2016 ANNUAL REPORT Azimut Holding S.p.A.

AZIMUT GROUP Annual report 2016

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 2016 Main balance sheet figures Information about main Azimut Group companies

Main risks and uncertainties Related party transactions Organisational structure and corporate governance Human resources Research and development Significant events after the reporting date Business outlook

CONSOLIDATED FINANCIAL STATEMENTS 50 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 58 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 157

COMPANY BODIES Board of Directors

Pietro Giuliani Chairman Sergio Albarelli Chief Executive Officer Marco Malcontenti Co-Chief Executive Officer Paola Antonella Mungo Co-Chief Executive Officer Paolo Martini Co-Managing Director Andrea Aliberti Director Anna Maria Bortolotti Director Giampiero Gallizioli Director Antonio Andrea Monari Director Raffaella Pagani Director Silvia Scandurra Director Marzio Zocca 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

AZIMUT GROUP'S STRUCTURE The Azimut Group operates globally in 14 countries and is comprised of the parent company,

Azimut Holding S.p.A., and 56 subsidiaries.

Source: Company data at 9/3/2017

Note (1): Controls distribution companies M&O Consultoria, FuturaInvest and Azimut Brasil Wealth Management. Note (2): controls AZ Sinopro Insurance Planning. Note (3): Azimut acquired the remaining 49% and is in the process of being merged into Azimut Capital Management SGR. Note

(4): Azimut reached an agreement to acquire the remaining 49% at 31/12/2017. 1989 Year of incorporation 2004 Year of IPO 43.6 billion Total assets 14 countries Geographical reach 581 Employees 1,637 Financial advisors 706 million 2016 revenues 173 million 2016 net profit

CGM SGR(2011)

Azimut Holding(Listed: AZM.IM)

Asset Management

Distribution

LifeInsurance

Alternatives

AZ Fund(1999)

51%

AZ CM(2007)

100%

100% Azimut Capital Management (2004)

Azimut Financial Insurance (2015)

100%

AZ Life(2003)

100%

Azimut Global Counseling (2013)

Azimut Enterprises(2014)

Futurimpresa SGR(2014)

100%

55%

AZ International Holdings(2010)

An Zhong (AZ) IM(2011)

Azimut Partecipazioni(2016)

AZ IM HK(2011)

AZ IM(2011)

AZ Swiss(2012)

100%

100%

51%

Eskatos CM(2011)

Katarsis CA(2011)

100%

AZ Athenaeum(2013)

100%100%100%

AZ Brasil Holdings(2013)

AZ Quest(2015)

60%

AZ Sestante(2015)

76%

Sigma Funds Mgmt(2016)

51%

Azimut Portföy(2011)

CGM(4)

(2011)

100% 51%

100%

AZ-México Holdings S.A. de CV (2014)

Màs Fondos S.A.(2014)

Azimut Brasil WMHolding(1)

(2015)

100%

AZ Brasil Holdings(2013)

100%

AZ Sinopro FP(2)

(2013)

AZ Sinopro SICE(2)

(2013)

51%

100% 100%

94%

AZ NGA(2014)

52%

AZ Andes SpA(2015)

90%

AZ Apice LLC(2016)

AZ US Holdings(2015)

70%

100%

100%

100%

Augustum Opus SIM(3)

(2013)

51%

49%

100%

100%

MAIN INDICATORS

Figures in millions of euro 2011 2012 2013 2014 2015 2016

Financial indicators (in millions of euros)

Total income: 326 434 472 552 708 706

of which fixed management fees 266 282 322 394 485 519

EBIT 90 177 182 193 280 205

Net profit for the period 80 161 156 92 247 173

Operating indicators

Financial advisors 1,390 1,396 1,477 1,524 1,576 1,637

Clients 155 thousand

160 thousand

163 thousand

173 thousand

185 thousand

198 thousand

Assets in fund management (billions of euro)

14.6 17.5 21.4 26.7 31.2 35.8

Net inflows (billions of euro) 0.9 1.6 3.1 4.8 4.5 3.5

Clients' net weighted average performance

-6.8% 8.0% 4.2% 4.8% 1.6% 3.6%

Breakdown of assets under management

Mutual funds 68%

Discretionary portfolio management

18%

AZ Life insurance 14%

68%

18%

15%

AUM Breakdown as of December 31st, 2016

MANAGEMENT REPORT

BASELINE SCENARIO

FINANCIAL MARKETS AND THE GLOBAL ECONOMY

Background scenario

January represented a nasty shock for the financial markets which were caught in a vicious

circle “China's slow-down - plummeting oil prices - deflation/recession”. The technical

analysis of these issues is extremely difficult and the markets remained in the grips of their

fears waiting for external actions (central banks, excellent macro-economic figures or a

cathartic event generating oversold/overbought levels) to act as a new catalyst. Consequently,

the central banks of the areas which fear deflation the most (ECB and BOJ) announced or

implemented new expansionary measures. However, they managed to support and further

inflate bond prices without convincing the stock markets about the fact that 2016 would not

have been characterised by another global recession.

Eventually, the situation began to level off in mid-February. During this period, the stock

markets showed new feelings, accompanied by a series of positive macro-economic surprises

which led the US market to reconsider its expectations about the FED which pointed not only

to an interruption of the upward cycle, but also to the possibility of cutting rates or of a new

QE. Conversely, in Europe, the ECB's expectations looked more plausible given the renewed

deflation scenario and the difficulties experienced by the banking sector.

March was characterised by a significant change of attitude on the part of the main central

banks. Although the ECB's expansive strategy was already assumed, its scope exceeded

expectations. Indeed, the ECB tackled several aspects, increasing the liquidity for banks also

through new targeted longer-term refinancing operations (TLTRO) under particularly

advantageous conditions, cutting the deposit and the refinancing rates and expanding the QE

from 60 billion/month to 80 billion/month, including non-banking corporates as of the end of

June. It is believed that the G20 informally decided to abandon competitive devaluations in

favour of domestic economic and monetary policies and a wait-and-see attitude on the part of

the FED to avoid aggravating the situation in China and the emerging markets given the

existence of currency pegs and the need for divergent monetary policies. This was aimed at

strengthening the still modest global growth. April partially reflected the issues that

characterised March, i.e., the central banks' attention to external events, specifically those

related to China and, to a lesser extent, the emerging economies, in a broader sense. In other

words, April had two faces: the first was the ongoing recovery of raw materials, above all oil,

and emerging economies, generating a reversal by the bond markets; the second showed the

gradual return of the risk-off trade. May was bi-directional for the bond markets: the

beginning of the month was characterised by a new downward revision of the US bond yields,

which lasted substantially until the middle of the month, despite the gradual improvement of

GDP's forecasts, as pointed by the Atlanta's FED forecast indicator. Not even the extremely

robust figures about Europe's growth (+0.6% on the previous quarter), also largely supported

by domestic growth, managed to scratch the scepticism of the markets which already look to

2Q forecasts according to which Europe will grow at a more modest pace with inflation still

low (despite the statistically-expected rebound in the second half of the year). However, the

tone of the market changed when many members of the FED gave a thumb up on a summer

increase, generating market repricing.

June was a surprise: the forthcoming British referendum heightened the tension on the

financial markets which fluctuated significantly until the very last day based on voting

surveys. On 23 June, the markets were clearly in favour of Britain staying in the EU.

Consequently, the results were a huge surprise. Indeed, following the Brexit, the operators

relieved the tension on bund and treasury yields, which were seen as a safe heaven, zeroing

any expected rate rise and even assuming the possibility the FED introduces cuts in 2017

(despite the marginal impact of the event on the US economy and, to date, the financial and

currency channels). September was very volatile for the bond markets (first a dramatic

decrease, then reaching new highs). Indeed, as is often the case, the operators had too many

expectations of the ECB about any new extraordinary monetary policies. Conversely, the Bank

of Japan shifted from monitoring quantities to monitoring prices, in an attempt to peg the

rates of 10-year bonds to 0%, a level that the markets soon perceived as the top limit. On the

other hand, the FED, which was well placed to implement the first of the four increases

proposed in December for 2016, decided to wait a little longer, with significant disagreements

with the board, pointing already to just one increase in December to heat up the employment

market. The first half of October was characterised by discussions, while in the second half of

the month, the ECB announced that it was considering cutting the monthly purchases of

securities. This rumour alarmed the market which immediately adjusted yields upwards,

showing how, overall, operators are too exposed to rates with excessively low yields. The

market subsequently returned to previous levels, awaiting the official announcement by the

ECB which postponed any decision to December. Against this background, tensions began to

arise on the British securities market, where inflation emerged, also as a consequence of the

strong depreciation of the pound. Consequently, in the second half of the month, the British

market dragged along with it all other bond markets. November saw the beginning of a new,

intense political season which will probably shape the markets longer than usual given the

close sequence of political events until next fall. In the US, Trump's appointment was another

surprise. The initial shock was very short and almost immediately replaced by the enthusiasm

generated by hypothetical expansionary measures which should be focused on investments in

infrastructures, repatriation of profits and a new American dream. The market interest rates

immediately translated this message in greater expenditure, increased deficit and higher debt,

hence requesting an additional risk premium which accounted for approximately a 60 bps

yield on the 10-year US securities. In December, Italy's rejected the proposed constitutional

reform by a huge majority and triggered the removal of Renzi's government, promptly

replaced by Gentiloni's government with the task of drafting a new electoral law. Having

largely foreseen the result, the Italian market was unshaken and, in fact, recovered on the

bund. The ECB announced that, as of April, the QE will be reduced from 80 billion to 60

billion/month as the conditions that led to the increase in March 2016 no longer existed,

while expanding purchasing flexibility. In the US, the FED raised rates only once in 2016 and

announced three increases in 2017.

ITALY'S ASSETS UNDER MANAGEMENT MARKET

According to Assogestioni's (Italy’s association of the investment management industry)

figures, in 2016, the increase in Italy's assets under management continued, with 1,943 billion

euro at year end (+6% on 1,835 billion at 2015 year end) and positive inflows of

approximately 55.6 billion euro.

In 2016, inflows of open-ended funds (+34.4 billion euro) exceeded considerably the number

of management mandates (+20.5 billion euro). Portfolio management inflows refer

exclusively to insurance product management (+20.7 billion euro), while retail portfolio

management recorded zero growth. Furthermore, social security products performed

negatively (-0.4 billion euro).

ITALY'S FINANCIAL PRODUCT AND SERVICE DISTRIBUTION MARKET

At the end of December 2016, Assoreti's (Italy’s association of the sales networks in the

financial services industry) survey highlighted a record value of 471.1 billion euro of financial

products and investment services distributed to member intermediaries, through its

authorised off-premises financial advisors.

Total assets under management products amount to 341.9 billion euro, or 72.6% of the total

portfolio, while assets under custody amount to 129,2 billion euro. Specifically, directly

subscribed UCITS amount to 163.4 billion euro, of which 145 billion is placed with open

collective portfolio management domiciled abroad. Insurance and social security products

amount to 126.4 billion, up 12.9% on the previous year, and account for 26.8% of the assets

held by networks' clients, while discretionary portfolios amount to 52.1 billion euro,

accounting for 11.1% of the total portfolio.

At 31 December 2016, the total contribution of networks to assets invested in open-ended

UCITS, through the direct and indirect distribution of units, amounts to 271.4 billion euro,

accounting for 30.1% of the total assets invested in funds (assets under management of 900.3

billion euro – estimated figure). With respect to assets under custody, the security portfolio

amounts to 62.4 billion euro, while liquidity is equal to 66.9 billion euro.

SIGNIFICANT EVENTS OF THE PERIOD

1 - GROUP'S PROFILE AND PRODUCT RANGE

1.1 The Group's reorganisation process

On 27 April 2016, the Bank of Italy approved the demerger of Azimut Consulenza SIM S.p.A.

and its merger into Azimut Capital Management SGR S.p.A. to the extent of the financial

product placement business unit, Azimut Financial Insurance S.p.A. to the extent of the

insurance and banking product placement business unit, and Azimut Partecipazioni S.r.l. to

the extent of the equity investment it held in Az Fund Management Sa. This transaction is part

of the Group's reorganisation process which Azimut Holding S.p.A.'s Board of Directors

approved on 19 March 2015 to simplify and streamline the company structure by

transforming the Group's investment companies into asset management companies. On 30

May 2016, the Bank of Italy approved the transformation of the subsidiary CGM Italia SIM into

an asset management company, completing the last authorisation step of the reorganisation

process. The demerger deed of Azimut Consulenza SIM S.p.A. was filed accordingly and, on 1

October 2016, the demerger took place, transferring all assets and all implied and explicit

legal relations to Azimut Capital Management SGR S.p.A., Azimut Financial Insurance S.p.A.

and the newco Azimut Partecipazioni S.r.l.. Eventually, the transformation of CGM Italia SIM

into CGM Italia SGR was completed.

On 7 November 2016, the Bank of Italy notified the Group that it had been struck off the

investment firms register. Consequently, as of said date, the regulatory capital has been

calculated only individually for asset management companies and the insurance company,

releasing a considerable portion of the Group's assets, which partly used to distribute 1 euro

per share (value date: 23 November 2016).

1.2 The parent company - Azimut Holding S.p.A.

Capital injections to AZ International Holdings SA

In 2016, following the Board of Directors' resolutions of 10 March 2016 and 24 May 2016,

Azimut Holding S.p.A. made a capital injection of 53.6 million euro to increase the share

capital of the subsidiary AZ International Holdings Sa and finance the Group's international

development.

1.3 AZ International Holdings SA

The Azimut Group carried out the following transactions during the year through its

subsidiary AZ International Holdings SA.

Brazil

The Brazilian companies are headed by AZ International Holdings SA through the sub-holding

AZ Brazil Holdings Ltda. The streamlining process of these companies began in early 2016 and

was concluded in part in November and December 2016. Specifically, AZ Legan Partecipações

SA was initially merged into AZ Legan Administração de Recursos Ltda and later on, the latter

company (post merger) was transferred to AZ Quest Partecipações SA and subsequently

merged into AZ Quest Investimentos Ltda.

The Group's acquisitions for 2016 are summarised below:

Acquisition of 100% of BRZ Gestão de Patrimônio

On 27 July 2016, Azimut Brasil Wealth Management Holding S.A. completed the acquisition of

100% of BRZ Gestão de Patrimônio, a Brazilian wealth management company with a proven

track record on developing customised investment solutions for Brazilian private investors.

The transaction, which did not require the local authorities' approval, entailed a total

disbursement of around 1.1 million euro. The acquisition contract provides for a price

adjustment linked to the acquiree's future results.

Australia

The Australian sub-group which, to date, comprises 20 companies, including one, Sigma

Funds Management, authorised to carry out discretionary funds activities, had AuM worth 2.7

billion euro at 31 December 2016.

In 2016, the following acquisitions were carried out through the Azimut Group's Australian

subsidiary AZ Next Generation Advisory Pty Ltd (“AZ NGA”).

RIT Toowomba Pty Ltd – On 14 December 2015, the Azimut Group signed an agreement to

acquire 100% of RIT Toowomba Pty Ltd (“RIT”) through its Australian subsidiary AZ NGA. RIT

provides pension and insurance consultancy services. Under the relevant agreement, 49% of

the transaction provides for the exchange of RIT 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 4.9 million euro

and included both the cash and share exchange portions. The transaction was completed in

January 2016, after meeting the conditions set out in the purchase and sale agreement.

Empowered Financial Partners Pty Ltd — On 29 January 2016, the Azimut Group signed an

agreement to acquire 100% of Empowered Financial Partners Pty Ltd (“EFP”) through its

Australian subsidiary AZ NGA. EFP provides financial advisory services, including asset

allocation, pension and insurance advisory services and strategic financial planning and

training. Under the relevant agreement, 49% of the transaction provides for the exchange of

EFP shares with AZ NGA shares and the progressive repurchase of these shares over the next

ten years. The residual 51% was paid in cash by the founding members. The transaction

amounted to approximately 1.8 million euro and included both the cash and share exchange

portions. The transaction was completed in early March 2016, after meeting the conditions

set out in the purchase and sale agreement.

Wealthwise Pty Ltd - On 3 March 2016, the Azimut Group signed an agreement to acquire

100% of Wealthwise Pty Ltd through its Australian subsidiary AZ NGA. Wealthwise Pty Ltd

provides financial advisory services, including asset allocation, pension and insurance

advisory services and strategic financial planning and training. Under the relevant agreement,

49% of the transaction provides for the exchange of Wealthwise Pty Ltd shares with AZ NGA

shares and the progressive repurchase of these shares over the next ten years. The residual

51% was paid in cash by the founding members. The transaction amounted to approximately

6.4 million euro and included both the cash and share exchange portions. It was completed in

April 2016, after meeting the conditions set out in the purchase and sale agreement.

Priority Advisory Group Pty Ltd - On 12 April 2016, the Azimut Group signed an agreement

to acquire 100% of Priority Advisory Group Pty Ltd (“PAG”) through its Australian subsidiary

AZ NGA. PAG provides financial advisory services, including asset allocation, pension and

insurance advisory services and strategic financial planning and training. Under the relevant

agreement, 47% of the transaction provides for the exchange of PAG shares with AZ NGA

shares and the progressive repurchase of these shares over the next ten years. The residual

53% was paid in cash by the founding members. The transaction amounted to approximately

6.3 million euro and included both the cash and share exchange portions.

Sterling Planners Pty Ltd - On 29 April 2016, the Azimut Group signed an agreement to

acquire 100% of Sterling Planners Pty Ltd (“SP”) through its Australian subsidiary AZ NGA. SP

offers a full suite of financial advisory services and is a market leader in facilitating UK

pension fund transfers into the Australian system. Under the relevant agreement, 49% of the

transaction provides for the exchange of SP shares with AZ NGA shares and the progressive

repurchase of these shares over the next ten years. The residual 51% was paid in cash by the

founding members. The transaction amounted to approximately 2.7 million euro and included

both the cash and share exchange portions. It was completed in May 2016, after the successful

resolutions of some provisions included in the purchase and sale agreement.

JFS Personal Investment Solutions Pty Ltd - On 10 June 2016, the Azimut Group signed an

agreement to acquire 100% of JFS Personal Investment Solutions Pty Ltd (“JFS”) through its

Australian subsidiary AZ NGA. JFS provides financial advisory services, including asset

allocation, pension and insurance advisory services and strategic financial planning and

training. Under the relevant agreement, 49% of the transaction provides for the exchange of

JFS shares with AZ NGA shares and the progressive repurchase of these shares over the next

ten years. The residual 51% was to be paid in cash to the founding members. The transaction

was not completed as some of the conditions precedent set out in the purchase and sale

agreement were not met.

Logiro Unchartered Pty Ltd - On 29 July 2016, the Azimut Group signed an agreement to

acquire 100% of Logiro Unchartered Pty Ltd (“Logiro”) through its Australian subsidiary AZ

NGA. Logiro offers a full suite of financial advisory products and is a market leader in

facilitating UK pension fund transfers into the Australian system. Under the relevant

agreement, 49% of the transaction provides for the exchange of Logiro shares with AZ NGA

shares and the progressive repurchase of these shares over the next ten years. The residual

51% was paid in cash by the founding members. The transaction amounted to approximately

2.9 million euro and included both the cash and share exchange portions. It was completed in

August 2016, after the successful resolutions of some provisions included in the purchase and

sale agreement.

Domane Financial Advisors Pty Ltd was acquired in August 2016 through Wise Planners Pty

Ltd which is already part of the AZ NGA Group.

Aspire Pty Ltd was acquired in October 2016 through Logiro, which is already part of the AZ

NGA Group, and TKT Pty Ltd, a vertical acquisition recognised by Wealthwise, which is also

part of AZ NGA.

On-Track Financial Solutions Pty Ltd - On 3 November 2016, the Azimut Group signed an

agreement to acquire 100% of On-Track Financial Solutions Pty Ltd (“On-Track”) through its

Australian subsidiary AZ NGA. On-Track provides asset allocation services to local retail and

institutional clients. Under the relevant agreement, 49% of the transaction provides for the

exchange of On-Track shares with AZ NGA shares and the progressive repurchase of these

shares over the next ten years. The residual 51% was paid in cash by the founding members.

The transaction amounted to approximately 4.0 million euro and included both the cash and

share exchange portions. It was completed in November 2016, after the successful resolutions

of some provisions included in the purchase and sale agreement.

In addition to the above, the following transactions were carried out on the Australian market:

Sigma Funds Management Pty Ltd — In April 2016, the Azimut Group, through its

Luxembourg-based subsidiary AZ International Holdings SA (“AZ International”), and the

shareholders of Sigma Funds Management Pty Ltd (“Sigma”), an Australian equity manager

specialised in the “value” approach, entered into a binding purchase and sale agreement to

form an asset management partnership in Australia. AZ International acquired 51% of Sigma,

while the remaining 49% is held by the company's current management. The aim of the

partnership is to obtain distinctive management skills in the local stock market, while

increasing distribution capacity. Azimut, through AZ International, acquired 51% of Sigma by

means of a deferred capital increase to cover for Sigma's working capital up to the cumulative

value of approximately 1.4 million euro. This amount will be used to finance its growth plan

resulting from the approved business plan. Azimut and Sigma's investment team also signed

shareholders' agreements which provide for call/put options where Azimut will be able to

increase its share over the next ten years.

Switzerland

Decrease in the equity investment in the subsidiary AZ Swiss (now AZ Swiss & Partners)

In February, AZ International Holdings decreased to 51% its equity investment in the

subsidiary AZ Swiss (now AZ Swiss & Partners). The decrease was necessary to enable new

shareholders to join the shareholding structure in order to develop the Group's presence in

the Swiss market.

AZ Swiss was authorised to carry out collective portfolio management services through the

set up of UCITS and non-UCITS funds.

Acquisition of the business unit of Sogenel Capital Holding S.A.

On 29 June 2016, AZ Swiss & Partners signed a binding sale and purchase agreement to

acquire the business unit of the Swiss-based Sogenel Capital Holding S.A., including all

relevant assets under management, clients, contracts and agreements, forming a new division

within AZ Swiss & Partners. The valuation of the business unit of Sogenel Capital Holding S.A.

is based on the 2015 pro-forma net profit adjusted for any income or expense item not

included in the scope of the transaction. In addition, the parties have agreed on a price

adjustment linked to the attainment of certain targets over the medium term. The closing of

the transaction occurred in July following the notification to the local regulatory authority

(FINMA) and after meeting the conditions set out in the purchase and sale agreement.

United States

Decrease in the equity investment in AZ Apice Capital Management LLC

In February 2016, AZ Apice Capital Management LLC (set up in 2015), an investment adviser

registered with the SEC and based in Miami, became operative. The company provides

financial planning and portfolio management advisory services for natural persons and/or

small companies, mainly to non-resident US citizens. The Azimut Group sold an additional

20% stake to the US shareholders, reducing its equity investment to 70%.

Singapore

Acquisition of 100% of Athenaeum Ltd

Athenaeum Ltd - On 9 February 2016, AZ International Holdings SA (“AZ International”)

completed the acquisition of the residual 45% of Athenaeum Ltd (“AZ Athenaeum”), an asset

management company regulated and based in Singapore specialised in mutual funds and

discretionary funds. The transaction was carried out following the request of the minority

shareholders, Athenaeum Holdings (Asia) Pte Ltd. (“ATH”), to bring forward the exercise of

the put option to the strike price set out in the 2013 acquisition agreement. Consequently, AZ

International now wholly owns AZ Athenaeum. The acquisition of the residual 45% of AZ

Athenaeum generated an outflow of approximately 0.6 million euro to the founding

shareholders which was paid in the 12 months after the transaction. Azimut and AZ

Athenaeum's current management contractually agreed to continue their collaboration in the

long-term to develop and consolidate the business in Singapore, focusing, in particular, on the

management of local products and the development of the relationship with the region's

HNWI through family office services.

Turkey

The merger of AZ Notus Portfoy Yonetimi AS into Azimut Portfoy AS was completed in August

2016. This transaction was the last step of the reorganisation of the Azimut Group in Turkey

which, to date, operates only through Azimut Portfoy AS.

1.4 Product updating

Azimut Capital Management SGR S.p.A.

Product updating

Azimut Previdenza pension fund

The changes to the regulation governing the “Azimut Previdenza” pension fund approved by

Azimut Capital Management SGR S.p.A.'s Board of Directors on 11 March 2015 and authorised

by the Supervisory Commission for Pension Funds on 25 June 2015 became effective on 1

February 2016. In short, the changes related to the merger of the Comparto Protetto fund into

the Comparto Obbligazionario fund and some changes to the four sub-funds' investment

policies.

Futurimpresa SGR S.p.A.

Product updating

New fund for SMEs

Through its subsidiary Futurimpresa SGR S.p.A., the Azimut Group announced the new

reserved closed-end fund IPO CLUB aimed at raising 150 million euro to be used in pre-

booking transactions, i.e., investment vehicles set up to channel funds to leading Italian SMEs

to be subsequently listed. On 1 February 2017, the fund was operative with an endowment

fund of 120 million euro.

Ipo Club is also the result of the decisive contribution of Azimut Global Counseling, a

subsidiary of the Azimut Group which operates in the financial advisory sector, and Electa

Ventures, a company of the Electa Group which had already been a pioneer in setting up Spac

and pre-booking companies in Italy. Inflows will continue up to 150 million euro (as

mentioned earlier).

AZ Fund Management SA

Product updating

Luxembourg-based umbrella fund “AZ Fund 1”: Cat Bond Fund

Following the request from the Luxembourg authority Commission de Surveillance du Secteur

Financier (CSSF), which oversees the AZ FUND 1 fund and its sub-funds, more stringent

criteria were applied to the sub-funds that mainly invest in Catastrophe Bonds (Cat Bonds).

For these sub-funds, the CSSF set a minimum initial subscription of 100,000 euro and a

subsequent payment, unchanged, at 500 euro.

Starting from 1 June 2016, the investment policy of the Cat Bond Fund was changed to invest

also in unrated Insurance Linked Securities (ILS). At the same time, its name was changed to

“Cat Bond Fund Plus”.

Luxembourg-based umbrella fund “AZ Fund 1” fund: “Arbitrage” sub-fund

Subscription closing of the “Arbitrage” sub-fund of the “AZ Fund 1” fund by AZ Fund

Management SA was set at 22 February 2016, having reached a high subscription level. This

decision was taken to protect investors' interests and pursue the investment objectives.

Following this decision, placement of the new “Arbitrage Plus” sub-fund began on 18 April

2016. Despite using a “merger arbitrage” strategy, the sub-fund is characterised by the fact

that the manager is free to concentrate investments.

Renaming of some sub-funds

Starting from 18 April 2016, AZ Fund Management SA renamed the following sub-funds of the

“AZ Fund 1” Fund to better reflect the investment policy in place:

• The “Opportunities” Sub-fund was renamed “Small Cap Europe”

• The “Alpha Manager Credit” Sub-fund was renamed “Credit”

• The “Alpha Manager Thematic” Sub-fund was renamed “Asset Dynamic”

• The “Alpha Manager Equity” Sub-fund was renamed “Global Equity”

Starting from 05 September 2016, AZ Fund Management SA renamed the following sub-funds

of the “AZ Fund 1” Fund to better reflect the investment policy in place:

• The “Best Cedola” Sub-fund was renamed “High Income”

• The “Best Bond” Sub-fund was renamed “International Bond”

• The “Aggregate Bond Euro” Sub-fund was renamed “Aggregate Bond Euro Plus”

Merger of sub-funds

The merger of the following sub-funds was completed with effect from 3 September 2016:

SUB-FUNDS TO BE MERGED MERGING SUB-FUND

AZ Fund 1 – Bond Target 2015, AZ Fund 1 –

Bond Target December 2016, AZ Fund 1 –

Bond Target June 2016 and AZ Fund 1 – Bond

Target September 2016

AZ Fund 1 – Bond Target 2019 Equity

Options

AZ Fund 1 – International Bond Target June

2016 AZ Fund 1 – Global Currencies & Rates

The merger of the following sub-funds was completed with effect from 09 December 2016:

SUB-FUNDS TO BE MERGED MERGING SUB-FUND

AZ Multi Asset – Sustainable Absolute Return AZ Multi Asset – Sustainable Equity Trend

Luxembourg-based umbrella fund AZ Multi Asset

Placement of two new sub-funds (AZ Multi Asset – Sustainable Equity Trend and AZ Multi

Asset – CGM –Investment Grade Opportunity) began on 17 October 2016.

Luxembourg-based umbrella fund AZ Multi Asset

Placement of three new sub-funds (AZ Multi Asset – ABS, AZ Multi Asset – 5 Years Global Bond

and AZ Multi Asset – Renaissance Opportunity Bond) began on 15 December 2016.

AZ Life dac

Launch of new “green” internal funds by AZ Life dac

The new Internal Funds GREEN I, GREEN II and GREEN III in the AZ Style unit-linked policies

were subscribed during the period 15-26 February 2016 at the initial price of 5 euro per unit.

Furthermore, on 15 February 2016, some Internal Funds were merged into other Internal

Funds to streamline the product range and increase the efficiency of the management service,

while renaming the RED and BLUE Internal Funds:

BLUE I (formerly Blue 2) RED I (formerly Red 2)

BLUE II (formerly Blue 3) RED II (formerly Red 3)

BLUE III (formerly Blue 5) RED III (formerly Red 5)

Launch of new “Alternative” internal fund by AZ Life dac

The new Alternative internal fund was launched on 17 October 2016, expanding the range of

investment solutions offered as part of the AZ Style unit-linked policies.

Changes to “AZ NAVIGATOR” Unit Linked policies

As of 14 November 2016, the following internal funds have been renamed as follows:

CURRENT NAME NEW NAME

Low Volatility Atlantico 1

Balanced Flexible Atlantico 2

Equity Dynamic Atlantico 3

As of the same date, six new internal funds have been introduced:

Pacifico 1 Pacifico 2 Pacifico 3

Artico 1 Artico 2 Artico 3

2 - OTHER SIGNIFICANT EVENTS OF THE YEAR

2.1 Azimut Holding S.p.A. Annual General Shareholders’ Meeting of 28 April 2016

The shareholders’ meeting (both ordinary and extraordinary) of 28 April 2016 approved the

following:

Approval of 2015 financial statements

The shareholders’ meeting approved the 2015 financial statements, which included a parent

company net profit of 156.8 million euro. At the same time, the shareholders resolved to pay a

dividend of 1.5 euro per ordinary share, pre-tax, of which 0.5 euro per share paid as of 25 May

2016, 23 May 2016 ex-dividend payment date and 24 May 2016 as the record date, while the

residual 1.0 euro per share paid within 30 days of the Azimut Group's being struck off from

the investment firms register by the Bank of Italy. They also approved the payment to

Fondazione Azimut Onlus of 2.8 million euro, equal to 1% of pre-tax consolidated profit and

the payment of 24,74 euro for each profit-participating financial instrument held by Top Key

People at the time of approval of payment of the dividend.

Appointment of the Board of Directors and the Board of Statutory Auditors

The shareholders’ meeting appointed twelve members of the Board of Directors, of whom ten

with a three-year term of office and two for one year, confirming Mr. Pietro Giuliani as interim

Chairman and Chief Executive Officer.

The shareholders’ meeting also appointed the Board of Statutory Auditors for the next three

years.

Proposal for purchase and allocation of treasury shares

The shareholders’ meeting approved the purchase of up to 567,950 Azimut Holding S.p.A.

ordinary shares, or 0.4% of the current share capital, including in one or more instalments, to

accrue the shares to service the exercise of the warrants awarded to investors following

subscription of the non-convertible “Azimut 2009-2016 subordinato 4%” subordinated bond.

Furthermore, the shareholders’ meeting approved the purchase of up to 28,000,000 Azimut

Holding S.p.A. ordinary shares, or 19.55% of the current share capital, including in one or

more instalments, considering 567,950 shares to service the exercise of the warrants and

those 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: resolutions pursuant to article 123-ter, paragraph 6, of Italian

Legislative Decree No. 58/98

The shareholders’ meeting approved Azimut Holding S.p.A.'s 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.

2.2 Significant events of the year

Repayment of Banco Bpm S.p.A. (formerly Banco Popolare) loan

On 30 June 2016, the Parent Company repaid the instalment (Line B) of the loan granted by

Banco Bpm S.p.A. (formerly Banco Popolare) for a total amount of 10 million euro.

