabilities measured at fair value, this item also includes liabilities arising from the future exercise of the call options of the residual portion of share capital of some companies that were acquired, but are not wholly owned. They are listed below:

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Company Measurement Eureka Whittaker Macnaught 1,914 Pride Advice 1,304 Lifestyle Financial Planning Services 1,516 Wise Planners 2,361 Financial Lifestyle Partners 1,162 Harvest Wealth 1,043 RI Toowoomba 2,062 Empowered Financial Partners 537 Wealthwise 2,755 Priority Advisory Group 2,293 Sterling Planners 1,335 Logiro Unchartered Pty Ltd 2,219 On Track Financial Solutions Pty Ltd 1,734 AZ Quest Participações SA 25,086 Peters & Partners Pty Ltd 1,557 Menico Tuck Parrish Financial Solutions Pty Ltd 1,161 Wealthmed Australia Pty Ltd 1,528 Farrow Hughes Mulcahy Financial Services Pty Ltd 2,503 Henderson Maxwel Pty Ltd 2,143 Hurwitz Geller Pty Ltd 1,794 Dunsford Financial Plannings Pty Ltd 1,606 Augustum Opus SIM S.p.A. 22,506 Compagnie de Gestion Privée Monégasque 42,063 Mas Fondos S.A. 938 AZ New Horizon 2,298 Total 127,418

That measurement reflects the discounted amount to be paid – in Azimut Holding shares, where contractually provided for – to non-controlling interests, following the exercise of the call options. The measurement reflects an estimate of the discounted amount to be paid to the seller. This amount is based on the estimate of key parameters (future income statement, balance sheet and financial position parameters set out in the relevant contracts), that are subject to specific sensitivity analyses. With respect to the acquisition of the Australian company Sigma Funds Management Pty Ltd and the related call options of the residual 49% thereof, the obligation to exchange the issuer's shares against the acquisition of a financial

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asset indicates the existence of a derivative. Fair value changes in the latter are to be allocated to the income statement. This position is currently being analysed by the IFRIC.

Financial liabilities measured at fair value and the related measurement at 31 December 2017 led to the recognition of gains of 429 thousand euro under “Net result of financial assets and financial liabilities measured at fair value”.

The same item includes the fair value of the covered warrants at 31 December 2017 issued by Azimut Capital Management Sgr S.p.A. to some employees amounting to 5,700 thousand euro at the same date, with a loss of 4,850 thousand euro.

Section 7 – Tax liabilities

“Tax liabilities” are described in detail in section 12 of assets to which reference should be made.

Section 9 – Other liabilities

This item amounts to 180,539 thousand euro (182,975 thousand euro at 31 December 2016) and is broken down as follows:

Total 31/12/2017 Total 31/12/2016 Due to suppliers 55,463 46,162 Due to Inland Revenue and tax authorities 8,046 9,048 Due to employees 9,305 6,273 Due to social security bodies 4,495 4,230 Other payables 38,096 44,378 Due to Financial Advisors 62,647 70,167 Deferred income 2,487 2,716 Total 180,539 182,975

“Deferred income” includes liabilities arising from the deferral of fee and commission income on the premiums of unit-linked policies issued by the Irish insurance company AZ Life Dac, classified as investment contracts. "Due to financial advisors" mainly includes amounts due for commissions of December 2017 paid in January 2018, in addition to other accruals relating to 2017, which will be paid during

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the subsequent year, and other contractual commitments for commissions, including loyalty commissions, to be paid to financial advisors over the medium-long term.

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Section 10 – Staff severance pay (TFR)

10.1 Staff severance pay (TFR): annual changes The item amounts to 2,965 thousand euro (3,403 thousand euro at 31 December 2016) and refers to TFR accrued by personnel employed by the group companies at 31 December 2017. Total Total

31/12/2017 31/12/2016

A. Opening balance 3,403 3,310 B. Increases 448 376 B1. Provisions for the year 364 288 B2. Other increases 85 88 C. Decreases -887 -283 C1. Payments made -357 -53 C2. Other decreases -530 -229 D. Closing balance 2,965 3,403

The decrease is mainly due to the actuarial gains of the year with a direct balancing entry in the specific equity reserve, net of the related tax effect and the substitute tax.

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 determine 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:

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- Turnover: 1.5% unchanged; - Advance: 2% unchanged; - 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.

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 on 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.

Section 11 – Provisions for risks and charges

The item amounts to 35,377 thousand euro (31,265 thousand euro at 31 December 2016).

11.1 Breakdown of “Provisions for risks and charges”  Supplementary indemnity provision for agents established based on actuarial criteria, in accordance with IFRS, totalling 29,212 thousand euro.  Provision for sundry risks (6,165 thousand euro) for potential legal disputes with customers, for the present value of the estimated expense to settle the obligations.

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11.2 “Provisions for risks and charges”: annual changes 31/12/2017 31/12/2016 Opening balance 31,265 26,694 Increases during the year 6,440 5,059 Decreases during the year -2,328 -488 Closing balance 35,377 31,265

Section 12 – Shareholders’ Equity

12.1 Breakdown of “Share Capital”

Types of shares Amount 1. Share capital 32,324 1.1 Ordinary shares 32,324 1.2 Other shares -

At 31 December 2017, 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.

12.2 Breakdown of “Treasury Shares”

Types of shares Amount 1. Treasury shares 130,028 1.1 Ordinary shares 130,028 1.2 Other shares -

At 31 December 2017, Azimut Holding S.p.A. held 13,314,037 treasury shares at an average carrying amount of 9.766 euro per share.

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12.3 Breakdown of “Equity instruments” This item amounts to 36,000 thousand euro and relates to the issue amount, as per the shareholders' resolution of 29 April 2010, of 1,500,000 profit-participating financial instruments (equal to their fair value calculated by an independent leading company).

12.4 Breakdown of “Share premium reserve” The share premium reserve amounts to 173,987 thousand euro at 31 December 2017 (unchanged on 31 December 2016).

12.5 Other information Breakdown and changes in “Reserves”

Legal reserve Other reserves Total A. Opening balance 6,465 256,642 263,107 B. Increases 15,962 15,962 B.1 Profit appropriations 14,302 14,302 B.2 Other changes 1,660 1,660 C. Decreases C.1 Allocations - loss account reserve - dividends - transfers to share capital C.2 Other changes D. Closing balance 6,465 272,604 279,069

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Breakdown and changes in “Valuation reserves”

Available-for- Tangible assets Intangible Cash flow Special Other Total sale financial assets hedge revaluation assets laws

A. Opening balance - 1,911 - - - - - 417 - 2,329 B. Increases 775 - - - - 570 1,345

B.1 Increases in fair value 775 775 B.2 Other changes 570 570 C. Decreases - 2,763 - - - - - 336 - 3,099

C.1 Decreases in fair value - 2,763 - 2,763 - C.2 Other changes 336 - 336 D. Closing balance - 3,900 - - - - - 183 - 4,083

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Section 13 – Minority interest

13.1 Breakdown of “Minority interest”

Items/Value 31/12/2017 31/12/2016 1. Share capital 63,235 39,209 2. Treasury shares 3. Equity instruments 4. Share premium reserve 5. Reserves -51,736 -27,336 6. Valuation reserves -3,030 1,484 7. Profit (loss) for the year 11,123 4,617 Total 19,592 17,975

Minority interest relate to stakes held by third parties.

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PART C – NOTES TO THE INCOME STATEMENT

Section 1 – Fee and commission income and expense

1.1 Breakdown of “Fee and commission income and expense”

Total 31.12.2017 Total 31.12.2016 SERVICES Fee and comm. Fee and comm. Net fee and Fee and comm. Fee and comm. Net fee and income expense comm. income expense comm. A. ASSET MANAGEMENT 1. Proprietary portfolio management 1.1 Mutual funds

- Management fees 499,900 - 438,878 - 499,900 438,878

- Incentive fees 128,375 - 120,512 - 128,375 120,512

- Entry / redemption fees 6,858 - 8,036 - 6,858 8,036

- Switch fees 21 - 19 - 21 19

- Other fees 2,260 - 2,022 - 2,260 2,022

Total mutual fund fees 637,413 - 569,468 - 637,413 569,468 1.2 Individual portfolio management

- Management fees 27,959 - 29,680 - 27,959 29,680

- Incentive fees 5,235 - 3,592 - 5,235 3,592

- Entry / redemption fees ------

- Other fees 624 - 416 - 624 416 Total individual portfolio 33,818 - 33,687 - management fees 33,818 33,687 1.3 Open-ended pension funds

- Management fees 9,474 - 7,211 - 9,474 7,211

- Incentive fees 2,729 - 3,368 - 2,729 3,368

- Entry / redemption fees ------

- Other fees 1,028 - 980 - 1,028 980 Total open-ended pension fund 13,231 - 13,231 11,559 11,559 fees 2. Discretionary portfolio management

- Management fees 1,574 - 7,545 - 1,574 7,545

- Incentive fees ------

- Other fees ------Total discretionary portfolio 1,574 - 7,545 - management fees 1,574 7,545 TOTAL ASSET MANAGEMENT FEES 686,036 - 622,259 -

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(A) 686,036 622,259

B. OTHER SERVICES 88,295 - 53,374 - 88,295 53,374

- Advisory services 8,894 - 5,599 - 8,894 5,599

- Sales commissions 58,830 - 34,018 - 58,830 34,018

- Order intake 541 - 617 - 541 617

- Insurance products 17,276 - 11,766 - 17,276 11,766

- Other services 2,754 - 1,374 - 2,754 1,374 Fee expenses for sales, ------distribution and order intake 311,345 311,345 293,897 293,897 TOTAL FEES AND COMMISSIONS - - 774,331 675,633 (A+B) 311,345 462,986 293,897 381,736

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1.2 Fee and commission expense: breakdown by type and counterparty

Financial SERVICES Banks Other Total institutions of of of of which: which: which: which: Group Group Group Group A. ASSET MANAGEMENT

1. Proprietary portfolio management ------

1.1 Sales fees ------

- UCI ------

- Individual portfolio management ------

- Pension funds ------

1.2 Maintenance fees ------

- UCI ------

- Individual portfolio management ------

- Pension funds ------

1.3 Incentive fees ------

- UCI ------

- Individual portfolio management ------

- Pension funds ------

1.4 - Other fees and commissions ------

- UCI ------

- Individual portfolio management ------

- Pension funds ------2. Discretionary portfolio management ------

- UCI ------

- Individual portfolio management ------

- Pension funds ------TOTAL ASSET MANAGEMENT FEES (A) ------B. OTHER SERVICES

- Advisory services ------

- Other services ------TOTAL FEES FOR OTHER SERVICES (B) ------Fee expenses for sales, distribution and order intake 19,222 - 1,412 - 290,712 - 311,345 - TOTAL FEES AND COMMISSIONS (A+B) 19,222 - 1,412 - 290,712 - 311,345 -

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“Fee and commission expense – other services” comprise the cost pertaining to 2017 related to the Long-term incentive plan described below.

Long-term incentive plan: “2015-2019 Plan”

During the year, Azimut Holding’s Board of Directors approved the changes to a long-term incentive plan reserved to the Group’s financial advisors (the “Beneficiaries”) with a contractual relationship with Azimut Capital Management SGR S.p.A. and Azimut Financial Insurance S.p.A.

