2014 Report Azimut Holding Spa 2014 Report Azimut Holding Spa Gruppo Azimut Summary Azimut Group Management Report 1 Consolidated financial statements at 31 December 2014 25 Notes to the consolidated accounts at 31 December 2014 37 Certification of the consolidated accounts pursuant 117 to article 154-bis of Legislative Decree n° 58/98 Azimut Holding Spa Management Report 119 Financial statements at 31 December 2014 137 Notes to the accounts at 31 December 2014 149 Attachments 205 Certification of the accounts pursuant 210 to article 154-bis of Legislative Decree n° 58/98 6 Gruppo Azimut Consolidated financial statements at 31 December 2014 1 2 Gruppo Azimut Management report The Azimut Group consolidated net profit for 2014 amounts to 92,096 thousand Group results euro (155,753 thousand euro in 2013), while consolidated EBIT came to 186,023 thousand euro (182,505 thousand euro in 2013). Total assets under management at the end of 2014 reached 26.7 billion euro, up by approximately 24.6% compared to the end of 2013. Total assets, including assets under custody, amounted to 30 billion euro. Group total inflows were positive at 5,599 million euro at 31 December 2014, rea- ching an all-time high. The recruitment of financial advisors showed a positive balance: in 2014, the Group networks showed 128 new engagements, bringing the total number of advisors to 1,524. Assets (amounts in millions of euro) Total assets Figures in millions of euro AUM AUM Change and net inflows 31/12/2014 31/12/2013 Absolute % Mutual funds 22,256 18,649 3,607 19.3% Discretionary portfolio management and other 4,553 2,860 1,693 59.2% AZ Life insurance 4,030 2,576 1,454 56.4% Double counting (4,154) (2,664) (1,490) 55.9% Total AUM, net 26,685 21,421 5,264 24.6% Securities, third-party funds and A/C 3,308 2,529 779 30.8% Total 29,993 23,950 6,043 25.2% Net inflows (amounts in millions of euro) Figures in millions of euro 2014 2013 Absolute % Change Mutual funds 3,191 2,243 948 42.3% Discretionary portfolio management and other 1,676 849 827 97.4% AZ Life insurance 1,224 975 249 25.5% Double counting (1,320) (963) (357) 37.1% Total AUM, net 4,771 3,104 1,667 53.7% Securities, third-party funds and A/C 828 132 696 527.3% Total 5,599 3,236 2,363 73.0% 3 Management report Consolidated net financial With regard to the methods used to assess net financial debt, reference is made to the debt recommendation issued by CESR (Committee of European Securities Regulators) dated 10 February 2005, and more specifically to the paragraph on “Capitalisation and indebtedness” in chapter II. Receivables and payables include those of a financial nature only, whereas trade receivables and payables have been excluded. Receivables in the form of fees and commissions for managed funds and discretionary portfolios are also included and are considered as cash equivalents given that they are collected by the Group during the first few working days after the reporting date. Items 31/12/2014 31/12/2013 A Cash 33 16 B Cash equivalents: 308,770 548,067 Due from banks 246,669 486,588 Due from managed funds 62,101 61,479 C Available-for-sale financial assets 260,540 97,466 D Total cash A+B+C 569,343 645,549 E Short-term receivables F Short-term bank loans G Current portion of long-term debt: (10,815) (13,740) Bonds (Azimut ‘09-’16) (354) Bonds (Azimut ‘11-’16 Senior) (19) (19) Bonds (Azimut ‘13-’20 Convertible) (524) (52) Due to banks (lease-back) (100) (3,123) Due to banks (Banco Popolare loan) (10,172) (10,192) H Other short-term payables I Short-term financial debt F+G+H (10,815) (13,740) J Short-term financial debt (net) I-E-D 558,528 631,809 K Long-term bank loans: (30,000) (40,100) Due to banks (Banco Popolare loan) (30,000) (40,000) Due to banks (lease-back) (100) L Bonds (216,142) (228,183) Bonds (Azimut ‘09-’16) (17,005) Bonds (Azimut ‘11-’16 Senior) (821) (817) Bonds (Azimut ‘13-’20 Convertible) (215,321) (210,361) M Other long-term debt N Long-term financial debt K+L+M (246,142) (268,283) O Net (financial) debt J+N 312,386 363,526 4 Gruppo Azimut Net financial position was positive for 312.4 million euro at 31 December 2014 (363.5 million euro at 31 December 2013). The financial results were impacted by the liquidity generated by operating activi- ties, as well as by 115 million euro for the payment of dividends to shareholders and holders of profit-participating financial instruments and the payment to Fondazione Azimut Onlus of 1.8 million euro, made in execution of the Shareholders’ resolution of 24 April 2014, in addition to the following main transactions carried out during the year: • on 13 February 2014, AZ International Holdings Sa, through its subsidiary AZ Brasil Holdings Ltda, acquired 50% of M&O Consultoria Ltda and FuturaInvest Gestao de Recursos Ltda