Exercise of warrants issued on the “Azimut 2009-2016 Subordinato 4%” Bond

The right to exercise the warrants related to the “Azimut 2009—2016 Subordinato 4%” Bond

expired on 30 June 2016. During the first half of 2016, 102,517 warrants assigned as part of

the placement of the “Azimut 2009—2016 Subordinato 4%” Bond were exercised against a

total of 1.9 million euro, delivering the same number of Treasury Shares. At the closing date of

the transaction, 154,437 warrants were not exercised. Consequently, they lose all rights and

become invalid for all effects.

Agreement to repurchase the residual 49% of Augustum Opus SIM

On 28 July 2016, Azimut Holding S.p.A., and the minority shareholders Augustum Opus SIM

reached an agreement whereby Azimut will acquire the residual 49%.

On 20 December 2016, the Board of Directors of Azimut Holding S.p.A. approved the

commencement of the activities preliminary to the merger of Augustum Opus SIM into Azimut

Capital Management SGR. The closing of the transaction will take place in the first half of

2017, subject to Bank of Italy's authorisation.

Board of Directors of Azimut Holding S.p.A.

On 27 September 2016, the Board of Directors co-opted Sergio Albarelli as Chief Executive

Officer of Azimut Holding S.p.A. as of 3 October 2016.

Azimut Enterprises Holding S.r.l.

Acquisition of 30% of Cofircont Compagnia Fiduciaria S.r.l.

On 20 September 2016, through its subsidiary Azimut Enterprises Holding, Azimut acquired

30% of Cofircont Compagnia Fiduciaria, a fiduciary company held by professionals (mainly

lawyers or accountants), against a consideration of 821,000 euro.

AZIMUT GROUP'S FINANCIAL PERFORMANCE FOR 2016

The Azimut Group's consolidated net profit for 2016 amounts to 172,685 thousand euro

(247,421 thousand euro in 2015), while consolidated EBIT came to 185,578 thousand euro

(278,664 thousand euro in 2015).

The performance of the year was considerably affected by the high volatility of the financial

markets which had a negative impact on the variable part of fees and commissions, as well as

the ongoing expansion of the Group 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 and the United States.

Through the wholly-owned subsidiary AZ International Holdings SA, incorporated under

Luxembourg law, the Group continued its mission to develop, research, acquire and manage

international partnerships. In 2016, eight companies (ten in 2015) were acquired and the

Group's presence was strengthened thanks to the purchase of additional equity investments

in existing subsidiaries.

The recruitment of financial advisors showed a positive balance: in 2016, the Group's network

showed 141 new engagements, bringing the total number of advisors to 1,637.

ASSETS

Total assets under management at the end of 2016 reached 35.8 billion euro, up by

approximately 15% compared to the end of 2015. Total assets, including assets under

custody, amounted to 43.6 billion euro, up by 19% on 2014.

Figures in millions of euro 31/12/2016 31/12/2015

Change

Absolute %

Mutual funds 28,756 26,495 2,261 9%

Discretionary portfolio management and other

7,701 5,754 1,947 34%

AZ Life insurance 6,434 5,588 846 15%

Advisory 869 620 249 40%

Double counting (7,960) (7,256) (704) (10%)

Total AUM, net 35,800 31,201 4,599 15%

Securities, third-party funds and A/C

7,805 5,481 2,324 42%

Total assets 43,605 36,682 6,923 19%

NET INFLOWS

Group total inflows were positive at approximately 6.5 billion euro at 31 December 2016,

slightly down on 2015 (-2%).

Figures in millions of euro 2016 2015

Change

Absolute %

Mutual funds 1,588 3,941 (2,353) (60%)

Discretionary portfolio management and other

1,617 992 625 63%

AZ Life insurance 333 1,399 (1,066) (76%)

Advisory 239 620 (381) (61%)

Double counting (267) (1,735) 1,469 (85%)

Total net inflows - Assets under management

3,511 4,454 (943) (21%)

Securities, third-party funds and A/C

3,019 2,689 330 12%

Total net inflows 6,530 6,667 (137) (2%)

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 Ltd,

reported under “Net premiums”, “Change in technical reserves” and “Fee and commission

income”, have been reclassified as “Insurance income”;

commission expenses paid to the distribution network, reported under “Fee and

commission expense” are now classed as “Acquisition costs”; similarly, the Enasarco/Firr

contributions related to these commission expenses and the other trade payables

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 liabilities 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.

Euro/000

01/01/2016 -

31/12/2016

01/01/2015 -

31/12/2015

Acquisition fees 9,826 10,151

Fixed management fees 518,866 484,567

Variable management fees 130,770 158,466

Other income 7,611 10,267

Insurance income 38,575 44,118

Total income 705,648 707,569

Acquisition costs (325,436) (290,762)

Overheads/administrative costs (158,984) (125,831)

Amortisation/provisions (15,920) (11,110)

Total costs (500,340) (427,703)

EBIT 205,308 279,866

Net financial income (3,033) 14,392

Net non-recurring costs (6,323) (5,065)

Interest expense (11,063) (11,015)

Pre-tax profit 184,889 278,178

Income tax (19,281) (23,555)

Deferred tax assets/liabilities 11,696 (4,636)

Net profit 177,304 249,987

Profit attributable to minority interest 4,619 2,566

Group net profit 172,685 247,421

Consolidated EBIT and consolidated Group net profit at 31 December 2016 came to 205

million euro (280 million euro at 31 December 2015) and 173 million euro (247 million euro

at 31 December 2015), respectively.

The trend of acquisition costs reflects the recruitment of financial advisors and private

bankers last year.

Overheads in 2016 increased on the previous year due to the consolidation of foreign

operations and charges related to investments in software to keep up with the growth of the

Group.

The decrease in financial income is due to the negative impact of changes in liabilities

measured at fair value.

MAIN BALANCE SHEET FIGURES

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

Euro/000 31/12/2016 31/12/2015

Financial assets measured at fair value 6,447,427 5,658,322

Available-for-sale financial assets 276,963 365,910

Receivables and equity investments 190,240 245,778

Tangible and intangible assets 524,535 455,731

Other assets 288,111 220,500

Total assets 7,727,276 6,946,241

Payables and outstanding securities 254,806 256,723

Technical reserves 251,324 281,209

Financial liabilities measured at fair value 6,299,036 5,439,863

Other liabilities and provisions 277,044 241,229

Shareholders’ equity 645,066 727,217

Total liabilities and shareholders’ equity 7,727,276 6,946,241

Financial assets and liabilities measured at fair value rose by approximately 14% on 31

December 2015. 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 reflect the investment of the excess liquidity of

operations in UCI units, decreased by 24% from 366 million euro to 277 million euro.

Similarly, cash and cash equivalents with bank current accounts held by group companies

decreased from 162 million euro to 82 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 life due to the

investments in software of the year.

CONSOLIDATED NET FINANCIAL POSITION

The Group's net financial position was 192.3 million euro at 31 December 2016 (336.3 million

euro at 31 December 2015).

Euro/000 31/12/2016 31/12/2015

A Cash 21 27

B Cash equivalents: 171,978 224,592 Due from banks 81,759 161,575 Due from managed funds 90,219 63,017

C Available-for-sale financial assets 266,832 363,596

D Total cash A+B+C 438,832 588,215

E Short-term financial receivables - -

F Short-term bank loans - -

G Current portion of long-term debt: (10,575) (11,398)

Bonds (Azimut '11-'16 Senior) - (778)

Bonds (Azimut '13-'20 Convertible) (524) (524)

Due to banks (BPN loan) (10,051) (10,096)

H Other short-term financial payables - -

I Short-term financial debt F+G+H (10,575) (11,398)

J Current financial debt (net) I+E+D 428,257 576,817

K Long-term bank loans: (10,000) (20,000)

Due to banks (BPN loan) (20,000)

L Bonds (225,998) (220,524)

Bonds (Azimut '13-'20 Convertible) (225,998) (220,524)

M Other long-term debt -

N Long-term financial debt K+L+M (235,998) (240,524)

O Net financial position J+N 192,259 336,293

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.

The results were impacted by the liquidity generated by operating activities, as well as by 236

million euro for the payment of dividends to shareholders and holders of profit-participating

financial instruments and the payment to Fondazione Azimut Onlus of 2.8 million euro made

in execution of the Shareholders’ resolution of 28 April 2016. 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 2016 are shown in the following table:

Interest rate Carryin

g

Carrying

Euro/000 Currenc

y Nominal Effective value amount

Expiry

Balance at 01/01/2016

Euro

241,108

of which:

BPN loan - Line B Euro 3 month Euribor

+1.25 3 month Euribor

+1.25 50,000 30,000 2018

“Azimut 2011-2016 Senior” Bond

Euro 2.50% 3.06% 884 747 2016

“Azimut 2013-2020” Subordinated Bond

Euro 2.13% 4.91% 250,000 210,361 2020

Redemptions Euro (10,747)

of which:

BPN loan - Line B Euro 3 month Euribor

+1.25 3 month Euribor

+1.25 (10,000) (10,000) 2018

“Azimut 2011-2016 Senior” Bond

Euro 2.50% 3.06% 884 (747) 2016

Balance at 31.12.2016 Euro 230,361

The “Azimut 2011-2016 Senior” bond was entirely repaid on 1 February 2016 (884 thousand

euro).

The instalment of the loan granted by Bpm S.p.A. (formerly Banco Popolare) relating to Line B

totalling 10,000 thousand euro was repaid on 30 June 2016.

TREASURY SHARES

At 31 December 2016, 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 first half of June 2016 (30 June 2016 being the last date allowed by the bond issue

regulation to exercise the warrants), 102,517 treasury shares were assigned against the

exercise of the same number of warrants issued at the placement of the “Azimut 2009 - 2016

Subordinato 4%” Bond. At the closing date of the transaction, 154,437 warrants were not

exercised. Consequently, they lose all rights and become invalid for all effects.

At 31 December 2016, Azimut Holding S.p.A.’s treasury share portfolio therefore stood at

10,387,189 shares, or 7.251% of share capital.

In the period between 31 December 2016 and the date this report was approved, 1,492,550

treasury shares have been purchased for a total of 25 million euro.

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

Shareholders’ equity of which profit

Euro/000 at 31/12/2016 for the year

Holding opening balance 599,012 161,943

Adjustments due to changes in calendar year 2,106

Total Holding shareholders’ equity 601,118 161,943

Adjustments:

Results of consolidated companies 316,858 316,858

Subsidiary consolidation effects 110,333 312

Azimut Holding S.p.A. dividend cancellation (187,614) (187,614)

Cancellation of subsidiaries' dividends (111,328) (111,328)

AZ International Holdings SA Group dividend cancellation (4,317) (4,317)

Equity accounted investments 1,632 22

Liabilities measured at fair value (98,673) (4,851)

Tax adjustments (917) 1,660

Total Group shareholders’ equity 627,092 172,685

Minority interest 17,975 4,619

Total SHAREHOLDERS’ EQUITY 645,067 177,304

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, 51% owned, carries out mutual fund management

activities. The net profit for 2016 amounts to 223,141,828 euro (2015: 227,083,932

euro). At 31 December 2016, total assets under management stood at approximately

28.9 billion euro.

- AZ Life dac, wholly owned, carries out insurance activities. The net profit for 2016

amounts to 20,545,689 euro (2015: 23,960,512 euro).

- Azimut Capital Management SGR S.p.A., wholly owned, manages harmonised Italian

funds, pension funds, alternative funds and discretionary funds. The net profit for 2016

amounts to 26,806,416 euro compared to 50,058,069 euro in the previous year. The

decrease on 2015 is mainly due to the reduction in fee and commission income which

fell from 102 million euro in 2015 to 90.3 million euro in 2015 and the increase in

administrative costs and impairment losses on tangible and intangible assets. At 31

December 2016, total assets under management stood at approximately 4.4 billion

euro, of which 1.4 billion euro related to mutual funds and 3.5 billion euro to

discretionary funds.

- Azimut Partecipazioni S.r.l., wholly owned, is a holding company focusing on unlisted

companies. On 1 October 2016, following the demerger of Azimut Consulenza Sim

S.p.A., it merged 49% of AZ Fund Management SA. Its net profit for 2016 amounts to

74,275,885 euro.

- AZ Financial Insurance S.p.A., wholly owned, was incorporated on 28 May 2015

through the payment of the 50 thousand euro share capital by the sole shareholder

Azimut Holding S.p.A.. The company's business object is insurance mediation, except

for reinsurance mediation, and bank products' placement and distribution. On 1

October 2016, following the demerger of Azimut Consulenza SIM S.p.A., it merged

Azimut Group's insurance product and contract placement and banking products and

services business unit. In 2016, it incurred a loss of 5,908,687 thousand euro (a loss of

390 million euro in 2015).

- AZ International Holdings SA, wholly owned, carries out foreign operations'

management activities. The loss for 2016 amounts to 1,167,165 euro (2015: net profit

of 496,523 euro).

- Azimut Opus SIM S.p.A., 51% owned, carries out unsecured placement and order

receipt activities and securities management. The net profit for 2016 amounts to

2,979,753 euro (2015: 1,915,261 euro).

- Futurimpresa SGR S.p.A., 55% owned, sets up and manages alternative investment

funds. The net profit for 2016 amounts to 243,992 euro (2015: 56,958 euro).

- Azimut Enterprises Holding S.r.l., wholly owned, is a holding company focusing on

unlisted companies, including Programma 101 Sicaf S.p.A. and Siamosoci 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. During the year, the company

acquired 30% of Cofircont Compagnia Fiduciaria S.r.l.. In 2016, it incurred a loss of 801

thousand euro compared to a loss of 135 thousand euro in 2015.

- Azimut Global Counseling S.r.l., wholly owned, provides financial planning

consultancy services, in addition to company restructuring, market research and

marketing activities, data collection and processing and financial information. In 2016,

it incurred a loss of 402 thousand euro compared to a loss of 325 thousand euro in

2015.

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 at 31 December 2016 is given below,

broken down by geographical area:

Europe

- Katarsis Capital Advisors SA, a wholly-owned Swiss company, which carries out

actuarial and financial advisory activities.

- Eskatos Capital Management SARL, wholly owned through Katarsis Capital Advisors

SA, is a Luxembourg-based company subject to CSSF's regulations which carries out

unharmonised investment fund management activities.

- AZ Swiss & Partners (formerly AZ Swiss), 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 Priveè Monegasque, 51% owned, which carries out asset

management, financial advisory and order receipt and transmission activities;

- CGM Italia SGR S.p.A. (formerly CGM Italia SIM S.p.A.), 51% owned through

Compagnie de Gestion priveè Monegasque, which carries out asset management, order

receipt and transmission and advisory activities.

Turkey

- Azimut Portfoy (formerly AZ Global Portfoy Yonetimi), wholly owned, which

carries out asset management activities. During the year, the merger of AZ Notus into

Azimut Portföy became effective.

South East Asia

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

management activities;

- AN Zhong (AZ) IM HK Limited, a regulated company wholly owned through AN Zhong

(AZ) IM Limited, which provides financial advisory activities 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 (formerly AN Ping Investment), 51% owned, is

a holding company set up to acquire the following controlling investments.

- AZ Sinopro Insurance Planning Ltd, 51% owned through AZ Sinopro Investment

Planning (owned, in turn, through AZ Sinopro Financial Planning), is a securities

investment consulting enterprises 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 holding company which heads

the partnerships forged over the past few years with local operators.

- AZ Quest Partecipacoe SA, 60% owned through AZ Brasil Holdings Ltda, is a Brazilian

independent company which carries out asset management activities.

- AZ Quest Investimentos Ltda, 59.98% owned through AZ Brasil Holdings Ltda, is a

Brazilian independent company which carries out asset management activities. As

such, it is subject to local regulations.

- AZ Brasil Wealth Management Holding SA (formerly AZ FI Holdings), wholly owned

by AZ Brasil Holdings Ltda, is a sub-holding company which holds the following

investments.

- M&O Consultoria Ltda, wholly owned through AZ Brasil Holdings Wealth

Management Holding SA, a company operating in the asset and wealth management

sectors.

- AZ Brasil Wealth Management Ltda, 89% owned through AZ Brasil Wealth

Management Holding SA, a company operating in the asset and wealth management

sectors.

- AZ & Partners BRZ (formerly BRZ Patrimonio), wholly owned through Azimut

Brasil Wealth Management Holding SA, a Brazilian wealth management company

specialised in the development of tailor-made investment strategies for Brazilian

private investors.

- AZ Mèxico Holdings S.A. de CV (formerly AZ Profie SA), 94.20% owned, is a Mexican

holding company set up in 2014 to develop asset management activities by forging

partnership with local operators.

- Mas Fondos SA, 94.20% owned through AZ Mèxico Holdings S.A. de CV, is a regulated

company which carries out distribution activities in the asset management sector.

- AZ Andes SA, 90% owned, is a Chilean holding company.

Australia

Next Generation Advisory Pty Ltd, 53.48% 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 and On-Track Financial Solutions

Pty Ltd.

AZ Sestante (formerly Ironbark), directly controlled by AZ International Holdings SA which

owns 76% thereof, acts as a trustee and manager of mutual funds in Australia. The company

was set up to launch and offer funds locally.

Sigma Funds Management Pty Ltd, directly controlled by AZ International Holdings SA

which owns 51% thereof, is an asset management company specialised in equity funds.

United States

AZ US Holdings LLC was incorporated by AZ International Holdings S.A. 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, which is subject to SEC's regulations, carries out

financial planning and portfolio management activities for non-resident US citizens.

KEY RISKS AND UNCERTAINTIES

KEY RISKS

For the purposes of risk monitoring, the Group has identified the main 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 clients 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 Area Delegates/Area Managers

(financial advisors responsible for coordinating specific areas of the country) also meet

regularly to keep track of the market situation and take the relevant steps to preserve the

competitiveness of each geographic area. Finally, market research and analysis by the

research and marketing department is used to compare results to those of Azimut’s

competitors and monitor the performance of funds.

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 advisors is strict and involves both local branches and the marketing departments

of the Group. Moreover, in addition to past experience, qualifications and 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-a-vis the Body in charge of the Financial Advisors' register.

Should any irregularity be detected, or in case of non-compliance with the code of conduct,

the financial advisors directly involved or their in-charge are asked to prepare a specific

report giving explanations or to enable the competent departments to carry out further in-

depth analyses and, where necessary take adequate measures.

Operational risk

Operational risk is related to potential losses due to inadequate or defective aspects of

procedure, human resources, internal processes, or external events. As well as being generally

evaluated in quantitative terms, monitored and mitigated in accordance with current

regulations, this risk is also subject to qualitative assessment for the individual group

companies.

Therefore, the Group uses a process to identify and assess the operational risks based on Risk

Self Assessment methods, which take account of the frequency and severity of identified risk

factors.

This procedure allows the companies to establish appropriate control and monitoring

techniques, i.e. measures to limit the negative effects of any adverse conditions to which the

Group is exposed.

Given the presence of this type of risk, the Group has established the following measures to

monitor and limit the effects:

mapping of main company processes, by means of an analysis of existing procedures and

interviews with the heads 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 risk

The administrative and IT activities of the Italian operating companies are outsourced.

When the contracts with Objectway Financial Software S.p.A. and Deloitte Enterprise Risk

Service S.r.l. were signed, establishing the method used in the performance of the outsourced

services, purposely created service level agreements were also drawn up to guarantee the

adequacy of the services provided and allow 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. Furthermore, the above

committee assesses the adjustments required by the evolution of operations and applicable

regulations, as well as the necessary actions to be taken. The committee meets at least once a

month and the participants are provided with a copy of the minutes of the meeting afterwards

which, where necessary, is also reported on to top managers.

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 strategic decisions and operating errors and the effects that these

may have on the company’s reputation;

a record of corporate risks of all subsidiaries is constantly updated, in order to identify

which departments, procedures and activities are most subject to reputational risks;

the Internal Control and Risk Management Committee, where the presence of managers

allows for top-down management of action to be taken to limit reputational risks or

respond to any events caused by them;

the Marketing and Investor Relations departments, centralised at Group level, have sole

responsibility for dealing with public relations/external communications and the

company’s image;

an Internal Code of Conduct governs the treatment of any action that gives rise to conflicts

of interest, cases of insider trading or market abuse and any penalties as a result of failure

to comply with regulations.

In accordance with the regulations for the treatment of privileged information pursuant to art.

115-b of Italian Legislative Decree no. 58/98 (TUF - Consolidated Law on Finance), Azimut

Holding S.p.A. established a Register for itself and on the behalf of its subsidiaries, by creating

a database with the technical/operating features required to guarantee that logical and

physical security requirements are met, records cannot be changed and that information is

easily accessible.

Compliance risk

Compliance risk is related to legal and administrative sanctions, significant financial losses or

damage to reputation as a result of non-compliance with laws and regulations or internal

procedures (e.g. by-laws, codes of conduct, corporate governance codes).

Given that all levels of the company are exposed to this risk, limiting its effects mainly

involves ensuring that personnel take adequate responsibility in the performance of their

work by complying with the internal code of conduct, code of ethics and procedure manual.

The Compliance department, 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 risk

As regards financial risks, proprietary trading by Group companies is exposed to market risks.

Moreover, the financial instruments in question are easily liquidated and are monitored

closely, most being mutual fund units managed by the Group companies.

As for credit risk, there are no specific problems given the nature of the Group’s activity.

Liquidity risk

Liquidity risk arises when the company is unable to gain access under reasonable economic

conditions to the financial resources required to ensure its efficiency.

The main factors that determine liquidity levels are the resources provided from or used by

administrative and investment activities, as well as loan expiry and renewal or liquidity of

investments and market conditions.

The 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 revenues and

certain types of fee items, the performance of which is determined by the results generated by

the management of placed products and the performance in terms of capital generation. The

generation of these revenues and the relative amount are by nature volatile and heavily

influenced by the returns offered by the funds and the risk appetite of the clients 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

2016.

No other atypical or unusual transactions were performed.

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.

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

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 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 over financial reporting

are described in the Report on corporate governance and ownership.

HUMAN RESOURCES

At 31 December 2016, Group personnel amounted to 581 employees, broken down as follows:

Position 2016 2015

Managers 93 85

Middle managers 143 113

Office staff 345 268

Total 581 466

The increase in the number of employees at 31 December 2016 over the previous year mainly

reflects the consolidation of recently acquired companies.

RESEARCH AND DEVELOPMENT ACTIVITIES

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 clients (see also the section on

‘Significant events of the year’).

SIGNIFICANT EVENTS AFTER THE REPORTING DATE

The main events that occurred after 31 December 2016 - the reporting date of the

consolidated financial statements, until 9 March 2017, the date on which the Board of

Directors approved the draft financial statements, are as follows:

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 the 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

may be repurchased as of today is 18,263,710, representing approximately 13% of

share capital. Buybacks will 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 will be equal to 30 euro);

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, to the extent of its duties, Consob fined some profiles of Azimut Consulenza SIM

(now Azimut Capital Management SGR).

BUSINESS OUTLOOK

Given the positive results of the subsidiaries in early 2016, 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.

Milan, 09 March 2017

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET AS AT 31 December 2016

Assets

Euro/000 31/12/2016 31/12/2015

Cash and cash equivalents 21 27

Financial assets measured at fair value 6,447,427 5,658,322

Available-for-sale financial assets 276,963 365,910

Held-to-maturity financial assets

Receivables 189,305 238,034

a) for portfolio management 90,219 63,017

b) other receivables 99,086 175,017

Equity investments 935 7,744

Tangible assets 7,219 6,199

Intangible assets 517,315 449,532

Tax assets 78,976 72,680

a) current 32,905 44,855

b) deferred 46,071 27,825

Other assets 209,114 147,793

TOTAL ASSETS 7,727,276 6,946,241

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

Liabilities and Shareholders’ Equity

Euro/000 31/12/2016 31/12/2015

Payables 28,283 34,897

Outstanding securities 226,522 221,826

Technical reserves where the investment risk is borne by 250,974 280,859

policyholders

Other technical reserves 350 350

Financial liabilities measured at fair value 6,299,036 5,439,863

Tax liabilities: 59,401 60,224

a) current 1,443 1,790

b) deferred 57,958 58,434

Other liabilities 182,975 151,000

Staff severance pay (TFR) 3,403 3,311

Provisions for risks and charges: 31,265 26,694

b) other provisions 31,265 26,694

Share capital 32,324 32,324

Treasury shares (-) - 81,288 - 80,727

Equity instruments 70,951 71,459

Share premium reserve 173,987 173,987

Reserves 263,107 280,181

Valuation reserves - 4,674 - 7,776

Profit for the period/year 172,685 247,421

Minority interest 17,975 10,348

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 7,727,276 6,946,241

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

CONSOLIDATED INCOME STATEMENTS AT 31 December 2016

Items

Euro/000 31/12/2016 31/12/2015

Fee and commission income 675,633 673,086

Fee and commission expense (293,897) (271,970)

NET FEE AND COMMISSION INCOME 381,736 401,116

Dividends and similar income 257 3

Interest income and similar income 1,509 1,781

Interest expense and similar charges (11,723) (11,237)

Net trading income (expense)

Profits on disposal or repurchase of: 1,733 14,155

a) financial assets 1,739 14,155

b) financial liabilities (6)

Net result of financial assets and financial liabilities measured at fair value - 4,851 9,687

Net premiums 2,618 5,070

Net profits (losses) on financial instruments at fair value through profit or loss 132,815 129,147

Change in technical reserves where the investment risk is borne by policyholders

29,885 19,283

Redemptions and claims - 134,445

- 116,363

TOTAL INCOME 399,533 452,642

Administrative costs: (192,513) (157,836)

a) personnel costs (72,485) (62,094)

b) other administrative costs (120,028) (95,742)

Net impairment/write-ups of tangible assets (2,508) (1,562)

Net impairment/write-ups of intangible assets (13,655) (8,750)

Net accruals to the provisions for risks and charges (5,844) (2,479)

Other operating income / costs 564 (3,351)

OPERATING PROFIT 185,578 278,664

Profit (loss) from equity investments - 689 - 485

PRE-TAX PROFIT (LOSS) FROM CONTINUING OPERATIONS 184,889 278,179

Income tax on profit from continuing operations (7,586) (28,192)

NET PROFIT (LOSS) FROM CONTINUING OPERATIONS 177,304 249,987

Profit (loss) for the period/year attributable to minority interest 4,619 2,566

PROFIT (LOSS) FOR THE YEAR 172,685 247,421

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

STATEMENT OF COMPREHENSIVE INCOME

Items

Euro/000

2016 2015

Profit for the period/year 172,685 249,987

Other comprehensive income, net of taxes, not transferred to profit or loss

Tangible assets

Intangible assets

Defined benefit plans 18 (60)

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 (2,347) 1,768

Cash flow hedge

Available-for-sale financial assets 5,431 (9,003)

Non-current assets held for sale

Share of valuation reserves of investments

measured at equity

Total other comprehensive income/(expense), net of taxes 3,102 (7,295)

Comprehensive income (Item 10+130) 175,787 242,692

Consolidated comprehensive income attributable to minority interest 4,619 2,566

Consolidated comprehensive income attributable to parent company 171,168 240,126

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

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

Items

Ba

lan

ce a

t 3

1/

12

/2

01

5

Ch

an

ge

s in

op

en

ing

ba

lan

ce

Ba

lan

ce a

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1/

01

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6

Allocation of prior year profit

Changes during the year

Co

nso

lid

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d c

om

pre

he

nsi

ve

in

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e f

or

20

16

Gro

up

sh

are

ho

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qu

ity

at

31

/1

2/

20

16

Sh

are

ho

lde

rs’ e

qu

ity

att

rib

uta

ble

to

min

ori

ty i

nte

rest

at

31

/1

2/

20

16

Ch

an

ge

s in

re

serv

es

Shareholders’ equity transactions

Re

serv

es

Div

ide

nd

s a

nd

oth

er

dis

trib

uti

on

s

Issu

e o

f n

ew

sh

are

s

Tre

asu

ry s

ha

re p

urc

ha

ses

Ex

tra

ord

ina

ry d

ivid

en

d d

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ibu

tio

n

Ch

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s in

eq

uit

y i

nst

rum

en

ts

Oth

er

cha

ng

es

Share capital 32,324

32,324

32,324

39,209

Share premium reserve 173,987

173,987

173,987

Other 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) (80,72

7) (1,791

) 1,230

(81,288)

Profit (loss) for the period/year 247,421

247,421

(141,689)

(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)

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY AT 31 December 2015

Items

Ba

lan

ce a

t 3

1/

12

/2

01

4

Ch

an

ge

s in

op

en

ing

ba

lan

ce

Ba

lan

ce a

t 0

1/

01

/2

01

5

Allocation of prior year

profit

Changes during the year

Co

nso

lid

ate

d c

om

pre

he

nsi

ve

in

com

e f

or

20

15

Gro

up

sh

are

ho

lde

rs’ e

qu

ity

at

31

/1

2/

20

15

Sh

are

ho

lde

rs’ e

qu

ity

att

rib

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ble

to

min

ori

ty i

nte

rest

at

31

/1

2/

20

15

Ch

an

ge

s in

re

serv

es

Shareholders’ equity transactions

Re

serv

es

Div

ide

nd

s a

nd

oth

er

dis

trib

uti

on

s

Issu

e o

f n

ew

sh

are

s

Tre

asu

ry s

ha

re p

urc

ha

ses

Ex

tra

ord

ina

ry d

ivid

en

d d

istr

ibu

tio

n

Ch

an

ge

s in

eq

uit

y i

nst

rum

en

ts

Oth

er

cha

ng

es

Share capital

32,324

32,324

32,324 20,001

Share premium reserve

173,98

7

173,98

7

173,987

Reserves:

a) income-related

387,98

6

387,98

6

(26,250) 255 (1,237)

360,354

(11,303)

b) other (38,927

) (38,927

)

(41,246

) (80,173)

Valuation reserves (481) (481) (7,295) (7,776) (916)

Equity instruments

71,715

71,715

(256) 71,459

Treasury shares (81,555

) (81,555

) (709)

1,537 (80,727)

Profit (loss) for the year

92,096

92,096

(92,096)

247,421

247,421 2,566 Group shareholders’ equity

637,145

637,14

5

(118,746)

(709) 1 (40,964)

240,126 716,869

Shareholders’ equity attributable to minority interest 6,772 6,772 1,020 2,566 10,348 On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

CONSOLIDATD CASH FLOW STATEMENT

Indirect method

A. OPERATING ACTIVITIES 2016 2015

1. Operations 134,755 145,550

- profit (loss) for the period/year (+/-) 172,685 249,987

- gains/losses on held-for-trading financial assets and financial assets/liabilities measured at fair value (-/+) (58,942) (138,835)

- profits/losses on hedging activities (-/+) 0 -

- net impairment losses (+/-) 0 -

- net impairment losses on tangible and intangible assets (+/-) 16,163 10,312

- net allowance to provisions for risks and charges and other expenses/income (+/-) 5,844 2,479

- tax and duties still to be paid (+) (1,702) 20,690

- net impairment losses on assets held for sale, net of tax (+/-) 0 -

- other changes (+/-) 707 917

2. Cash generated from or used by financial assets -787,765 -1,576,667

- held-for-trading financial assets 0 -

- financial assets measured at fair value (730,163) (1,527,577

)

- available-for-sale financial assets (3,052) (18)

- due from banks (1,225) 1,927

- due from financial institutions 1,056 1,104

- due from clients (3,716) (825)

- other assets (50,665) (51,278)

3. Cash generated from or used by financial liabilities 839,055 1,669,812

- due to banks (6,625) (8,369)

- due to financial institutions (8) 432

- due to clients (27) 183

- outstanding securities 4,679 5,143

- held-for-trading financial liabilities 0 -

- financial liabilities measured at fair value 859,173 1,696,799

- technical reserves (29,885) (19,283)

- other liabilities 11,748 (5,093)

Net cash generated from or used by operating activities 186,045 238,695

B. INVESTMENT ACTIVITIES

1. Cash generated from: 0

0

- disposal of equity investments 0

-

- dividends 0

-

- disposal of held-to-maturity financial assets 0

-

- disposal of tangible assets 0

-

- disposal of intangible assets 0

-

- disposal of subsidiaries and business units 0

-

2. Cash used by: (80,593) -56,411

- purchase of equity investments (821) (691)

- purchase of held-to-maturity financial assets

- purchase of tangible assets (3,528) (4,065)

- purchase of intangible assets (16,069) (12,544)

- purchase of subsidiaries and business units (60,175) (39,111)

Net cash generated from or used by investment activities (80,593) -56,411

C. FINANCING ACTIVITIES

- issue/purchase of treasury shares (1,791) 1,537

- change in other reserves (21,564) -49,523

- change in capital and reserves attributable to minority interest 7,627 3,576

- issue/purchase of equity instruments (508) -256

- dividends and other distributions (238,599) -118,746

Net cash generated from or used by financing activities (254,835) -163,412

NET CASH GENERATED OR USED FOR THE PERIOD/YEAR (149,383) 18,872

RECONCILIATION

2016 2015

Opening cash and cash equivalents 588,215 569,343

Total net cash generated/used for the period/year (149,383) 18,872

Closing cash and cash equivalents 438,832 588,215

Reference should be made to the paragraph on the “Consolidated net 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)

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 Interpretations

Committee, endorsed by the European Commission and in force on 31 December 2016,

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 2016, 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 statements schedules formats 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.