This is an equity-settled plan which grants Azimut Holding S.p.A. ordinary shares against the services provided by the Beneficiaries over the term of the plan. Therefore, it falls under the scope of IFRS 2 for equity-settled payments.

Under this plan, the total cost of the transaction is set since inception, based on the fair value of the shares at that moment, and their actual granting (when the Plan expires) takes place provided that specific Group’s expansion targets are reached and that a specific target price of the Parent Company’s shares is achieved (deferred and conditional granting). In the past, under the same long-term incentive plan, bonuses were paid to the Beneficiaries on a cash basis.

In accordance with the applicable principle, the plan cost is calculated based on the fair value of the shares at the grant date, i.e., the date on which the Plan was communicated and accepted by the Beneficiaries. It is recognised in profit or loss in the period between the grant date and the vesting date with a balancing entry in shareholders’ equity.

Specifically, the new conditions of the Plan provide that Beneficiaries meet a specific service condition, i.e., that the Azimut Group achieves specific performance and result goals (performance condition) as described below:

1) cumulative net profit of 1 billion euro in 2015 - 2019;

2) a 15 billion euro increase in adjusted shareholders’ equity, excluding acquisitions, if any, and the market effect;

3) achieving the 50 billion euro assets under management threshold;

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4) acquiring at least 15 thousand new customers during the plan term;

5) achieving a trading price of Azimut Holding S.p.A. shares on Borsa Italiana equal to or greater than 35 euro each.

These conditions were considered only for the purposes of allocating the cost over the Plan term and its final cost.

Conditions’ cost

The total amount of the Plan is equal to 25 million euro.

In accordance with the relevant standard, the cost is recognised proportionally over the vesting period by the entity with which the Beneficiary has an employment relationship. Specifically, part of the amount is allocated to Azimut Capital Management SGR S.p.A. and part to Azimut Financial Insurance S.p.A. based on the net inflows of both companies as of 1 January 2015. The cost is taken to “Fee and commission expense” with a balancing entry in the shareholders’ equity item “Reserves – Other equity reserves” for a total of 15,000,000 euro, of which 5,000,000 euro pertains to 2017.

Finally, no shares will be granted unless 4 of the 5 conditions listed above are met.

Section 2 – Dividends and similar income

This item amounts to 258 thousand euro (257 thousand euro in 2016).

2.1 Breakdown of item 30 “Dividends and similar income”

Total 31/12/2017 Total 31/12/2016 Items/Income Income Income from Dividends from UCI Dividends UCI units units 1. Held-for-trading

financial assets 2. Available-for-sale financial assets 258 257 3. Financial assets measured at fair

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value 4. Equity investments Total 258 257

Section 3 – Interest

3.1 Breakdown of “Interest income and similar income”

The item amounts to 1,071 thousand euro (1,509 thousand euro in 2016).

Repurch Deposits Debt Total Total ase and Items/Technical forms securiti Other 31/12/2 31/12/2 agreeme current es 017 016 nts accounts

1. Held-for-trading financial assets ------2. Financial assets measured at fair value ------3. Available-for-sale financial assets - - - 137 137 172 4. Held-to-maturity financial assets ------

5. Receivables - - 633 - 633 987

6. Other assets 301 - - - 301 350

7. Hedging derivatives ------

Total - - 633 438 1,071 1,509

"Other assets" are almost entirely related to interest income on bank current accounts and interest income accrued on the loans disbursed to financial advisors.

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3.2 Breakdown of “Interest expense and similar charges”

The item amounts to 10,725 thousand euro (11,723 thousand euro in 2016).

Repur Oth Total Total chase Securi er Other loans 31/12/20 31/12/20 agree ties loan 17 16 Items/Technical forms ments s 1. Due to banks 734 0 734 600 2. Due to financial institutions 0 0 3. Due to customers

4. Outstanding securities 9,494 9,494 10,789 5. Held-for-trading financial 0 0 liabilities 6. Financial liabilities measured 0 0 at fair value 7. Other liabilities 497 497 334 8. Hedging derivatives 0 0 Total 0 734 9,494 497 10,725 11,723 “Due to banks – other loans” is mainly composed of interest expense arising from the loans raised by the Parent Company. Section 6 – Net result of financial assets and financial liabilities measured at fair value

6.1 Breakdown of "Net result of financial assets and financial liabilities measured at fair value"

Losses Profits on on Net Items/Income items Gains Losses disposal disposa result l 1. Financial assets

1.1 Debt securities 1.2 Equity securities and UCI units 1.3 Loans 2. Financial assets and financial liabilities: exchange rate differences 3. Financial liabilities 429 (4,850) (4,421) 3.1 Payables

3.2 Debt securities

3.3 Other liabilities 4. Credit and financial derivatives

Total 429 (4,850) (4,421)

Section 7 – Profits (losses) on disposal or repurchase

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This item amounts to -9,721 thousand euro (1,733 thousand euro in 2016).

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7.1 Breakdown of “Profits (losses) on disposal or repurchase”

Total 31/12/2017 Total 31/12/2016 Net Items/Income items Profit Loss Profit Loss Net result result - 1. Financial assets 4,815 - 1,804 1,739 - 1,739 6,619 - 1.1 Available-for-sale assets 4,815 - 1,804 1,739 - 1,739 6,619 1.2 Held-to-maturity assets - - - - 1.3 Other financial assets - - - - - Total (1) 4,815 - 1,804 1,739 - 1,739 6,619 - 2. Financial liabilities - 7,917 - 6 - 6 7,917 2.1 Payables ------2.2 Outstanding securities - 7,917 - - 6 - 6 7,917 - - Total (2) - - 6 - 6 7,917 7,917 - - Total (1+2) - 6 1,733 4,815 14,536 9,721 1,739

Net premiums “Net premiums” amount to 3,531 thousand euro (2,618 thousand euro in 2016) for premiums relating to unit-linked policies issued by the Irish insurance company AZ Life Dac, classified as insurance contracts.

Net profits (losses) on financial instruments at fair value through profit or loss This item amounts to 184,679 thousand euro (132,815 thousand euro in 2016) and is composed of realised gains and losses and changes in the value of financial assets and liabilities, relating to unit-linked policies, and measured at fair value.

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Section 9 – Administrative costs

9.1 Breakdown of “Personnel costs”

This item amounts to 83,255 thousand euro (72,485 thousand euro in 2016). The breakdown is as follows:

Items Total 31.12.2017 Total 31.12.2016

1. Employees 63,446 50,396 a) wages and salaries 51,188 40,146 b) social security 7,639 6,759 c) staff severance pay (TFR) d) pension contributions e) TFR provisions 858 767 f) accrual to the pension provision and similar obligations: defined contribution defined benefit g) private pension plans: 55 59 defined contribution 55 59 defined benefit h) other costs 3,707 2,657 2. Other personnel 770 1,278 3. Directors and Statutory Auditors 19,039 20,818 4. Early retirement costs 5. Cost recoveries for employees seconded to other companies 6. Reimbursed costs for employees seconded to the company Total 83,255 72,485

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9.2 Average number of employees by category

2017 2016 Managers 130 92 Middle managers 166 113 Other employees 459 304 Total 755 509

9.3 Breakdown of “Other administrative costs”

This item amounts to 127,302 thousand euro (120,028 thousand euro in 2016). The breakdown is as follows: Items Total 31.12.2017 Total 31.12.2016 Professional services rendered 15,853 13,153 Advertising, promotion and marketing expenses 10,643 9,928 Telephone and fax 2,481 2,281 Lease and rent 8,507 7,762 Insurance premiums 1,295 1,293 Tax liabilities 966 1,253 Enasarco/Firr contributions 5,685 8,507 Lease and hire 8,493 7,784 Outsourced functions 39,570 38,862 Services other than IT services 14,590 10,295 Maintenance costs 1,308 1,636 Other administrative costs 17,911 17,273 Total 127,302 120,028

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Section 10 – Net impairment losses/reversals of impairment losses on tangible assets

In 2017 net impairment losses and reversals of impairment losses on tangible assets based on depreciation are broken down as follows:

10.1 Breakdown of “Net impairment losses/reversals of impairment losses on tangible assets”

Reversals Items/Impairment losses and Depreciatio Impairmen of Net result reversals n t losses impairmen t losses

1. Group-owned 2,414 - 2,414 -

- business purposes 2,414 - 2,414 -

- investment purposes - - - -

2. Under finance lease - - - -

- business purposes - - - -

- investment purposes - - - -

Total 2,414 - 2,414 -

Section 11 – Net impairment losses/reversals of impairment losses on intangible assets

In 2017 net impairment losses and reversals of impairment losses on intangible assets based on amortisation are broken down as follows:

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11.1 Breakdown of “Net impairment losses/reversals of impairment losses on intangible assets”

Reversals of Items/Impairment losses and Amortisatio Impairment impairment Net result reversals n losses losses

1. Goodwill - - - - - 2. Other intangible assets 13,444 - - 13,444 - 2.1 Group-owned 13,444 - - 13,444

- generated internally - - - -

- other (software packages) 13,444 13,444 - -

2.2 Under finance lease - - - -

Total 13,444 13,444 - -

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Section 13 – Net accruals to provisions for risks and charges

13.1 Breakdown of “Net accruals to provisions for risks and charges”

This item amounts to 6,383 thousand euro (5,844 thousand euro in 2016) and includes the accrual to the supplementary indemnity provision for agents (4,233 thousand euro) and the net accrual to the provision for sundry risks and charges (2,150 thousand euro) related to risks for disputes with customers, as described in the note to “Provisions for risks and charges” in Section 11 of Liabilities.

Section 14 – Other operating income and costs

14.1 Breakdown of “Other operating income and costs”

This item is positive by 1,877 thousand euro (565 thousand euro in 2016) and is mainly composed of trade expenses and current account bank charges, in addition to charge-backs made to financial advisors.

Section 15 – Profits (losses) on equity investments 15.1 Breakdown of “Profits (losses) on equity investments”

This item is a loss of 8 thousand euro (loss of 689 thousand euro in 2016).

Items 2017 2016 1. Income 84 1.1 Revaluations 84 1.2 Profits on disposal 1.3 Write-ups 1.4 Other increases 2. Costs (92) (689) 2.1 Write-downs (92) (689) 2.2 Losses on disposal 2.3 Impairment losses 2.4 Other costs Net result (8) (689)

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Section 17 – Income tax on profit from continuing operations

17.1 Breakdown of “Income tax on profit from continuing operations”

Total Total Breakdown 31/12/2017 31/12/2016

1. Current taxes 21,699 19,282

2. Changes in current taxes of previous years - -

3. Decrease in current taxes for the year - -

3.bis Decrease in current taxes for the year - - due to tax credits pursuant to Italian Law No. 214/2011 - - 4. Change in deferred tax assets -4,616 -10,638 5. Change in deferred tax liabilities 4,280 -1,058 Total - 21,363 7,586

Current income taxes for the year mainly refer to IRAP and IRES paid by the Group’s Italian companies, taxes payable by the foreign companies as well as the income and charges 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. Taxes for the Group’s foreign companies are calculated in accordance with the tax regulations in force in the individual countries of residence. “Change in deferred tax assets” includes the release of deferred tax assets on the amount of the lease instalment deductible during the year and the recognition of deferred tax assets on temporary differences resulting from the different timing criteria of IRES tax deductibility. The same item also includes the deferred tax liabilities on dividends to be paid by the subsidiaries within the consolidation scope.