against a total consideration of 3,850 thousand euro; • on 18 April 2014, after checking controls over the granting of profit-participating financial instruments (subscribed as per the shareholders’ resolution of 29 April 2010 and subsequent resolutions of the Board of Directors), the total number of instru- ments was revised, leading to the subscription of 64,804 profit-participating financial instruments at 24 euro each, for a total of 1,555,296 euro by the so-called top key people; • on 27 June 2014, Azimut Holding Spa acquired 51% of Augustum Opus Sim Spa against a total consideration of 10,000 thousand euro; • during the year, Azimut Holding Spa made capital injections of 3,325 thousand euro in favour of Programma 101 Spa; • on 25 July 2014, Azimut Enterprises Holding Srl acquired 20% of Club Investimenti 2 against a total consideration of 1,000 thousand euro: • on 9 December 2014, Azimut Capital Management Sgr Spa, AZ Fund Management Sa and AZ Life Ltd paid 81,522 thousand euro, net of prior year tax losses and tax credits, in accordance with the agreement entered into by the Azimut Group and the Tax Authority on 29 November 2014. During the year, transactions involving treasury shares led to a total decrease of 218,212 shares for a total of 0.8 million euro. The details of these transactions are il- lustrated in the “Treasury Shares” section of these consolidated financial statements. 5 Management report Loans raised and repaid during the year The changes in financial debt items during the year are shown in the following table. Euro/000 Interest rate Currency Nominal Effective Nominal Carrying Expiry Value amount Balance at 01/01/2014 Euro 279,382 of which: BPN loan - Line B Euro 3 month 3 month 50,000 50,000 2018 Euribor +1.25 Euribor +1.25 “Azimut 2009-2016” Euro 4% 4.95% 17,691 15,024 2016 Subordinated Convertible Bond: “Azimut 2011-2016 Senior” Bond Euro 2.5% 3.06% 884 797 2016 “Azimut 2013-2020” Euro 2.13% 4.91% 250,000 210,361 2020 Subordinated Convertible Bond: Lease-Back agreement Euro one year one year 3,200 3,200 2015 Euribor +0.4% Euribor +0.4% Repayments: Euro (28,124) BPN loan - Line B Euro 3 month 3 month (10,000) (10,000) 2013 Euribor +1.25% Euribor +1.25% “Azimut 2009-2016” Euro 4% 4.95% (17,691) (15,024) 2016 Subordinated Convertible Bond: Lease-Back agreement Euro Euribor+0,4% Euribor+0,4% (3,100) (3,100) 2015 Balance at 31/12/2014 Euro 251,258 The instalment of the loan granted by Banco Popolare relating to Line B totalling 10,000 thousand euro was repaid on 30 June 2014. On 1 July 2014, as well as paying the interest instalment of 708 thousand euro, and in execution of the Board of Directors’ decision of 8 May 2014, Azimut Holding Spa also made an advance partial redemption of the 2009-2016 subordinated bond (“Azimut 2009 - 2016 subordinato 4%”) totalling 17,691 thousand euro, or 20% of the original par value, extinguishing the bond. 6 Gruppo Azimut Reconciliation of Azimut Holding Spa net income and shareholders’ equity to consolidated figures Total shareholders’ equity of which profit at 31/12/2014 for the year Holding opening balance 637,507 136,509 Adjustments due to changes in calendar year (*) 2,106 Total Holding shareholders’ equity 639,613 136,509 Adjustments: Results of consolidated companies 210,745 210,745 Subsidiary consolidation effects 76,424 365 Azimut Holding Spa dividend cancellation (155,754) (155,754) Azimut Consulenza Sim Spa dividend cancellation (97,723) (97,723) AZ International Holdings Sa Group dividend cancellation (3,522) (3,522) Equity accounted investments 1,525 (25) Liabilities measured at fair value (33,680) (199) Tax adjustments (483) 1,700 Total Group shareholders’ equity 637,145 92,096 Minority interest 5,627 1,145 Total shareholders’ equity 642,772 93,241 (*) The adjustment refers to the merger of Tumiza Spa and Azimut Holding Spa which took place in 2001. The reporting dates of these companies were 30 June and 31 December, respectively. In order to provide a more effective representation of the results, the income state- Reclassified consolidated ment has been reclassified and thus better reflects the content of the items according income statement to operating criteria. The main reclassifications involved the following: • cost recoveries on portfolio management reported under “Fee and commission inco- me” have been reclassified as “Other income” in the reclassified income statement; • net premiums and the corresponding change in the technical reserves, commissions and recovered expenses relating to insurance and investment products issued by AZ Life Ltd, reported under “Net premiums”, “Change in technical reserves” and “Fee and commission income”, have been reclassified as “Insurance income”; • commission expenses paid to the distribution network, reported