As the Group was struck off the investment firms register by the Bank of Italy, entailing the

exit from the group of investment firms as of 7 November 2016, the Azimut Group decided to

prepare its consolidated financial statements using the formats and the disclosures required

of asset management companies as they are deemed to fairly represent the Group's

operations.

For comparative purposes, the 2015 balances, presented in accordance with the schedules

and the disclosure provided in the relevant notes as required of financial companies that are

parent companies of asset management groups, were reclassified accordingly, where

necessary.

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 ESMA (European Securities and Markets Authority) and Consob

(the Italian Commission for Listed Companies and the Stock Exchange) documents which

refer to specific IAS/IFRS. In this respect, Consob communication No. 0007780/16 of 28

January 2016 on the most significant issues of financial reports at 31 December 2015 was also

considered.

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 Euros.

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

form2, 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.

These consolidated financial statements have been prepared based on the going concern

assumption. Financial, operating and other indicators3 have been considered which, as also

shown in the document issued on 6 February 2009 by the supervisory authorities Bank of

Italy, Consob and ISVAP (now IVASS), may highlight problems that, if not taken into proper

consideration, could compromise the Group’s stability and ability to operate as a going

concern.

Although the economic outlook remains uncertain, an overall valuation of the past and

current financial position of the Group, its operating guidelines, business model and the risks

to which business activity is exposed4, 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 2016.

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 the 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 A2. of the Notes to Azimut

S.p.A.'s separate financial statements at 31 December 2016. In addition to that set out in Part

2Transactions and other events have been recognised and presented in accordance with the principle of substance over

form. 3Examples of which are shown in Audit Standard No. 570 on “Going Concerns”.

4As described in the Management Report.

A.2, following the completion of the endorsement procedure, the following amendments to

IAS/IFRS became effective on 1 January 2016.

Amendments IASB publication

date

Endorsement date Date of coming into

force

Amendments to IAS 19: Defined

Benefit Plans: employee

Contributions

21 November 2013 17 December 2014 1 February 2015

Annual improvements to IFRS 2010-

2012 cycle

12 December 2013 17 December 2014 1 February 2015

Amendments to IAS 27: Equity

method in separate financial

statements

12 August 2014 18 December 2015 1 January 2016

Amendments to IAS 1: Disclosure

initiative

18 December 2014 18 December 2015 1 January 2016

Annual improvements to IFRS 2012-

2014 cycle

25 September 2014 15 December 2015 1 January 2016

Amendments to IAS 16 and IAS 38:

Clarification of acceptable methods of

depreciation and amortisation

12 May 2014 02 December 2015 1 January 2016

Amendments to IFRS 11: Acquisition

of an interest in a joint operation

06 May 2014 24 November 2015 1 January 2016

Applying the consolidation exception

(amendments to IFRS 10, IFRS 12 and

IAS 28)

18 December 2014 22 September 2016 1 January 2016

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

date

Endorsement date Date of coming into

force

IFRS 14 “Regulatory deferral

accounts”

30 January 2014 n.a.* n.a. *

IFRS 9 “Financial instruments” 24 July 2014 22 November 2016 01 January 2018**

IFRS 16 “Leases” 13 January 2016 --- 01 January 2019**

IFRS 15 “Revenue from contracts with

customers” and amendments

28 May 2014 and 11

September 2015

22 September 2016 1 January 2018**

Amendments IASB publication

date

Endorsement date Date of coming into

force

Amendments to IAS 12: Recognition

of deferred tax assets for unrealised

losses

11 January 2016 --- 01 January 2017**

Amendments to IAS 7: Disclosure

initiative

29 January 2016 --- 01 January 2017**

Amendments to IFRS 2: Classification

and measurement of share-based

payment transactions

20 June 2016 --- 1 January 2018**

Amendments to IFRS 4: Applying IFRS

9 – Financial instruments

12 September 2016 --- 1 January 2018**

Amendments to IAS 40: Transfers of

investment property

08 December 2016 --- 1 January 2018**

Annual improvements to IFRS 2014-

2016 cycle

06 February 2017 --- 1 January 2018**

IFRIC 22 Foreign currency transactions and advance consideration

17 February 2017 --- 1 January 2018**

Clarifications IASB publication

date

Endorsement date Date of coming into

force

Clarifications to IFRS 15: Revenue

from contracts with customers

12 April 2016 --- 1 January 2018**

* 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.

Section 3 - Significant events after the reporting date

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 the 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 may be repurchased as of today is 18,263,710, representing

approximately 13% of share capital. Buybacks will 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 will be equal to 30 euro).

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, to the extent of its

duties, Consob fined some profiles of Azimut Consulenza SIM (now Azimut Capital

Management SGR).

The consolidated financial statements were authorised for publication by Azimut Holding

S.p.A.’s Board of Directors on 09 March 2017.

Section 4 – Other information

Risks and uncertainties related to estimates

The preparation of the 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 due to internal and external factors.

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);

- 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.

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

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 2015, the consolidation scope saw the entry of the following

companies:

a) the consolidation of the following nine Australian companies: 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, On-Track Financial Solutions Pty Ltd

(acquired through the Australian subsidiary AZ NGA) and Domane Financial Advisers Pty Ltd

and Aspire Pty Ltd (acquired through the Australian subsidiaries Wise Planners PTY Ltd and

Logiro Unchartered Pty Ltd, respectively).

The purchase agreements of the nine 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% (53% for Priority Advisory Group Pty Ltd) 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 24.2 million euro, was

allocated to goodwill. Specifically:

o the acquisition of RI Toowoomba led to the recognition of goodwill of 2,459

thousand euro;

o the acquisition of Empowered Financial Partners Pty Ltd led to the recognition of

goodwill of 1,748 thousand euro;

o the acquisition of Wealthwise Pty Ltd led to the recognition of goodwill of 3,023

thousand euro;

o the acquisition of Priority Advisory Group Pty Ltd led to the recognition of goodwill

of 4,657 thousand euro;

o the acquisition of Sterling Planners Pty Ltd led to the recognition of goodwill of

2,719 thousand euro;

o the acquisition of Logiro Unchartered Pty Ltd led to the recognition of goodwill of

2,374 thousand euro;

o the acquisition of On-Track Financial Solutions Pty Ltd led to the recognition of

goodwill of 3,857 thousand euro;

o the acquisition of Aspire Pty Ltd led to the recognition of goodwill of 1,962 thousand

euro;

o the acquisition of Domane Financial Advisers Pty Ltd led to the recognition of

goodwill of 1,416 thousand euro;

b) the consolidation of the Australian company Sigma Funds Management Pty Ltd purchased

in April 2016 in which the parent has a 51% equity investment through AZ International

Holdings SA. The difference between the fair value of the assets and liabilities purchased and

the consideration paid to purchase the equity investments, totalling 1.4 million euro, was

allocated to goodwill.

c) the consolidation of BRZ Gestấo de Patrimônio purchased in July 2016 through Azimut

Brasil Wealth Management Holding S.A.. The difference between the fair value of the assets

and liabilities purchased and the consideration paid to purchase the equity investments,

totalling 1.1 million euro, was allocated to goodwill.

d) the consolidation of Azimut Brasil Wealth Management Ltda (formerly LFI Participacoes

S.A.), previously held by 50% by Azimut Brasil Wealth Management Holding S.A.. The

difference between the fair value of the assets and liabilities purchased and the consideration

paid to purchase the equity investments, totalling 4.5 million euro, was allocated to goodwill.

65

1. Wholly-owned subsidiaries

Name Registered

office

Type of ownership

(*)

Stake Voting rights

%

Shareholder % stake

A. Fully consolidated, wholly-owned companies

1. Azimut Capital Management Sgr S.p.A.

Milan 1 Azimut Holding S.p.A. 100 100

2. AZ Fund Management SA Luxembourg 1

Azimut Holding S.p.A. 51 51

Azimut Partecipazioni S.p.A.

49 49

3. AZ Life Ltd Dublin 1 Azimut Holding S.p.A. 100 100

4. Azimut Global Counseling S.r.l. Milan 1 Azimut Holding S.p.A. 100 100

5. Azimut Enterprises Holding S.r.l.

Milan 1 Azimut Holding S.p.A. 100 100

6. Augustum Opus Sim S.p.A. Milan 1 Azimut Holding S.p.A. 51 51

7. Futurimpresa Sgr S.p.A. Italy 1 Azimut Holding S.p.A. 55 55

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 S.A.

Luxembourg 1 Azimut Holding S.p.A. 100 100

66

11. AN Zhong (AZ) IM Hong Kong 1 AZ International Holdings SA

100 100

12. AN Zhong (AZ) IM HK Hong Kong 1 AN Zhong (AZ) IM 100 100

13. AZ Investment Management Shanghai 1 AN Zhong (AZ) IM 100 100

14. Compagnie de Gestion priveè Monegasque

Monaco 1 AZ International Holdings SA

51 51

15. CGM Italia SGR S.p.A. (formerly CGM Italia SIM S.p.A)

Italy 1 Compagnie de Gestion priveè Monegasque

51 51

16. Katarsis Capital Advisors SA Lugano 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 (formerly AZ Swiss SA)

Lugano 1 AZ International Holdings SA

51 51

19. AZ Sinopro Investment Planning Ltd

Taiwan 1 AZ International Holdings SA

51 51

20. AZ Sinopro Investment Planning Ltd

Taiwan 1 AZ Sinopro Investment Planning Ltd

51 51

21. AZ Sinopro Insurance Planning Ltd

Taiwan 1 AZ Sinopro Investment Planning Ltd

51 51

22. Atheneaum Ltd Singapore 1 AZ International Holdings SA

100 100

23. AZ Brasil Holdings Ltda Brazil 1 AZ International Holdings SA

100 100

24. Quest Partecipacoes S.A. Brazil 1 AZ Brasil Holdings Ltda

60 60

25. Quest Investimentos Ltda Brazil 1 Quest Participações Ltda

60 60

26. Azimut Brasil Wealth Management Holding S.A. (formerly AZ FI Holdings)

Brazil 1 AZ Brasil Holdings Ltda

100 100

27. M&O Consultoria Ltda Brazil 1 Azimut Brasil WM Holding SA

100 100

67

28. Futurainvest Gestão de Recursos Ltda

Brazil 1 Azimut Brasil WM Holding SA

100 100

29. AZ & Partners Gestão de Recursos Ltda (formerly BRZ Gestấo de Patrimônio)

Brazil 1 Azimut Brasil WM Holding SA

100 100

30. Azimut Brasil Wealth Management Ltda

Brazil 1 Azimut Brasil WM Holding SA

89 89

31. Azimut Portfoy AS Turkey 1 AZ International Holdings SA

100 100

32. AZ Mexico Holdings S.A. de CV (formerly AZ Profie SA)

Mexico 1 AZ International Holdings SA

94.2 94.2

33. Mas Fondos S.A. Mexico 1 AZ Mexico Holdings S.A. de CV (formerly AZ Profie SA)

94.2 94.2

34. Next Generation Advisory PTY Ltd

Australia 1 AZ International Holdings SA

53.81 53.81

35. Eureka Whittaker Macnaught PTY Ltd

Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

36. Pride Advice PTY Ltd Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

37. Lifestyle Financial Planning Services (LFPS) PTY Ltd

Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

38. Eureka Financial Group PTY Ltd

Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

39. Pride Financial PTY Ltd Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

40. Wise Planners PTY Ltd Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

41. Domane Financial Advisers PTY LTD

Australia 1 Wise Planners PTY Ltd 53.81 53.81

42. Financial Lifestyle Partners PTY Ltd

Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

43. Harvest Wealth PTY Ltd Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

68

44. RI Toowoomba PTY Ltd Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

45. Empowered Financial Partners PTY Ltd

Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

46. Wealthwise PTY Ltd Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

47. Priority Advisory Group PTY Ltd

Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

48. Sterling Planners PTY Ltd Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

49. Logiro Unchartered PTY Ltd Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

50. Aspire Pty Ltd Australia 1 Logiro Unchartered PTY Ltd

53.81 53.81

51. On-Track Financial Solutions Pty Ltd

Australia 1 Next Generation Advisory PTY Ltd

53.81 53.81

52. AZ Sestante Ltd (formerly Ironbark Funds Management (RE) Ltd)

Australia 1 AZ International Holdings SA

76 76

53. AZ Andes S.p.A. Chile 1 AZ International Holdings SA

90 90

54. Sigma Funds Management PTY Ltd

Australia 1 AZ International Holdings SA

51 51

55. AZ US Holding Inc. United States

1 AZ International Holdings SA

100 100

56. AZ Apice Capital Management LLC

United States

1 AZ US Holding Inc. 70 70

(*) Type of ownership:

(1) majority of voting rights at ordinary shareholders’ meetings

69

Investments measured at equity

Name Registered office

Stake Voting rights %

Shareholder Stake%

Companies measured at equity

1. Cofircont Compagnia Fiduciaria S.p.A. Italy

Azimut Enterprises Holding S.r.l. 30 30

2. SiamoSoci S.r.l. Italy Azimut Enterprises Holding S.r.l. 22 22

2. Significant valuations 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. With

respect to the mutual funds underlying the Unit Linked Funds, the Azimut Group checks

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 operational 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 assets under management and the incentive fees linked to the performance of

the managed funds.

3. Wholly-owned subsidiaries with significant non-controlling interests

70

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'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", e.g., goodwill, after allocation to the

subsidiary's asset or liability items, where necessary. Conversely, negative differences

are taken to profit or loss.

For the purposes of consolidation, the financial statements at 31 December 2016 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 are obtained through the information included in the reporting packages at

31 December 2016.

71

The Parent Company financial statements and those of the subsidiaries have been

consolidated on a line-by-line basis, including all subsidiaries and assuming all assets,

liabilities, costs and income of each subsidiary, while eliminating the 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 equity investments consolidated on a line-by-line

basis and the related net fair value of the acquired assets and assumed 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 are

classified under the specific item “foreign exchange differences” in the valuation reserve.

Equity method—The investees over which the Group exerts significant influence or has

joint control, as defined by IAS 28, are measured using the equity method.

Under this method, the investee 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 related to the differences arising from the translation of

foreign currency amounts into the financial statements' functional currency. The portion

related to these changes is recognised directly in equity. When the investee incurs losses

72

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 privèe Monegasque SAM and CGM Italia SGR S.p.A.

With respect to the consolidation of Compagnie de Gestion privèe Monegasque SAM and

CGM Italia SGR 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 privèe

Monegasque SAM.

Based on the above, in the consolidated financial statements of the Azimut Group, the

residual 49% of the company's share capital is represented as a financial liability

measured at fair value, to the extent of the amount to be paid for the purchase (the

amount of which depends on a contractually agreed consideration).

Business combinations carried out in 2016

At the reporting date, the activities related to the application of IFRS 3 and the fair value

calculation of the assets and liabilities of the companies acquired in 2016 are still

underway. In this respect, IFRS 3 allows the provisional allocation of acquisition costs,

provided that completion takes place within twelve months of the acquisition date.

A.2 Key financial statements items

This section describes the accounting policies used to prepare the consolidated financial

statements at 31 December 2016, specifically the classification, recognition,

measurement and derecognition of assets and liabilities items, and the recognition of

73

revenue and expense. The accounting policies have been applied consistently in the

current and previous years.

1 - Financial assets at fair value:

Classification - This category includes investments relating to insurance contracts (unit-

linked policies) issued by the 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 profits or losses in the specific shareholders’ equity reserve, net of the related tax

effect ("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, exceeds the recoverable amount.

74

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.

Assets which do not qualify as subsidiaries, associates or jointly-controlled entities, are

not listed on active markets and for which the fair value cannot be measured reliably, are

measured at cost.

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.

With respect to impairment testing, the Company employs a specific policy that sets the

limits in terms of severity and of durability, both according to the type of financial

instrument.

Specifically, the impairment thresholds include, in terms of severity, (i) a loss of 20% for

“debt instruments5” and a loss of 30% for the “other financial instruments6”.

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.

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 ownership.

3 - Receivables

Receivables include the amounts due from banks, from financial institutions, from clients

and managed funds, or all receivables involving fixed payments or in any case payments

which are definable and are not listed on an active market.

5Money market instruments, bonds, money market mutual funds and bond funds.

6Securities, equity, balanced and flexible funds, private equity and hedge funds.

75

As this mainly involves trade receivables, they are measured at their estimated realisable

value, being the best possible estimate of their fair value. Conversely, receivables relating

to loans to financial advisors, initially recognised at their fair value equal to the amount

granted, are subsequently measured at amortised cost that coincides with the initial

value, since no additional transaction costs are expected and since such loans are granted

at market rates (Euribor plus spread).

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 pursuant to Article 2359 of

the Italian Civil Code, i.e. companies in which the Group has at least 20% of voting rights

and thus exerts significant influence, but not control, over financial and operating

policies.

Measurement and recognition—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 subjected to an impairment test, pursuant to the

foregoing IAS 36, by comparing its recoverable amount and its corresponding carrying

amount, whenever the application of the provisions set forth in IAS 36 indicate 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.

76

5 - Tangible assets

Classification - They include business properties, plant, furniture and fixtures, machines

and equipment of any kind and renovation costs for any rented properties.

With reference to business properties, IAS 16 establishes that land is to be recognised

separately from buildings since only the latter is subject to depreciation as the useful life

is not indefinite. This separation is necessary only in the case of self-contained

properties: no separation is necessary if the property consists of a portion of the building

(for example an apartment), since in this case, the company does not own the

surrounding land or land beneath. Azimut Group owns portions of property and

therefore no separation was adopted for their measurement.

Measurement and recognition - 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 assets acquired and the liabilities

assumed and carrying amount of the investments recognised.

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.

77

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.

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 tax base of assets and liabilities and their carrying

amounts. 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 deferred charges on the fee and commission expenses payable to

the sales network for the sale of “no load” products. These funds do not charge an entry

fee but are able to break even by charging an exit fee for a specific amount of time.

Therefore, they are recognised in the income statement over the foregoing period in

accordance with the matching principle.

In addition, “other assets” include the prepayments generated by the deferral of

commission expenses incurred for the purchase of unit-linked policies classified as

investment contracts.

78

9 - Payables

Measurement and recognition - Short-term trade payables (due within 12 months) are

recognised at their par value.

Payables in the form of mid/long-term loans, initially recognised at the amount collected,

are subsequently measured at amortised cost using the effective interest rate method.

The amortised cost corresponds to the initial 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.. The bond is recognised as a

financial liability and an equity instrument being a financial instrument composed of a

debt component and an embedded derivative (on equity instruments). The equity

component, being the difference between the fair value of the instrument, as a whole, and

the fair value of the debt component, was recognised in shareholders’ equity under

“Equity instruments”.

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 revenue 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.

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 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

79

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 “Interest

expense and similar charges” in the income statement, using the effective interest rate

method.

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.

Measurement and recognition—The measurement of call options reflects the

countervalue 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, which approximates fair value, 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.

Derecognition - Financial liabilities are derecognised after settlement.

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

80

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 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 2006, 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 analyses, statistics

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 revenue arising from plan assets. In

accordance with IAS 19, actuarial gains and losses are recognised in a fair value 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 transactions or

events;

- it is probable that an outflow of resources will be required to generate economic

benefits;

- a reliable estimate can be made of the amount of the obligation.

81

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 and in accordance with the matching principle.

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, when it is probable it will be received

and when it can be reliably calculated.

Fees, commissions and other income from services offered to clients 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. The gains 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 Company's

82

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 Company to repay the

amount paid by investors, participate in the allocation of the Company's residual assets

in case of liquidation, in subordination to the Company's 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.

83

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 respective 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 and 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 acquisition date, 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 under common

control 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.

84

A.3 Disclosure about 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 valuation;

Level 2: inputs other than unadjusted quoted prices that are directly (as in the

case of prices) or indirectly (deriving from prices) observable market data;

Level 3: inputs based 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 investment funds, whose fair value is

designated as Level 1 if represented by the Net Asset Value (NAV) provided by

the fund manager at the measurement date, are classified as Level 1; conversely,

with respect to listed funds and Exchange Trade Funds (ETF), Level 1 fair value is

85

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 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, which approximates fair

value, 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. Financial liabilities are derecognised after settlement.

A.4.5.1 Accounting portfolios: breakdown by fair value level

Financial assets/liabilities measured at fair value

Level 1 Level 2 Level 3 Total

86

1. Held-for-trading financial assets

2. Financial assets measured at fair value 102,110 6,345,317 6,447,427

3. Available-for-sale financial assets 267,460 9,503 276,963

4. Hedging derivatives

Total 369,57

0 6,345,31

7

9,503 6,724,39

0

1. Held-for-trading financial liabilities

2. Financial liabilities measured at fair value 6,195,001 104,035 6,299,036

3. Hedging derivatives

Total 6,195,00

1 104,035

6,299,036

87

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

FINANCIAL ASSETS

Held for trading

Measured at fair value

Available for sale

Hedging assets

Tangible assets

Intangible assets

1. Opening balance 2,314

2. Increases 8,086

2.1. Purchases 2,711

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 5,375

3. Decreases 897

3.1. Sales 284

3.2. Redemptions

3.3. Losses charged to: 613

3.3.1 Profit or loss

of which: losses 613

3.3.2 Shareholders’ equity

3.4. Transfers from other levels

3.5. Other decreases

4. Closing balance 9,503

88

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

Held-for-trading

financial liabilities

Financial liabilities measured at fair

value Hedging derivatives

1. Opening balance 62,488

2. Increases 44,047

2.1. Purchases 17,164

2.2. Losses charged to: 7,809

2.2.1 Profit or loss 6,497

of which: losses 6,497

2.2.2 Shareholders’ equity 1,312

2.3. Transfers from other levels

2.4. Other increases 19,074

3. Decreases 2,501

3.1. Sales

3.2. Redemptions 92

3.3. Profits allocated to: 2,409

3.3.1 Profit or loss 1,646

of which: gains 1,646

3.3.2 Shareholders’ equity 763

3.4. Transfers from other levels

3.5. Other decreases

4. Closing balance 104,035

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”.

89

Operating segment disclosure (IFRS 8)

Given the small size of the foreign companies under AZ International Holdings SA, the

Azimut Group’s business is mainly attributable to the companies directly controlled by

Azimut Holding S.p.A. and, though this business is conducted through numerous

companies, each specialising in the distribution, promotion and management of financial

and insurance products (essentially unit-linked products), it is attributable to a single

operating segment.

As a matter of fact, the nature of the various products and services offered, the structure

of the management and operating processes, the type of clients, as well as the methods

adopted for the distribution of products and services are sufficiently similar as to ensure

that the risks and benefits do not differ to any great extent but, on the contrary, have

many comparable features.

Furthermore, the business model of the operating companies directly controlled by

Azimut Holding S.p.A. is distinguished by the strong interaction between management

and distribution activities. The distribution network is able to steer clients towards

products that enable the management team to best exploit the market time and, on the

other hand, the excellent track record of portfolio management enables the distribution

network to further penetrate the market.

Therefore, these companies operate as a single structure, dedicated in its entirety to

asset management and the sale of investment instruments, in which the contributions

made by the individual companies appear to be indistinguishable and whose operating

results are revised periodically by management for the purpose of decisions regarding

the allocation of resources and measurement of results and company performance.

Consequently, the accounting information was not reported separately by operating

segments, in line with the internal reporting system used by management and based on

the individual accounting data used to prepare the consolidated financial statements

under IFRS. Similarly, no information is provided on revenue per client and non-current

assets in the form of breakdown by geographical area, or information on each individual

client’s relationship with the company as management believes this is of little relevance

in terms of disclosure.

Therefore, given that there is only one operating segment subject to disclosure, as

regards information on income from clients by product/service, please see details on fee

90

income and net premiums reported with data from the profit and loss account included

in these notes.

AZ International Holding SA acts as the incubator in order to develop research,

acquisition and management of the new foreign partnerships.

Earnings per share

Basic earnings per share are calculated by dividing the net profit for the period by the

average number of outstanding ordinary shares.

There were no earnings-dilutive transactions to be disclosed at 31 December 2016.

2016 2015

Basic earnings per share 1.300 1.842

Average number of outstanding shares (*) 132,860,826 132,868,491

Diluted earnings per share 1.300 1.842

Average number of outstanding shares (*) 132,860,826 132,868,491

* outstanding shares are calculated net of treasury shares held by Azimut Holding S.p.A. at the reporting

date.

91

PART B – NOTES TO THE BALANCE SHEET

ASSETS

Section 1 – Cash and cash equivalents

Cash and cash equivalents amount to 21 thousand euro and refer to cash on hand.

Section 3 – Financial assets measured at fair value

Interest income and similar expense amounts to 6,447,427 thousand euro (5,658,322

thousand euro at 31 December 2015).

3.1 Breakdown of “Financial assets measured at fair value”

Items/Value Total 31/12/2016 Total 31/12/2015

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

1. Debt securities

- of which: government securities

2. Equity securities and UCITS units 6,345,317 5,289,746

3. Other assets 102,110 368,576

Total 102,110 6,345,317 368,576 5,289,746

“UCI units” Level 2 refers 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.

92

3.2 Financial assets measured at fair value: breakdown by issuer

Items/Value Total 31/12/2016 Total 31/12/2015

1. Financial assets 6,447,427 5,658,322

a) Governments and central banks - -

b) Other public bodies - -

c) Banks 102,110 368,576

d) Financial institutions - -

e) Other issuers 6,345,317 5,289,747

Total 6,447,427 5,658,322

Section 4 – Available-for-sale financial assets

This item amounts to 276,963 thousand euro (365,910 thousand euro at 31 December

2015). The breakdown is as follows:

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

Items/Value

Total 31/12/2016 Total 31/12/2015

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

1. Debt securities 1,014 - - 2,149 - -

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

2. Equity securities and UCITS units 266,446 - 9,503 - - 2,314

3. Other assets - - - 361,447 -

Total 267,460 - 9,503 363,596 - 2,314

“UCI units” Level 1 refers to the units in investment funds managed by the Azimut Group

as part of the Group’s liquidity management policies.

93

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

Items/Value Total 31/12/2016 Total 31/12/2015

1. Financial assets 276,963 365,910

a) Governments and central banks 1,014 2,149

b) Other public bodies - -

c) Banks 1,398 2,314

d) Financial institutions - -

e) Other issuers 274,552 361,447

Total 276,963 365,910

94

Section 6 – Receivables

6.1 Receivables

Interest income and similar expense amounts to 189,305 thousand euro (238,034

thousand euro at 31 December 2015).

The breakdown is as follows:

Breakdown

Total 31/12/2016 Total 31/12/2015

Carryin

g

amount

Fair value Carryin

g

amount

Fair value

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

1. Receivables for portfolio

management services

90,219

90,219

-

-

63,017

63,017

-

-

1.1. UCI units

85,614

85,614

60,200

60,200

1.2 individual portfolio management

3,037

3,037

1,511

1,511

1.3 pension fund management

1,569

1,569

1,306

1,306

2. Receivables for other services:

17,286

17,286

-

-

13,817

13,817

-

-

2.1 advisory

-

2.2 outsourced corporate functions

-

2.3 other

17,286

17,286

13,817

13,817

3. Other receivables

81,800

81,800

-

-

161,200

161,200

-

-

3.1 repurchase agreements

-

- of which: government securities

-

of which: other debt securities

-

of which: other equity securities

and units

-

3.2 deposits and current accounts

81,800

81,800

161,200

161,200

3.3 other

-

4. Debt securities

-

-

Total

189,305

189,305

-

-

238,034

238,034

-

-

“Deposits and current accounts” are composed of cash deposited in the current accounts

of the Group companies, with interest in line with that applied to term deposits.

95

“Receivables for services - sale of products” 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 services - portfolio management” includes receivables in the form of fee

and commission income on mutual funds and managed funds accrued during December

2016 and collected the following month.

6.2 Receivables: breakdown by counterparty

Breakdown/Counterparty

Banks Financial institutions Clients

of

which:

Group

of

which:

Group

of

which:

Group

1. Receivables for portfolio management

services -

- -

-

90,219

-

1.1. UCI units -

- -

-

85,614

-

1.2 individual portfolio management -

- -

-

3,037

-

1.3 pension fund management -

- -

-

1,569

-

2. Receivables for other services:

2,072

-

6,258

-

8,956

-

2.1 advisory -

- -

- -

-

2.2 outsourced corporate functions -

- -

- -

-

2.3 other

2,072

-

6,258

-

8,956

-

3. Other receivables

81,800

- -

- -

-

3.1 repurchase agreements -

- -

- -

-

- of which: government securities -

- -

- -

-

of which for other debt securities -

- -

- -

-

of which for other equity securities and

units -

- -

- -

-

3.2 deposits and current accounts

81,800

- -

- -

-

3.3 other -

- -

- -

-

Total 31.12.2016

83,872

-

6,258

-

99,175

-

Total 31.12.2015

162,458

-

7,320

-

68,257

-

96

Section 9 - Equity investments This item amounts to 935 thousand euro (7,744 thousand euro at 31 December 2015).

It comprises interests in associates and subsidiaries of parents pursuant to article 2359

of the Italian Civil Code.

9.1 Equity investments: information

Name Registered office

Stake Voting rights %

Shareholder Stake

%

Associates measured at equity

1. Cofircont Compagnia Fiduciaria S.r.l. Italy

Azimut Enterprises Holding S.r.l. 30 30

2. SiamoSoci S.r.l. Italy Azimut Enterprises Holding S.r.l. 22 22

9.2 Annual change in equity investments

Total value

A. Opening balance 7,744

B. Increases 821

B.1 Purchases 821

B.2 Write-ups

B.3 Revaluations

B.4 Other changes

C. Decreases 7,630

C.1 Sales

C.2 Write-downs 34

C.3 Other changes 7,596

D. Closing balance 935

“Other changes”, which show a decrease, refer to Programma 101 Sicaf S.p.A. (5,375

thousand euro) reclassified to “available-for-sale financial assets” and Azimut Brasil

Wealth Management Ltd (2,221 thousand euro), 100% of which was transferred to AZ

Quest Partecipacoe SA.

97

9.3 Significant equity investments: accounting figures

Name Carrying amount Fair value (*) Dividends

received

1. Cofircont Compagnia Fiduciaria S.r.l. 821 821 -

2. SiamoSoci S.r.l. 114 114 -

(*) As these companies are not listed, fair value coincides with the carrying amount.

Section 10 - Tangible assets

Interest income and similar expense amounts to 7,219 thousand euro (6,199 thousand euro at 31 December 2015). 10.1 Breakdown of “Tangible assets” - business purposes: breakdown of assets at cost” Items/Value Total 31/12/2016 Total 31/12/2015

1. Company-owned 7,219 6,199

a) land - -

b) buildings 157 166

c) furniture & fixtures 1,903 1,516

d) capital goods - -

e) other 5,159 4,517

2. Under finance lease - -

a) land - -

b) buildings - -

c) furniture & fixtures - -

d) capital goods - -

e) other - -

Total 7,219 6,199

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10.2 Tangible assets - business purposes: "annual change"

Land Buildings Furniture &

fixtures Plant Other Total

A. Opening gross balance

- 311 7,770 15,806 23,887

A.1 Total net impairment losses -

145 -

6,254 -

13,331 -

19,730

A.2 Opening net balances 166 1,516 4,516 6,198

B. Increases 927

4,642 5,569

B.1 Purchases 927

4,642 5,569

B.2 Leasehold improvements

B.3 Write-ups

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 -540

-1,958 -2,507

C.1 Sales

C.2 Amortisation -9 -540

-1,958 -2,507

C.3 Impairment losses charged to:

a) shareholders’ equity

b) profit or loss

C.4 Decreases in fair value charged to:

charged to:

a) shareholders’ equity

b) profit or loss

C.5 Exchange rate losses

C.6 Transfers to:

a) assets held for investment purposes

b) assets held for sale

C.7 Other changes

D. Gross closing balance

-

311

8,697

-

20,448

29,456

D.1 Total net impairment losses -

154 -

6,794

- -

15,289 -

22,237

D.2 Net closing balance

157

1,903

-

5,159

7,219

E. Measurement at cost

157

1,903

-

5,159

7,219

Depreciation rates are as follows:

99

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

duration of contract

Sector 11 – Intangible assets This item amounts to 517,315 thousand euro (449,532 thousand euro at 31 December 2015). 11.1 Breakdown of “Intangible assets”

Total 31/12/2016 Total 31/12/2015

Assets at cost Assets at fair

value Assets at cost

Assets at fair

value

1. Goodwill 461,418 - 396,049 -

2. Other intangible assets 55,897 - 53,483 -

2.1 generated internally - - - -

2.2 other 55,897 - 53,483 -

Total 517,315 - 449,532 -

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.,

100

with accounting effects on 1 July 2002, a portion of goodwill on

consolidation, equal to 176.3 million euro amortised by 26.4 million euro

prior to the adoption of IFRS (calculated based on a valuation by the

independent company PricewaterhouseCoopers Corporate Finance S.r.l.)