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17.2 Reconciliation of theoretical tax burden and effective tax burden

Reconciliation of theoretical tax rate and effective tax rate

31.12.2017

Pre-tax profit 247,272 Applicable theoretical rate 24

Theoretical tax burden 59,345 Effect of increases 6,385 Effect of decreases (78,329) Change in deferred tax assets 4,223 Change in deferred tax liabilities (2,775) Other decreases (3,143) Current IRAP taxes 7,392 Decreases due to foreign companies excluded from tax consolidation (CNM) (14,463)

Taxes as per the financial statements (21,363)

Section 19 – Profit (loss) for the year attributable to minority interest This item is positive by 11,123 thousand euro (4,619 thousand euro in 2016) and reflects the net balance of profits and losses attributable to minority interest in consolidated companies.

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PART D OTHER INFORMATION

Section 1 – Specific references to business activities

1.1. Information on commitments, guarantees and third party assets

1.1.1 Commitments and guarantees issued to third parties

At 31 December 2017, the Group had commitments to Banca Popolare di Vicenza (now Intesa San Paolo) and Banco Bpm S.p.A. for a total of 3.1 million euro relating to sureties issued in favour of the subsidiary Azimut Capital Management Sgr S.p.A.

No collateral was issued at 31 December 2017.

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

1.1.2 Commitments relating to guaranteed pension funds

Azimut Capital Management Sgr S.p.A. has a unit of the Azimut Previdenza pension fund, known as “Guaranteed”, the management of which is assigned 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.

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1.1.4 Own securities deposited with third parties

Own securities deposited with third parties 31/12/2017 31/12/2016 UCI units deposited with BNP Paribas 247,723 158,559 UCI units deposited with Banco BPM 8,949 627 UCI units deposited with Banque De Rothschild 25,174 15,606 Luxembourg UCI units deposited with Banco BTG Pactual Sa 6,199 0

Azimut Holding S.p.A. treasury shares 164,424 163,438 deposited with Banco BPN S.p.A. Azimut Holding S.p.A. treasury shares 35,134 0 deposited with BCC Treviglio Azimut Holding S.p.A. treasury shares 13,067 1,303 deposited with BPVI (now Intesa San Paolo) Total 500,670 339,529

1.1.5 Third-party assets under custody

Third-party assets and securities entrusted by customers using individual and collective portfolio management services are deposited at the custodian bank Banco Bpm S.p.A. Third-party assets and securities entrusted by customers and invested in hedge funds are deposited with the custodian bank Banco Bpm S.p.A. Third-party assets and securities entrusted by customers and invested in Luxembourg funds are deposited with the custodian bank Bnp Paribas. Third-party assets and securities entrusted by customers invested in the discretionary portfolios of CGM Italia Sim S.p.A. And Compagnie Monégasque Privée, are mainly deposited with: Banca Popolare Commercio e Industria, UBS Milano, Banca Generali and Banca BSI Monaco. Third-party assets and securities entrusted by customers and invested in Luxembourg Eskatos funds are deposited with the custodian bank Banque Privée Edmond de Rothschild. Third-party assets and securities entrusted by customers and invested in Turkish funds are deposited with the custodian banks Takasbank and Euroclear. Third-party assets and securities entrusted by customers to AZ Investment Management are deposited with the custodian bank ICB, Shanghai Branch.

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Third-party assets and securities entrusted by customers and invested in Brazilian funds are deposited with the custodian bank Banco BTG Pactual SA.

1.2 Information on Assets under Management

1.1.1 Total net UCI (breakdown by UCI)

UCI 31/12/2017 31/12/2016 1. Proprietary portfolio management Italy 1,846,476 1,979,850 Luxembourg 25,696,080 24,580,033 Monaco 291,139 565,265 Switzerland 655,221 36,942 Turkey 234,463 257,840 Brazil 2,540,647 1,247,770 Chile 69,716 3,067 China 85,368 68,247 Mexico 82,873 Singapore 17,077 13,377 Taiwan 172 10 Australia 164,639 3,503 United Arab Emirates 32,936 Total proprietary portfolio management 31,716,808 28,755,904

1.2.2 Total value of portfolio management activity

Total 31/12/2017 Total 31/12/2016 of of which which invested in invested AM in AM company compan funds y funds

1. Proprietary portfolio management 8,749,766 6,632,285

2. Discretionary portfolio management 704,480 1,069,130

3. Portfolio management delegated to third parties

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1.2.3 Total value of pension funds

Net value of pension funds managed by Azimut Capital Management Sgr S.p.A. at 31 December 2017: Totale 31/12/2017 Totale 31/12/2016 1. Gestioni proprie 1.1 Fondi pensione aperti: Azimut Previdenza Comparto Protetto - - Azimut Previdenza Comparto Equilibrato 283.291.498 210.507.012 Azimut Previdenza Comparto Crescita 273.658.501 225.557.813 Azimut Previdenza Obbligazionario 41.649.119 36.072.867 Totale gestioni proprie 598.599.118 472.137.692 2. Gestioni ricevute in delega 2.1 Fondi pensione: - aperti - - - chiusi - - - Altre forme pensionistiche - - Totale gestioni ricevute in delega - - 3. Gestioni date in delega a terzi 3.1 Fondi pensione: - aperti - - Azimut Previdenza Comparto Garantito 147.072.024 112.972.310 - chiusi - - - Altre forme pensionistiche - - Totale gestioni date in delega a terzi 147.072.024 112.972.310

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Section 3 – Information on risk management and hedging policies

3.1 FINANCIAL RISKS

As regards financial risks, the Company's proprietary trading is exposed to market risk. 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 corporate activity.

At 31 December 2017, the Group held only funds managed by Group companies in its proprietary portfolio as part of liquidity management policies.

The financial risks associated with the use of liquidity refer to flexible mutual funds, such as AZ Fund Multiasset whose goal is the appreciation of capital by investing in the Eurozone in the equity, bond and liquidity markets to the extent of UCIs managed by AZ Fund Management SA.

As regards financial risks linked to the investment held in Eskatos Multistrategy ILS Fund, this UCI is an asset that is completely uncorrelated with the normal risks that instruments usually present on the market are subject to. The return of the Eskatos Multistrategy ILS Fund was higher than that recorded in the previous year, which in turn was already positive.

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-ante and ex-post evaluations of the risk profiles of the various managed portfolios and providing the Investment Department with an ex-ante evaluation procedure of the market risk. Specifically, the assessment is performed by analysing the portfolios of the individual Funds and monitoring, on an on-going basis, the significant risk factors identified, such as the average financial duration, equity exposure and its distribution in geographical areas and industry 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

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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.

3.2 OPERATIONAL RISKS

This form of risk includes those that are typical of the various business operating procedures.

In the broader framework of its own activities, the Risk Management function “maps out” and monitors the risks, through specific analyses based on an internally-developed model approved by the internal control and risk management committee. The operating model applied associates an index which summarises the risk level, to each type of risk identified, based on the combination of empirical findings, theoretical assessments and interviews with operators. The results of the analyses are subsequently presented, analysed and discussed with the internal control and risk management committee. Where necessary, the latter takes the necessary measures in respect of the irregularities identified.

Since the Company's incorporation, the losses arising from the above-mentioned operational risks have never been significant.

With respect to operational risks arising from outsourced functions, when the relevant contract was signed, the Company agreed the terms and conditions governing the provision of the outsourced services and prepared specific service level agreements whereby the outsourcer undertakes to provide its supplies at an appropriate qualitative service level, allowing the Company to take action against the supplier in the event of any economic losses arising from problems in the provision of services.

Another measure to ensure that services are performed correctly was the creation of an Operating Committee, whose members come from both Azimut Capital Management SGR S.p.A. and the supplier company, to establish the procedures, define the timescales, and monitor the correct execution of all services provided. This Committee meets at least once a

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month. Minutes are drawn after the meeting which are subsequently discussed with the participants.

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Section 4 – Information on shareholders’ equity 4.1 Company shareholders’ equity 4.1.1 Qualitative information For information on the individual items of the consolidated shareholders’ equity, please refer to part B of these notes.

4.1.2 Quantitative information 4.1.2.1 Company shareholders’ equity: breakdown

Items/Value 31/12/2017 31/12/2016 1. Share capital 32,324 32,324 2. Share premium reserve 173,987 173,987 3. Reserves 279,069 263,107 income-related

a) legal 6,465 6,465 b) statutory c) treasury shares d) other 383,478 362,711 other -104,409 -106,069 4. (Treasury shares) -130,028 - 81,288 5. Valuation reserves -13,542 -4,674 Available-for-sale financial assets -3,900 -1,911 Tangible assets Intangible assets Foreign investment hedge Cash flow hedge Exchange rate differences -9,459 -2,346

Non-current assets held for sale and discontinued operations Special revaluation laws

Actuarial gains/losses on defined benefit plans -183 -417

Share of valuation reserves for investments measured at equity 6. Equity instruments 36,000 70,951 7. Profit (loss) for the year 214,786 172,685 Total 592,596 627,092

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4.1.2.2 Valuation reserves of available-for-sale assets: breakdown Total 31/12/2017 Total 31/12/2016 Assets/Value Positive Negative Positive Negative reserve reserve reserve reserve 1. Debt securities 80 65 2. Equity securities 3. UCI units 1,721 -5,701 2,380 -4,356 4. Loans Total 1,801 -5,701 2,445 -4,356

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Section 5 – Statement of comprehensive income Gross Income Net Items amount tax amount 10. Profit for the year 247,272 (21,363) 225,909 Other comprehensive income not transferred to profit or loss 323 (89) 234 20. Tangible assets 30. Intangible assets 40. Defined benefit plans 323 (89) 234 50. Non-current assets held for sale

60. Share of valuation reserves of investments measured at equity Other comprehensive income transferred to profit or loss 70. Foreign investment hedge: a) changes in fair value b) transfer to profit or loss c) other changes 80. Exchange rate differences: (7,113) (7,113) a) changes in fair value b) transfer to profit or loss c) other changes (7,113) (7,113) 90. Cash flow hedge: a) changes in fair value b) transfer to profit or loss c) other changes 100. Available-for-sale financial assets: (2,743) 754 (1,989) a) changes in carrying amount (2,743) 754 (1,989) b) transfer to profit or loss - impairment losses - profits/losses on disposal c) other changes 110. Non-current assets held for sale: a) changes in fair value b) transfer to profit or loss c) other changes 120. Share of valuation reserves of investments measured at equity: a) changes in fair value b) transfer to profit or loss - impairment losses - profits/losses on disposal c) other changes 130. Total other comprehensive income (expense) (9,534) 666 (8,868) 140. Comprehensive income (Items 10+130) 237,739 (20,698) 217,041 150. Consolidated comprehensive income attributable to minority interest 12,667 (1,544) 11,123 160. Consolidated comprehensive income attributable to the parent company 225,072 (19,154) 205,918

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Section 6 – Related-party transactions

6.1 Information on key management fees Directors' fees amounted to 18,016 thousand euro in 2017. Fees for the Board of Statutory Auditors, calculated based on the parameters in force, amounted to 740 thousand euro.