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:

Company Total

31/12/2016 Total

31/12/2015

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 66,153

23,424

Compagnie de Gestion Monegasque 31,425

31,425 Azimut Brasil Holdings and

subsidiaries 30,438

24,884 AZ Swiss & Partners - Sogenel

acquisition 15,644

-

Azimut Portfoy 9,232

7,840

Katarsis 6,756

6,756

Mas Fondos 6,122

6,122

Sigma Funds Management 1,442

-

AZ Sinopro Financial Planning 1,247

1,247

Athenaeum 592

592

AZ Sestante 49

49 AZ Notus (merged into Azimut

Portfoy) -

1,392

- Total AZ International CGU 169,100

103,731

Total 461,418 396,049

101

The increase at the reporting date is mainly due:

- to consolidation differences of 24,216 thousand euro, included in goodwill arising from

the difference between the fair value of assets acquired and liabilities assumed and the

carrying amount, at the relevant acquisition dates, of the equity investments acquired in

2016 in RIToowomba, Empowered Financial Partners, Wealthwise, Priority Advisory

Group, Sterling Planners, JFS Personal Investment Solutions, Logiro, Domane Financial

Advisors and Aspire through the sub-holding NGA, in addition to the 18,513 thousand

euro increase related to goodwill recognised in the separate financial statements of

NGA's subsidiaries;

- to goodwill of 15,644 thousand euro recognised in the financial statements of AZ Swiss

& Partners following the acquisition of Sogenel's business unit;

- to consolidation differences of 5,554 thousand euro included in goodwill arising from

the difference between the fair value of assets acquired and liabilities assumed and the

carrying amount, at the relevant acquisition dates, of the equity investments acquired in

2016 in Azimut Brasil Wealth Management Ltda and BRZ Gestấo de Patrimônio through

the sub-holding Azimut Brasil WM Holding SA;

- goodwill of 1,442 thousand euro recognised following the acquisition of Sigma Funds

Management by AZ International Holdings Sa.

“Other intangible assets – Other” refer to:

the “Azimut” trademark purchased on expiry on 2 November 2015 by exercising

the relevant option of 100 thousand euro (plus VAT) included in the finance lease

entered into in October 2006 with Banca Italease S.p.A. for its original amount

(35,338 thousand euro).

Software totalling 18,193 thousand euro.

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11.2 Intangible assets: "annual change"

Total

A. Opening balance 449,532

B. Increases 81,438

B.1 Purchases 16,069

B.2 Write-ups

B.3 Increases in fair value taken to:

- shareholders’ equity

- income statement

B.4 Other changes 65,369

C. Decreases 13,655

C.1 Sales

C.2 Amortisation 11,064

C.3 Write-downs charged to: 2,591

- shareholders’ equity

- income statement 2,591

C.4 Decreases in fair value charged to:

- shareholders’ equity

- income statement

C.5 Other changes

D. Closing balance 517,315

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

Company % 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 IFRS, specifically IAS

36 – “Impairment of assets”, stipulate that the company must perform annual

impairment tests to check the adequacy of the amounts recognised. The aim of the

impairment test is to identify any impairment loss. Where the test shows that the value of

an asset has been overestimated, the company shall recognise an impairment loss.

103

For the purpose of impairment testing, two cash generating units (CGU) have been

identified that basically reflect the Azimut Group’s business and to which the above

intangible assets have been allocated.

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., aimed at identifying, acquiring and managing new foreign partnerships

with an integrated approach.

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 CGU of AZ International Holdings SA is part of the Azimut Group to promote the

development of the distribution of financial products, including in the relevant markets

in which the companies of the above CGU operate.

The impairment test for this CGU checks for impairment indicators on intangible assets

allocated to the same CGU of 169 million euro.

The following companies belong to the “CGU AZ International”:

Katarsis Capital Advisors SA; Eskatos Capital Management Sarl; Compagnie de Gestion Priveè Monegasque; CGM Italia SGR S.p.A. AN Zhong (AZ) IM Limited; AN Zhong (AZ) IM HK Limited;

104

AZ Investment Management; AZ Global Portfoy Yonetimi A.S.; AZ Notus Portfoy Yonetimi A.S.; AZ Sinopro Financial Planning Limited; AZ Sinopro Investment Planning Limited; AZ Sinopro Insurance Planning Limited; Athenaeum LTD; AZ Swiss & Partners SA (formerly AZ Swiss SA); AZ Brasil Holdings LTDA; AZ Legan Partecipações S.A.; AZ Legan administração de Rescursos; AZ Quest Partecipacoe SA; AZ Quest Investimentos Ltda; Azimut Brasil Wealth Management Holding S.A. (formerly AZ FI Holdings); M&O Consultoria; AZ Futurainvest; Azimut Brasil Wealth Management Ltds (formerly LFI Investimentos Ltda); BRZ Gestao de Patrimonio; AZ Mexico Holdings S.A. de CV (formerly AZ Profie SA); Mas Fondos S.A.; AZ Andes S.p.A.; NGA Next Generation Advisory Pty Ltd; Eureka Whittaker Macnaught Pty Ltd; Eureka Financial Group Pty Ltd; Pride Advice Pty Ltd; Pride Financial Pty Ltd; Lifestyle Financial Planning Services Pty Ltd; AZ Sestante Ltd (formerly Ironbark Funds Management (RE) Ltd); Wise Planners Pty Ltd; Financial Lifestyle Partners Pty Ltd; Harvest Wealth Pty Ltd; RI Toowoomba Pty Ltd; Empowered Financial Partners Pty Ltd; Wealthwise Pty Ltd; Priority Advisory Group Pty Ltd; Sterling Planners Pty Ltd; Sigma Funds Management Pty Ltd; Logiro Unchartered Pty Ltd; Domane Financial Advisers Pty Ltd; Aspire Pty Ltd; On-Track Financial Solutions Pty Ltd AZ US Holding Inc.; AZ Apice Capital Management LLC.

Azimut CGU

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.;

105

AZ Fund Management SA; AZ Life Ltd; Azimut Global Counseling S.r.l.; Azimut Enterprises Holding S.r.l. Augustum Opus SIM S.p.A.; Futurimpresa SGR S.p.A.; Azimut Financial Insurance S.p.A..

Again, the impairment test conducted on this CGU was aimed at checking the existence of

impairment of goodwill of 292 million euro related to the CGU (including goodwill of

149.8 million and the trademark of 35.3 million related to the Parent Company).

For the purposes of the impairment test of intangible assets, the value in use of each CGU

was calculated using the Discounted Cash Flow method and comparing value in use with

the carrying amount of the CGUs, inclusive of the above intangible assets.

Value in use calculated using the Discounted Cash Flow method is as follows:

calculation of unlevered cash flows: for the purposes of this calculation, the expected cash

flow was approximated to the net profit for the year. Profits for the first five years were

based on the “2015 – 2019 to 2021 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 revenue after 2021 unchanged at 2%.

Calculation of the weighted average cost of capital (“WACC”), equal to 7.29%, based on

the following parameters:

• Risk Free: 10-year Italian government bonds, December 2016;

• Azimut Beta: calculated on a five-year timescale with daily readings (source:

Bloomberg);

• market risk premium: extra yield required for investments in shares rather than risk-

free securities

Cost of capital calculation:

106

WACC 31/12/2016

Risk-free rate 1.27%

Market risk premium 5.60%

Beta Unlevered 1,075

Risk premium 5.60%

Cost of equity (Ke) 7.29%

D / (D+E) 0%

E / (D+E) 100%

WACC 7.29%

Discounting cash flows over the five-year timescale and cash flows calculated for

terminal value purposes at the WACC to estimate the Enterprise Value of the CGU and

calculating the value in use of the CGU, adjusted to reflect the net financial position at 31

December 2016.

Based on the above, management calculated Azimut CGU's and AZ International CGU's

value in use at 5,120 million euro and 665 million euro, respectively. These amounts are

greater than the CGUs' carrying amounts of 727 million and 175 million euro,

respectively, as no impairment losses were recognised.

Furthermore, the CGU's value in use was subjected to a sensitivity analysis which

considered WACC changes and the long-term growth rate (g-rate).

The tables below show the results of the sensitivity analyses which did not identify any

impairment losses.

107

Impairment test on the Azimut CGU

Sensitivity Analysis

Impairment test on the AZ International Holdings CGU

Sensitivity Analysis

4.454,70 5,29% 5,79% 6,29% 6,79% 7,29% 7,79% 8,29% 8,79%

0,00% 4.379 4.050 3.774 3.538 3.335 3.158 3.002 2.864

0,50% 4.797 4.398 4.067 3.790 3.553 3.349 3.170 3.014

1,00% 5.312 4.818 4.417 4.085 3.806 3.568 3.362 3.183

1,50% 5.963 5.335 4.839 4.436 4.102 3.822 3.583 3.376

2,00% 6.812 5.990 5.359 4.860 4.455 4.120 3.838 3.597

2,50% 7.965 6.843 6.016 5.382 4.881 4.474 4.137 3.854

3,00% 9.620 8.001 6.873 6.043 5.406 4.902 4.493 4.154

3,50% 12.198 9.664 8.037 6.904 6.069 5.429 4.923 4.512

Differenza tra Valore d'uso e Valore contabile della CGU Diminuzione Flussi

0% -2,5% -5,0% -7,5% -10,0% -12,5% -17,5% -20,0%

4.343 4.232 4.121 4.009 3.898 3.675 3.564

Differenza tra Valore d'uso e Valore contabile della CGU

548,49 5,29% 5,79% 6,29% 6,79% 7,29% 7,79% 8,29% 8,79% 9,29%

0,0% 537,2 488,7 447,9 413,0 383,0 356,8 333,8 313,3 295,1

0,5% 599,0 540,1 491,3 450,2 415,2 385,0 358,7 335,5 315,0

1,0% 675,2 602,1 542,9 493,8 452,6 417,4 387,1 360,6 337,3

1,5% 771,4 678,7 605,2 545,7 496,4 455,0 419,6 389,1 362,5

2,0% 896,9 775,4 682,1 608,3 548,5 499,0 457,3 421,8 391,1

2,5% 1.067,3 901,4 779,3 685,6 611,4 551,3 501,5 459,7 424,0

3,0% 1.311,9 1.072,6 905,9 783,2 689,1 614,5 554,1 504,1 462,1

3,5% 1.692,9 1.318,4 1.077,9 910,5 787,1 692,5 617,7 556,9 506,7

Differenza tra Valore d'uso e Valore contabile della CGU Diminuzione Flussi

0 -2,5% -5,0% -7,5% -10,0% -12,5% -15,0% -17,5% -20,0%

548,49

54849% 535 521 507 494 480 466 453 439

Differenza tra Valore d'uso e Valore contabile della CGU

108

Conclusions

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 645

million euro, the Company's market cap at 31 December 2016 was equal to 2.3 billion

euro.

Section 12 – Tax assets and tax liabilities

Tax assets This item amounts to 78,976 thousand euro (72,680 thousand euro at 31 December

2015). The breakdown is as follows:

12.1 Breakdown of “Tax assets: current and deferred”

Breakdown Total

31/12/2016 Total

31/12/2015

Current 32,905 44,855 Deferred 46,071 27,825

Total 78,976 72,680

“Deferred tax assets” mainly include:

6,736 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;

18,779 thousand euro to 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 (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 and other negative items deducted

off the balance sheet (as indicated in EC section of the Modello Unico tax return)

up until the tax year underway at 31 December 2007;

to remaining portion, the temporary differences resulting from the different

timing criteria of IRES and IRAP tax deductibility for some cost items compared to

that recognised in the income statement.

109

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 the tax consolidation regime, was assessed, generating the recognition of

deferred tax assets on losses.

Tax liabilities

This item amounts to 59,401 thousand euro (60,224 thousand euro at 31 December

2015). The breakdown is as follows:

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

Breakdown Total

31/12/2016 Total

31/12/2015 Current 1,443 1,790 Deferred 57,958 58,434

Total 59,401 60,224

“Deferred tax liabilities” mainly include deferred tax liabilities relating to the 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 2016.

110

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

Total 31/12/2016 Total

31/12/2015

1. Opening balance 26,206 26,705

2. Increases 30,796 6,014

2.1 Deferred tax assets recognised in the year: 21,320

a) from previous years

b) due to changes in accounting policies

d) other 21,320 6,014

2.2 New taxes or increased tax rates

2.3 Other increases 9,475

3. Decreases 11,924 -6,513

3.1 Deferred tax assets eliminated during the year 3,792 -6,513

a) reversals 3,792 -5,268

b) write-off of irrecoverable tax

c) due to changes in accounting policies

d) other -1,245

3.2 Decreases in tax rates

3.3 Other decreases 8,133

a) conversion into tax credits pursuant to Italian Law 214/2011.

b) other 8,133

4. Closing balance 45,077 26,206

111

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

Total 31/12/2016 Total

31/12/2015

1. Opening balance 53,577 47,006

2. Increases 5,182 6,598

2.1 Deferred tax liabilities recognised in the year: 5,182 5,901

a) from previous years

b) due to changes in accounting policies

c) other 5,182 5,901

2.2 New taxes or increased tax rates

2.3 Other increases 0 697

3. Decreases

6,581 -27

3.1 Deferred tax liabilities eliminated during the year

6,502

-27

a) reversals

6,502 -27

b) due to changes in accounting policies

c) other

3.2 Decreases in tax rates 79

3.3 Other decreases

4. Closing balance 52,178 53,577

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

Total

31/12/2016 Total

31/12/2015

1. Opening balance 1,619 388

2. Increases 28 1,246

2.1 Deferred tax liabilities recognised in the year: 1,246

a) from previous years

b) due to changes in accounting policies

d) other 28 1,246

2.2 New taxes or increased tax rates

2.3 Other increases

3. Decreases 654 -15

3.1 Deferred tax liabilities eliminated during the year -15

a) reversals -15

b) write-off of irrecoverable tax

c) due to changes in accounting policies

112

d) other

3.2 Decreases in tax rates

3.3 Other decreases 654

4. Closing balance 993 1,619

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

Total

31/12/2016 Total

31/12/2015

1. Opening balance 4,857 5,280

2. Increases 986 119

2.1 Deferred tax liabilities recognised in the year: 899

a) from previous years

b) due to changes in accounting policies

d) other 899 119

2.2 New taxes or increased tax rates

2.3 Other increases 87

3. Decreases 63 -542

3.1 Deferred tax liabilities eliminated during the year 0 -542

a) from previous years -542

b) due to changes in accounting policies

d) other

3.2 Decreases in tax rates 56

3.3 Other decreases 7

4. Closing balance 5,780 4,857

113

Section 14 – Other assets

This caption amounts to 209,114 thousand euro (147,793 thousand euro at 31 December

2015).

14.1 Breakdown of “Other assets”

Total 31/12/2016 Total 31/12/2015

Due from Inland Revenue 65,384 92,271 Due from financial advisors 13,655 15,027

Other receivables 122,042 31,912 Prepayments 8,033 8,583

Total 209,114 147,793

Amounts due from Inland Revenue include receivables for VAT and amounts due from

Inland Revenue for mathematical reserves.

“Prepayments” include commission expense, which does not pertain to the current year,

for the sale of No Load products. These products do not charge an entry fee but break

even within 36 months in the case of mutual funds and the Star, Pleiadi and AZ Style

insurance products and 18 months in the case of hedge funds.

“Deferred charges” also include the assets generated via the deferral of acquisition costs

for unit-linked policies issued by the Group’s Irish insurance company, classified as

investment contracts.

“Due from financial advisors” mainly includes loans granted to financial advisors

amounting to 10,385 thousand euro, which generate interest income in line with the

Euribor plus spread, in addition to advance commissions paid to the same financial

advisors to the amount of 1,197 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 43,424

thousand euro and receivables related to the payment of capital gain tax advances of

45,134 thousand euro.

114

LIABILITIES

Section 1 – Payables Payables amount to 28,283 thousand euro (34,897 thousand euro at 31 December 2015).

1.1 Breakdown of “Payables”

Breakdown/Value Total 31/12/2016 Total 31/12/2015

1. Due to sales network: 6,963 3,942

1.1 for UCITS sales 6,963 3,942

1.2 for individual portfolio sales - -

1.3 for pension fund sales - -

2. Payables for asset management services: 588 614

2.1 for proprietary portfolio management 588 614

2.2 for discretionary portfolio management - -

2.3 for other - -

3. Payables for other services: 681 244

3.1 advisory - -

3.2 outsourced corporate functions - -

3.3 other 681 244

4. Other payables 20,051 30,096

4.1 repurchase agreements - -

- of which: government securities - -

of which for other debt securities - -

of which for other equity securities and units - -

4.2 other 20,051 30,096

Total 28,283 34,897

Fair value-Level 1 - -

Fair value-Level 2 - -

Fair value-Level 3 28,283 34,897

Total fair value 28,283 34,897

“Other” includes:

a loan of 20,000 thousand euro granted by Banco Popolare (now 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 instalments and

115

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

Breakdown/Counterparty

Banks Financial institutions Clients

of which:

Group

of which:

Group

of which:

Group

1. Payable to sales network: 6,544 - 419 - - -

1.1 for UCITS sales 6,544 - 419 - - -

1.2 for individual portfolio management

sales - - - - - -

1.3 for pension fund sales - - - - - -

2. Payables for asset management services: - - - - 588 -

2.1 for proprietary portfolio management - - - - 588 -

2.2 for discretionary portfolio management - - - - - -

2.3 for other - - - - - -

3. Payables for other services: 84 - 597 - - -

3.1 advisory services received - - - - - -

3.2 outsourced corporate functions - - - - - -

3.3 other 84 - 597 - - -

4. Other payables 20,051 - - - - -

4.1 repurchase agreements - - - - - -

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

of which for other debt securities - - - - - -

of which for other equity securities

and units - - - - - -

4.2 other 20,051 - - - - -

Total 31.12.2016 26,679 - 1,016 - 588 -

Total 31.12.2015 33,259 - 1,024 - 614 -

Section 2 – Outstanding securities

116

2.1 Breakdown of "Outstanding securities"

Breakdown

Total 31/12/2016 Total 31/12/2015

Carrying

amount

Fair value Carrying

amount

Fair value

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

1. Securities

Bonds 226,522 - 244,238 - 221,826 - 233,291 -

Other securities - - - - - - - -

Total 226,522 - 244,238 - 221,826 - 233,291 -

The item is entirely comprised of a:

1. convertible bond “Azimut 2013-2020 Convertibile 2,125%” amounting to 226,522

thousand euro originally composed of 2,500 bonds worth 100,000 euro with a

duration of seven years. The amount refers to total bonds sold and includes the

charges incurred by the Parent Company for the issue and placement, in addition

to interest expense accrued at 30 December 2016 which will be paid on the pre-

established date. Convertible bonds bear gross annual interest of 2.125% and can

be converted into Azimut Holding S.p.A. ordinary shares (newly issued and/or

existing) from the fourth year and forty-fifth day after the issue to 20 days prior to

the maturity date. The conversion price is set at 24.26 euro. In accordance with

IAS 32 and based on that set out in the section on Accounting standards, the total

debt component of this financial instrument was 214,312 thousand euro

calculated on 25 November 2013 (issue date), whereas the equity component

amounted to 35,688 thousand euro.

Subordinated securities

117

This category comprises the bond described earlier.

Technical reserves where the investment risk is borne by policyholders Technical reserves where the investment risk is borne by policyholders amount to

250,974 thousand euro (280,859 thousand euro at 31 December 2015) and refer to the

commitments arising from the unit-linked policies issued by the subsidiary AZ Life Ltd,

classified as insurance contracts.

Section 4 – Financial liabilities measured at fair value This item amounts to 6,299,036 thousand euro (5,439,863 thousand euro at 31

December 2015) and mainly includes the commitments arising from the unit-linked

policies issued by the subsidiary AZ Life Ltd (6,195,001 thousand euro), classified as

investment contracts (level 2).

4.1 Breakdown of “Financial liabilities measured at fair value”

Liabilities

Total 31/12/2016 Total 31/12/2015

Carrying

amount

Fair value Carrying

amount

Fair value

L1 L2 L3 L1 L2 L3

1. Payables 6,299,036 - 6,195,001 104,035 5,439,863 - 5,377,375 62,488

2. Debt securities - - - - - - - -

bonds - - - - - - - -

other

securities - - - - - - - -

Total 6,299,036 - 6,195,001 104,035 5,439,863 - 5,377,375 62,488

This item also includes financial liabilities measured at fair value, liabilities related to the

future exercise of the call options for the residual portion of the share capital of some

companies that were acquired, but are not wholly owned. They are listed below:

118

Company Measurement

Eureka Whittaker Macnaught 1,348

Pride Advice 574

Lifestyle Financial Planning Services 1,701

AZ Sestante 16

Wise Planners 2,112

Financial Lifestyle Partners 1,573

Harvest Wealth 1,539

RI Toowoomba 2,830

Empowered Financial Partners 911

Wealthwise 3,602

Priority Advisory Group 3,537

Sterling Planners 1,166

Logiro Unchartered Pty Ltd 1,657

On-Track Financial Solutions Pty Ltd 2,476

Aspire Pty Ltd 1,250

AZ Quest Partecipacoe SA 28,658

Augustum Opus SIM S.p.A. 17,636

Compagnie de Géstion Privée Monegasque 30,441

Mas Fondos S.A. 1,008

Total 104,035

With respect to measurement, the amount 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 Sigma transaction and the related call options of the residual 49% thereof,

the obligation to exchange the issuer's shares against the acquisition of a financial 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.

119

Financial liabilities measured at fair value and the related measurement at 31 December

2016 led to the recognition of losses of 4,851 thousand euro under “Net result of financial

assets and financial liabilities measured at fair value”.

financial

Section 7 – Tax liabilities

“Tax liabilities” are described in detail in section 12 of these notes to which reference

should be made.

Section 9 – Other liabilities

This item amounts to 182,975 thousand euro (151,000 thousand euro at 31 December

2015).

Total 31/12/2016 Total 31/12/2015

Due to suppliers 46,162 27,012

Due to Inland Revenue 9,048 10,475

Due to employees 6,273 4,804

Due to social security bodies 4,230 4,153

Other payables 44,378 39,620

Deferred income 2,716 3,145

Due to Financial Advisors 70,167 61,791

Total 182,975 151,000

“Deferred income” includes liabilities arising from the deferral of commission income on

the premiums of unit-linked policies issued by the Irish insurance company AZ Life Dac,

classified as investment contracts.

"Due to financial advisors" mainly includes amounts due to financial advisors for

commissions of December 2016 paid in January 2017, in addition to other accruals

relating to 2016, which will be paid during the subsequent year, and other contractual

commitments for commissions, including loyalty commissions, to be paid to financial

advisors over the medium-long term.

120

Section 10 – Staff severance pay (TFR)

10.1 “Staff severance pay (TFR): "annual change"

The item amounts to 3,403 thousand euro (3,310 thousand euro at 31 December 2015)

and refers to TFR accrued by personnel employed by the group companies at 31

December 2015.

Total

31/12/2016 Total

31/12/2015

A. Opening balance 3,310 3,030

B. Increases 376 459

B1. Provisions for the year 288 358

B2. Other increases 88 101

C. Decreases -283 -179

C1. Payments made -53 -114

C2. Other decreases -229 -65

D. Closing balance 3,403 3,310

The increase is mainly due to the actuarial losses of the year with a specific direct contra

entry in shareholders’ equity reserves, 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 eliminate the probabilities of removal of personnel in service due to death,

the SIM/F 2000 table was used (ISTAT - Italian National Institute of Statistics - mortality

table by gender), prudentially reduced by 20%. Decreases due to disability were

calculated using the relevant INPS (the Italian social security institution) tables, reduced

by 20%. Pension, which is considered the main reason for outgoing employees, was

121

subject to a timescale equal to meeting the minimum requirement (contribution period

or seniority), calculated in accordance with ruling legislation. The following parameters

were used for other technical, non-financial factors:

- Turnover: 1.5% 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 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 This intem amounts to 31,265 thousand euro (26,694 thousand euro at 31 December

2015).

11.1 Breakdown of “Provisions for risks and charges”

122

Supplementary indemnity provision for agents established based on actuarial

criteria, in accordance with IFRS, totalling 26,783 thousand euro.

Other provisions (4,466 thousand euro) for potential legal disputes with clients,

for the present value of the estimated expense to settle the obligations.

11.2 “Provisions for risks and charges”: annual change

31/12/2016 31/12/2015

Opening balance 26,694 25,580

Increases during the year 5,059 2,479

Decreases during the year -488 -1,365

Closing balance 31,265 26,694

123

Section 12 – Shareholders’ Equity

12.1 Breakdown of “Share Capital”

Types of shares Total

1. Share capital 32,324

1.1 Ordinary shares 32,324

1.2 Other shares - At 31 December 2016, 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 Total

1. Treasury shares -81,288

1.1 Ordinary shares -81,288

1.2 Other shares -

At 31 December 2016, Azimut Holding S.p.A. held 10,387,189 treasury shares at an

average carrying amount of 7.826 euro per share.

124

12.3 Breakdown of “Equity instruments”

This item amounts to 70,951 thousand euro and, as described in Part A - Section A.2 of

these notes, can be analysed as follows:

at the issue amount, as per the Shareholders' resolution of 29 April 2010, of

1,500,000 profit-participating financial instruments recognised in the previous

year for a total of 36,000,000 euro (equal to their fair value calculated by an

independent leading company);

the equity component of the convertible bond, recognised on 25 November 2013

upon issue of the convertible bond at 34,949 thousand euro, calculated on a

residual basis as the difference between the fair value of the bond, as a whole, and

the fair value of the debt component. The costs borne by the Company for the

bond issue are allocated proportionally to the debt component and the equity

component.

12.4 Breakdown of “Share premium reserve”

The share premium reserve amounts to 173,987 thousand euro at 31 December 2016

(unchanged on 31 December 2015).

12.5 Other information

Breakdown and changes in “Reserves”

Legal reserve Other reserves Total

A. Opening balance 6,465 273,716 280,181

B. Increases 9,330 9,330

B.1 Profit appropriations 8,822 8,822

B.2 Other changes 508 508

C. Decreases 26,404 26,404

C.1 Allocations

- loss account reserve

- dividends

- transfers to share capital

C.2 Other changes 26,404 26,404

D. Closing balance 6,465 256,642 263,107

125

Breakdown and changes in “Valuation reserves”

Available-for-

sale financial

assets

Tangible assets Intangibl

e assets

Cash flow

hedge

Special

revaluation

laws

Other Total

A. Opening

balance

-

7,341

-

-

-

-

-

435

-

7,776

B. Increases 5,908

-

-

-

-

18

5,926

B.1 Increases in

fair value

5,908

5,908

B.2 Other

changes

18

18

C. Decreases - 478

-

-

-

-

0

-

478

C.1 Decreases

in fair value - 478 -

478

C.2 Other

changes

0

0

D. Closing

balance

-

1,911

-

-

-

-

-

417

-

2,329

Section 13 - Minority interest

13.1 Breakdown of “Minority interest”

Items/Value 31/12/2016

1. Share capital 39,209 2. Treasury shares 3. Equity instruments 4. Share premium reserve 5. Reserves -27,336 6. Valuation reserves 1,484 7. Profit (loss) for the period/year 4,617

Total 17,975

Minority interest relate to stakes held by third parties.

126

PART C – NOTES TO THE INCOME STATEMENT

Section 1 – Fee and commission income and expenses Fee and commission income and expenses

SERVICES

Total 31.12.2016 Total 31.12.2015

Fee and

comm.

income

Fee and

comm.

expense

Fee and

comm. and

comm.

Fee and

comm.

income

Fee and

comm.

expense

Fee and

comm. and

comm.

A. ASSET

MANAGEMENT

1. Proprietary portfolio

management

1.1 Mutual funds

- Management fees

438,878

-

438,878

436,595

-

436,595

- Incentive fees

120,512

-

120,512

155,105

-

155,105

- Entry / redemption fees

8,036

-

8,036

7,289

-

7,289

- Switch fees

19

-

19

24

-

24

- Other fees

2,022

-

2,022

4,193

-

4,193

Total mutual fund fees

569,468

-

569,468

603,206

-

603,206

1.2 Individual portfolio

management

- Management fees

29,680

-

29,680

13,677

-

13,677

- Incentive fees

3,592

-

3,592

2,214

-

2,214

- Entry / redemption fees

-

-

-

-

-

-

- Other fees

416

-

416

274

-

274

Total individual portfolio

management fees

33,687

-

33,687

16,165

-

16,165

1.3 Open-ended pension

funds

- Management fees

7,211

-

7,211

6,170

-

6,170

- Incentive fees

3,368

-

3,368

17

-

17

- Entry / redemption fees

-

-

-

-

-

-

- Other fees

980

-

980

850

-

850

Total open pension fund

fees

11,559

-

11,559

7,037

-

7,037

2. Discretionary portfolio

management

- Management fees

7,545

-

7,545

5,639

-

5,639

- Incentive fees

-

-

-

-

-

-

127

- Other fees

-

-

-

-

-

-

Total discretionary

portfolio management fees

7,545

-

7,545

5,639

-

5,639

TOTAL ASSET

MANAGEMENT FEES (A)

B. OTHER SERVICES

53,374

53,374

41,040

41,040

- Consulting

5,599

-

5,599

3,274

-

3,274

- Sales commissions

34,018

-

34,018

24,508

-

24,508

- Order intake

617

-

617

404

-

404

- Insurance products

11,766

-

11,766

9,051

-

9,051

- Other services:

1,374

-

1,374

3,803

-

3,803

Fee expenses for sales,

distribution and order

intake

-

(293,897)

(293,897)

-

(271,970)

(271,970)

TOTAL FEES (A+B)

675,633

(293,897)

381,736

673,086

(271,970)

401,116

128

1.2 Fee and commission expense: breakdown by type and counterparty

SERVICES Banks Financial

institutions Other Total

of

which:

Group

of

which:

Group

of

which:

Group

of

which:

Group

A. ASSET MANAGEMENT

1. Proprietary portfolio

management

-

-

-

-

-

-

-

-

1.1 Sales commissions

-

-

-

-

-

-

-

-

- UCITS

-

-

-

-

-

-

-

-

- Individual portfolio

management

-

-

-

-

-

-

-

-

- Pension funds

-

-

-

-

-

-

-

-

1.2 Maintenance fees

-

-

-

-

-

-

-

-

- UCITS

-

-

-

-

-

-

-

-

- Individual portfolio

management

-

-

-

-

-

-

-

-

- Pension funds

-

-

-

-

-

-

-

-

1.3 Incentive fees

-

-

-

-

-

-

-

-

- UCITS

-

-

-

-

-

-

-

-

- Individual portfolio

management

-

-

-

-

-

-

-

-

- Pension funds

-

-

-

-

-

-

-

-

1.4 - Other fees and

commissions

-

-

-

-

-

-

-

-

- UCITS

-

-

-

-

-

-

-

-

- Individual portfolio

management

-

-

-

-

-

-

-

-

- Pension funds

-

-

-

-

-

-

-

-

2. Discretionary portfolio

management

-

-

-

-

-

-

-

-

- UCITS

-

-

-

-

-

-

-

-

- Individual portfolio

management

-

-

-

-

-

-

-

-

- Pension funds

-

-

-

-

-

-

-

-

TOTAL ASSET

MANAGEMENT FEES (A)

-

-

-

-

-

-

-

-

B. OTHER SERVICES

- Consulting

-

-

-

-

-

-

-

-

- Other services:

-

-

-

-

-

-

-

-

TOTAL FEES FOR OTHER

SERVICES (B)

-

-

-

-

-

-

-

-

Fee expenses for sales,

distribution and order intake

17,388

-

1,409

-

275,100

-

293,897

-

129

TOTAL FEES (A+B)

17,388

-

1,409

-

275,100

-

293,897

-

Section 2 - Dividends and similar income

This item amounts to 257 thousand euro (2015: 3 thousand euro).