6.2 Related-party disclosures Related-party transactions refer to commercial transactions carried out by Azimut Holding S.p.A. with its subsidiaries and associates, and among its subsidiaries and/or associates in 2017. 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 subsidiary Azimut Capital Management Sgr S.p.A. pays Azimut Holding S.p.A. contractually established annual royalties totalling 2,000 thousand euro;

 Azimut Holding S.p.A., as the Parent Company, and Azimut Capital Management Sgr S.p.A., Azimut Financial Insurance S.p.A., Azimut Enterprises Holding S.r.l. and Azimut Partecipazioni S.r.l., as subsidiaries, have adopted the tax consolidation regime;

 a contractually established annual fee (totalling 1,000 thousand euro) is payable for the coordination activities carried out by the company on behalf of the subsidiary Azimut Capital Management Sgr S.p.A.;

 an annual fee calculated based on contractually established percentages is payable for the Risk Management, Internal Audit, Compliance and Anti-money Laundering control activities carried out by the company in favour of the subsidiaries Azimut Capital Management S.p.A. and Azimut Libera Impresa Sgr S.p.A. (formerly Futurimpresa Sgr S.p.A.). The 2017 balance is 455 thousand euro;

 Azimut Holding S.p.A. has issued sureties to the subsidiary Azimut Capital Management sgr S.p.A.

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Azimut Capital Management Sgr S.p.A. has disbursed loans to several financial advisors, identified as related parties, to develop their business. The terms and conditions of these loans are at arm’s length. At 31 December 2017, they amounted to 10,508 thousand euro.

Moreover, the Group’s directors 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.

Finally, during the year, the subsidiary Azimut Capital Management Sgr S.p.A. issued a covered warrant offered for subscription to the Group’s employees, some of whom are also directors of the parent company and its subsidiaries, against consideration and using employees’ capital and with the risk entirely born by the latter. Total financial instruments issued and subscribed amount to 1,000 and are worth 850 thousand euro, while the instruments subscribed by the Group’s employees who also act as directors are equal to 364.

With respect to profit-participating financial instruments, in accordance with Shareholders' resolutions, 8 key directors subscribed 225,700 instruments (paying the corresponding amount), including the Chairman Pietro Giuliani (127,700), the Chief Executive Officer Sergio Albarelli (37,500), the directors Andrea Aliberti (15,000), Paolo Martini (29,000), Marzio Zocca (10,000) and Alessandro Zambotti (6,500). As per the Shareholders' agreement related to Azimut Holding S.p.A., 923 related parties subscribed a total of 1,247,350 profit- participating financial instruments. At the reporting date, the Parent Company held 26,950 profit-participating financial instruments.

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The following table shows the impact that the transactions or positions with related parties (other than those listed above) have on the Group’s financial position and results of operations: Total Related parties Absolute value % Assets Other assets 208,474 10,508 5.04 Liabilities Financial liabilities at fair value 6,605,461 2,075 0.03 Other liabilities 180,539 4,054 2.25 Income statement Administrative costs 210,557 19,416 9.22

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

Section 7 – Other information

7.1 Average number of financial advisors In 2017, the average number of financial advisors amounted to 1,637.

7.2 Dividends paid The unit dividend for 2017 amounted to 1 euro per ordinary share and was paid in May 2017.

7.3 Significant non-recurring events and transactions The non-recurring significant events and transactions which marked 2017 refer to the acquisitions carried out through the subsidiary AZ International Holding SA.

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7.5 Auditing and non-auditing service fees

Pursuant to Article 149-duodecies of Consob Regulation No. 11971/99 and subsequent amendments and supplements, the breakdown of fees (net of VAT and expenses) due to the independent auditors and companies within its network for auditing and non-auditing services during 2017 is as follows:

Service Service provider Recipient Fees

Audit PricewaterhouseCoopers S.p.A. Parent Company Azimut 105 Holding S.p.A. Subsidiaries (*) 284 PricewaterhouseCoopers S.p.A. Subsidiaries (**) 1,258 network Financial & tax due PricewaterhouseCoopers Parent Company Azimut 48 diligence Advisory S.p.A. Holding S.p.A. PricewaterhouseCoopers S.p.A. Subsidiaries 180 network

Other services PricewaterhouseCoopers S.p.A. Parent Company Azimut 35 Holding S.p.A. (***) PricewaterhouseCoopers Parent Company Azimut 26 Advisory S.p.A. Holding S.p.A. (****) PricewaterhouseCoopers S.p.A. Subsidiaries (*****) 31 network

Certification PricewaterhouseCoopers S.p.A. Parent Company Azimut 114 services Holding S.p.A. (******) PricewaterhouseCoopers S.p.A. Subsidiaries 6

GROUP TOTAL in thousands of euro 2,087 (*) This amount includes: 123 thousand euro for the audit of the funds managed by Azimut Capital Management Sgr S.p.A. and Azimut Libera Impresa Sgr S.p.A. not included in the income statement as the related cost is borne by the Funds. (**) This amount includes 598 thousand euro for the audit of the AZ Fund 1 and AZ Multi Asset, AZ Pure China and AZ Fund K funds managed by AZ Fund Management SA not included in the income statement as the related cost is borne by the Fund. (***) This amount includes the limited assurance on the non-financial disclosure prepared in accordance with ruling legislation and included in the management report. (****) This amount includes the fees related to the gap analysis carried out for the Group's Manager in charge of financial reporting. (*****) This amount includes the fees related to the limited review of the interim financial statements prepared by AZ Fund Management SA for the purposes of distributing an interim dividend and assisting the subsidiaries AZ Sestante, AZ International Holdings SA and the investment funds managed by Athenaeum Ltd. (******) This amount mainly includes the fees related to the comfort letter for the convertible bond issue and the certification services (35 thousand euro) related to the limited review of the condensed consolidated interim financial statements of Azimut Holding S.p.A.

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CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT TO ARTICLE 81-TER OF CONSOB REGULATION NO. 11971 OF 14 MAY 1999 AND SUBSEQUENT AMENDMENTS AND SUPPLEMENTS

Certification of the consolidated financial statements pursuant to Article 81-ter of Consob Regulation No. 11971 of 14 May 1999 and subsequent amendments and supplements

1. The undersigned, Sergio Albarelli, Chief Executive Officer, and Alessandro Zambotti, Manager in charge of financial reporting of Azimut Holding S.p.A., 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 2017 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 2017 is based on a process designed by Azimut Holding S.p.A. in line with the Internal Control – Integrated Framework model issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), an internationally accepted reference framework.

3. The undersigned also represent that:

3.1. the consolidated financial statements at 31 December 2017:

- were prepared in accordance with the International Financial Reporting Standards endorsed by the European Community pursuant to Regulation (EC) 1606/2002 of the European Parliament and Council, of 19 July 2002; - are consistent with the accounting books and records; - and give a true and fair view of the financial position and results of operations of the issuer and the companies included in its consolidation scope;

3.2. the management report contains a reliable analysis of the consolidated operating performance and results, in addition to the position of the issuer and the consolidated companies and a description of the main risks and uncertainties to which they are exposed.

Milan, 8 March 2018

Chief Executive Officer Manager in charge of financial reporting

(Sergio Albarelli) (Alessandro Zambotti)

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2017 ANNUAL REPORT Azimut Holding S.p.A.

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AZIMUT HOLDING S.p.A.

2017 Annual report

Page

Company bodies and independent auditors 208

Management Report 209 1. Macroeconomic scenario 2. General information about the company 3. Azimut shares 4. Performance - Financial performance - Balance sheet figures - Net financial position - Shareholders' equity, own funds and minimum capital requirements - Performance of direct subsidiaries 5. Company transactions and other significant events of the year 6. Organisational structure and corporate governance 7. Other information - Risk management and control - Related-party disclosures - Intra-group relations - Research and development - Secondary and branch offices - Marketing activities - Treasury shares 8. Significant events after the reporting date 9. Business outlook

Profit allocation plan 233

Financial statements 235 - Balance sheet - Income statement - Statement of comprehensive income - Statement of changes in shareholders’ equity - Cash flow statement

Notes to the financial statements 243 Part A – Accounting policies Part B – Notes to the balance sheet Part C – Notes to the income statement Part D – Other information

Annexes 316

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Page Annex A: List of equity investments held Annex B: List of significant equity investments, pursuant to Article 125 of Consob (Italian Securities and Exchange Commission) Regulation No. 11971/99 as amended

Certification of the separate financial statements 322

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COMPANY BODIES

Board of Statutory Auditors Vittorio Rocchetti Chairman Costanza Bonelli Standing Auditor Daniele Carlo Trivi Standing Auditor Maria Catalano Alternate Auditor Luca Giovanni Bonanno Alternate Auditor

Independent Auditors PricewaterhouseCoopers S.p.A.

Manager in charge of financial reporting Alessandro Zambotti

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MANAGEMENT REPORT

Dear Shareholders,

The financial statements of Azimut Holding S.p.A. at 31 December 2017 are submitted to your examination and approval. They show a net profit for the year of 208,842,024 euro (161,942,807 euro at 31 December 2016).

MACROECONOMIC SCENARIO

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The risks to the world economy remain linked to the possible volatility increase in financial markets, in addition to the sudden escalation of geopolitical tensions, specifically in North Korea, and the uncertainties about the economic policies, which may have a negative effect on the confidence of households and businesses. Although the first phase of Brexit has been agreed, the uncertainties surrounding the structure of the relationship between the two economies remain high. The outcome of the latest meeting between the countries (United States, Canada and Mexico) members of the North American Free Trade Agreement (NAFTA) for its revision makes the future of international trade agreements less predictable. However, the effects of the tax reform in the United States approved on 20 December 2017 (Tax Cuts And Jobs Act), envisaging a decrease in the tax rates for households and businesses, may stimulate global growth.

ITALY'S ASSETS UNDER MANAGEMENT MARKET

According to Assogestioni's (Italy’s association of the investment management industry) figures, in 2017, the increase in Italy's assets under management continued, with 2,085 billion euro at year end (+7.6% on 1,937 billion euro at 2016 year end) and positive inflows of approximately 97.5 billion euro.

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With respect to assets under management, net investments in UCI units prevailed and rose: inflows from collective portfolio management amount to 18.8 billion euro (3.3 billion euro in 2016) and account for 53.8% of net volumes in this segment. The resources are focused on open-ended UCI domiciled abroad, with net volumes of 15.5 billion euro, while Italian open- ended funds are positive for 3.1 billion euro. Inflows from discretionary portfolios also increased with investments totalling 4.2 billion euro (+79.7% on 2016). Specifically, the resources for discretionary funds activities amount to 2.7 billion euro (+93.4%), while net investment volumes in securities management are equal to 1.5 billion euro (+59.4%). During the year, the value of net premiums paid on insurance and social security products amounts to approximately 12.0 billion euro (-6.8% on 2016). Of this amount, 5.4 billion euro is invested in unit-linked policies, 4.6 billion euro in multi-line policies and 1.2 billion euro in traditional life insurance policies. Index-linked policies show a negative balance of 182 million euro.

In 2017, the net resources for open-ended UCI generated by the network’s activities amount to 31.7 billion euro, accounting for 41.3% of total net investments in open collective portfolio management (76.7 billion euro).