2.1 Breakdown of “Dividends and similar income”

Items/Income

Total 31/12/2016 Total 31/12/2015

Dividends Income from

UCI units Dividends

Income from

UCI units

1. Financial assets held

for trading

2. Available-for-sale

financial assets 257

3

3. Financial assets measured at fair

value

4. Equity investments

Total 257 3

Section 3 – Interest

3.1 Breakdown of “Interest income and similar income” Interest income and similar expense amounts to 1,509 thousand euro (1,781 thousand euro at 31 December 2015).

Items/Technical forms Debt

securities

Repurchas

e

agreement

s

Deposits

and current

accounts

Other Total

31/12/2016

Total

31/12/2015

1. Held-for-trading financial

assets

-

-

-

-

-

-

2. Financial assets measured at

fair value

-

-

-

-

-

-

3. Available-for-sale financial

assets

-

-

-

172

172

19

4. Held-to-maturity financial

assets

-

-

-

-

-

-

5. Receivables

-

-

987

-

987

1,532

6. Other assets

-

-

-

350

350

230

7. Hedging derivatives

-

-

-

-

-

-

130

Total

-

-

987

522

1,509

1,781

"Other assets" is almost entirely related to interest income on bank current accounts and

interest income accrued on the loans disbursed to financial advisors.

3.2 Breakdown of “Interest expense and similar charges” Interest income and similar expense amounts to 11,723 thousand euro (11,237 thousand euro at 31 December 2015).

Items/Technical forms

Loans

Repurchase

agreements

Securities

Other

Total 31/12/201

6

Total 31/12/201

5

1. Payables 600

600 602

2. Outstanding securities 10,789 10,789 10,542

3. Held-for-trading financial liabilities 0 0

4. Financial liabilities measured at fair value

0 0

5. Other liabilities 334 334 93

6. Hedging derivatives 0 0

Total 600 - 10,789 334 11,723 11,237

“Due to banks - other loans” is mainly composed of interest charges 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"

Items/Income items Gains

Profits on

disposal

Losses

Losses on

disposal

Net resu

lt

1. Financial assets

1.1 Debt securities

1.2 Equity securities and UCI units

1.3 Loans

2. Financial assets and financial liabilities: exchange differences

3. Financial liabilities

1,646

-6,49

7

-4,85

1

3.1 Payables

3.2 Debt securities

131

3.3 Other liabilities

4. Credit and financial derivatives

Total 1,646 -

6,497

-

4,851

Section 7 – Profits (losses) on disposal and repurchase

This item amounts to 1,733 thousand euro (14,155 thousand euro in 2015).

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

Items/Income items

Total 31/12/2016 Total 31/12/2015

Profit Loss Net

result Profit Loss

Net result

1. Financial assets

1.1 Available-for-sale financial assets 1,739 1,739 14,155 14,155

1.2 Held-to-maturity financial assets

1.3 Other financial assets

Total (1) 1,739 1,739 14,155 14,155

2. Financial liabilities

2.1 Payables

2.2 Outstanding securities -6 -6 0 0

Total (2) -6 -6 0 0

Total (1+2) 1,739 -6 1,733 14,155 14,155

Net premiums

“Net premiums” amount to 2,618 thousand euro (5,070 thousand euro in 2015) for

premiums relating to unit-linked policies issued by the Irish insurance company AZ Life

Ltd, classified as insurance contracts.

Net profits (losses) on financial instruments at fair value through profit or loss

The item stood at 132,815 thousand euro (129,148 thousand euro at 31 December 2015)

and is composed of realised gains and losses and changes in the value of financial assets

and liabilities, relating to unit-linked policies, and designated at fair value.

132

Section 9 – Administrative costs 9.1 Breakdown of “Personnel costs” This item amounts to 72,485 thousand euro (62,094 thousand euro at 31 December

2015). The breakdown is as follows:

Items Total 31.12.2016 Total 31.12.2015

1. Employees 50,389 38,098

a) wages and salaries 40,146 29,043

b) social security 6,759 5,983

c) staff severance pay (TFR) - -

d) pension contributions - -

e) TFR provisions 767 769

f) accrual to the pension provision and similar obligations: - -

- defined contribution - -

- defined benefit - -

g) private pension plans: 59 61

- defined contribution 59 61

- defined benefit - -

h) other expenses - 2,657 - 2,242

2. Other personnel 1,278 1,223

3. Directors and Statutory Auditors 20,818 22,773

4. Early retirement costs - -

5. Cost recoveries for employees seconded to other companies - -

6. Reimbursed costs for employees seconded to the company - -

Total 72,485 62,094

133

9.2 Average number of employees by category

2016 2015

Managers 92 81

Middle managers 113 105

Other employees 304 252

Total 509 439

9.3 Breakdown of “Other administrative costs”

This item amounts to 120,028 thousand euro (95,742 thousand euro at 31 December

2015). The breakdown is as follows:

Items Total 31.12.2016 Total 31.12.2015

Professional services rendered

13,153

13,364

Advertising, promotion and marketing expenses

9,928

10,022

Telephone and fax

2,281

2,282

Enasarco/Firr contributions

7,762

6,128

Lease and rent

1,293

1,207

Insurance premiums

1,253

944

Tax liabilities

8,507

6,934

Lease and hire

7,784

4,768

Outsourced functions

38,862

27,285

Services other than IT services

10,295

7,703

Maintenance costs

1,636

1,098

Other administrative costs

17,273

14,006

Total

120,028

95,742

134

Section 10 - Net impairment and write-ups of tangible assets

Net impairment and write-ups of tangible assets based on depreciation at 31 December

2015 are broken down as follows:

10.1 Breakdown of “Net impairment and write-ups of tangible assets”

Items/Impairment and write-ups Amortisation

Impairment losses

Write-ups

Net result

1. Group-owned 2,508 0 0 2,508 - business purposes 2,508 0 0 2,508 - investment purposes 0 0 0 0

2. Under finance lease 0 0 0 0 - business purposes 0 0 0 0 - investment purposes 0 0 0 0

Total 2,508 0 0 2,508

Section 11 - Net impairment and write-ups of intangible assets Net impairment and write-ups of intangible assets based on amortisation at 31 December

2016 are broken down as follows:

11.1 Breakdown of “Net impairment and write-ups of intangible assets”

Items/Impairment and write-ups Amortisation

Impairment losses

Write-ups

Net result

1. Goodwill

2. Other intangible assets 11,064 2,591 13,655 2.1 Group-owned 11,064 2,591 13,655 - generated internally - other 11,064 2,591 13,655 2.2 Under finance lease

Total 11,064 2,951 13,655

135

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 5,844 thousand euro (2,479 thousand euro in 2015) and includes

the accrual to the supplementary indemnity provision for agents (6,079 thousand euro)

and the net accrual to the provision for sundry risks and charges (235 thousand euro),

related to risks for disputes with clients, as described in the note to “Provisions for risks

and charges” – 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 565 thousand euro (3,351 thousand euro in 2015) and is mainly

composed of trade expenses and current account bank charges, in addition to charge-

backs made to financial advisors.

Section 15 – Profit (loss) on equity investments

15.1 Breakdown of “Profit (loss) on equity investments” This item is a loss of 689 thousand euro (485 thousand euro in 2015).

Items 2016 2015

1. Income

1.1 Revaluations 1.2 Profit on disposal 1.3 Write-ups 1.4 Other increases

2. Costs 689 485 2.1 Write-downs 689 2.2 Losses on disposal 485 2.3 Impairment write-downs 2.4 Other costs

Net result 689 485

136

Section 17 - Income tax on profit from continuing operations 17.1 Breakdown of “Income tax on profit from continuing operations”

Total

31/12/2016 Total

31/12/2015

1. Current taxes 19,282 23,463

2. Changes in current taxes of previous periods/years 0 0

3. Decrease in current taxes for the period/year 0 0

Italian Law no. 214 0 0

4. Change in deferred tax assets (10,638) (1,895)

5. Change in deferred tax liabilities (1,058) 6,624

Taxes for the period/year 7,586 28,192

Current income taxes for the period mainly refer to IRAP and IRES paid by the Group’s

Italian companies, taxes payable by the foreign companies as well as the income from tax

consolidation amounting to the taxes receivable and due on taxable income transferred

to the parent company by the Group’s Italian subsidiaries that have adopted the tax

consolidation regime pursuant to Article 117 of Italian Presidential Decree 917/86.

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 period, the posting of deferred tax assets on

temporary differences resulting from the different timing criteria of IRES tax

deductibility.

“Change in deferred tax liabilities” mainly includes deferred tax liabilities, in line with IAS

12, related to the temporary differences between the carrying amount and the tax value

of goodwill.

These tax liabilities are not expected to become actual costs given that the

aforementioned temporary differences will be reduced following a negative impairment

test result that leads to a write-down of goodwill and the trademark and in the case of

disposal.

The same item also includes the deferred tax liabilities on dividends to be paid by the

subsidiaries within the scope of consolidation.

137

17.2 Reconciliation of theoretical tax burden and effective tax burden

Reconciliation of theoretical tax burden and effective tax burden

31.12.2016

Pre-tax profit

184,889

Applicable theoretical rate 27.5

Theoretical tax burden

50,844

Effect of increases 3,697

Effect of decreases (73,285)

Change in deferred tax assets (9,812)

Change in deferred tax liabilities 12,163

Other decreases (623)

Current Irap taxes

6,178

Decreases due to companies excluded from CNM 3,252

Taxes as per the financial statements

(7,586)

Section 21 - Profit (loss) for the year attributable to minority interest

This item is positive by 4,619 thousand euro (2,566 thousand euro at 31 December 2015)

and reflects the net balance of profits and losses attributable to minority interests in

consolidated companies.

138

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 2016, Azimut Holding S.p.A. had commitments to Banca Popolare di

Vicenza and Banco Popolare for a total amount 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 2016.

As regards the business activities of AZ Life Ltd, for as long as there is no change in the

shareholder 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.

1.1.4 Own securities deposited with third parties

139

Own securities deposited with third

parties

31/12/2016 31/12/2015

UCI units deposited with BNP Paribas 158,555,800 153,487,168

UCI units deposited with Banco BPN S.p.A.

626,696 0

UCI units deposited with Banque De Rothschild Luxembourg

15,606,070 15,185,009

Azimut Holding S.p.A. treasury shares

deposited with Banco BPM S.p.A.

163,437,887 237,634,153

Azimut Holding S.p.A. treasury shares deposited with BPVI

1,302,931 1,894,425

Total 339,529,384 408,200,755

1.1.5 Third party assets under custody

Third-party assets and securities entrusted by clients using individual and collective

portfolio management services are deposited at the custodian bank Banco Bpm S.p.A..

Third-party assets and securities entrusted by clients and invested in hedge funds are

deposited with the custodian bank Banco Bpm S.p.A..

Third-party assets and securities entrusted by clients and invested in Luxembourg funds

are deposited with the custodian bank Bnp Paribas.

Third-party assets and securities entrusted by clients invested in the discretionary

portfolios of CGM Italia SGR S.p.A. and Compagnie Monegasque Privèe, are mainly

deposited with: Banca Popolare Commercio e Industria, UBS Milano, Banca Generali and

Banca BSI Monaco.

Third-party assets and securities entrusted by clients and invested in Luxembourg

Eskatos funds are deposited with the custodian bank Banque Privée Edmond de

Rothschild.

Third-party assets and securities entrusted by clients and invested in Turkish funds are

deposited with the custodian banks Takasbank and Euroclear. Third-party assets and

securities entrusted by clients to AZ Investment Management are deposited with the

custodian bank ICB, Shanghai Branch.

140

Third-party assets and securities entrusted by clients and invested in Brazilian funds are

deposited with the custodian bank BTG Pactual SA.

141

1.2 Information on Assets under Management

1.2.1 Total value of UCITS

UCITS 31/12/2016 31/12/2015

1. Proprietary portfolio management

Italy 1,979,850

1,854,541 Luxembourg 24,580,033

23,304,527

Monaco 565,265 324,572 Switzerland 36,942

-

Turkey 257,840 360,506 Brazil 1,247,770 561,134 Chile 3,067 4,611 China 68,247 65,860 Singapore 13,377 18,942 Taiwan 10

-

Australia 3,503

-

Total proprietary portfolio management 28,755,904 26,494,693

142

1.2.2 Total value of portfolio management activity

Total 31/12/2016 Total 31/12/2015

of which invested

in AM company

funds

of which invested

in AM company

funds

1. Proprietary portfolio management 6,632,28

5

4,928,495

3,362

2. Discretionary portfolio management 1,069,13

0 825,414

3. Portfolio management delegated to third parties

-

-

-

-

143

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 2016:

Total

31/12/2016

Total

31/12/2015

1. Proprietary portfolio management

1.1 Open-ended pension funds:

Azimut Previdenza Comparto Protetto - 32,876

Azimut Previdenza Comparto Equilibrato 210,507 168,998

Azimut Previdenza Comparto Crescita 225,558 182,945

Azimut Previdenza Obbligazionario 36,073 4,867

Total proprietary portfolio management 472,138 389,687

2. Discretionary portfolio management

Pension funds

- open-ended - -

- closed-ended - -

- other forms of pension funds - -

Total discretionary portfolio management - -

3. Portfolio management delegated to third

parties

3.1 Pension funds

- open-ended - -

- Azimut Previdenza Comparto Garantito 112,972 64,674

- closed-ended - -

- other forms of pension funds - -

Total portfolio management delegated to third 112,972 64,674

144

parties

145

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 risks.

Moreover, the financial instruments in question are easily liquidated and are monitored

closely, most being mutual fund units managed by the group companies. As for credit

risk, there are no specific problems given the nature of the company’s activity.

At 31 December 2016, 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 UCITS managed by AZ

Fund Management SA.

As regards financial risks linked to the investment held in Eskatos Multistrategy ILS

Fund, this UCITS is an asset that is completely uncorrelated with the normal risks that

instruments usually present on the market are subject to. The yield of the Eskatos

Multistrategy ILS Fund was already positive in 2015.

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 market

risk evaluation procedure. Specifically, the assessment is performed by analysing the

portfolios of the individual Funds and on-going monitoring of the significant risk factors

identified, such as the average financial duration, equity exposure and its distribution in

geographical areas and economic segments, currency exposure and the credit rating of

the issuers.

146

The assessment of the Fund’s risk profile is performed ex-post both in absolute terms

(volatility understood as the standard annual deviation) and in relative terms compared

to the benchmark (tracking error volatility). These latter factors represent the basis for

the establishment of the limits within which the manager may accept the risk.

The Risk Management function uses external providers to calculate the Value at Risk

(VaR) of all the portfolios managed with regard to the ex-ante evaluation of the market

risk. In addition, the Risk Management Function monitors the development of the risk

models adopted and the return of the funds in relation to peers and the benchmark.

3.2 OPERATIONAL RISKS

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

procedures.

The Risk Management function “maps out” and monitors the risks in the broader

framework of its own activities, 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

147

service level, allowing the Company to take action against the supplier in the event of any

economic losses arising from problems in the supply 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 month. Minutes are drawn after the meeting which are subsequently discussed

with the participants.

Section 4 – Information on Shareholders’ Equity

4.1 Company shareholders’ equity

148

4.1.1 Qualitative information

For information on the individual shareholders’ equity items, please refer to Part B of

these notes.

4.1.2 Quantitative information

4.1.2.1 Company shareholders’ equity: breakdown

Items/Value

31/12/2016 31/12/2015

1. Share capital 32,324 32,324

2. Share premium reserve 173,987 173,987

3. Reserves 263,107 280,181

- income-related

a) legal 6,465 6,465

b) statutory

c) treasury shares

d) other 362,711 353,889

- other - 106,069 - 80,173

4. (Treasury shares) - 81,288 - 80,727

5. Valuation reserves - 4,674 - 7,776

Available-for-sale financial assets - 1,911 - 7,341

- Tangible assets

- Intangible assets

- Foreign investment hedge

- Cash flow hedge

- Exchange rate differences - 2,346 1

- Non-current assets held for sale and discontinued operations

- Special revaluation laws

- Actuarial gains/losses on defined benefit plans - 417 - 435

- Share of valuation reserves for investments measured at

equity -

6. Equity instruments 70,951 71,459

7. Profit (loss) for the period/year 172,685 247,421

Total 627,092 716,870

4.1.2.2 Valuation reserves of available-for-sale assets: breakdown

149

Assets/Value Total 31/12/2016 Total 31/12/2015

Positive reserve

Negative reserve

Positive reserve

Negative reserve

1. Debt securities 65 80 0 2. Equity securities

3. UCI units 2,380 -4,356 743 8,269

4. Loans

Total 2,445 -4,356 743 8,269

150

Section 5 - Statement of comprehensive income

Items Pre-tax profit Income

tax

Net

profit

10. Profit for the period/year 184,889 (7,586) 177,303

Other comprehensive items not transferred through profit or loss 25 (7) 18

20. Tangible assets

30. Intangible assets

40. Defined benefit plans 25 (7) 18

50. Non-current assets held for sale

60. Share of valuation reserves of investments measured at equity

Other comprehensive items transferred through profit or loss

70. Foreign investment hedge:

a) changes in fair value

b) transfer through profit or loss

c) other changes

80. Exchange rate differences: (2,347) (2,347)

a) changes in fair value

b) transfer through profit or loss

c) other changes (2,347) (2,347)

90. Cash flow hedge:

a) changes in fair value

b) transfer through profit or loss

c) other changes

100. Available-for-sale financial assets: 7,491 (2,060) 5,431

a) changes in carrying amount 7,491 (2,060) 5,431

b) transfer through 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 through profit or loss

c) other changes

120. Share of valuation reserves of investments

measured at equity:

a) changes in fair value

b) transfer through profit or loss

- impairment losses

- profits/losses on disposal

c) other changes

130. Total other comprehensive income 5,169 (2,067) 3,102

140. Comprehensive income (Items 10+130) 190,058 (9,653) 180,405

150. Consolidated comprehensive income attributable to minority interest 5,685 (1,066) 4,619

160. Consolidated comprehensive income attributable to parent company 184,373 (8,587) 175,786

151

Section 6 - Related party transactions

6.1 Information on key management fees

Directors' fees amounted to 20,889 thousand euro in 2016.

Fees for the Board of Statutory Auditors, calculated based on the parameters in force,

amounted to 829 thousand euro.

6.2 Related party disclosures

Related party transactions refer exclusively to commercial transactions carried out by

Azimut Holding S.p.A. with its subsidiaries and associates, and among its subsidiaries

and/or associates in 2016. 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. annual royalties totalling 2,000 thousand euro,

established by contract;

Azimut Holding S.p.A., as the parent company, 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 1,000,000 euro) is payable for the

coordination activities carried out by the Parent 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., Futurimpresa Sgr S.p.A. and Augustum Opus Sim S.p.A..

The 2016 balance is 722 thousand euro.

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

Management sgr S.p.A..

152

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 2016, they amounted to 10,385 thousand euro.

Moreover, the directors of the Group who also act as managers of mutual funds are

exempt from paying fees and commissions on any personal investments made in the

funds they manage.

With respect to profit-participating financial instruments, in accordance with

Shareholders' resolutions, 13 key directors subscribed 231,101 instruments (paying the

corresponding amount), including the Chairman Pietro Giuliani (78,650), the Co-Chief

Executive Officers Marco Malcontenti (33,000) e Antonella Mungo (33,000), the directors

Andrea Aliberti (15,000), Paolo Martini (25,000), Marzio Zocca (15,000), Gianpiero

Gallizioli (3,903) and Silvia Scandurra (1,548). As per the Shareholders' agreement

related to Azimut Holding S.p.A., 944 related parties subscribed a total of 1,476,096

profit-participating instruments. Following the call option exercised by Azimut Holding

S.p.A. in May 2016, at the reporting date, the company held 23,904 profit-participating

financial instruments.

153

The following table shows the impact that the transactions or positions with related

parties have on the Group’s financial position and results of operations:

Total Related parties

Absolute

value

%

Assets

Other assets 209,114 13,655 6.53

Liabilities

Other liabilities 182,975 14,119 7.72

Income statement

Administrative costs 192,513 21,499 11.17

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 2016, the average number of financial advisors amounted to 1606.

7.2 Dividends paid

The ordinary dividend for 2016 amounted to 1.5 euro per share.

7.3 Significant non-recurring events and transactions

The non-recurring significant events and transactions which marked 2016 refer to the

acquisitions carried out through the subsidiary AZ International Holding SA.

154

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 audit company and companies within its network for auditing and non-auditing

services during 2016 are as follows:

Service Service provider Recipient Fees

Audit PricewaterhouseCoopers S.p.A. Parent Company - Azimut Holding S.p.A.

70

Subsidiaries (*) 272

PricewaterhouseCoopers S.p.A. network

Subsidiaries (**) 948

Other services PricewaterhouseCoopers Advisory S.p.A.

Parent Company - Azimut Holding S.p.A.

5

PricewaterhouseCoopers network

S.p.A.

Subsidiaries (***) 68

Certification services

PricewaterhouseCoopers S.p.A. Parent Company - Azimut Holding S.p.A.

18

PricewaterhouseCoopers S.p.A. Subsidiaries 6

GROUP TOTAL

in thousands of euro 1,387

(*) This amount includes: 103,580 euro for the audit of the financial statements of the funds managed by Azimut Capital Management Sgr S.p.A. and Futurimpresa Sgr S.p.A. not included in the income statement as the related cost is borne by the funds.

(**) This amount includes 461,690 euro for the audit of the AZ Fund 1, 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 fees related to the review of the interim financial statements prepared by AZ Fund Management Sa for the purposes of distributing an interim dividend, assisting the subsidiaries Az Brasil Holdings Sa, Azimut Brasil Wealth Management Holding Sa and the Athenaeum Investment fund managed by the subsidiary Athenaeum Ltd.

155

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 application of the administrative and accounting procedures used for the

preparation of the 2016 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 2016 is based on a process designed by Azimut Holding in line with the Internal Control – Integrated Framework model issued by the Committee of Sponsoring Organisations of the Treadway Commission, an internationally accepted reference framework.

3. The undersigned also represent that:

3.1. the consolidated financial statements at 31 December 2016:

- were prepared in accordance with the International Financial Reporting Standards endorsed by the European Commission pursuant to Regulation (EC) 1606/02 of the European Parliament and Council, of 19 July 2002;

- are consistent with the accounting books and records; - and provide a true and fair view of the financial position and results of

operations of the issuer and the companies included in its scope of consolidation;

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, 09 March 2017 Chief Executive Officer Manager in charge of financial

reporting

(Sergio Albarelli) (Alessandro Zambotti)

156

AZIMUT HOLDING S.p.A. Annual report 2016

Page

Company bodies 160

Management Report 161 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 185

Financial statements 186 - Balance sheet - Income statement

- Statement of comprehensive income

- Statement of changes in equity

- Cash flow statement

Notes to the financial statements 194 Part A - Accounting policies

Part B - Notes to the balance sheet

Part C - Notes to the income statement

157

Page Part D - Other information

Annexes 256 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 260

158

COMPANY BODIES

Board of Directors

Chairman Pietro Giuliani Chief Executive Officer

Sergio Albarelli Co-Chief Executive Officers Marco Malcontenti Paola Antonella Mungo Co-Managing director Paolo Martini

Directors Andrea Aliberti Marzio Zocca Giampiero Gallizioli Silvia Scandurra Raffaella Pagani Antonio Andrea Monari Anna Maria Bortolotti

Board of Statutory Auditors

Chairman Vittorio Rocchetti Permanent auditors Costanza Bonelli Daniele Carlo Trivi Alternate auditors Maria Catalano Luca Giovanni Bonanno

Independent Auditors

PricewaterhouseCoopers S.p.A.

159

MANAGEMENT REPORT

Dear Shareholders,

The financial statements of Azimut Holding S.p.A. at 31 December 2016 are submitted to

your examination and approval. They show a net profit for the year of 161,942,807 euro

(156,753,585 euro in 2015).

1. MACROECONOMIC SCENARIO

Background scenario

January represented a nasty shock for the financial markets which were caught in a

vicious circle “China's slow-down - plummeting oil prices - deflation/recession”. The

technical analysis of these issues is extremely difficult and the markets remained in the

grips of their fears waiting for external actions (central banks, excellent macro-economic

figures or a cathartic event generating oversold/overbought levels) to act as a new

catalyst. Consequently, the central banks of the areas which fear deflation the most (ECB

and BOJ) announced or implemented new expansionary measures. However, they

managed to support and further inflate bond prices without convincing the stock

markets about the fact that 2016 would not have been characterised by another global

recession.

Eventually, the situation began to level off in mid-February. During this period, the stock

markets showed new feelings, accompanied by a series of positive macro-economic

surprises which led the US market to reconsider its expectations about the FED which

pointed not only to an interruption of the upward cycle, but also to the possibility of

cutting rates or of a new QE. Conversely, in Europe, the ECB's expectations looked more

plausible given the renewed deflation scenario and the difficulties experienced by the

banking sector.

March was characterised by a significant change of attitude on the part of the main

central banks. Although the ECB's expansive strategy was already assumed, its scope

exceeded expectations. Indeed, the ECB tackled several aspects, increasing the liquidity for

banks also through new targeted longer-term refinancing operations (TLTRO) under

160

particularly advantageous conditions, cutting the deposit and the refinancing rates and

expanding the QE from 60 billion/month to 80 billion/month, including non-banking

corporates as of the end of June. It is believed that the G20 informally decided to abandon

competitive devaluations in favour of domestic economic and monetary policies and a

wait-and-see attitude on the part of the FED to avoid aggravating the situation in China

and the emerging markets given the existence of currency pegs and the need for

divergent monetary policies. This was aimed at strengthening the still modest global

growth. April partially reflected the issues that characterised March, i.e., the central

banks' attention to external events, specifically those related to China and, to a lesser

extent, the emerging economies, in a broader sense. In other words, April had two faces:

the first was the ongoing recovery of raw materials, above all oil, and emerging

economies, generating a reversal by the bond markets; the second showed the gradual

return of the risk-off trade. May was bi-directional for the bond markets: the beginning of

the month was characterised by a new downward revision of the US bond yields, which

lasted substantially until the middle of the month, despite the gradual improvement of

GDP's forecasts, as pointed by the Atlanta's FED forecast indicator. Not even the

extremely robust figures about Europe's growth (+0.6% on the previous quarter), also

largely supported by domestic growth, managed to scratch the scepticism of the markets

which already look to 2Q forecasts according to which Europe will grow at a more

modest pace with inflation still low (despite the statistically-expected rebound in the

second half of the year). However, the tone of the market changed when many members

of the FED gave a thumb up on a summer increase, generating market repricing.

June was a surprise: the forthcoming British referendum heightened the tension on the

financial markets which fluctuated significantly until the very last day based on voting

surveys. On 23 June, the markets were clearly in favour of Britain staying in the EU.

Consequently, the results were a huge surprise. Indeed, following the Brexit, the

operators relieved the tension on bund and treasury yields, which were seen as a safe

heaven, zeroing any expected rate rise and even assuming the possibility the FED

introduces cuts in 2017 (despite the marginal impact of the event on the US economy

and, to date, the financial and currency channels). September was very volatile for the

bond markets (first a dramatic decrease, then reaching new highs). Indeed, as is often the

161

case, the operators had too many expectations of the ECB about any new extraordinary

monetary policies. Conversely, the Bank of Japan shifted from monitoring quantities to

monitoring prices, in an attempt to peg the rates of 10-year bonds to 0%, a level that the

markets soon perceived as the top limit. On the other hand, the FED, which was well

placed to implement the first of the four increases proposed in December for 2016,

decided to wait a little longer, with significant disagreements with the board, pointing

already to just one increase in December to heat up the employment market. The first

half of October was characterised by discussions, while in the second half of the month,

the ECB announced that it was considering cutting the monthly purchases of securities.

This rumour alarmed the market which immediately adjusted yields upwards, showing

how, overall, operators are too exposed to rates with excessively low yields. The market

subsequently returned to previous levels, awaiting the official announcement by the ECB

which postponed any decision to December. Against this background, tensions began to

arise on the British securities market, where inflation emerged, also as a consequence of

the strong depreciation of the pound. Consequently, in the second half of the month, the

British market dragged along with it all other bond markets. November saw the

beginning a new, intense political season which will probably shape the markets longer

than usual given the close sequence of political events until next fall. In the US, Trump's

appointment was another surprise. The initial shock was very short and almost

immediately replaced by the enthusiasm generated by hypothetical expansionary

measures which should be focused on investments in infrastructures, repatriation of

profits and a new American dream. The market interest rates immediately translated this

message in greater expenditure, increased deficit and higher debt, hence requesting an

additional risk premium which accounted for approximately a 60 bps yield on the 10-

year US securities. In December, Italy's rejected the proposed constitutional reform by a

huge majority and triggered the removal of Renzi's government, promptly replaced by

Gentiloni's government with the task of drafting a new electoral law. Having largely

foreseen the result, the Italian market was unshaken and, in fact, recovered on the bund.

The ECB announced that, as of April, the QE will be reduced from 80 billion to 60

billion/month as the conditions that led to the increase in March 2016 no longer existed,

while expanding purchasing flexibility. In the US, the FED raised rates only once in 2016

and announced three increases in 2017.

162

ITALY'S ASSETS UNDER MANAGEMENT MARKET

According to Assogestioni's (Italy’s association of the investment management industry)

figures, in 2016, the increase in Italy's assets under management continued, with 1,943

billion euro at year end (+6% on 1,835 billion at 2015 year end) and positive inflows of

approximately 55.6 billion euro.

In 2016, inflows of open-ended funds (+34.4 billion euro) exceeded considerably the

number of management mandates (+20.5 billion euro). Portfolio management inflows

refer exclusively to insurance product management (+20.7 billion euro), while retail

portfolio management recorded zero growth. Furthermore, social security products

performed negatively (-0.4 billion euro).

ITALY'S FINANCIAL PRODUCT AND SERVICE DISTRIBUTION MARKET

At the end of December 2016, Assoreti's (Italy’s association of the sales networks in the

financial services industry) survey highlighted a record value of 471.1 billion euro of

financial products and investment services distributed to member intermediaries,

through its authorised off-premises financial advisors.

Total assets under management products amount to 341.9 billion euro, or 72.6% of the

total portfolio, while assets under custody amount to 129,2 billion euro. Specifically,

directly subscribed UCITS amount to 163.4 billion euro, of which 145 billion is placed

with open collective portfolio management domiciled abroad. Insurance and social

security products amount to 126.4 billion, up 12.9% on the previous year, and account

for 26.8% of the assets held by networks' clients, while discretionary portfolios amount

to 52.1 billion euro, accounting for 11.1% of the total portfolio.

At 31 December 2016, the total contribution of networks to assets invested in open-

ended UCITS, through the direct and indirect distribution of units, amounts to 271.4

billion euro, accounting for 30.1% of the total assets invested in funds (assets under

management of 900.3 billion euro – estimated figure). With respect to assets under

custody, the security portfolio amounts to 62.4 billion euro, while liquidity is equal to

66.9 billion euro.

2. GENERAL INFORMATION ABOUT THE COMPANY

163

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 44 billion euro at 31 December 2016. 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 1,200 managers, financial advisors and employees who

signed 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 2016, it had

19 managers and 12 other resources, including junior managers and white collars. 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 regional offices in Italy, nor is it engaged in any activity

through branch offices.

In its role of consolidating entity, the Company participates in the national tax

consolidation scheme 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 Azimut shares rose from 23.06 euro at 30 December

2015 to 15.86 euro at 30 December 2016.

At 31 December 2016, outstanding shares numbered 143,254,497. On the same date, the

capitalisation was approximately 2.3 billion euro.

In 2016, the Company continued to develop its relations with institutional investors,

which account for the majority of the shareholder structure. Following approval of

annual financial statements and interim reports, the Company organised conference calls

and road-shows on the main European markets and in the U.S.. In March 2017, the

164

Azimut Holding S.p.A. share was covered by the analysts of twelve Italian and foreign

investment firms.

4. PERFORMANCE

Financial performance

In Euros 2016 2015

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 187,869,443 169,981,168

Interest income and similar income 190,430 543,980

Interest expense and similar charges -11,162,874 -11,018,342

Profits/losses on disposal or repurchase of financial assets and liabilities 101,830 11,734,495

Total income 178,998,829 173,241,301

Administrative costs -19,880,685 -16,735,507

a) personnel costs -9,022,259 -6,928,476

b) other administrative costs -10,858,426 -9,807,031

Impairment losses on tangible and intangible assets -983,721 -855,597

Net allowance for risks and charges -30,000 30,000

Other operating income / costs 1,756,617 969,890

Operating profit 159,861,040 156,650,087

Income tax 2,081,767 103,498

Profit for the year 161,942,807 156,753,585

Operating profit came to 160 million euro (157 million euro in 2015) mainly due to 2016

dividends amounting to 188 million euro (170 million euro in 2015). Dividends from

Azimut Holding group companies include an interim dividend on the profit for 2016,

disbursed in November 2016, from the subsidiary AZ Fund Management SA of 78 million

euro (the interim dividend on the profit for 2014 collected in December 2015 from the

same subsidiary amounted to 104 million euro).

Interest expense amounts to 11 million euro in 2016, in line with 2015.

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Balance sheet figures

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

Assets 31/12/2016 31/12/2015 Change

Absolute %

Available-for-sale financial assets 174,788,566 168,672,177 6,116,389 4%

Receivables 15,901,903 36,680,000 -20,778,097 -57%

Equity investments 552,673,445 495,504,066 57,169,379 12%

Tangible and intangible assets 186,896,272 187,222,129 -325,857 0%

Tax assets 29,336,885 22,854,794 6,482,091 28%

Other asset items 16,426,010 80,677,128 -64,251,118 -80%

Total assets 976,023,081 991,610,294 -15,587,213 -2%

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, despite the figure on 2015 year-end balance.

Receivables, mainly comprised of cash and cash equivalents with bank current accounts,

decreased considerably, mainly because of (i) the deferred collection, compared to the

previous year, of the interim dividend from AZ Fund Management SA and the (ii) capital

injection to AZ International Holdings SA to finance the purchase of foreign equity

investments.

Equity investments rose by approximately 57 million euro on the 2015 year-end

balance mainly as a consequence of (i) capital injections to increase the share capital of

the subsidiary AZ International Holdings SA by about 53.6 million euro and (ii) the

capital injection to increase the share capital of Azimut Enterprises Holding S.r.l. by 3.7

million euro.

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 decreased in respect of intercompany balances and, specifically, the

balance due from AZ Fund Management SA following the collection of last year's dividend

portion.

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Liabilities and shareholders' equity 31/12/2016 31/12/2015 Change

Absolute %

Payables 88,656,657 30,095,834 58,560,823 195%

Outstanding securities 226,522,394 221,826,947 4,695,447 2%

Tax liabilities 53,921,113 52,162,638 1,758,475 3%

Other liability items 7,910,727 16,961,715 -9,050,988 -53%

Share capital 32,324,092 32,324,092 0 0%

Treasury shares -81,288,161 -80,726,765 -561,396 1%

Equity instruments 70,949,500 71,452,010 -502,510 -1%

Reserves and share premium reserves 415,083,952 490,760,238 -75,676,286 -15%

Profit for the year 161,942,807 156,753,585 5,189,222 3%

Total liabilities and shareholders' equity 976,023,081 991,610,294 -15,587,213 -2%

With respect to Liabilities, Payables are up following 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 Popolare. Conversely, Outstanding

securities, comprised of the convertible bond “Azimut 2013 – 2020 subordinato 2.125%”

remained stable.

The decrease in Reserves and share premium reserves is due to the distribution of an

additional dividend in November 2016.

Net financial position

Net financial position was negative for 125 million euro at 31 December 2016. The

balance was impacted by (i) the payment of dividends (236 million euro) to shareholders

and holders of profit-participating financial instruments and (ii) the payment of 2.8

million euro to Fondazione Azimut Onlus made in execution of the Shareholders’

resolution of 28 April 2016, in addition to the following main operations performed

during the year:

a capital injection of 53.6 million euro to increase the share capital of the subsidiary

AZ International Holdings SA;

a capital injection of 3.7 million euro to increase the share capital of Azimut

Enterprises Holding S.r.l.;

the repayment, on 30 June 2016, of the instalment (Line B) of the 10 million euro

loan granted by Banco Popolare;

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the 68.5 million euro loan disbursed on 18 November 2016 by Azimut Partecipazioni

S.r.l..

During the year, the Company recognised dividends income from its investees for 188

million euro, of which 78 million euro as interim dividends from AZ Management Fund

SA. At 31 December 2016, 7 million euro was still to be collected.

The Company's net financial position may be analysed as follows:

Items 31/12/2016 31/12/2015

A Cash 6,488 3,095

B Cash equivalents: 15,901,903 36,680,000

Due from banks 15,901,903 36,680,000

C Available-for-sale financial assets 174,161,870 168,672,177

D Total cash A+B+C 190,070,261 205,355,272

E Short-term financial receivables - -

F Short-term bank loans - -

G Current portion of long-term debt: -10,575,183 -11,398,707

Bonds (Azimut '11-'16 Senior) - -778,801

Bonds (Azimut '13-'20 Convertible) -524,073 -524,072

Due to banks (lease-back) - -

Due to banks (Banco Bpm S.p.A. loan) -10,051,110 -10,095,834

H Other short-term financial payables - -

I Short-term financial debt F+G+H -10,575,183 -11,398,707

J Short term financial debt (net) I+E+D 179,495,078 193,956,565

K Long-term bank loans: -10,000,000 -20,000,000

Due to banks (Banco Bpm S.p.A. loan) -10,000,000 -20,000,000

L Bonds -225,998,321 -220,524,073

“Azimut ‘11-’16 Senior” Bond - -

"Azimut '13-'20 Convertible" Bond -225,998,321 -220,524,073

M Other long-term debt - -

Loan from Azimut Partecipazioni S.r.l. - 68,605,547.00 -

N Long-term financial debt K+L+M -304,603,868 -

240,524,073

O Net (financial) debt J+N -125,108,790 -46,567,508

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

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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 2015 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 236 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 office 2016 profit (loss) 2015 profit (loss)

AZ Fund Management SA Luxembourg 223,141,829 227,083,930

AZ Life Ltd Ireland 20,545,689 23,960,512

Azimut Capital Management SGR S.p.A. Italy 26,806,416 50,058,067

Azimut Global Counseling S.r.l. Italy -437,522 - 358,008

Azimut Enterprises Holding S.r.l. Italy -800,640 - 136,038

Augustum Opus SIM S.p.A. Italy 2,979,753 1,915,261

AZ International Holdings SA Luxembourg -1,167,165 - 496,523

Azimut Financial Insurance S.p.A. Italy - 5,908,687 - 390

Futurimpresa SGR S.p.A. Italy 243,992 56,958

Azimut Partecipazioni S.r.l. Italy 74,275,885 -

AZ Fund Management SA manages the Luxembourg-based umbrella funds Az Fund 1

and Az Multiasset. During the year, it achieved a profit of 223 million euro compared to a

profit of approximately 227 million in 2015.

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 clients with

personalised assistance designed specifically for them. In fact, AZ Life Dac offers

solutions differentiated based on client type through differentiated Unit Linked policies,

including based on the client's investment strategies. During the year, it achieved a profit

of 21 million euro compared to a profit of approximately 24 million in 2015.

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

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management services on behalf of third parties, including under delegation

arrangements. On 1 October 2016, following the demerger of Azimut Consulenza SIM

S.p.A., it merged Azimut Group's historical network comprised of 1637 financial advisors

at 31 December 2016. The net profit for 2016 amounts to 26,806,416 euro compared to

50,058,069 euro in the previous year. The decrease on 2015 is mainly due to the

reduction in fee and commission income which fell from 102 million euro in 2015 to 90.3

million euro in 2015 and the increase in administrative costs and impairment losses on

tangible and intangible assets.

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 2015, it incurred a loss of 438

thousand euro compared to a loss of 325 thousand euro in 2015.

Azimut Enterprises Holding S.r.l. is a holding company focusing on unlisted companies,

including Programma 101 Sicaf S.p.A. and Siamosoci 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. During the year, the company acquired 30% of Cofircont

Compagnia Fiduciaria S.p.A.. In 2016, it incurred a loss of 801 thousand euro compared to

a loss of 135 thousand euro in 2015.

Augustum Opus SIM S.p.A. was incorporated in April 2009 and, today, is one of Italy's

main private asset management companies. This is an independent dynamic company

which provides global consultancies in financial investments and portfolio management.

Specifically, it focuses on managing, upon proxy, some UCITS funds and provides

portfolio management services. In 2016, it achieved a profit of 3 million euro, up on

2015.

AZ International Holdings SA is a Luxembourg-based holding company that acts as

incubator through which the Group continued its research, development, acquisition and

management of foreign partnerships. Through this company, the Group is present in 14

countries, including Luxembourg, Ireland, China (Hong Kong and Shanghai), Monaco,

Switzerland, Singapore, Brazil, Mexico, Taiwan, Chile, Australia, Turkey and the United

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States. In 2016, it incurred a loss of 1,167 thousand euro compared to a profit of 497

thousand in 2015.

AZ Financial Insurance S.p.A. was incorporated on 28 May 2015 through the payment

of the 50 thousand share capital by the sole shareholder Azimut Holding S.p.A.. The

company's business object is insurance mediation, except for reinsurance mediation, and

bank products' placement and distribution. On 1 October 2016, following the demerger

of Azimut Consulenza SIM S.p.A., it merged Azimut Group's insurance activities and

banking products placement business unit. In 2016, it incurred a loss of 6 million euro

compared to a loss of 390 in 2015.

Futurimpresa SGR S.p.A. was purchased in 2015. This company manages private equity

funds. In 2016, it achieved a profit of 244 thousand euro compared to a loss of 57

thousand in 2015.

Azimut Partecipazioni S.r.l. is a holding company focusing on unlisted companies. On 1

October 2016, following the demerger of Azimut Consulenza Sim S.p.A., it merged 49% of

AZ Fund Management SA. Its net profit for 2016 amounts to 74 million euro.

5. COMPANY TRANSACTIONS AND OTHER SIGNIFICANT EVENTS OF THE YEAR

Azimut Holding S.p.A.

Capital injections to AZ International Holdings SA

In 2016, following the Board of Directors' resolutions of 10 March 2016 and 24 May

2016, Azimut Holding S.p.A. made a capital injection of 53.6 million euro to increase the

share capital of the subsidiary AZ International Holdings Sa and finance the Group's

international development.

Azimut Group reorganisation

On 27 April 2016, the Bank of Italy approved the demerger of Azimut Consulenza SIM

S.p.A. and its merger into Azimut Capital Management SGR S.p.A. to the extent of the

financial product placement business unit, Azimut Financial Insurance S.p.A. to the extent

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of the insurance and banking product placement business unit, and Azimut

Partecipazioni S.r.l. to the extent of the equity investment it held in Az Fund Management

Sa. This transaction is part of the Group's reorganisation process which Azimut Holding

S.p.A.'s Board of Directors approved on 19 March 2015 to simplify and streamline the

company structure by transforming the Group's investment companies into asset

management companies. On 30 May 2016, the Bank of Italy approved the transformation

of the subsidiary CGM Italia SIM into an asset management company, completing the last

authorisation step of the reorganisation process. The demerger deed of Azimut

Consulenza SIM S.p.A. was filed accordingly and, on 1 October 2016, the demerger took

place, transferring all assets and all implied and explicit legal relations to Azimut Capital

Management SGR S.p.A., Azimut Financial Insurance S.p.A. and the newco Azimut

Partecipazioni S.r.l.. Eventually, the transformation of CGM Italia SIM into CGM Italia SGR

was completed.

On 7 November 2016, the Bank of Italy notified the Group that it had been struck off the

investment firms register. Consequently, as of said date, the regulatory capital has been

calculated only individually for asset management companies and the insurance

company, releasing a considerable portion of the Group's assets, which partly used to

distribute1 euro per share (value date: 23 November 2016).

Azimut Holding S.p.A. Annual General Shareholders’ Meeting of 28 April 2016

The shareholders’ meeting (both ordinary and extraordinary) of 28 April 2016 approved

the following:

Approval of 2015 financial statements

The shareholders’ meeting approved the 2015 financial statements, which included a

parent company net profit of 156.8 million euro. At the same time, the shareholders

resolved to pay a dividend of 1.5 euro per ordinary share, pre-tax, of which 0.5 euro per

share paid as of 25 May 2016, 23 May 2016 ex-dividend payment date and 24 May 2016

as the record date, while the residual 1.0 euro per share paid within 30 days of the

Azimut Group's being struck off from the investment firms register by the Bank of Italy.

They also approved the payment to Fondazione Azimut Onlus of 2.8 million euro, equal

to 1% of pre-tax consolidated profit and the payment of 24,74 euro for each profit-

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participating financial instrument held by Top Key People at the time of approval of

payment of the dividend.

Appointment of the Board of Directors and the Board of Statutory Auditors

The shareholders’ meeting appointed twelve members of the Board of Directors, of

whom ten with a three-year term of office and two for one year, confirming Mr. Pietro

Giuliani as interim Chairman and Chief Executive Officer.

The shareholders’ meeting also appointed the Board of Statutory Auditors for the next

three years.

Proposal for purchase and allocation of treasury shares

The shareholders’ meeting approved the purchase of up to 567,950 Azimut Holding S.p.A.

ordinary shares, or 0.4% of the current share capital, including in one or more

instalments, to accrue the shares to service the exercise of the warrants awarded to

investors following subscription of the non-convertible “Azimut 2009-2016 subordinato

4%” subordinated bond. Furthermore, the shareholders’ meeting approved the purchase

of up to 28,000,000 Azimut Holding S.p.A. ordinary shares, or 19.55% of the current

share capital, including in one or more instalments, considering 567,950 shares to

service the exercise of the warrants and those 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: resolutions pursuant to article 123-ter, paragraph 6, of Italian

Legislative Decree No. 58/98

The shareholders’ meeting approved Azimut Holding S.p.A.'s 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.

Repayment of Banco Bpm S.p.A. (formerly Banco Popolare) loan

On 30 June 2016, the Parent Company repaid the instalment (Line B) of the loan granted

by Banco Bpm S.p.A. (formerly Banco Popolare) for a total amount of 10 million euro.

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Exercise of warrants issued on the “Azimut 2009-2016 Subordinato 4%” Bond

The right to exercise the warrants related to the “Azimut 2009—2016 Subordinato 4%”

Bond expired on 30 June 2016.

During the first half of 2016, 102,517 warrants assigned as part of the placement of the

“Azimut 2009—2016 Subordinato 4%” Bond were exercised against a total of 1.9 million

euro, delivering the same number of Treasury Shares. At the closing date of the

transaction, 154,437 warrants were not exercised. Consequently, they lose all rights and

become invalid for all effects.

Agreement to repurchase the residual 49% of Augustum Opus SIM

On 28 July 2016, Azimut Holding S.p.A, and the minority shareholders Augustum Opus

SIM reached an agreement whereby Azimut will acquire the residual 49%. The purchase

conditions are in line with the original ones dating 2013 to purchase 51% of capital,

except for the reference period for assessment purposes which considered a four-year

period rather than a six-year period, as originally agreed.

On 20 December 2016, the Board of Directors of Azimut Holding S.p.A. approved the

commencement of the activities preliminary to the merger of Augustum Opus SIM into

Azimut Capital Management SGR. The closing of the transaction will take place in the first

half of 2017, subject to Bank of Italy's authorisation.

Board of Directors of Azimut Holding S.p.A.

On 27 September 2016, the Board of Directors co-opted Sergio Albarelli as Chief

Executive Officer of Azimut Holding S.p.A. as of 3 October 2016.

Azimut Enterprises Holding S.r.l.

Acquisition of 30% of Cofircont Compagnia Fiduciaria S.r.l.

On 20 September 2016, through its subsidiary Azimut Enterprises Holding, Azimut

acquired 30% of Cofircont Compagnia Fiduciaria, a fiduciary company held by

professionals (mainly lawyers or accountants), against a cash consideration of 821,100

euro.

Azimut Capital Management SGR S.p.A.

Demerger of Azimut Consulenza SIM S.p.A.

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The demerger of Azimut Consulenza SIM S.p.A. was completed on 1 October 2016,

transferring all assets and all implied and explicit legal relations to Azimut Capital

Management SGR, Azimut Financial Insurance S.p.A. and the newco Azimut

Partecipazioni S.r.l..

Product updating

Azimut Previdenza pension fund

The changes to the regulation governing the “Azimut Previdenza” pension fund approved

by Azimut Capital Management SGR S.p.A.'s Board of Directors on 11 March 2015 and

authorised by the Supervisory Commission for Pension Funds on 25 June 2015 became

effective on 1 February 2016. In short, the changes related to the merger of the Comparto

Protetto fund into the Comparto Obbligazionario fund and some changes to the four sub-

funds' investment policies.

Futurimpresa SGR S.p.A.

Product updating

New fund for SMEs

Through its subsidiary Futurimpresa SGR S.p.A., the Azimut Group announced the new

reserved closed-end fund IPO CLUB aimed at raising 150 million euro to be used in pre-

booking transactions, i.e., investment vehicles set up to channel funds to leading Italian

SMEs to be subsequently listed. On 1 February 2017, the fund was operative with an

endowment fund of 120 million euro. Ipo Club is also the result of the decisive contribution of

Azimut Global Counseling, a subsidiary of the Azimut Group which operates in the

financial advisory sector, and Electa Ventures, a company of the Electa Group which had

already been a pioneer in setting up Spac and pre-booking companies in Italy. Inflows

will continue up to 150 million euro (as mentioned earlier).

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AZ Fund Management SA

Product updating

Luxembourg-based umbrella fund “AZ Fund 1”: Cat Bond Fund

Following the request from the Luxembourg authority Commission de Survellance du

Secteur Financier (CSSF), which oversees the AZ FUND 1 fund and its sub-funds, more

stringent criteria were applied to the sub-funds that mainly invest in Catastrophe Bonds

(Cat Bonds). For these sub-funds, the CSSF set a minimum initial subscription of 100,000

euro and a subsequent payment, unchanged, at 500 euro.

Starting from 1 June 2016, the investment policy of the Cat Bond Fund was changed to

invest also in unrated Insurance Linked Securities (ILS). At the same time, its name was

changed to “Cat Bond Fund Plus”.

Luxembourg-based umbrella fund “AZ Fund 1” fund: “Arbitrage” sub-fund

Subscription closing of the “Arbitrage” sub-fund of the “AZ Fund 1” fund by AZ Fund

Management SA was set at 22 February 2016, having reached a high subscription level.

This decision was taken to protect investors' interests and pursue the investment

objectives. Following this decision, placement of the new “Arbitrage Plus” sub-fund began

on 18 April 2016. Despite using a “merger arbitrage” strategy, the sub-fund is

characterised by the fact that the manager is free to concentrate investments.

Renaming of some sub-funds

Starting from 18 April 2016, AZ Fund Management SA renamed the following sub-funds

of the “AZ Fund 1” Fund to better reflect the investment policy in place:

• The “Opportunities” Sub-fund was renamed “Small Cap Europe”

• The “Alpha Manager Credit” Sub-fund was renamed “Credit”

• The “Alpha Manager Thematic” Sub-fund was renamed “Asset Dynamic”

• The “Alpha Manager Equity” Sub-fund was renamed “Global Equity”

Starting from 05 September 2016, AZ Fund Management SA renamed the following sub-

funds of the “AZ Fund 1” Fund to better reflect the investment policy in place:

• The “Best Cedola” Sub-fund was renamed “High Income”

• The “Best Bond” Sub-fund was renamed “International Bond”

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• The “Aggregate Bond Euro” Sub-fund was renamed “Aggregate Bond Euro Plus”

Merger of sub-funds

The merger of the following sub-funds was completed with effect from 3 September

2016:

SUB-FUNDS TO BE MERGED MERGING SUB-FUND

AZ Fund 1 – Bond Target 2015, AZ Fund 1 –

Bond Target December 2016, AZ Fund 1 –

Bond Target June 2016 and AZ Fund 1 –

Bond Target September 2016

AZ Fund 1 – Bond Target 2019 Equity

Options

AZ Fund 1 – International Bond Target June

2016 AZ Fund 1 – Global Currencies & Rates

The merger of the following sub-funds was completed with effect from 09 December

2016:

SUB-FUNDS TO BE MERGED MERGING SUB-FUND

AZ Multi Asset – Sustainable Absolute

Return AZ Multi Asset – Sustainable Equity Trend

Luxembourg-based umbrella fund AZ Multi Asset

Placement of two new sub-funds (AZ Multi Asset – Sustainable Equity Trend and AZ Multi

Asset – CGM –Investment Grade Opportunity) began on 17 October 2016.

Luxembourg-based umbrella fund AZ Multi Asset

Placement of three new sub-funds (AZ Multi Asset – ABS, AZ Multi Asset – 5 Years Global

Bond and AZ Multi Asset – Renaissance Opportunity Bond) began on 15 December 2016.

AZ Life dac

Launch of new “green” internal funds by AZ Life dac

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The new Internal Funds GREEN I, GREEN II and GREEN III in the AZ Style unit-linked

policies were subscribed during the period 15-26 February 2016 at the initial price of 5

euro per unit.

Furthermore, on 15 February 2016, some Internal Funds were merged into other

Internal Funds to streamline the product range and increase the efficiency of the

management service, while renaming the RED and BLUE Internal Funds:

BLUE I (formerly Blue 2) RED I (formerly Red 2)

BLUE II (formerly Blue 3) RED II (formerly Red 3)

BLUE III (formerly Blue 5) RED III (formerly Red 5)

Launch of new “Alternative” internal fund by AZ Life dac

The new Alternative internal fund was launched on 17 October 2016, expanding the

range of investment solutions offered as part of the AZ Style unit-linked policies.

Changes to “AZ NAVIGATOR” Unit Linked policies

As of 14 November 2016, the following internal funds have been renamed as follows:

CURRENT NAME NEW NAME

Low Volatility Atlantico 1

Balanced Flexible Atlantico 2

Equity Dynamic Atlantico 3

As of the same date, six new internal funds have been introduced:

Pacifico 1 Pacifico 2 Pacifico 3

Artico 1 Artico 2 Artico 3

AZ Capital Management Ltd

The company was put into liquidation in December 2016.

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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.

Azimut 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.

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 (TUF) available on the

Company's website (www.azimut-group.com), Azimut Governance section, and attached

to the financial statements.

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 risk

Liquidity risk

The Company mainly manages and coordinates direct and indirect equity investments.

Consequently, the exposure to operational risks is not significant. The Group's operating

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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 made to that set out in the Consolidated

financial statements of Azimut Holding S.p.A. at 31 December 2016 - 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 2016, 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.

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 Group did not engage in any “significant”

transactions during 2016.

No other atypical or unusual transactions were performed.

Intra-group relations

For information on relations with group companies, please see Part D, Section 5 of the

Notes to the financial statements on related party transactions.

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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 regional offices in Italy, nor is it engaged in any activity through

branch offices.

Marketing, communication and training activities

In 2016, marketing, communication and training activities were focused on providing

sales support to financial partners, specifically to improve digital and technological

aspects and to develop skills. The implementation of web collaboration services

continued with the introduction of the new token-based remote signature system with a

view to simplifying and increasing the efficiency of customer relations. Again in 2016, the

network participated in many local events (over 400 in Italy), including more than 50

road shows dedicated to investors aimed at exploring the value-investing philosophy as

well as asset classes and alternative strategies. As part of the demerger and current

merger of Azimut Consulenza SIM into Azimut Capital Management SGR, the Group's new

institutional website was launched and the various distribution brands were grouped

into one single brand (Azimut Capital Management). The advertising and communication

campaign for the launch of the new Azimut Capital Management integrated the regular

initiatives in the general and specialist press. In 2016, in addition to the legally-required

training, Azimut provided its employees with more than 2,000 hours of training. The

financial advisors chose among six different specialist paths, developed in collaboration

with external partners and internal specialists, integrating technical and commercial

training. Furthermore, on-demand courses were held to explore specific issues and train

managers.

Treasury shares

182

At 31 December 2016, 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 first half of 2016 (30 June 2016 being the last date allowed by the bond issue

regulation to exercise the warrants), 102,517 treasury shares were assigned against the

exercise of the same number of warrants issued at the placement of the “Azimut 2009 -

2016 Subordinato 4%” Bond. At the closing date of the transaction, 154,437 warrants

were not exercised. Consequently, they lose all rights and become invalid for all effects.

At 31 December 2016, Azimut Holding S.p.A.’s treasury share portfolio therefore stood at

10,387,189 shares, or 7.251% of share capital.

With respect to operations between 31 December 2016 and the date this report was approved,

1,492,500 treasury shares have been purchased for a total of 25 million euro.

8. SIGNIFICANT EVENTS AFTER THE REPORTING DATE

In January and February 2017, the Company made a capital injection of 3 million euro to

increase the share capital of the subsidiary AZ International Holdings SA in order to

enable it to complete the acquisitions described in the section on subsequent events after

the reporting date.

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 the 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 may be

repurchased as of today is 18,263,710, representing approximately 13% of share capital.

Buybacks will be executed in tranches, with the first tranche amounting to 25,000,000

euro at the maximum price of

50 euro (only for the first tranche the maximum acquisition price will be equal to 30

euro).

183

These separate financial statements were authorised for publication by the Company's

Board of Directors on 09 March 2017.

9. BUSINESS OUTLOOK

Given the positive results of the subsidiaries for 2016 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 2017.

184

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 2016.

The financial statements show a profit for the year of 161,942,807 euro, which we

propose to allocate as follows:

1,848,892.68 euro, or 1% of pre-tax consolidated profit, to be paid to the charitable

organisation Fondazione Azimut pursuant to Article 32 of the By-laws.

a gross dividend of 1.00 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;

17.27 euro for each participating financial instrument held by Top Key People at the

time of approval of payment of the dividend, equal to 0.00001% of consolidated

profit, under Art. 32 of the By-laws;

the remainder to be allocated to “Other Reserves”.

We propose that the dividend be paid as follows: 1.00 euro per share as of 24 May 2017,

22 May 2017 as the ex-dividend payment date and 23 May 2017 as the record date.

Milan, 09 March 2017

On behalf of the Board of Directors Chief Executive Officer

Sergio Albarelli

185

BALANCE SHEET AS AT 31 December 2016

Assets 31/12/2016 31/12/2015

10. Cash and cash equivalents 6,488 3,095

40. Available-for-sale financial assets 174,788,566 168,672,177

60. Receivables 15,901,903 36,680,000

a) for portfolio management - -

b) other receivables 15,901,903 36,680,000

90. Equity investments 552,673,445 495,504,066

100. Tangible assets 813,912 918,374

110. Intangible assets 186,082,360 186,303,755

120. Tax assets 29,336,885 22,854,794

a) current 780,980 7,782,934

b) deferred 28,555,905 15,071,860

140. Other assets 16,419,522 80,674,033

TOTAL ASSETS 976,023,081 991,610,294

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

186

Liabilities and Shareholders’ Equity 31/12/2016 31/12/2015

10. Payables

88,656,657

30,095,834

20. Outstanding securities

226,522,394

221,826,947

70. Tax liabilities:

53,921,113

52,162,638

a) current

-

360,442

b) deferred 53,921,113 51,802,196

90. Other liabilities

6,758,760

16,053,136

100

. Staff severance pay (TFR)

1,121,967

908,579

110

. Provisions for risks and charges:

30,000

-

b) other provisions

30,000

-

120

. Share capital

32,324,092

32,324,092

130

. Treasury shares (-) - 81,288,161 - 80,726,765

140

. Equity instruments

70,949,500

71,452,010

150

. Share premium reserve

173,986,915

173,986,915

160

. Reserves

241,103,546

319,086,477

170

. Valuation reserves - 6,509 - 2,313,154

180

. Profit for the period/year 161,942,807 156,753,585

TOTAL LIABILITIES AND SHAREHOLDERS'

EQUITY 976,023,081 991,610,294

187

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

188

INCOME STATEMENT AS AT 31 December 2016

Items 31/12/2016 31/12/2015

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

187,869,443

169,981,168

40. Interest income and similar income

190,430

543,980

50. Interest expense and similar charges (11,162,874) (11,018,342)

90. Profits on disposal or repurchase of: 101,830 11,734,495

a) financial assets 108,032 11,813,137

b) financial liabilities (6,202) (78,642)

TOTAL INCOME 178,998,829 173,241,301

110. Administrative costs: (19,880,685) (16,735,507)

a) personnel costs (9,022,259) (6,928,476)

b) other administrative costs (10,858,426) (9,807,031)

120. Net impairment/write-ups of tangible assets (345,795) (276,868)

130. Net impairment/write-ups of intangible assets (637,926) (578,729)

150. Net accruals to provisions for risks and charges (30,000) 30,000

160. Other operating income / costs 1,756,617 969,890

OPERATING PROFIT 159,861,040 156,650,087

PRE-TAX PROFIT (LOSS) FROM CONTINUING

OPERATIONS

159,861,040

156,650,087

190. Income tax on profit from continuing operations 2,081,767 103,498

PROFIT (LOSS) FROM CONTINUING OPERATIONS

161,942,807

156,753,585

PROFIT (LOSS) FOR THE YEAR 161,942,807 156,753,585

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

189

STATEMENT OF COMPREHENSIVE INCOME

Items 31/12/2016 31/12/2015

10. Profit for the period/year 161,942,807 156,753,585

Other comprehensive income, net of taxes, not transferred to profit or

loss (14,160) (30,335)

20. Tangible assets

30. Intangible assets

40. Defined benefit plans (14,160) (30,335)

50. Non-current assets held for sale

60. Share of valuation reserves of investments measured at equity

Other comprehensive income, net of taxes, transferred to profit or loss 2,320,805 (4,512,182)

70. Foreign investment hedges

80. Exchange rate differences

90. Cash flow hedge

100

. Available-for-sale financial assets 2,320,805 (4,512,182)

110

. Non-current assets held for sale

120

. Share of valuation reserves of investments measured at equity

130

. Total other comprehensive income/(expense), net of taxes 2,306,645 (4,542,517)

140

. Comprehensive income (Items 10+130) 164,249,452 152,211,068

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

190

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY AT 31 December 2016

Items

Ba

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Allocation of prior year profit Changes during the year

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Shareholders’ equity transactions

Re

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on

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eq

uit

y

inst

rum

en

ts

Oth

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cha

ng

es

Share capital 32,324,092

32,324,092

32,324,092

Share premium reserve

173,986,915

173,986,915

173,986,915

Other reserves: a) income-related 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

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

191

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY AT 31 December 2015

Items

Ba

lan

ce a

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1/

12

/20

14

Ch

an

ge

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op

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ba

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Ba

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15

Allocation of prior year profit Changes during the year

Co

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en

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5

Sh

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Shareholders’ equity transactions

Re

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sh

are

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Tre

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ha

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Ex

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Oth

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es

Share capital

32,324,092

32,324,092

32,324,092

Share premium reserve

173,986,915

173,986,915

173,986,915

Other reserves:

a) income-related 303,442,940 303,442,940 17,762,556

251,031 (1,236,170) 320,220,357

b) other (1,133,880) (1,133,880) (1,133,880)

Equity instruments

71,703,041 71,703,041 (251,031)

71,452,010

Valuation reserves 2,229,363 2,229,363 (4,542,517) (2,313,154)

Treasury shares (81,554,957) (81,554,957) (708,732) 1,536,924

(80,726,765)

Profit (loss) for the year 136,509,410 136,509,410 (17,762,556) (118,746,854)

156,753,585

156,753,585

Shareholders’ equity

637,506,924

637,506,924

(118,746,854) (708,732) 300,754

152,211,068

670,563,160

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

192

CASH FLOW STATEMENT

Indirect method

A. OPERATING ACTIVITIES

2016 2015

1. Operations 161,568,058 154,247,282

- profit (loss) for the period/year (+/-) 161,942,807 156,753,585

- gains/losses on held-for-trading financial assets and financial assets/liabilities measured at fair value (-/+) 0 0

- profits/losses on hedging activities (-/+) 0 0

- net impairment losses (+/-) 0 0

- net impairment losses on tangible and intangible assets (+/-) 983,721 855,597

- net allowance to provisions for risks and charges and other expenses/income (+/-) 30,000 (30,000)

- taxes and tax credits still to be paid (+) (1,431,717) (3,253,982)

- net impairment losses on assets held for sale, net of tax (+/-) 0 0

- other changes (+/-) 43,246 (77,917)

2. Cash generated from or used by financial assets 57,357,631 (49,187,758)

- held-for-trading financial assets 0 0

- financial assets measured at fair value 0 0

- available-for-sale financial assets (626,696) 0

- due from banks 0 0

- due from financial institutions 0 0

- due from clients 0 0

- other assets 57,984,328 (49,187,758)

3. Cash generated from or used by financial liabilities 57,110,320 (18,531,352)

- due to banks 58,500,000 (10,100,000)

- due to financial institutions 0 0

- due to clients 0 0

- outstanding securities 4,713,024 5,148,105

- held-for-trading financial liabilities 0 0

- financial liabilities measured at fair value 0 0

- other liabilities (6,102,704) (13,579,457)

Net cash generated from or used by operating activities 276,036,009 86,528,172

193

B. INVESTMENT ACTIVITIES 2016 2015

1. Cash generated from: 125,000 0

- disposal of equity investments 125,000 0

- dividends 0 0

- disposal of held-to-maturity investments 0 0

- disposal of tangible assets 0

- disposal of intangible assets 0 0

- disposal of subsidiaries and business units 0 0

2. Cash used by: (57,952,243) (77,380,771)

- purchase of equity investments (57,294,379) (75,977,633)

- purchase of held-to-maturity investments 0 0

- purchase of tangible assets (241,333) (543,706)

- purchase of intangible assets (416,531) (859,432)

- purchase of subsidiaries and business units 0 0

Net cash generated from or used by investment activities (57,827,243) (77,380,771)

C. FINANCING ACTIVITIES

- issue/purchase of treasury shares (561,397) 828,192

- change in other reserves 6,169,791 (5,527,656)

- issue/purchase of equity instruments (502,510) (251,031)

- dividends and other distributions (238,599,662) (118,746,854)

Net cash generated from (or used by) financing activities (233,493,778) (123,697,349)

NET CASH GENERATED (OR USED) FOR THE YEAR (15,285,012) (114,549,948)

RECONCILIATION

2016 2015

Opening cash and cash equivalents 205,355,273 319,905,221

Total net cash generated/used for the period/year (15,285,012) (114,549,948)

Closing cash and cash equivalents 190,070,260 205,355,273

Reference should be made to the paragraph on the “net financial debt” of the Management Report for a

breakdown of “Cash and cash equivalents”.