Total financial instruments under custody are negative by 33 million euro: according to the breakdown of figures, purchase orders prevailed on shares (3.1 billion euro) and ETPs (671 million euro), while disinvestments prevailed on government bonds (-1.1 billion euro), bonds (-1.7 billion euro) and certificates (-1.9 billion). Liquidity inflows for 2017 were positive at almost 4.2 billion euro.

2. GENERAL INFORMATION ABOUT THE COMPANY

Azimut Holding S.p.A. (the “Company”) is the parent company of the Azimut Group which is Italy's main independent holding company, with assets under management of approximately 50 billion euro at 31 December 2017. The Group is specialised in asset management and provides financial advisory services, mainly through its network of financial advisors.

The Company has been listed on the Milan stock exchange since July 2004 and is included, inter alia, in the FTSE MIB and the Euro Stoxx 600 indices. Its shareholding structure is comprised of over 1,400 investment managers, financial advisors and employees who signed

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a shareholders' agreement which ensures the stability and quality of performance and represents a unique example of commitment and independence.

The Company manages and coordinates the Azimut Group. At 31 December 2017, it had 20 managers and 14 other resources, including middle managers and office staff. For additional information about workforce figures, reference should be made to Part C, section 9 of the Notes to the financial statements.

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

In its role as consolidating entity, the Company participates in the tax consolidation regime pursuant to Article 117 and subsequent articles of the Income Tax Consolidation Act, together with the subsidiaries Azimut Capital Management SGR S.p.A., Azimut Financial Insurance S.p.A., Azimut Enterprises Holding S.r.l. and Azimut Partecipazioni S.r.l. The relationships arising from this taxation regime are regulated by a specific contract.

3. AZIMUT SHARES

The stock price (reference price) of the Azimut shares rose from 15.86 euro at 30 December 2016 to 15.97 euro at 30 December 2017.

At 31 December 2017, outstanding shares numbered 143,254,497. On the same date, the capitalisation was approximately 2.3 billion euro.

In 2017, the Company continued to develop its relations with institutional investors, which account for the majority of the shareholding 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. In March 2018, the Azimut Holding S.p.A. share was covered by the analysts of twelve Italian and foreign investment firms.

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4. PERFORMANCE

Financial performance

In euro 2017 2016

Fee and commission income 2,000,000 2,000,000 Net fee and commission income 2,000,000 2,000,000 Dividends and similar income 240,453,618 187,869,443 Interest income and similar income 86,380 190,430 Interest expense and similar charges -10,046,198 -11,162,874 Profits/losses on disposal or repurchase of financial assets and -8,926,414 101,830 liabilities Total income 223,567,386 178,998,829 Administrative costs -21,989,647 -19,880,685 a) personnel costs -9,263,195 -9,022,259 b) other administrative costs -12,726,452 -10,858,426 Impairment losses on tangible and intangible assets -979,193 -983,721 Net accruals to the provisions for risks and charges -120,000 -30,000 Other operating income and costs 1,217,701 1,756,617 Operating profit 201,696,247 159,861,040 Income tax 7,145,777 2,081,767 Profit for the year 208,842,024 161,942,807 Operating profit came to 202 million euro at 31 December 2017 (160 million euro at 31 December 2016) mainly due to 2017 dividends amounting to 240 million euro (188 million euro at 31 December 2016). Dividends from Azimut Holding S.p.A. Group companies include an interim dividend on the profit for 2017, paid in December 2017, from the subsidiary AZ Fund Management SA of 102 million euro (the interim dividend on the profit for 2016 collected in November 2016 from the same subsidiary amounted to 78 million euro).

Interest expense amounted to 10 million euro at 31 December 2017, slightly down compared to the previous year.

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Balance sheet figures

The Company's main balance sheet figures are shown in the reclassified table below.

Change Assets 31/12/2017 31/12/2016 Absolute % Available-for-sale financial assets 183,900,103 174,788,566 9,111,537 5%

Receivables 30,893,962 15,901,903 14,992,059 94%

Equity investments 623,656,139 552,673,445 70,982,694 13%

Tangible and intangible assets 186,118,140 186,896,272 -778,132 0%

Tax assets 31,205,879 29,336,885 1,868,994 6%

Other asset items 38,706,307 16,426,010 22,280,297 136%

Total assets 1,094,480,530 976,023,081 118,457,449 12%

An analysis of Assets shows, above all, that the portfolio of Available-for-sale financial assets, comprised of mutual funds units managed by the Azimut Group, remains significant, in line with 2016 year-end figure.

Receivables, which increased, mainly comprised cash deposited in bank current accounts as per the cash pooling arrangement between the Parent Company and some of its subsidiaries.

Equity investments rose by approximately 71 million euro on the 2016 year-end figure mainly as a consequence of (i) capital injections of about 35.7 million euro to the subsidiary AZ International Holdings SA to increase its share capital, (ii) capital injections of 4 million euro to Azimut Enterprises Holding S.r.l. to increase its share capital, (iii) payments made to cover the 2016 loss and capital contribution to the subsidiary Azimut Financial Insurance S.p.A. of approximately 12.4 million euro, (iv) the purchase of 45% of Azimut Libera Impresa SGR S.p.A. (formerly Futurimpresa SGR S.p.A.) of approximately 1.9 million euro and (v) the purchase of 49% of Augustum Opus Sim S.p.A. of approximately 1.7 million euro. This item also increased by 15 million euro and refers to the cost at 31 December 2017 of the incentive plan in favour of the financial advisors operating for Azimut Holding S.p.A. Subsidiaries (Azimut Capital Management SGR S.p.A. and Azimut Financial Insurance), whose remuneration comprises Parent Company’s shares (share-based payments). This item has a balancing entry in a specific equity reserve.

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Tangible and intangible assets, which include goodwill (approximately 150 million euro), software and trademarks (roughly 36 million euro) and office machinery, are substantially unchanged compared to the previous year.

Other asset items increased significantly in respect of intercompany balances and, specifically, the balance due from AZ Fund Management SA following the cash pooling arrangement.

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Change Liabilities and shareholders' equity 31/12/2017 31/12/2016

Absolute % Payables 11,962,152 88,656,657 -76,694,505 -87% Outstanding securities 353,815,985 226,522,394 127,293,591 56% Tax liabilities 54,392,735 53,921,113 471,622 1% Other liability items 99,262,040 7,910,727 91,351,313 1155% Share capital 32,324,092 32,324,092 0 0% Treasury shares -130,028,451 -81,288,161 -48,740,290 60% Equity instruments 36,000,000 70,949,500 -34,949,500 -49% Reserves and share premium reserve 427,909,953 415,083,952 12,826,001 3% Profit for the year 208,842,024 161,942,807 46,899,217 29% Total liabilities and shareholders' equity 1,094,480,530 976,023,081 118,457,449 12%

With respect to Liabilities, Payables are down following the repayment of the 68.5 million euro loan granted to the subsidiary Azimut Partecipazioni S.r.l., in addition to the payment of the 10 million euro instalment of the loan granted by Banco BPM S.p.A.

Outstanding securities comprise the “Azimut 2017-2022 2%” bond issued in March 2017, with the concurrent early redemption of the “Azimut 2013-2020 convertible 2.125%” bond.

Other liability items increased significantly in respect of intercompany balances and, specifically, the balance due to Azimut Partecipazioni S.r.l., following the cash pooling arrangement.

The increase in Treasury shares is due to the treasury shares purchased in accordance with the decisions of the companies’ Boards of Directors, as described in the “Significant events of the year” paragraph.

Net financial position

At 31 December 2017, the net financial position was negative by 160 million euro, up on the balance at 31 December 2016 (-125 million euro).

The balance was impacted by the liquidity generated by operating activities, as well as by the payment of dividends to shareholders (131 million euro), in addition to the following main transactions carried out during the year:

 payment to the Ipo Club Fund, for a total of 5,200 thousand euro in 2017. At 31 December 2017, Azimut Holding S.p.A. holds approximately 17.5% of the Fund's units;

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 early redemption of the “Azimut 2013-2020 subordinato 2.125%” convertible bond, which entailed a total outflow of approximately 279 million euro against the recognition of liabilities of roughly 226 million euro at 31 December 2017 and the corresponding equity portion of about 35 million euro. The redemption also led to the recognition of a loss of approximately 8 million euro;  repayment of the 68.5 million euro loan disbursed during the previous year by Azimut Partecipazioni S.r.l.;  in 2017, following the Board of Directors' resolutions of 24 May 2016 and 4 May 2017, Azimut Holding S.p.A. made a capital injection of 35.7 million euro to increase the share capital of the subsidiary AZ International Holdings SA in order to finance the Group's international development;  a capital injection of 4 million euro in 2017 to increase the share capital of Azimut Enterprises Holding S.r.l.;  a capital injection of 12.5 million euro in 2017 to increase the share capital of Azimut Financial Insurance S.p.A.;  repayment, on 30 June 2017, of the instalment (Line B) of the 10 million euro loan granted by Banco Popolare;  acquisition, on 28 July 2017, of the additional 45% of Azimut Libera Impresa S.p.A. (formerly Futurimpresa S.p.A.) against a total consideration of 1.9 million euro;  Acquisition, on 16 November 2017, of the additional 49% of Augustum Opus Sim S.p.A. against a total consideration of 1.7 million euro;  during the year, transactions involving treasury shares led to a total increase of 2,926,848 shares for a total of 48.7 million euro. The details of these transactions are illustrated in the “Significant events of the year” section of these separate financial statements.

During the year, the Company recognised dividends income from its investees for 240 million euro, of which 102 million euro as interim dividends from AZ Fund Management SA.

On 17 February 2017, the Company entered into a cash-pooling arrangement with its subsidiaries AZ Fund Management SA, Azimut Capital Management S.p.A., Azimut Financial Insurance S.p.A. and Azimut Partecipazioni S.r.l, to centralise treasury with Azimut Holding S.p.A. and increase the efficiency of the Group’s liquidity management, while maintaining legal

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and operational independence. The service provided refers solely to the organisation and management of non-bank current account items and offsetting intercompany commercial transactions. The service provides for a one-month Euribor plus a 10bp spread.

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The Company's net financial position may be analysed as follows:

Items 31/12/2017 31/12/2016

A Cash 7,326 6,488 B Cash equivalents: 28,931,809 15,901,903 Due from banks 28,931,809 15,901,903 C Available-for-sale financial assets 174,990,838 174,161,870 D Total cash A+B+C 203,929,973 190,070,261 E Short-term financial receivables - - F Short-term bank loans - - G Current portion of long-term debt: -15,350,685 -10,575,183 - Bonds (Azimut '17-'22) - 5,350,685 Bonds (Azimut '13-'20 Convertible) 0 -524,073 Due to banks (Banco BPM loan) -10,000,000 -10,051,110 H Other short-term financial payables - - I Short-term financial debt F+G+H -15,350,685 -10,575,183 J Short-term financial debt (net) I-E-D 188,579,288 179,495,078 K Long-term bank loans 0 -10,000,000 Due to banks (Banco BPM loan) 0 -10,000,000 L Bonds - 348,465,300 -225,998,321 Azimut ‘11-’22 Bond - 348,465,300 - Azimut '13-'20 Convertible Bond 0 -225,998,321 M Other long-term payables - - Loan from Azimut Partecipazioni S.r.l. - - 68,605,547 N Long-term financial debt K+L+M -348,465,300 -304,603,868 O Net financial debt J+N -159,886,012 -125,108,790

With regard to the methods used to assess net financial position, reference was made to the recommendation issued by CESR (Committee of European Securities Regulators) dated 10 February 2005, and more specifically to the paragraph on “Capitalisation and indebtedness” in chapter II.