On behalf of the Board of Directors

Chief Executive Officer (Sergio Albarelli)

194

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 Interpretations

Committee, endorsed by the European Commission and in force on 31 December 2016,

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 2016, 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 formats and how

they must be filled in and the content of the notes thereto for asset management

companies. For comparative purposes, the 2015 balances, presented in accordance with

the schedules and the disclosure provided in the relevant notes as required of financial

companies that are parent companies of asset management groups, were reclassified

accordingly.

The financial statements comprise the balance sheet, the income statement, the

statement of comprehensive income, the statement of changes in shareholders’ equity,

195

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 and represent an integral part of these notes:

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 indicators7 have been considered which, as also shown in the document issued

on 6 February 2009 by the supervisory authorities Bank of Italy, Consob and ISVAP (now

IVASS), may highlight problems that, if not taken into proper consideration, could

compromise the Group’s stability and ability to operate as a going concern.

Although the economic outlook remains uncertain, a joint 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

exposed8, lead us to believe that it will continue as a going concern in 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.

7Examples of which are shown in Audit Standard No. 570 on “Going Concerns”.

8As described in the Management Report.

196

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 form9, 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 2016.

The IAS/IFRS applied to prepare Azimut Holding S.p.A.'s separate 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 A2. of the

Notes to Azimut S.p.A.'s separate financial statements at 31 December 2016. 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 2016.

Amendments IASB publication

date

Endorsement date Date of coming

into force

Amendments to IAS 19: Defined

Benefit Plans: employee

Contributions

21 November 2013 17 December 2014 1 February 2015

Annual improvements to IFRS

2010-2012 cycle

12 December 2013 17 December 2014 1 February 2015

Amendments to IAS 27: Equity

method in separate financial

statements

12 August 2014 18 December 2015 1 January 2016

9Transactions and other events have been recognised and presented in accordance with the principle of substance

over form.

197

Amendments IASB publication

date

Endorsement date Date of coming

into force

Amendments to IAS 1: Disclosure

initiative

18 December 2014 18 December 2015 1 January 2016

Annual improvements to IFRS

2012-2014 cycle

25 September 2014 15 December 2015 1 January 2016

Amendments to IAS 16 and IAS 38:

Clarification of acceptable methods

of depreciation and amortisation

12 May 2014 02 December 2015 1 January 2016

Amendments to IFRS 11:

Acquisition of an interest in a joint

operation

06 May 2014 24 November 2015 1 January 2016

Applying the consolidation

exception (amendments to IFRS 10,

IFRS 12 and IAS 28)

18 December 2014 22 September 2016 1 January 2016

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

date

Endorsement date Date of coming

into force

IFRS 14 “Regulatory deferral

accounts”

30 January 2014 n.a.* n.a. *

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

IFRS 16 “Leases” 13 January 2016 --- 01 January 2019**

IFRS 15 “Revenue from contracts

with customers” and amendments

28 May 2014 and 11

September 2015

22 September 2016 1 January 2018**

Amendments IASB publication

date

Endorsement date Date of coming

into force

Amendments to IAS 12: Recognition

of deferred tax assets for unrealised

losses

11 January 2016 --- 01 January 2017**

Amendments to IAS 7: Disclosure

initiative

29 January 2016 --- 01 January 2017**

198

Amendments IASB publication

date

Endorsement date Date of coming

into force

Amendments to IFRS 2:

Classification and measurement of

share-based payment transactions

20 June 2016 --- 1 January 2018**

Amendments to IFRS 4: Applying

IFRS 9 – Financial instruments

12 September 2016 --- 1 January 2018**

Amendments to IAS 40: Transfers

of investment property

08 December 2016 --- 1 January 2018**

Annual improvements to IFRS

2014-2016 cycle

06 February 2017 --- 1 January 2018**

IFRIC 22 Foreign currency

transactions and advance

consideration

17 February 2017 --- 1 January 2018**

Clarifications IASB publication

date

Endorsement date Date of coming

into force

Clarifications to IFRS 15: Revenue

from contracts with customers

12 April 2016 --- 1 January 2018**

* 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.

Section 3 - Significant events after the reporting date

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 the 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 may be

repurchased as of today is 18,263,710, representing approximately 13% of share capital.

199

Buybacks will be executed in tranches, with the first tranche amounting to 25,000,000

euro at the maximum price of

50 euro (only for the first tranche the maximum acquisition price will be equal to 30

euro).

In January and February 2017, the Company made a capital injection of 3 million euro to

increase the share capital of the subsidiary AZ International Holdings SA.

These separate financial statements were authorised for publication by the Company's

Board of Directors on 09 March 2017.

Section 4 – Other information

Risks and uncertainties related to estimates

The preparation of the separate 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);

- 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).

200

A.2 Key financial statements items

This section describes the accounting policies used to prepare the financial statements at

31 December 2016, specifically the classification, recognition, measurement and

derecognition of assets and liabilities items, and the recognition of revenue and expense.

The accounting policies have been applied consistently in the current and previous years.

1 - Available-for-sale financial assets

Classification - Financial assets held by the Company 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 amount

arising from application of the amortised cost in the income statement, while fair value profits or

losses are taken to a specific shareholders’ equity reserve ("Valuation reserves") until disposal or

impairment.

The fair value of Available-for-sale financial assets is calculated based on the quoted

prices in active markets or internal valuation models as described in the section on “Fair

value hierarchy”.

Impairment losses are recognised in the income statement when the purchase cost, net of

any repayment of principal and amortisation, exceeds the recoverable amount. The

cumulative 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.

Assets which do not qualify as subsidiaries, associates or jointly-controlled entities, are

not listed on active markets and for which the fair value cannot be measured reliably, are

measured at cost.

For the purposes of applying IAS 39.61, the Company identified the following impairment

thresholds beyond which the fair value decrease of an equity instrument listed on an

201

active market classified as AFS is deemed significant or prolonged, therefore indicating

an impairment loss.

With respect to impairment testing, the Company employs a specific policy that sets the

limits in terms of severity and of durability, both according to the type of financial

instrument.

Specifically, the impairment thresholds include, in terms of severity, (i) 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.

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 ownership.

2 - Receivables

Receivables include the amounts due from banks, from financial institutions and all

receivables involving fixed or determinable payments and which are not listed on an

active market.

Measurement and recognition - They are recognised at fair value and are measured at amortised

cost. The amortised cost method is not applied to short-term receivables whose term

would make the effect of the concept of discounting negligible.

Derecognition - They are derecognised once settled.

3 - Equity investments

Classification - This item includes investments in jointly-controlled subsidiaries, associates or

companies subject to significant influence. A subsidiary is an entity in which the investor

holds, directly or indirectly through its subsidiaries, more than half the voting rights

(51%). Control exists when the investor holds half, or a smaller percentage, of votes at

shareholders' meetings provided that it has:

10

Money market instruments, bonds, money market mutual funds and bond funds. 11

Securities, equity, balanced and flexible funds, private equity and hedge funds.

202

a) control over more than one half of the voting rights by virtue of an agreement with

other investors;

b) the power to govern the financial and operating policies of the inveterate under a

statute or an agreement;

c) the power to appoint or remove the majority of the members of the Board of Directors

or similar company body and control over the investee is held by such body;

d) the power to cast the majority of votes at a meeting of the Board of Directors or similar

company body and control over the investee is held by such Board or Body.

A jointly controlled entity is a company subject to contractual, shareholders or other

arrangements for the joint management of the business and the appointment of

directors.

An associate is a company in which an entity holds 20% or more of the voting power or

the investor has significant influence, including due to specific legal relationships, such as

the participation in shareholders' agreements. Significant influence is the power to

participate in the financial and operating policy decisions of the investee but is not

control or joint control of those policies.

Measurement and recognition - Equity investments are recognised at purchase cost, net of

impairment losses, if any. If there is evidence that an equity investment may be impaired,

its recoverable amount is estimated, considering the present value of the future cash

flows that the equity investment may generate, including the final disposal amount.

Should the recoverable amount be lower than the carrying amount, the related difference

is taken to the income statement.

Recognition of income components - Dividends received from investees are recognised as revenue

when the right to receive them arises, i.e., when their distribution is approved.

Derecognition - Equity investments are derecognised when the contractual rights to the cash

flows arising therefrom expire or when they are sold substantially transferring all risks and

rewards incidental to ownership.

4 - Tangible assets

Classification—They include technical plant, furniture and fixtures, vehicles and office machinery

and equipment of any kind and renovation costs for any leased properties.

203

Measurement and recognition - 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 - They are derecognised upon disposal or when the asset has been retired and

future benefits are not expected from its disposal.

5 - Intangible assets

Classification - Intangible assets include goodwill, the “Azimut” trademark (purchased at the end

of the finance lease) and the application software for long-term use.

Measurement and recognition - Software is recognised at cost, net of amortisation and

impairment losses. Such assets are amortised based on their estimated residual useful life.

Goodwill is not amortised, but is periodically tested for impairment. Impairment tests are

carried out every year (or whenever there is evidence of impairment). To this end, the

cash generating unit to which goodwill is to be allocated is identified. The amount of the

impairment is determined on the basis of the difference between the carrying amount of

goodwill and its recoverable amount, if lower. Recoverable amount is the higher of a cash

generating unit's fair value less costs of disposal and its value in use. The related

adjustments are taken to the income statement.

Derecognition - Intangible assets are derecognised at the date of disposal and when no future

economic benefits are expected.

6 - 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.

204

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 tax base of assets and liabilities and their carrying

amounts. Deferred tax assets are recognised to the extent their recovery is probable,

based on the Company's ability to generate ongoing positive taxable income.

7 - Other assets

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

8 - Payables

Measurement and recognition - Short-term trade payables (due within 12 months) are recognised

at their par value.

Payables in the form of mid/long-term loans, initially recognised at the amount collected,

are subsequently measured at amortised cost using the effective interest rate method.

The amortised cost corresponds to the initial carrying amount, since no transaction costs

are applicable and since the nominal interest rate of such liabilities is in line with market

rates.

Liabilities in the form of the contractual commitments relating to fees and commissions,

including retention fees, to be paid to financial advisors in the medium/long-term (over

12 months), are calculated on the basis of actuarial criteria and represent the best

estimate of the expense required to settle the foregoing liabilities.

Derecognition - Payables are derecognised once settled.

9 - Outstanding securities

Derecognition - This item includes the convertible bond issued by Azimut Holding S.p.A.. The

bond is recognised as a financial liability and an equity instrument being a financial

instrument composed of a debt component and an embedded derivative (on equity

instruments). The equity component, being the difference between the fair value of the

instrument, as a whole, and the fair value of the debt component, was recognised in

shareholders’ equity under “Equity instruments”.

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

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which usually corresponds with the collected amount or the issue price, adjusted to

reflect any additional cost and revenue 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.

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 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 “Interest expense and

similar charges” in the income statement, using the effective interest rate method.

10 - Other liabilities

Classification—This item includes liabilities that are not ascribable to other liability items.

Recognition—Short-term liabilities (due within 12 months) and trade payables are recognised at

their par value.

Derecognition - Other liabilities are derecognised once settled.

11 - Staff severance pay (TFR)

In accordance with the legislation governing TFR introduced by 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 2006, 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 analyses, statistics

and probabilistic analyses and applying adequate demographic techniques. Cash flows

206

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 110

Administrative costs; a) personnel costs, net of the contributions paid, those pertaining

to prior years not yet recognised, interest accrued and expected revenue arising from

plan assets. In accordance with IAS 19, actuarial gains and losses are recognised in a fair

value reserve.

12 - 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 transactions or

events;

- it is probable that an outflow of resources will be required to generate economic

benefits;

- a reliable estimate can be made of the amount of the obligation.

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.

Derecognition - Accruals are derecognised when the use of resources that generate economic

benefits to settle the obligation becomes improbable.

13 - Costs and income

They are recognised on an accrual basis and in accordance with the matching principle.

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, when it is probable it will be received

and when it can be reliably calculated.

207

Fees, commissions and other income from services offered to clients are included in the

income statement at the time the services are provided. Financial income and charges are

recognised on an accruals basis.

14 - Treasury shares

They are recognised as a decrease in equity. The gains or losses arising from the

purchase, sale, issue or elimination of treasury shares are not recognised in the income

statement, but in equity.

15 - 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 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 Company to repay the

amount paid by investors, participate in the allocation of the Company's residual assets

in case of liquidation, in subordination to the Company's creditors and shareholders.

These instruments are not transferable, except to the Company (at their fair value and

subject to specific conditions). In this case, the relevant equity rights are suspended.

Furthermore, these instruments entitle their holders to receive a part of the Company's

profit as per the By-laws subject to, inter alia, the Shareholders' approval of dividend

distribution.

A.3 Disclosure about transfers between portfolios

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

208

A.4. Fair value disclosure

Qualitative information

In accordance with the provisions of IFRS 7 and IFRS 13, the Company classifies fair

value measurement of financial assets and financial liabilities based on a hierarchy that

conveys the nature of inputs used. The levels are as follows:

Level 1: unadjusted quoted prices in active markets for assets and liabilities

identical to those subject to valuation;

Level 2: inputs other than unadjusted quoted prices that are directly (as in the

case of prices) or indirectly (deriving from prices) observable market data;

Level 3: inputs based 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 Company, the open-ended investment

funds, whose fair value is designated as Level 1 if represented by the Net Asset Value

(NAV) provided by the fund manager at the measurement date, are classified as Level 1.

Conversely, with respect to listed funds and Exchange Trade Funds (ETF), Level 1 fair

value is equal to the closing price of the relevant stock market.

Quantitative information

A.4.5 Fair value hierarchy

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

fair value levels

209

Financial assets/liabilities measured at fair

value Level 1 Level 2 Level 3 Total

1. Held-for-trading financial assets - - - -

2. Financial assets measured at fair value - - - -

3. Available-for-sale financial assets

174,788,566 - -

174,788,566

4. Hedging derivatives - - - -

5. Tangible assets - - - -

6. Intangible assets - - - -

Total 174,788,566

-

- 174,788,566

1. Held-for-trading financial liabilities - - - -

2. Financial liabilities measured at fair value - - - -

3. Hedging derivatives - - - -

Total - - - -

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

At the reporting date, the Company does not hold financial assets measured at level 3-fair

value on a recurring basis.

A.5 - Disclosure about the so-called “Day one profit/loss”

The Company did not carry out transactions which entailed recognition of the so-called

“day one profit/loss”.

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PART B – NOTES TO THE BALANCE SHEET

ASSETS

Section 1 - Cash and cash equivalents – Item 10

Cash and cash equivalents amount to 6,488 euro (3,095 euro at 31 December 2015) and

refer to cash on hand in euro and foreign currency.

Section 4 – Available-for-sale financial assets – Item 40

This item amounts to 174,788,566 euro, up by 6,116,389 euro on the previous year end

(168,672,177 euro at 31 December 2015).

4.1 Breakdown of item 40 “Available-for-sale financial assets”

Items/Value

Total 31/12/2016 Total 31/12/2015

Level 1 Level

2

Level

3 Level 1 Level 2 Level 3

1. Debt securities

- of which: government

securities

2. Equity securities and UCITS

units

174,788,566

168,672,177

3. Other assets

Total 174,788,566 168,672,177

-

-

“UCI units” Level 1 refers to the units in investment funds managed by the Azimut Group

as part of the Company’s liquidity management policies.

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

211

Items/Value Total 31/12/2016 Total 31/12/2015

1. Financial assets

a) Governments and central banks

b) Other public bodies

c) Banks

d) Financial institutions

e) Other issuers

174,788,566

168,672,177

Total 174,788,566 168,672,177

As regards the nature and form of risks arising from the above financial assets, reference

should be made to section 2 - Part D “Other information – Information on risk

management and hedging policies”.

212

Section 6 - Receivables – Item 60

6.1 Breakdown of item 60 “Receivables”

This item amounts to 15,901,903 euro, down by 20,778,097 euro on the previous year

end (36,680,000 euro at 31 December 2015). The residual interim dividends to be

collected at 31 December 2016 amount to 6,860,748 euro and are included under Other

assets.

Due from banks may be analysed as follows:

Breakdown/Value

Total 31/12/2016 Total 31/12/2015

Carrying amount

Fair value Carrying amount Fair value

L1 L2 L3 L1 L2 L3 1. Receivables for portfolio management services:

1.1. UCI management 1.2 individual portfolio

management 1.3 pension fund

management 2. Receivables for other services:

2.1 advisory 2.2 outsourced

corporate functions

2.3 other

3. Other receivables:

15,901,903 15,901,903 36,680,000 36,680,000 3.1 repurchase

agreements - of which:

government securities - of which: other debt

securities - of which: other

equity securities and units 3.2 deposits and current

accounts

15,901,903 15,901,903

36,680,000 36,680,000

3.3 other

4. Debt securities

Total

15,901,903 15,901,903 36,680,000 36,680,000

L1 = Level 1 L2 = Level 2 L3 = Level 3

213

This item is composed of cash deposited in bank current accounts which bear interest at

market rates.

6.2 Receivables: breakdown by counterparty

Breakdown/Counterparty

Banks Financial institutions Clients

of

which:

Group

of which:

Group

of

which:

Group

1. Receivables for portfolio

management services:

1.1. UCI management

1.2 individual portfolio management

1.3 pension fund management

2. Receivables for other services:

2.1 advisory

2.2 outsourced corporate functions

2.3 other

3. Other receivables 15,552,575 349,328 349,328

3.1 repurchase agreements

of which: government securities

of which: other debt securities

of which: other equity securities and

units

3.2 deposits and current accounts 15,552,575 349,328 348,328

3.3 other

Total 31/12/2016 15,552,575 349,328 349,328

Total 31/12/2015 36,627,657 52,343 52,343

Section 9 - Equity investments – Item 90

This item amounts to 552,673,445 euro (495,504,066 euro at 31 December 2015), up by

57,169,379 euro on the previous year end.

9.1 Equity investments: information The details of the Company’s equity investments are provided in annex A of these notes,

and refer to the financial statements of the wholly -owned subsidiaries at 31 December

2016.

214

In accordance with IAS 36 governing impairment tests, the carrying amount of the

company's equity investments was tested for impairment in order to identify any

impairment indicators, if any. Reference should be made to section 11.1, paragraph

"Impairment test" for information on the methodology applied.

9.2 Annual change in equity investments

Group equity investments

Non-group equity investments Total

A. Opening balance 495,504,066 495,504,066

B. Increases 57,294,379 57,294,379

B.1 Purchases

B.2 Write-ups

B.3 Revaluations

B.4 Other changes 57,294,379

57,294,379

C. Decreases 125,000 125,000

C.1 Sales

-

C.2 Write-downs

C.3 Other changes 125,000 125,000

D. Closing balance 552,673,445 552,673,445

“Increases” is comprised of:

other changes refer to

- capital injections to increase the share capital of AZ International Holdings

SA, with registered office in Luxembourg (53,600,000 euro) and Azimut

Enterprise Holding S.r.l. (3,694,379 euro) made during the year.

“Decreases” is comprised of:

other changes refer to

- the liquidation of Az Capital Management Ltd, based in Ireland.

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Section 10 - Tangible assets – Item 100

10.1 Breakdown of item 100 “Tangible assets” - business purposes: breakdown of assets

at cost”

This item amounts to 813,912 euro, down by 104,462 euro on 918,374 euro at 31

December 2015.

The breakdown is as follows:

Total 31/12/2016 Total 31/12/2015

Assets/Value

1. Company-owned 813,912 918,374

a) land

b) buildings

c) furniture & fixtures 25,645 39,992

d) electronic systems

e) other 788,267 878,382

2. Under finance lease

a) land

b) buildings

c) furniture & fixtures

d) electronic systems

e) other

Total 813,912 918,374

“Other” includes electronic office equipment (personal computers, printers and

monitors) and the telephone system.

216

10.5 Tangible assets - business purposes: "annual change"

Land Building

s

Furniture

& fixtures

Electroni

c systems

Other Total

A. Opening gross balance

172,542

1,715,57

4 1,888,116

A.1 Total net impairment losses -132,550 -837,191 -969,741

A.2 Opening net balances

39,992

878,383

918,375

B. Increases

1,702

239,630 241,332

B.1 Purchases

1,702

239,630 241,332

B.2 Leasehold improvements

B.3 Write-ups

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

16,049

329,746 345,795

C.1 Sales

C.2 Amortisation

16,049

329,746 345,795

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) assets held for investment purposes

b) assets held for sale

C.7 Other changes

D. Net closing balance

25,645

788,267

813,912

D.1 Total net impairment losses -148,599

-

1,166,93

7 -1,315,536

D. Gross closing balance

174,244

1,955,20

4

2,129,448

Measurement at cost

25,645

788,267

813,912

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Depreciation is calculated based on the following rates:

Company % rate Electronic office equipment 20%

Furniture & fixtures 12%

Telephone system 25%

Other assets 25%

Section 11 - Intangible assets – Item 110

This item amounts to 186,082,360 euro, down by 221,395 euro on the previous year end

(186,303,755 euro at 31 December 2015). “Outstanding securities” are broken down as

follows:

11.1 Breakdown of item 110 “Intangible assets:

Total 31/12/2016 Total 31/12/2015

Assets at cost Assets at fair

value Assets at cost

Assets at fair value

1. Goodwill 149,829,431 149,829,431

2. Other intangible assets 36,252,929 36,474,323

2.1 generated internally

2.2 other 36,252,929 36,474,323

Total 186,082,360 186,303,755

“Goodwill” of an original amount of 176.3 million euro, of which 26.4 million amortised prior to

the adoption of the IFRS, and corresponding to the portion of goodwill arising from merger that

had not been allocated as an increase in the carrying amount of equity investments relates to the

goodwill paid by Azimut Holding S.p.A. (formerly Tumiza S.p.A.) to purchase the Group in 2002

by acquiring the entire share capital of Azimut Holding S.p.A., incorporated in December of the

same year.

“Other intangible assets – other” refers to the cost of software (914,705 euro) and the

Azimut trademark.

Impairment test

218

With respect to "goodwill" and "trademarks" (recognised as an intangible asset with an

indefinite useful life), IAS 36 – “Impairment of assets”, stipulates that the Company must

perform annual impairment tests to check the adequacy of the amounts recognised. The

aim of the impairment test is to identify any impairment loss: should the test identify the

non-recoverability of accounting balances, the Company shall recognise an impairment

loss on the asset.

For the purposes of impairment testing at group-level, two cash generating units (CGUs)

have been identified that basically reflect the Azimut Group’s business and to which the

above intangible assets (goodwill and trademarks) have been allocated.

The first CGU, to which the Company's goodwill and trademarks were allocated, 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., aimed at identifying, acquiring and managing new foreign partnerships.

The impairment test of the Azimut CGU, to which goodwill and the trademark were

allocated, had a positive outcome.

For the purposes of the impairment test, management calculated the value in use of the

Azimut CGU using the Discounted Cash Flow method and comparing value in use with the

carrying amount of the CGU, inclusive of the above intangible assets (trademark and

goodwill).

Value in use calculated using the Discounted Cash Flow method is as follows:

1 - Calculation of unlevered cash flows: for the purposes of this calculation, the expected

cash flow was approximated to the net profit for the year. To calculate Cash Flow an

219

approximate estimate is made based on net profit for the year, gross of

amortisation/depreciation and financial income/charges.

Profits for the first five years were based on the “2015 – 2019 to 2021 Extended Business

Plan. It was calculated using the following assumptions:

Average inflows 2.5 billion euro per year

weighted average performance of 2% p.a.

Increase in overheads It is in line with forecast growth of personnel and structure.

Flow increases after 2021 Steady at 2%.

2 - Calculation of the weighted average cost of capital (“WACC”), equal to 7.29%, based on

the following parameters:

Risk Free: 10-year Italian government bonds, December 2016;

Azimut Beta calculated on a 5-year timescale with daily readings

(source: Bloomberg)

Market risk premium extra yield required for investments in shares rather

than risk-free securities (Source: Credit Suisse

Global Equity Strategy - 31 December 2016);

Azimut's financial structure. N/A

220

Cost of capital calculation:

WACC 31/12/2016

Risk-free rate 1,274%

Market risk premium 5.60%

Beta Unlevered 1,075

Risk premium 5.60%

Cost of equity (Ke) 7.29%

D / (D+E) 0%

E / (D+E) 100%

WACC 7.29%

Discounting cash flows over the five-year timescale and cash flows calculated for

terminal value purposes at the WACC to estimate the Enterprise Value of the CGU and

calculating the value in use of the CGU, adjusted to reflect the net financial position at 31

December 2016.

Based on the above, management calculated Azimut CGU's value in use at 5,120 million

euro. This amount is considerably greater than the CGU carrying amount of 665 million,

as no impairment losses were recognised.

Furthermore, the CGU's value in use was subjected to a sensitivity analysis, which

considered WACC changes and the long-term growth rate (g-rate).

221

The table below shows the results of the sensitivity analysis (with the X axis including

WACC and the terminal growth rate on the y axis) which did not identify any impairment

loss.

Sensitivity Analysis

11.2 Intangible assets: "annual change"

Total

A. Opening balance 186,303,755

B. Increases 416,531

B.1 Purchases 416,531

B.2 Write-ups

B.3 Increases in fair value taken to:

- shareholders’ equity

- income statement

B.4 Other changes

C. Decreases 637,926

C.1 Sales

C.2 Amortisation 637,926

C.3 Write-downs charged to:

- shareholders’ equity

- income statement

C.4 Decreases in fair value charged to:

- shareholders’ equity

- income statement

C.5 Other changes

D. Closing balance 186,082,360

4.454,70 5,29% 5,79% 6,29% 6,79% 7,29% 7,79% 8,29% 8,79%

0,00% 4.379 4.050 3.774 3.538 3.335 3.158 3.002 2.864

0,50% 4.797 4.398 4.067 3.790 3.553 3.349 3.170 3.014

1,00% 5.312 4.818 4.417 4.085 3.806 3.568 3.362 3.183

1,50% 5.963 5.335 4.839 4.436 4.102 3.822 3.583 3.376

2,00% 6.812 5.990 5.359 4.860 4.455 4.120 3.838 3.597

2,50% 7.965 6.843 6.016 5.382 4.881 4.474 4.137 3.854

3,00% 9.620 8.001 6.873 6.043 5.406 4.902 4.493 4.154

3,50% 12.198 9.664 8.037 6.904 6.069 5.429 4.923 4.512

Differenza tra Valore d'uso e Valore contabile della CGU Diminuzione Flussi

0% -2,5% -5,0% -7,5% -10,0% -12,5% -17,5% -20,0%

4.343 4.232 4.121 4.009 3.898 3.675 3.564

Differenza tra Valore d'uso e Valore contabile della CGU

222

The above purchases refer exclusively to software packages, which are amortised using

the following rates:

Company % rate Software packages 33%

Section 12 – Tax assets and tax liabilities - Item 120 - Item 70

Tax assets This item amounts to 29,336,885 euro, up by 6,482,091 euro on the previous year end

(22,854,794 euro at 31 December 2015).

12.1 Breakdown of item 120 “Tax assets: current and deferred”

31/12/2016 31/12/2015

Current 780,980 7,782,934

Deferred 28,555,905 15,071,860

of which pursuant to Italian Law 214/2011 - -

Total 29,336,885 22,854,794

“Current tax assets” mainly refers to non-offset IRES and IRAP tax credits for the year

2016.

“Deferred tax assets” mainly include:

6,736,474 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;

18,778,248 euro of deferred taxes related to tax losses;

1,693,463 thousand euro of deferred tax assets relating to the adjustment of the

carrying amount and tax value (IRAP) of the trademark and goodwill pursuant to

Article 1, paragraph 51 of Italian Law 244/2007 (2008 Finance act) and offset

against future tax liabilities arising from amortisation and other negative items

deducted off the balance sheet (as indicated in EC section of the Modello Unico tax

return) up until the tax year underway at 31 December 2007;

223

to a lesser extent, the temporary differences resulting from the different timing

criteria of IRES tax deductibility for some cost items compared to that recognised

in the income statement.

Tax liabilities

This item amounts to 53,921,113 euro, up by 1,758,475 euro on the previous year end

(52,162,638 euro at 31 December 2015).

12.2 Breakdown of item 70 “Tax liabilities: current and deferred”

Breakdown 31/12/2016 31/12/2015

Current - 360,442

Deferred 53,921,113 51,802,196

Total 53,921,113 52,162,638

“Deferred tax liabilities” mainly include deferred tax liabilities relating to the difference

between the carrying amount and tax value of the trademark amounting to 11,686,351

euro and the deferred tax liabilities recognised on the temporary difference between the

carrying amount and tax value of goodwill of 40,847,109 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 be reduced following a

negative impairment test result that leads to the recognition of an impairment loss on

goodwill and the trademark and in the case of disposal.