Receivables and payables include those of a financial nature only, whereas trade receivables and payables have been excluded.

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Shareholders' equity, own funds and minimum capital requirements

The development of shareholders' equity at 31 December 2017 primarily reflects the decisions regarding the allocation of the profit for the year made when approving the 2016 financial statements which entailed payment of dividends of 157 million euro and payment of profit-participating financial instruments held by top key people. For additional information, reference should be made to the relevant section of these notes.

Performance of direct subsidiaries

Registered 2017 profit 2016 profit (loss) office (loss)

1 AZ Fund Management SA Luxembourg 226,845,920 223,141,829

2 AZ Life Dac Ireland 26,344,710 20,545,689 3 Azimut Capital Management SGR Italy S.p.A. 15,901,467 26,806,416 4 Azimut Global Counseling S.r.l. Italy - 45,077 - 401,620 5 Azimut Enterprises Holding S.r.l. Italy - 169,117 - 800,640 6 AZ International Holdings SA Luxembourg - - 1,167,165 1,353,405

7 Azimut Financial Insurance S.p.A. Italy - 5,908,687 27,594,976

8 Azimut Libera Impresa SGR S.p.A. Italy 675,199 243,992 9 Azimut Partecipazioni S.r.l. Italy 93,462,915 74,305,948 10 Azimut Analytics S.r.l. Italy - 158,312 -

AZ Fund Management SA manages the Luxembourg-based umbrella funds, AZ Fund 1 and AZ Multiasset. During the year, it achieved a profit of 227 million euro compared to a profit of approximately 223 million in 2016.

AZ life Dac is Azimut Group's Irish-based company authorised to provide life insurance services in Ireland as per the Central Bank of Ireland's measure of 13 January 2004. AZ Life Dac, which also operates through the Milan branch, provides customers with personalised assistance designed specifically for them. In fact, AZ Life Dac offers solutions differentiated based on customer type through different Unit-Linked policies, including based on the

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customer's investment strategies. During the year, it achieved a profit of 26 million euro compared to a profit of approximately 21 million in 2016.

Azimut Capital Management SGR S.p.A. is an independent asset management company that manages 13 Italian funds harmonised with Directive 2009/65/EC, an Italian hedge fund and a pension fund. Furthermore, it provides investment portfolio individual management services on behalf of third parties, including under delegation arrangements. The net profit for 2017 amounts to 16 million euro (2016: 27 million euro).

Azimut Global Counseling S.r.l. provides financial planning consultancy services, in addition to company restructuring, market research and marketing activities, data collection and processing, and financial information. In 2017, it incurred a loss of 45 thousand euro compared to a loss of 402 thousand euro in 2016.

Azimut Enterprises Holding S.r.l. is a holding company focusing on unlisted companies, including Programma 101 Sicaf S.p.A., Siamosoci S.r.l. and Cofircont Compagnia Fiduciaria S.r.l. which contribute to diversifying the Group's business. Programma 101 Sicaf S.p.A. is a venture capital company specialised in early stage investments in the digital sector, while Siamosoci S.r.l. acts as start-up incubator. Cofircont Compagnia Fiduciaria S.r.l. is a fiduciary company. During the year, the company set up Azimut Analitycs S.r.l., paying in 6,000 euro and holding 60% of its quota capital. In 2017, it incurred a loss of 169 thousand euro compared to a loss of 801 thousand euro in 2016.

AZ International Holdings SA is a Luxembourg-based holding company through which the Group continued its research, development, acquisition and management of foreign partnerships. Through this company, the Group is present in 15 countries, including Luxembourg, Ireland, China (Hong Kong and Shanghai), Monaco, Switzerland, Singapore, Brazil, Mexico, Taiwan, Chile, Australia, Turkey, the United States, Dubai and Iran. In 2017, it incurred a loss of 1,353 thousand euro compared to a loss of 1,167 thousand euro in 2016.

Azimut Financial Insurance S.p.A. carries out insurance mediation, except for reinsurance mediation, and bank products' placement and distribution activities. In 2017, it achieved a profit of 28 million euro compared to a loss of 6 million euro in 2016. The increase in the profit for the year is due to the collection of the interim dividend paid by AZ Fund

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Management (38 million euro) as a result of the completion of Azimut Partecipazione S.r.l.’s partial demerger on 1 October 2017.

Azimut Libera Impresa SGR S.p.A. (formerly Futurimpresa SGR S.p.A.) manages private equity funds. In 2017, it launched the IPO Club fund specialised in SPAC and Prebooking Company investments, supporting Italy’s SMEs. In July 2017, Azimut Holding S.p.A. acquired the additional 45% investment therein. In 2017, it achieved a profit of 675 thousand euro compared to a profit of 244 thousand euro in 2016.

Azimut Partecipazioni S.r.l. is a holding company focusing on unlisted companies. On 1 October 2017, following the demerger to Azimut Financial Insurance S.p.A., it sold 19% of the investment held in AZ Fund Management SA. On 31 December 2017, Bank of Italy authorised the merger into Azimut Capital Management SGR S.p.A. with effect from 1 January 2018. During the year, it achieved a profit of 93 million euro compared to a profit of 74 million in 2016.

Azimut Analitycs S.r.l. was set up on 25 May 2017 by Azimut Enterprises Holding S.r.l. which paid in 6,000 euro and holds 60% of its quota capital. Its main business object is data collection, analysis, mining and management and the conception, creation, development, design and implementation and management, including on behalf of third parties, of information systems and/or application software. In 2017, it incurred a loss of 158 thousand euro.

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5. COMPANY TRANSACTIONS AND OTHER SIGNIFICANT EVENTS OF THE YEAR

Azimut Holding S.p.A.

Capitalisation transactions carried out by Azimut Holding S.p.A.

In 2017, following the Board of Directors' resolutions of 10 March 2016 and 04 May 2017, Azimut Holding S.p.A. made a capital injection of 35.7 million euro to increase the share capital of the subsidiary AZ International Holdings Sa and finance the Group's international development.

Purchases of treasury shares by Azimut Holding S.p.A.

As of 7 February 2017, as resolved by the Shareholders in their Ordinary meeting of 28 April 2016, Azimut Holding S.p.A. launched a share buy-back programme in order to subsequently re-sell treasury shares or use them to acquire or exchange equity investments, accumulate the capital stock for the execution of stock options programmes, service the financial instruments convertible into Company's shares or any other useful purpose which increases the value of the Company in compliance with the legislation from time to time in force. The maximum number of shares that could be repurchased on 7 February 2017 was 18,263,710, representing approximately 13% of share capital. Buybacks could be executed in tranches, for a total amount of 25,000,000 euro at the maximum price of 50 euro (only for the first tranche the maximum acquisition price was up to 30 euro).

The purchase of the first tranche was completed on 27 February 2017 and involved a total of 1,492,550 treasury shares against a consideration of 24.8 million euro.

Issue of a fixed-rate non-convertible bond

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On 20 March 2017, the Board of Directors of Azimut Holding S.p.A. approved the issue of a fixed-rate non-convertible bond (the “Bond”). The company closed the Bond placement at 350 million euro on 22 March 2017, with a fixed-rate coupon of 2.000% and a five-year duration, maturing on 28 March 2022. The bonds were offered to qualified investors, excluding those in the United States and other selected countries, and are listed on the Luxembourg Stock Exchange.

In accordance with the “Use of Proceeds”, the Company may use the proceeds from the Bond for its own operations and to finance potential extraordinary transactions, including the possible repurchase of the Company's equity instruments currently outstanding and/or repay part of the debt or to finance the rescheduling and settlement of the Company's long-term debt, including the repurchase offer related to the subordinated convertible bond named “euro 250,000,000 2.125% Subordinated Convertible Bonds due 2020” issued by the Company in 2013 and maturing in 2020.

On the same date, a bondholders' meeting (the "Meeting") was called to amend certain provisions of the Trust Deed and the terms and conditions of the Bonds, and in particular that covering the Issuer's possibility of early redemption.

In the meeting held on 8 May 2017 at Azimut Holding S.p.A.'s registered office, the bondholders approved the amendments included in the agenda and, at the same time, Azimut Holding S.p.A. exercised the option for the early redemption of all Bonds still outstanding and not included in the offer. The total amount paid to settle the convertible bond was 279.4 million euro.

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Azimut Holding S.p.A. General Shareholders’ Meeting of 27 April 2017

The shareholders’ meeting (both ordinary and extraordinary) of 27 April 2017 resolved the following:

Approval of 2016 financial statements

The shareholders’ meeting approved the 2016 financial statements, which included a Parent Company net profit of 161.9 million euro. The shareholders concurrently resolved to pay a dividend of 1 euro per ordinary share, pre-tax, to be paid as of 24 May 2017, 22 May 2017 ex- dividend payment date and 23 May 2017 as the record date. 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 17,27 euro for each profit-participating financial instrument held by Top Key People at the time of approval of payment of the dividend.

Appointment of Directors

The Shareholders were in favour of the appointment of Sergio Albarelli and Alessandro Zambotti as Directors. In their meeting of 27 April 2017, the Board of Directors of Azimut Holding S.p.A. confirmed Sergio Albarelli as Chief Executive Officer and Alessandro Zambotti as the Chief Financial Officer of the Group.

Proposal for purchase and allocation of treasury shares and consequent resolutions

Remuneration Report

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. Furthermore, the Shareholders were in

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favour of the proposal to increase the ratio between the fixed and variable components of remuneration up to 2:1.

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Repayment of Banco BPM S.p.A. loan On 30 June 2017, the Parent Company repaid the instalment (Line B) of the loan granted by Banco BPM S.p.A. for a total amount of 10 million euro.

Acquisition of 100% of Azimut Libera Impresa SGR S.p.A. (formerly Futurimpresa SGR S.p.A.)

On 1 August 2017, Azimut Holding S.p.A. reached an agreement with the Milan, Bergamo, Brescia and Como Chambers of Commerce to acquire the residual 45% of Futurimpresa SGR S.p.A., subsequently renamed Azimut Libera Impresa SGR S.p.A. (“Azimut Libera Impresa”) as of 4 October 2017, an asset management company specialised in the management of alternative investment funds. As a result of this transaction, which is worth approximately 2 million euro, Azimut Libera Impresa is now wholly owned by the Azimut Group. In addition to the Finanza e Sviluppo Impresa private equity fund, Azimut Libera Impresa also includes the Antares AZ I fund, launched in 2016 and specialised in private debt, the IPO Club fund, launched in 2017 and specialised in SPAC and Prebooking Company investments, both supporting Italy’s SMEs.

Partial demerger and merger by incorporation of Azimut Partecipazioni S.r.l.

The entire transaction meets the need to simplify and streamline the Group’s corporate structure in Italy, also for the purposes of an effective allocation of costs and revenues. It

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provides for the allocation of part of the investment held by Azimut Partecipazioni S.r.l. in AZ Fund Management SA (19%) to Azimut Financial Insurance S.p.A. and the subsequent merger of Azimut Partecipazioni S.r.l. into Azimut Capital Management SGR S.p.A. with the transfer of the residual 30% investment in AZ Fund Management SA.

The partial demerger became effective on 1 October 2017, while the merger by incorporation of Azimut Partecipazioni S.r.l. into Azimut Capital Management SGR S.p.A. became effective on 1 January 2018.

No share exchange ratio was calculated for the partial demerger and the merger and no shares of the Company were allocated to Azimut Partecipazioni S.r.l. shareholders since the Parent Company is the sole share/quotaholder of both companies.

6. ORGANISATIONAL STRUCTURE AND CORPORATE GOVERNANCE Azimut Holding S.p.A. complies with corporate governance regulations in force in Italy. Moreover, the corporate governance structure partially reflects the recommendations contained in the Corporate Governance Code for Listed Companies published by Borsa Italiana.

For more information about the corporate governance structure, reference should be made to the “Report on corporate governance and ownership structure” prepared pursuant to Article 123-bis of the Consolidated Law on Finance available on the Company's website (www.azimut-group.com), Azimut Governance section, and attached to the financial statements.

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7. OTHER INFORMATION

Risk management and control

With respect to the main risks to which Azimut Holding S.p.A. and its Group are exposed, the following risks were identified:

 Strategic risk  Sales network risks  Operational risk  Outsourcing risk  Reputational risk  Compliance risk  Financial risks  Liquidity risk

Azimut Holding S.p.A. mainly manages and coordinates direct and indirect equity investments. Consequently, the exposure to operational risks is not significant. The Group's operating companies monitor the operational risks inherent to the specific business of asset management companies. Monitoring of operational risks is comprised of the following activities: risk mapping, risk event analysis, risk assessment, risk management and reporting.

For additional information about the risks and uncertainties to which the Company and the Group are exposed, reference should be made to that set out in the “Consolidated financial statements of Azimut Holding S.p.A. at 31 December 2017 – Management Report” and “Part D – Other information, Section 2 – Information on risk management and hedging policies” of the Notes to the “Separate financial statements of Azimut Holding S.p.A. at 31 December 2017”, and the “Report on corporate governance and ownership structure” pursuant to Article 123- bis of the Consolidated Law on Finance available on the Company's website (www.azimut- group.com), Azimut Governance section.

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Related-party disclosures

Pursuant to Consob Regulation on Related Parties (Resolution No. 17221 of 10 March 2010, as amended), on 22 November 2010, the Board of Directors of Azimut Holding S.p.A. approved the procedures that ensure transparency and fairness of related-party transactions (“Related- Party Transaction Procedure” available on Azimut’s website at www.azimut-group.com).

With reference to paragraph 8 of Article 5 of the Consob Regulation on periodic disclosure of related party transactions, the Company did not engage in any “significant” transactions during 2017.

No other atypical or unusual transactions were performed.

Intra-group relations

For information on relations with Group companies, reference should be made to Part D, Section 5 of the Notes to the financial statements on related-party transactions.

Research and development

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

Secondary and branch offices

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

Marketing, communication and training activities

In 2017, marketing activities were focused on providing sales support to Financial Partners, specifically to improve digital and technological aspects and to develop skills. Specifically, new digital platforms were implemented to offer, though the Group's distribution network, service tools which extend the concept of financial advisory to an all-inclusive concept which covers all customers’ assets.

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Again in 2017, the network was considerably active throughout Italy, organising local events focused on financial, social security and cultural topics and sport sponsorships.

Treasury shares At 31 December 2017, 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.

During the year, transactions involving treasury shares led to an increase of 2,926,848 treasury shares for a total of approximately 49 million euro.

At 31 December 2017, Azimut Holding S.p.A.’s treasury share portfolio therefore stood at 13,314,037 shares, or 9.294% of share capital.

8. SIGNIFICANT EVENTS AFTER THE REPORTING DATE

The main events that occurred after 31 December 2017, the reporting date of the separate financial statements, until 8 March 2018, the date on which the Board of Directors approved the draft financial statements, are as follows:

 On 1 January 2018, Azimut Partecipazioni S.r.l. merged into Azimut Capital Management SGR S.p.A.  The purchase of the additional tranche of treasury shares, approved by the company’s Board of Directors on 12 December 2017, was completed on 26 January 2018, based on the authorisation issued pursuant to Article 2357 of the Italian Civil Code by the shareholders in their meeting of 27 April 2017. In January 2018, 1,735,200 treasury shares were purchased, for a total of 30 million euro.  In January and February 2018, the Company made a capital injection of 4 million euro to increase the share capital of the subsidiary AZ International Holdings SA.  On 20 February 2018, Azimut Holding S.p.A., through the subsidiary Azimut Capital Management SGR S.p.A. (“Azimut SGR”), entered into an agreement with Sofia Gestione del Patrimonio SGR S.p.A. under extraordinary administration (“Sofia SGR”) and Sofia

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Partners S.p.A. (“Sofia Partners”), as the majority shareholder of Sofia SGR, whereby Azimut SGR acquires Sofia SGR’s assets (the “Business Unit”). The Business Unit will mainly provide the following services: (i) collective portfolio management, (ii) investment portfolio individual management on behalf of third parties, (iii) management under delegation arrangements assigned by parties providing investment portfolio management services and Italian and/or foreign UCI and (iv) consultancies for investments in financial instruments. By purchasing the Business Unit, Azimut Capital Management SGR will take over, inter alia, four open-ended mutual funds set up, promoted and currently managed by Sofia SGR, and will increase its network by adding Sofia SGR’s 47 financial advisors who, at 31 December 2017, were in charge of assets under management worth approximately 800 million euro. Concurrently with the Business Unit’s transfer, Azimut Capital Management SGR will pay Sofia SGR a base consideration of 3 million euro and, after 24 months, the residual amount, if any, of the variable portion of the price to be calculated based on the performance of the assets under management transferred to Azimut Capital Management SGR and their net profitability. Under the agreement, Azimut Capital Management SGR will obtain a series of representations and guarantees on the Business Unit's risks until its transfer, which are typical for similar transactions. The completion of this transaction also depends on obtaining of Bank of Italy’s necessary authorisations, approvals and/or clearances.

These separate financial statements were authorised for publication by the Company's Board of Directors on 8 March 2018.

9. BUSINESS OUTLOOK Given the positive results of the subsidiaries for 2017 and considering the dividends proposed by the boards of directors of said companies at the respective shareholders’ meetings, the Company is expected to generate a profit for 2018.

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PROFIT ALLOCATION PLAN

Dear Shareholders,

The Board of Directors of Azimut Holding S.p.A. submits to your approval the separate financial statements at 31 December 2017.

The financial statements show a profit for the year of 208,842,024 euro, which we propose to allocate as follows:

 2,472,718 euro, or 1% of pre-tax consolidated profit, to be paid to the charitable organisation Fondazione Azimut Onlus pursuant to Article 32 of the By-laws;

 a gross dividend of 1 euro to the Shareholders for each of the shares comprising the Company’s share capital, excluding any treasury shares held on the day preceding the ex-dividend date, payable according to the ordinary terms;

 bonus issue of 1 Azimut Holding ordinary share for every 18 ordinary shares held, excluding any treasury shares held on the day preceding the ex-dividend date. The fractional rights arising from the share allocation will be monetised based on the official price resulting from the transactions carried out on the last market trading day prior to the ex-dividend date, without expenses, fees or other charges for the shareholders;

 21.48 euro for each Profit-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 Article 32 of the By-laws.

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We propose that the dividend be paid and that the treasury shares be allocated as of 23 May 2018, 21 May 2018 as the ex-dividend payment date and 22 May 2018 as the record date.

Milan, 8 March 2018

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

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BALANCE SHEET AS AT 31 DECEMBER 2017

Assets 31/12/2017 31/12/2016

10. Cash and cash equivalents 7,326 6,488 40. Available-for-sale financial assets 183,900,103 174,788,566 60. Receivables 30,893,962 15,901,903 a) for portfolio management - - b) other receivables 30,893,962 15,901,903 90. Equity investments 623,656,139 552,673,445 100. Tangible assets 561,106 813,912 110. Intangible assets 185,557,034 186,082,360 120. Tax assets 31,205,879 29,336,885 a) current 170,731 780,980 b) deferred 31,035,148 28,555,905 of which pursuant to Italian Law 214/11 - - 140. Other assets 38,698,981 16,419,522

TOTAL ASSETS 1,094,480,530 976,023,081

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

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Liabilities and Shareholders’ Equity 31/12/2017 31/12/2016

10. Payables 11,962,152 88,656,657

20. Outstanding securities 353,815,985 226,522,394

70. Tax liabilities: 54,392,735 53,921,113 a) current 1,180,368 - b) deferred 53,212,367 53,921,113

90. Other liabilities 98,389,673 6,758,760

100. Staff severance pay (TFR) 722,367 1,121,967 110. Provisions for risks and charges: 150,000 30,000 b) other provisions 150,000 30,000

120. Share capital 32,324,092 32,324,092 - - 130. Treasury shares (-) 130,028,451 81,288,161

140. Equity instruments 36,000,000 70,949,500

150. Share premium reserve 173,986,916 173,986,915

160. Reserves 253,240,924 241,103,546 170. Valuation reserves 682,113 - 6,509 180. Profit for the year 208,842,024 161,942,807

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,094,480,530 976,023,081

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

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INCOME STATEMENT AS AT 31 DECEMBER 2017

Items 31/12/2017 31/12/2016

10. Fee and commission income 2,000,000 2,000,000

NET FEE AND COMMISSION INCOME 2,000,000 2,000,000

30. Dividends and similar income 240,453,618 187,869,443

40. Interest income and similar income 86,380 190,430

50. Interest expense and similar charges (10,046,198) (11,162,874)

90. Profits (losses) on disposal or repurchase of: (8,926,414) 101,830 a) financial assets (1,008,935) 108,032 b) financial liabilities (7,917,479) (6,202)

TOTAL INCOME 223,567,386 178,998,829

110. Administrative costs: (21,989,647) (19,880,685) a) personnel costs (9,263,195) (9,022,259) b) other administrative costs (12,726,452) (10,858,426)

Net impairment losses/reversals of impairment losses on 120. tangible assets (326,053) (345,795)

Net impairment losses/reversals of impairment losses on 130. intangible assets (653,140) (637,926)

150. Net accruals to the provisions for risks and charges (120,000) (30,000)

160. Other operating income and costs 1,217,701 1,756,617 OPERATING PROFIT 201,696,247 159,861,040 PRE-TAX PROFIT (LOSS) FROM CONTINUING OPERATIONS 201,696,247 159,861,040

190. Income tax on profit from continuing operations 7,145,777 2,081,767

NET PROFIT (LOSS) FROM CONTINUING OPERATIONS 208,842,024 161,942,807

PROFIT (LOSS) FOR THE YEAR 208,842,024 161,942,807

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STATEMENT OF COMPREHENSIVE INCOME

Items 31.12.2017 31.12.2016

10. Profit for the year 208,842,024 161,942,807 Other comprehensive income, net of taxes, not 112,075 (14,160) transferred to profit or loss 20. Tangible assets 30. Intangible assets 40. Defined benefit plans 112,075 (14,160) 50. Non-current assets held for sale Share of valuation reserves of investments measured at 60. equity Other comprehensive income, net of taxes, transferred 576,546 2,320,805 to profit or loss 70. Foreign investment hedges 80. Exchange rate differences 90. Cash flow hedge 100. Available-for-sale financial assets 576,546 2,320,805 110. Non-current assets held for sale Share of valuation reserves of investments measured at 120. equity Total other comprehensive income (expense), net of 130. 688,621 2,306,645 taxes

140. Comprehensive income (Items 10+130) 209,530,645 164,249,452

On behalf of the Board of Directors

Chief Executive Officer (Sergio Albarelli)

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STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY AT 31 DECEMBER 2016

Allocation of prior year profit Changes during the year

(loss) Shareholders’ equity transactions

Items

December 2016 December 2016 December

Reserves

purchases

distribution

instruments

distributions

Balance at 31/12/2015 at Balance 01/01/2016 at Balance

Other changes Other

Treasury share share Treasury

Changes in reserves in Changes

Shareholders’ equity at 31 31 at equity Shareholders’

Changes in equity equity in Changes

Changes in opening balance opening in Changes

Issue of new shares of new Issue

Comprehensive income at 31 31 at income Comprehensive

Dividends and other other and Dividends

Extraordinary dividend dividend Extraordinary

Share capital 32,324,092 32,324,092 32,324,092

Share premium reserve 173,986,915 173,986,915 173,986,915

Reserves: a) income- related 320,220,357 320,220,357 51,021,231 (132,867,308) 502,510 3,360,637 242,237,427 b) other (1,133,880) (1,133,880) (1,133,880) Equity instruments 71,452,010 71,452,010 (502,510) 70,949,500

Valuation reserves (2,313,154) (2,313,154) 2,306,645 (6,509)

Treasury shares (80,726,765) (80,726,765) (1,791,601) 1,230,204 (81,288,162)

Profit (loss) for the year 156,753,585 156,753,585 (51,021,231) (105,732,354) 161,942,807 161,942,807

Shareholders’ equity 670,563,160 670,563,160 (238,599,662) 0 (1,791,601) 4,590,841 164,249,452 599,012,190

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STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY AT 31 December 2017

Allocation of prior year profit Changes during the year

(loss)

Shareholders’ equity transactions

Items

reserves

2017

December 2017

Reserves

distribution

instruments

distributions

Balance at 31/12/2016 Balance at 01/01/2017

Other changes

Changes in

Changes openingin balance

Changes equityin

Comprehensive income at 31

Issue of new shares

Dividends and other

Extraordinary dividend

Treasury share purchases

Shareholders’ December equity at 31

Share capital 32,324,092 32,324,092 32,324,092

Share premium reserve 173,986,915 173,986,915 173,986,915

Reserves: a) income-related 242,237,427 242,237,427 3,559,656 (6,124,371) (297,908) 239,374,804 b) other (1,133,880) (1,133,880) 15,000,000 13,866,120

Equity instruments 70,949,500 70,949,500 (34,949,500) 36,000,000

Valuation reserves (6,509) (6,509) 688,622 682,113 Treasury shares (81,288,162) (81,288,162) (69,712,728) 20,972,439 (130,028,451)

Profit (loss) for the year 161,942,807 161,942,807 (3,559,656) (158,383,151) 208,842,024 208,842,024

Shareholders’ equity 599,012,190 599,012,190 0 (158,383,151) 0 0 (69,712,728) 0 (26,073,871) 20,674,531 209,530,646 575,047,617

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CASH FLOW STATEMENT

Indirect method A. OPERATING ACTIVITIES

2017 2016

1. Operations 218,553,953 161,568,058 - profit (loss) for the year (+/-) 208,842,024 161,942,807 - 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 losses (+/-) 0 0

- net impairment losses on tangible and intangible assets (+/-) 979,193 983,721 net accruals to provisions for risks and charges and other expenses/income (+/-) 120,000 30,000 - taxes, duties and tax credits still to be paid (+) 3,942,780 (1,431,717) - other changes (+/-) 4,669,955 43,246 36,281,304 2. Cash generated from or used by financial assets 57,357,631 - available-for-sale financial assets (8,282,569) (626,696) - other assets 27,998,735.65 57,984,328 3. Cash generated from or used by financial liabilities 135,577,416 57,110,320 - due to banks (10,000,000) 58,500,000 - due to financial institutions (68,500,000) 0 - outstanding securities 122,466,979 4,713,024 - other liabilities 91,610,437 (6,102,704) Net cash generated from or used by operating activities 317,850,064 276,036,009

B. INVESTMENT ACTIVITIES

1. Cash generated from 2,000 125,000 - disposal of equity investments 0 - dividends from equity investments 0 125,000 - disposal of held-to-maturity financial assets 0 - disposal of tangible assets 2,000 - disposal of intangible assets 0 0

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- disposal of business units 0 0 2. Cash used by (56,185,755) (57,952,243) - purchase of equity investments (55,982,694) (57,294,379) - purchase of held-to-maturity financial assets 0 0 - purchase of tangible assets (75,247) (241,333) - purchase of intangible assets (127,814) (416,531) - purchase of business units 0 0 Net cash generated from or used by investment activities (56,183,755) (57,827,243)

C. FINANCING ACTIVITIES

- issue/purchase of treasury shares (69,712,728) (561,397) - change in other reserves 15,238,782 6,169,791 - issue/purchase of equity instruments (34,949,500) (502,510) - dividends and other distributions (158,383,151) (238,599,662) Net cash generated from or used by financing activities (247,806,597) (233,493,778)

NET CASH GENERATED OR USED FOR THE YEAR 13,859,713 (15,285,012)

RECONCILIATION

2017 2016

Opening cash and cash equivalents 190,070,260 205,355,273 Total net cash generated or used for the year 13,859,713 (15,285,012) Closing cash and cash equivalents 203,929,973 190,070,260

Reference should be made to the paragraph on the “financial position” of the Management Report for a breakdown of “Cash and cash equivalents”. On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

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NOTES TO THE SEPARATE FINANCIAL STATEMENTS

PART A – ACCOUNTING POLICIES

A.1 General information

Section 1 – Statement of compliance with IAS/IFRS

The separate financial statements comply with the International Accounting Standards (IAS) / International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and the related interpretations of the IFRS Interpretations Committee, endorsed by the European Commission and in force on 31 December 2017, implementing Italian Legislative Decree No. 38/2005 and Regulation (EC) No. 1606/2002. There were no departures from IAS/IFRS.

For information about the standards that came into force in 2017, reference should be made to “Section 2 – General reporting criteria” which also describes the impacts, if any, on the company.

Section 2 – General reporting criteria

The separate financial statements have been drawn up in accordance with the instructions issued by the Bank of Italy for the preparation of “financial statements of IFRS financial intermediaries, other than banking intermediaries” on 9 December 2016. The Instructions lay down the mandatory financial statements schedules and how they must be filled in, and the content of the notes thereto for asset management companies. As of 2018, following the coming into force of two new accounting standards (IFRS 9 and IFRS 15), the provisions attached to the Bank of Italy Regulation of 9 December 2016 no longer apply. Indeed, they are replaced by the new provisions the Bank of Italy issued on 22 December 2017.

These financial statements comprise the balance sheet, the income statement, the statement of comprehensive income, the statement of changes in shareholders’ equity,

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the cash flow statement (prepared using the indirect method) and these notes. They are accompanied by the management report on the performance of the company. These notes are comprised of four parts:

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 these notes and represent an integral part thereof:  list of equity investments held (Annex A);  list of significant equity investments, pursuant to Article 125 of Consob (Italian Securities 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 indicators12 have been considered which, as also shown in the joint 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 company stability and ability to operate as a going concern.

Although the economic outlook remains uncertain, an overall valuation of the past and current financial position and results of operations of the Company, its operating guidelines, the business model of investees and the risks to which the business activity is exposed13, lead us to believe that it will continue to operate on a going concern basis for the foreseeable future.

The financial statements have been prepared clearly and give a true and fair view of the Company's financial position, results of operations, changes in shareholders' equity and cash flows.

12 Examples of which are shown in audit standard No. 570 on “Going Concerns”. 13 As described in the Management Report.

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The financial statements have been prepared in accordance with IAS 1 “Presentation of financial statements” and in line with the general assumptions of the “Framework for the preparation and presentation of financial statements” (the “framework”) prepared by the IASB, specifically with respect to the fundamental principle of substance over form14, the relevance and materiality of financial information, the accruals basis of accounting and the going concern assumption. Except for that provided for or permitted by IAS/IFRS or one of their interpretations or Bank of Italy's provisions on the financial statements of asset management companies, assets and liabilities and costs and revenue are not offset.

Accounting standards, amendments and interpretations endorsed by the European Union and in force from 1 January 2017.

The IAS/IFRS applied to prepare the Azimut Holding S.p.A.'s financial statements, governing the classification, recognition, measurement and derecognition criteria of asset and liability items and the recognition of income and expense are those in force at the drafting date of these financial statements, as endorsed by the European Union.

For information on the classification, recognition, measurement and derecognition criteria of the main items, reference should be made to that set out in Part A.2 of the Notes to the separate financial statements at 31 December 2017. To date, no accounting standards endorsed by the European Commission provide for the mandatory application in 2017.

In addition to that set out in Part A.2, following the completion of the endorsement procedure, the following amendments to IAS/IFRS became effective on 1 January 2017.

Accounting standards, amendments and interpretations in force from 1 January 2017. Amendments IASB publication Endorsement Date of coming date date into force

14 Transactions and other corporate events have been recognised and presented in accordance with the principle of substance over form.

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Amendments IASB publication Endorsement Date of coming date date into force

Amendments to IAS 12 11 January 2016 6 November 2017 1 January 2017 “Recognition of deferred tax assets for unrealised losses”

Amendments to IAS 7 29 January 2016 6 November 2017 1 January 2017 “Disclosure initiative”

Accounting standards, amendments and interpretations which will come into force. Standards IASB publication Endorsement Date of coming date date into force

IFRS 14 “Regulatory deferral 30 January 2014 n.a.* n.a. * accounts”

IFRS 9 “Financial instruments” 24 July 2014 22 November 2016 1 January 2018 IFRS 16 “Leases” 13 January 2016 31 October 2016 1 January 2019 IFRS 15 “Revenue from 28 May 2014 and 22 September 1 January 2018 contracts with customers” and 11 September 2015 2016 amendments IFRS 17 "Insurance contracts" 18 May 2017 --- 1 January 2021 IFRIC 22 “Foreign currency 17 February 2017 --- 1 January 2018** transactions and advance consideration” IFRIC 23 “Uncertainty over 7 June 2017 --- 1 January 2019** income tax treatments”

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Amendments IASB publication Endorsement Date of coming date date into force Amendments to IFRS 2 20 June 2016 26 February 2018 1 January 2018 “Classification and measurement of share-based payment transactions”

Amendments to IFRS 4 12 September 2016 3 November 2017 1 January 2018 “Applying IFRS 9 – Financial instruments”