224

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

Total

31/12/2016 Total 31/12/2015

1. Opening balance 13,801,827 15,952,346

2. Increases 14,469,968 1,803,621

2.1 Deferred tax assets recognised in the year 7,655,268 1,803,621

from previous years

due to changes in accounting policies

write-ups

other

2.2 New taxes or increased tax rates

2.3 Other increases 6,814,700

3. Decreases (1,014,118) (3,954,140)

3.1 Deferred tax assets eliminated during the year (1,014,118) (3,954,140)

a) reversals (1,014,118) (3,954,140)

b) write-off of irrecoverable tax

c) due to changes in accounting policies

d) other

3.2 Decreases in tax rates

3.3 Other decreases

4. Closing balance 27,257,677 13,801,827

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

Total

31/12/2016 Total 31/12/2015

1. Opening balance 51,432,348 47,617,731

2. Increases 1,945,569 3,841,617

2.1 Deferred tax liabilities recognised in the year 1,945,569 3841617

a) from previous years -

b) due to changes in accounting policies -

c) other 1,945,569 3,841,617

2.2 New taxes or increased tax rates -

2.3 Other increases -

-

3. Decreases (725,759) (27,000)

3.1 Deferred tax liabilities eliminated during the year (725,759) (27,000)

a) reversals (725,759) (27,000)

b) due to changes in accounting policies -

c) other -

-

3.2 Decreases in tax rates -

3.3 Other decreases -

4. Closing balance 52,652,158 51,432,348

225

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

Total

31/12/2016 Total 31/12/2015

1. Opening balance 1,270,031 38,206

2. Increases 28,197 1,231,825

2.1 Deferred tax assets recognised in the year 28,197 1,231,825

a) from previous years

b) due to changes in accounting policies

c) other 28,197 1,231,825

2.2 New taxes or increased tax rates

2.3 Other increases

3. Decreases

3.1 Deferred tax assets eliminated during the year

a) reversals

b) write-off of irrecoverable tax

c) due to changes in accounting policies

d) other

3.2 Decreases in tax rates

3.3 Other decreases

4. Closing balance 1,298,228 1,270,031

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

Total

31/12/2016 Total 31/12/2015

1. Opening balance 369,848 858,306

2. Increases 899,107 53,650

2.1 Deferred tax assets recognised in the year 899,107 53,650

from previous years

due to changes in accounting policies

2.2 New taxes or increased tax rates

2.3 Other increases 899,107 53,650

Other

3. Decreases (542,108)

3.1 Deferred tax assets eliminated during the year (542,108)

a) reversals (542,108)

b) due to changes in accounting policies

c) other

3.2 Decreases in tax rates

3.3 Other decreases

4. Closing balance 1,268,955 369,848

226

Section 14 – Other assets - Item 140

This item amounts to 16,419,522 euro, down by 64,254,511 euro on the previous year

end (80,674,033 euro at 31 December 2015).

14.1 Breakdown of item 140 “Other assets”

Breakdown 31/12/2016 31/12/2015

Due from Inland Revenue 5,146,668 4,731,789

Other receivables 10,931,348 75,919,141

Prepayments 341,506 23,103

Total 16,419,522 80,674,033

“Due from Inland Revenue” refers exclusively to VAT credits.

“Due from group companies” mainly includes:

the 2 million euro receivable from the subsidiary Azimut Capital Management SGR

S.p.A. in the form of royalties on the Azimut trademark due for 2016;

the receivables from the subsidiaries Azimut Capital Management SGR S.p.A. and

Azimut Partecipazioni S.r.l. for direct taxes (IRES) arising from the 2016 positive

taxable income, transferred to the parent company following adoption of the tax

consolidation regime;

the 6,860,748 receivable related to the dividend approved and not yet collected by

AZ Management Fund SA.

227

LIABILITIES

Section 1 – Payables – Item 10

1.1 The breakdown is as follows:

This item amounts to 88,656,657 euro, up by 58,560,823 euro on the previous year end

(30,095,834 euro at 31 December 2015). The item is as follows:

Breakdown/Value Total 31/12/2016

Total

31/12/2015

1. Due to sales network:

1.1 for UCITS sales

1.2 for individual portfolio sales

1.3 for pension fund sales

2. Payables for asset management services:

2.1 for proprietary portfolio management

2.2 for discretionary portfolio management

2.3 for other

3. Payables for other services:

3.1 advisory

3.2 outsourced corporate functions

3.3 other

4. Other payables

4.1 repurchase agreements

of which: government securities

of which for other debt securities

of which for other equity securities and units

4.2 other 88,656,657 30,095,834

Total 88,656,657 30,095,834

Fair value-Level 1

Fair value-Level 2

Fair value-Level 3 88,656,657 30,095,834

Total fair value 88,656,657 30,095,834

At the reporting date, this item includes the residual portion of the loan granted by Banco

Popolare (now Banco Bpm S.p.A.) on 22 April 2008 for an initial amount of 200 million

euro, divided into two lines, A and B, each originally amounting to 100 million euro. The

credit lines are repayable in instalments and expire on 30 June 2013 and 30 June 2018

respectively, with the interest rate calculated based on the Euribor plus 115 basis points

for Line A and 125 basis points for Line B. The loan is not subject to covenants, condition

precedent or subsequent. The year-end balance includes the residual principal

(20,000,000 euro) and the interest accrued on this loan at the reporting date.

228

The change in loans on 31 December 2015 is due to the combined effect of the following

transactions (i) the repayment of the instalment of the loan granted by Banco Popolare

(now Banco Bpm S.p.A.) (Line B) (10,000,000 euro), (ii) the loan granted by Azimut

Partecipazioni S.r.l. (68,500,000) on 18 November 2016. The 24-month loan expires on

16 November 2018 and the interest rate is calculated based on the Euribor plus 150 basis

points.

1.2 "Payables": breakdown by counterparty

Breakdown/Counterparty Banks Financial institutions Clients

of

which

Group

of

which

Group

of

which

Group

1. Payable to sales network:

1.1 for UCITS sales

1.2 for individual portfolio management

sales

1.3 for pension fund sales

2. Payables for asset management services:

2.1 for proprietary portfolio management

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

4.1 repurchase agreements

of which: government securities

of which for other debt securities

of which for other equity securities and

units

4.2 other 20,051,110 68,605,547

Total 31.12.2016 20,051,110 68,605,547

Total 31.12.2015 30,095,834 -

Section 2 – Outstanding securities – Item 20

2.1 Breakdown of item 20 “Outstanding securities”

229

Total 31/12/2016 Total 31/12/2015

Items/Value

Carrying

amount

Fair value

Carrying

amount

Fair value

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

1. Securities

- bonds 226,522,394

244,237,783

221,826,947

236,431,875

- other

securities

Total 226,522,394 244,237,783 221,826,947

236,431,875

This item is solely comprised of the bond “Azimut 2013-2020 Convertibile 2.125%” amounting

to 226,522,394 euro originally composed of 2,500 bonds worth 100,000 euro with a duration

of seven years. The amount refers to total bonds sold and includes the charges incurred

by the Company for the issue and placement, in addition to interest expense accrued at

31 December 2016 which will be paid on the pre-established date. Convertible bonds

bear gross annual interest of 2.125% and can be converted into Azimut Holding S.p.A.

ordinary shares (newly issued and/or existing) from the fourth year and forty-fifth day

after the issue to 20 days prior to the maturity date. The conversion price is set at 24.26

euro. In accordance with IAS 32 and based on that set out in the Part A - Section A.2 on the

accounting policies applied to individual financial statements items, the total debt

component of this financial instrument is 215,050,500 thousand euro, as calculated on 25

November 2013 (issue date), whereas the equity component, amounts to a residual

34,949,500 thousand euro.

2.2 Subordinated securities This category comprises the bond described earlier.

Section 7 – Tax liabilities – Item 70

230

“Tax liabilities” are described in detail in section 12 of these notes to which reference

should be made.

Section 9 - Other liabilities – Item 90

This item amounts to 6,758,760 euro, down by 9,294,376 euro on 16,053,136 euro at 31

December 2015.

9.1 Breakdown of item 90 “Other liabilities”

31/12/2016 31/12/2015

Due to suppliers 2,067,997 1,828,116

Due to company bodies 229,437 186,886

Due to Inland Revenue 430,427 424,645

Due to social security bodies 250,851 154,642

Due to employees 1,629,290 863,668

Other payables 2,150,758 12,595,179

Total 6,758,760 16,053,136

“Other payables” include the amounts due to the subsidiary Azimut Financial Insurance

S.p.A. against the direct taxes (IRES) transferred to the Company in accordance with the

Tax Consolidation Regime.

231

Section 10 – Staff severance pay (TFR) – Item 10

This item amounts to 1,121,967 euro, up by 213,388 euro on the previous year end

(908,579 euro at 31 December 2015).

10.1 “Staff severance pay (TFR): "annual change"

Total 31/12/2016 Total 31/12/2015

A. Opening balance 908,579 749,573

B. Increases 219,468 159,006

B1. Provisions for the year 131,632 118,968

B2. Other increases: 87,836 40,038

C. Decreases 6,080

C1. Payments made 6,080

C2. Other decreases

D. Closing balance 1,121,967 908,579

"Other increases" include the actuarial loss of the year with a direct balancing entry in

the specific shareholders’ equity reserve, net of the related tax effect and the substitute

tax.

10.2 "Other information” In accordance with that set out in the Part A - Section A.2 on the accounting policies

applied to individual financial statements items, staff severance pay was calculated

pursuant to IAS 19, based on the following specific technical, demographic and financial

assumptions:

Demographic assumptions

In order to eliminate the probabilities of removal of personnel in service due to death,

the SIM/F 2000 table was used (ISTAT - Italian National Institute of Statistics - mortality

table by gender), prudentially reduced by 20%. Decreases due to disability were

calculated using the relevant INPS (the Italian social security institution) tables, reduced

by 20%. Pension, which is considered the main reason for outgoing employees, was

subject to a timescale equal to meeting the minimum requirement (contribution period

232

or seniority), calculated in accordance with ruling legislation. The following parameters

were used for other technical, non-financial factors:

- 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 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 - Item 110 11.1 Breakdown of item 110 “Provisions for liabilities and charges”

This item amounts to 30,000 thousand euro at 31 December 2016 (nil balance at 31

December 2015).

11.2 Item 110 “Provisions for risks and charges”: annual change

233

The increase on 31 December 2015 is due to the provision for legal disputes accrued

during the year equal to the present value of the charge that is expected to be necessary

to settle the obligations.

Other provisions Total

Opening balance 0

Accruals 30,000

Utilisation

Other

Total 31/12/2016 30,000

Section 12 - Shareholders’ Equity – Items 120, 130, 140, 150, 160 and 170

The breakdown of shareholders’ equity is as follows:

12.1 Breakdown of item 120 “Share capital”

Types of shares Total

1. Share capital 32,324,092

1.1 Ordinary shares 32,324,092

1.2 Other shares -

At 31 December 2016, the fully paid up and subscribed share capital was composed of

143,254,497 ordinary shares, with a total value of 32,324,092 euro.

12.2 Breakdown of item 130 “Treasury Shares”

Types of shares Total

1. Treasury shares 81,288,161

1.1 Ordinary shares 81,288,161

1.2 Other shares -

At 31 December 2016, Azimut Holding S.p.A. held 10,387,189 treasury shares at an

average carrying amount of 7.826 euro per share.

12.3 Breakdown of item 140 “Equity instruments”

234

This item amounts to 70,949,500 euro. In accordance with IAS 32 and based on that set

out in the Part A - Section A.2 on the accounting policies applied to individual financial

statements items, this item includes:

at the issue amount, as per the Shareholders' resolution of 29 April 2010, of

1,500,000 profit-participating financial instruments recognised in the previous year

for a total of 36,000,000 euro (equal to their fair value calculated by an independent

leading company);

the equity component of the convertible bond issued on 25 November 2013 of

34,949,500 euro, calculated on a residual basis as the difference between the fair

value of the bond, as a whole, and the fair value of the debt component. The costs

borne by the Company for the bond issue are allocated proportionally to the debt

component and the equity component.

12.4 Breakdown of item 150 “Share premium reserve”

The share premium reserve amounts to 173,986,915 thousand euro at 31 December

2016 (173,986,915 euro at 31 December 2016).

12.5 Other information

12.5.1 Breakdown of Item 160 “Reserves”

Legal reserve Other reserves Total

A. Opening balance 6,464,818 312,621,658 319,086,476

B. Increases 54,884,378 54,884,378

B.1 Profit appropriations

51,021,231 51,021,231

B.2 Other changes

3,863,147 3,863,147

C. Decreases -132,867,308 -132,867,308

C.1 Allocations

-132,867,308 - 132,867,308

- loss account reserve

- dividends

-132,867,308 -132,867,308

- transfers to share capital

C.2 Other changes

0

D. Closing balance 234,638,728 241,103,546

235

The following gives a breakdown of shareholders’ equity, showing the origin and level of

availability and distributability of the items, in accordance with Article 2427 paragraph 7

bis of the Italian Civil Code.

BREAKDOWN OF SHAREHOLDERS' EQUITY (Art. 2427 no. 7 bis)

Type/Description Total Possible

use Available amount

Summary of uses over past three years

Loss account reserve Other

Share capital 32,324,092

Share capital reserve

Treasury share reserve -81,288,162

Shares or quotas of parent company

Share premium reserve 173,986,915 A, B, C 173,986,915

Other reserves -1,133,880

Equity instruments 70,949,500

Income-related reserve:

Legal reserve 6,464,818 B 6,464,818

Unallocated earnings 235,772,608 A, B, C 235,772,608

Total 437,075,891 416,224,341

A: share capital increase B: to cover losses C: dividends

12.5.2 Breakdown of item 170 “Valuation reserves”

Available-for-sale

financial assets Severance pay (TFR) Total

A. Opening balance -2,250,375 -62,779 -2,313,154

B. Increases 3,285,715 4,365 3,290,080

B.1 Increases in fair value 3,269,481 3,269,481

B.2 Other changes 16,234 4,365 20,600

C. Decreases 964,910 18,525 983,435

C.1 Decreases in fair value 62,828 62,828

C.2 Other changes 902,082 18,525 920,607

D. Closing balance 70,430 -76,939 -6,509

236

PART C - NOTES TO THE INCOME STATEMENT

Section 1 – Fee and commission income and expenses–Items10 and 20

Fees and commissions amount to 2,000,000 euro (unchanged from last year) and include

royalties on the "Azimut" trademark for the year, charged to the subsidiary Azimut Capital

Management SGR S.p.A..

1.1 “Fee and commission income and expenses”

SERVICES Total 31/12/2016 Total 31/12/2015

Fee and

comm.

income

Fee

and

comm.

expens

es

Fee and

comm. net

Fee and

comm.

income

Fee

and

comm.

expens

es

Fee and

comm. net

A. ASSET MANAGEMENT

1. Proprietary portfolio

management

1.1 Mutual funds

- Management fees

- Incentive fees

- Entry / redemption fees

- Switch fees

- Other fees

Total mutual fund fees

1.2 Individual portfolio

management

- Management fees

- Incentive fees

- Entry / redemption fees

- Other fees

Total individual portfolio

management fees

1.3 Open-ended pension

funds

- Management fees

- Incentive fees

- Entry / redemption fees

- Other fees

Total open pension fund fees

2. Discretionary portfolio

management

- Management fees

- Incentive fees

- Other fees

Total discretionary portfolio

management fees

237

TOTAL ASSET

MANAGEMENT FEES (A)

B. OTHER SERVICES

- Consulting

- Royalties

2,000,000

2,000,000

2,000,000

2,000,000

TOTAL FEES FOR OTHER

SERVICES (B) 2,000,000 2,000,000 2,000,000 2,000,000

TOTAL FEES (A+B) 2,000,000 2,000,000 2,000,000 2,000,000

Section 2 - Dividends and similar income – Item 30

This item amounts to 187,869,443 euro, up by 17,888,275 euro on the previous year end

(169,981,168 euro at 31 December 2015).

2.1 Breakdown of item 30 “Dividends and similar income”

Items/Income

Total 31/12/2016 Total 31/12/2015

Dividends Income from

UCI units Dividends Income from UCI

units

1. Financial assets held

for trading

2. Available-for-sale

financial assets 255,232

2,555

3. Financial assets measured at fair

value

4. Equity investments 187,614,211 169,978,612

Total 187,614,211 255,232 169,978,612 2,555

“Dividends from equity investments" may be analysed as follows:

Company 2016 2015

Azimut Consulenza SIM S.p.A. 66,780,000 49,959,000

Azimut Capital Management SGR S.p.A. 25,500,000.00 -

AZ Fund Management SA 90,452,461 119,022,153

AZ Life Dac 3,900,000.00 -

Augustum Opus SIM S.p.A. 981,750 997,458

Total 187,614,211 169,978,611

The amount related to the subsidiary AZ Fund Management SA also includes the interim

dividend whose distribution was approved during the year.

238

Section 3 - Interest – Items 40 and 50

Interest income

This item amounts to 190,430 euro (543,980 euro in 2015), down on the previous year. It

includes gross interest income on current accounts.

3.1 Breakdown of item 40 “Interest income and similar income”

Items/Technical forms

Debt securities

Repurchase

agreements

Deposits and

current accounts

Other Total 31/12/2016

Total 31/12/2015

1. Held-for-trading financial assets 2. Financial assets measured at fair value

3. Available-for-sale financial assets

4. Financial assets held

to maturity

5. Receivables

190,430 543,980

6. Other assets

7. Hedging derivatives

Total

190,430 543,980

239

Interest expense

This item amounts to 11,162,874 euro (11,018,342 euro in 2015), up by 144,532 euro on the

previous year.

3.2 Breakdown of item 50 “Interest expense and similar charges”

Items/Technical forms Loans Repurchase agreements

Securities Other Total

31/12/2016 Total

31/12/2015

1. Payables

373,667

262 373,929 475,500

2. Outstanding securities

10,788,945 10,788,945

10,542,840 3. Held-for-trading financial liabilities - 4. Financial liabilities measured at fair value -

5. Other liabilities 2

6. Hedging derivatives -

Total

373,667 -

10,788,945

262 11,162,874

11,018,342

Section 7 - Profits (losses) on disposal or repurchase – Item 90

The item is a profit of 101,830 euro (2015: 11,734,495) and relates to the net profits arising

from the disinvestment of the mutual funds held by the Company as part of liquidity

management policies.

7.1 Breakdown of item 90 “Profits (losses) on disposal and repurchase”

Items/Income items

Total 31/12/2016 Total 31/12/2015

Profit Loss Net profit Profit Loss Net profit

1. Financial assets

1.1 Available-for-sale financial

assets

163,300 55,268 108,032

11,813,137 11,813,137

1.2 Held-to-maturity assets

-

-

-

-

1.3 Other financial assets

-

-

-

-

Total (1)

163,300 55,268 108,032 11,813,137 11,813,137

2. Financial liabilities

2.1 Payables

-

-

-

-

2.2 Outstanding securities

6,202

-

6,202

490

79,132

78,642

Total (2)

-

6,202 6,202

490

79,132

78,642

Total (1+2)

163,300 61,470 101,830 11,813,627 79,132 11,734,495

Section 9 – Administrative costs – Item 110

240

This item amounts to 19,880,685 euro, up by 3,145,178 euro on the previous year

(16,735,507 euro in 2015).

9.1 Breakdown of item 110.a. “Personnel costs”

Items/Sectors Total 31/12/2016 Total 31/12/2015

1. Employees 6,607,988 4.904344

a) wages and salaries 4,952,611 3,712,702

b) social security 1,284,638 957975

c) staff severance pay (TFR)

d) pension contributions

e) TFR provisions 301,248 233,667

f) accrual to the pension provision and similar obligations:

- defined contribution

- defined benefit

g) private pension plans:

- defined contribution

- defined benefit

h) other expenses 69,491 86,307

2. Other personnel 599,507 317,383

3. Directors and Statutory Auditors 1,814,764 1,620,442

4. Early retirement costs - -

5. Cost recoveries for employees seconded to other companies - -

6. Reimbursed costs for employees seconded to the company - -

Total 9,022,259 6,928,476

9.2 Average number of employees by category

Position 31/12/2016 31/12/2015

Managers 17 12 Middle managers 11 11 Office staff 2 2 Total 30 25

241

9.3 Breakdown of item 110.b. “Other administrative costs”

31/12/2016 31/12/2015

Professional services rendered 3,404,903 4,265,162

Insurance premiums 118,768 114,467

Indirect taxes 39,835 80,876

Advertising, promotion and marketing expenses 710,456 1,088,866

Outsourcing and EDP services 3,370,594 1,877,374

Expenses for acquisition of non-professional goods and services 3,213,870 2,380,286

Total 10,858,426 9,807,031

242

Section 10 - Net impairment and write-ups of tangible assets – Item 120

10.1 Breakdown of “Net impairment and write-ups of tangible assets”

Items/Impairment and write-ups Amortisation

Impairment

losses Write-ups Net result

1. Group-owned 345,795 345,795

- business purposes 345,795 - - 345,795

- investment purposes - - - -

2. Under finance lease

- business purposes - - - -

- investment purposes - - - -

Total 345,795 - - 345,795

Section 11 - Net impairment and write-ups of intangible assets – Item 130

11.1 Breakdown of item 130 “Net impairment and write-ups of intangible assets”

Items/Impairment and write-ups Amortisation Impairment losses Write-

ups Net result

1. Goodwill - - - -

2. Other intangible assets 637,926 637,926

2.1 Group-owned 637,926 - - 637,926

- generated internally - - - -

- other (software packages) 637,926 - - 637,926

2.2 Under finance lease - - - -

Total 637,926 - - 637,926

Section 13 – Net accruals to provisions for risks and charges – Item 150 This item of 30,000 euro (2015: nil balance) comprises the net accrual to the provision for

sundry risks and charges related to litigation risks.

Section 14 - Other operating income and costs – Item 160

This item amounts to 1,756,617 euro (2015: 969,890 euro) and mainly includes recharged

amounts for coordination activities by the parent company and other amounts recharged to

subsidiaries.

Section 17 - Income tax on profit from continuing operations – Item 190

243

Taxes for the year amount to a positive 2,081,767 euro (positive by 103,498 in 2015).

17.1 Breakdown of item 190 “Income tax on profit from continuing operations”

Total

31/12/2016 Total

31/12/2015

1. Current taxes 2,789,763 - 3,133,216

2. Changes in current taxes of previous periods/years

3. Decrease in current taxes for the period/year

3 bis. Reduction in current taxes for the year due to tax credits pursuant to Law no. 214/2011

4. Change in deferred tax assets - 6,091,339 - 784,899

5. Change in deferred tax liabilities 1,219,809 3,814,617

Taxes for the period/year -2,081,767 -103,498

Income tax for the year mainly refers to IRAP of the year, calculated in accordance with ruling

legislation and income from tax consolidation amounting to the taxes receivable and due on

taxable income transferred to the parent company by the Italian subsidiaries that have

adopted the tax consolidation regime pursuant to Article 117 of Italian Presidential Decree

917/86.

“Change in deferred tax liabilities” mainly includes deferred tax liabilities, in line with IAS 12,

related to the temporary differences between the carrying amount and the tax value of

goodwill.

244

17.2 Reconciliation of theoretical tax burden and effective tax burden

2016

Taxable income Tax % rate

IRES

Pre-tax profit 159,861,040

Theoretical IRES tax burden 43,961,786 27.50%

Effect of increases 4,122,035 1,133,560 28.21%

Effect of decreases 191,455,580 (52,650,285)

of which: Dividends 178,576,538 (49,108,548) -2.51%

Goodwill amortisation 9,334,808 (2,567,072) -4.12%

Trademark amortisation 3,055,556 (840,278) -4.64%

Other 488,678 (134,387) -4.73%

Change in deferred tax assets 2,978,065 818,968 -4.21%

Change in deferred tax liabilities 12,427,280 908,005 -3.65%

Other changes 141,193 -3.56%

IRES tax for the year (5,686,773) -3.56%

IRES effective tax rate -3.56%

IRAP taxable income 56,068,375 3,123,008 5.57%

Change in deferred tax assets 3,055,556 170,194 5.57%

Change in deferred tax liabilities 9,334,808 311,804 3.34%

IRAP tax for the year 3,605,007 3.34%

Total income tax for the year (2,081,767)

245

PART D – OTHER INFORMATION

Section 1 – Specific references to business activities

1.1. Commitments, guarantees and third party assets

1.1.1 Commitments and guarantees issued to third parties

At 31 December 2016, the Company had commitments to Banca Popolare di Vicenza and

Banco Bpm S.p.A. for a total amount 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 2016.

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.

1.1.4 Own securities deposited with third parties Own securities deposited with third parties 31/12/2016 31/12/2015

UCI units deposited with BNP Paribas 158,555,800 153,487,168

UCI units deposited with Banco Bpm S.p.A. 626,696 0

UCI units deposited with Banque De

Rothschild Luxembourg

15,606,070 15,185,009

Azimut Holding S.p.A. treasury shares

deposited with Banco Bpm S.p.A.

163,437,887 237,634,153

Azimut Holding S.p.A. treasury shares

deposited with BPVI

1,302,931 1,894,425

Total 339,529,384 408,200,755

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 risks.

Moreover, the financial instruments in question are easily liquidated and are monitored

246

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 company’s activity.

At 31 December 2016, Azimut Holding S.p.A. held only funds managed by group companies in

its proprietary portfolio as part of liquidity management policies. Details at the reporting

date:

Name Issuer Company Total 31/12/2016 Type

AZ Fund 1 Az Fund Mgt SA Az Fund Mgt SA 158,555,800

Luxembourg

open-ended

fund

Eskatos Multistrategy Eskatos Capital Mgt SA Eskatos Capital Mgt SA 15,606,070

Luxembourg

open-ended

fund

Antares fund Futurimpresa SGR S.p.A. Futurimpresa SGR S.p.A. 626,696

Italian

open-ended

fund

Total 174,788,566

* comprising the item “Available-for-sale financial assets” in the financial statements at 31 December 2016.

As regards the risks linked to the investment held in Eskatos – AZ Multistrategy ILS Fund (a

fund of “Eskatos S.C.A., SICAV-FIS), this UCITS is an asset that is completely uncorrelated with

the normal risks that instruments usually present on the market are subject to. The yield of

the Eskatos – AZ Multistrategy ILS Fund was positive during the period, as well as in the first

few months of 2017.

Specifically, the assessment is performed by periodically checking that the management of the

Eskatos – AZ Multistrategy ILS Fund (a fund of “Eskatos S.C.A. SICAV-FIS) applies adequate

measurement techniques in line with the specific characteristics of the portfolio and

implements the processes necessary to ensure that the risks associated to the instruments

invested by the fund and the relevant contributions to the portfolio total risk are identified

based on sound and reliable qualitative and quantitative information, while considering the

actuarial peculiarities of the insurance-linked securities; moreover, it should carry out stress

tests and scenario analyses to identify any potential risks associated to significant events

related to the value of the fund portfolio or part of it.

As regards the assessment procedure for the management of financial assets on behalf of third

parties, the risk management function plays a significant role. This service involves both

performing ex post evaluations of the risk profiles of the various managed portfolios and

247

providing the Investment Department with an ex ante market risk evaluation procedure.

Specifically, the assessment is performed by analysing the portfolios of the individual funds

and on-going monitoring of the significant risk factors identified, such as the average financial

duration, exposure to various asset classes and financial instruments, currency exposure and

the credit rating of the issuers.

The assessment of the fund’s risk profile is performed ex-post both in absolute terms

(volatility understood as the standard annual deviation) and in relative terms compared to

the benchmark (tracking error volatility). 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. Where necessary, the VaR represents the basis for the

establishment of the limits within which the manager may accept the 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, where disclosed.

3.2 Operational risks

Qualitative information

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

The Risk Management function “maps out” the risks in the broader framework of its own

activities, preparing and constantly maintaining an up-to-date database of the risks identified.

This is then discussed by the Internal Control and Risk Management Committee, which

analyses the risks at group level.

Activities which show significant risk values are analysed and assessed by this Committee

and, if required, the necessary action is subsequently taken.

Section 4 - Information on shareholders' equity

4.1 Company shareholders’ equity

4.1.1 Qualitative information

For information on the individual shareholders’ equity items, please refer to Part B of these

notes.

4.1.2 Quantitative information

4.1.2.1 Company shareholders’ equity: breakdown

Total 31/12/2016 Total 31/12/2015 Items/Value

248

1. Share capital 32,324,092 32,324,092

2. Share premium reserve 173,986,915 173,986,915

3. Reserves

241,103,546 319,086,477

- income-related

a) legal 6,464,818 6,464,818

b) statutory

c) treasury shares

d) other 235,772,608 313,755,539

- other -1,133,880 - 1,133,880

4. (Treasury shares) - 81,288,162 - 80,726,764

5. Valuation reserves - 6,509 - 2,313,154

Available-for-sale financial assets 70,430 -2,250,375

- Tangible assets

- Intangible assets

- Foreign investment hedge

- Cash flow hedge

- Exchange rate differences - Non-current assets held for sale and discontinued

operations

- Special revaluation laws

- Actuarial gains/losses on defined benefit plans - 76,939 - 62,779 - Share of valuation reserves for investments

measured at equity

6. Equity instruments 70,949,500 71,452,010

7. Profit (loss) for the period/year 161,942,807 156,753,585

Total 599,012,189 670,563,161

4.1.2.2 Valuation reserves of available-for-sale assets: breakdown

Assets/Value

Total 31/12/2016 Total 31/12/2015

Positive reserve Negative reserve Positive reserve Negative reserve

Debt securities

Equity securities

UCI units 70,430 - 2,250,375

Loans

Total 70,430 - - - 2,250,375

4.1.2.3 Valuation reserves of available-for-sale financial assets: "annual change"

Debt securities Equity securities UCI units Total

249

1. Opening balance - - 2,250,375 - 2,250,375

2. Increases - - 3,285,715 3,285,715

2.1 Increases in

fair value - - 3,269,481 3,269,481

2.2 Transfer

through income

statement of

negative reserves: - - 16,234 16,234

- following

impairment - - - -

- following

disposal - - - -

2.3 Other

changes - - -

3. Decreases - - 964,910 964,910

3.1 Decreases in

fair value - 62,828 62,828

3.2 Impairment

write-downs - - -

3.3 Transfer

through income

statement of

positive reserves:

following disposal - - 2,975 2,975

3.4 Other

changes - - 899,107 899,107

4. Closing balance - - 70,430 70,430

250

Section 5 - Statement of comprehensive income

Items Pre-tax profit Income

tax Net profit

10. Profit for the period/year 159,861,040 2,081,767 161,942,807

Other comprehensive items not transferred through profit or loss -19,531 5,371 -14,160

20. Tangible assets

30. Intangible assets

40. Defined benefit plans -19,531 5,371 -14,160

50. Non-current assets held for sale

60. Share of valuation reserves of investments measured at equity

Other comprehensive items transferred through profit or loss 3,201,111 -880,305 2,320,805

70. Foreign investment hedge:

a) changes in fair value

b) transfer through profit or loss

c) other changes

80. Exchange rate differences:

a) changes in fair value

b) transfer through profit or loss

c) other changes

90. Cash flow hedge:

a) changes in fair value

b) transfer through profit or loss

c) other changes

100. Available-for-sale financial assets:

a) changes in carrying amount 3,037,810 -835,398 2,202,412

b) transfer through profit or loss

- impairment losses

- profits/losses on disposal 163,300 -44,908 118,393

c) other changes

110. Non-current assets held for sale:

a) changes in fair value

b) transfer through profit or loss

c) other changes

120. Share of valuation reserves of investments

measured at equity:

a) changes in fair value

b) transfer through profit or loss

- impairment losses

- profits/losses on disposal

c) other changes

130. Total other comprehensive income 3,181,580 -874,934 2,306,645

140. Comprehensive income (Items 10+130) 163,042,620 1,206,833 164,249,452

251

Section 6 - Related party transactions 6.1 Information on key management fees

At 31 December 2016, directors' fees amounted to 1,606,764 euro and the fees for the Board

of Statutory Auditors members stood at 208,000 euro.

The Board of Directors is composed of 12 members. The Board of Auditors has three standing

members.

6.2 Related party disclosures

Related party transactions refer exclusively to commercial transactions carried out by Azimut

Holding S.p.A. with its subsidiaries in 2016. These transactions are part of the Group’s

ordinary operations and are conducted on an arm’s length basis. The most important

commercial transactions are described below:

for use of the trademark, the subsidiary Azimut Capital Management Sgr S.p.A. pays

Azimut Holding S.p.A. annual royalties totalling 2,000,000 thousand euro, established

by contract;

Azimut Holding S.p.A., as the parent company, 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 1,000,000 euro) is payable for the

coordination activities carried out by the Parent 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., Futurimpresa Sgr S.p.A., Augustum Opus Sim S.p.A. and Cgm Italia

Sgr S.p.A.. The 2016 balance is 721,517 euro.

252

Total Related parties

Absolute value %

Assets

Receivables: 15,901,903 349,328 2.20%

Receivables for cash held in deposit accounts 349,328 2.20%

Other assets: 16,419,522 10,793,265 65.73%

Receivables for tax consolidation 1,657,936 10.10%

Receivables for dividends to be collected 6,860,748 41.78%

Invoices issued for administrative cost recoveries 274,581 1.67%

Invoices to be issued for Royalties 2,000,000 12.18%

Liabilities

Payables 88,656,657 68,605,547 77.38%

Short-term loan 68,605,547 77.38%

Other liabilities: 6,758,760 2,352,463 34.81%

IRES payables 2,123,026 31.41%

Due to the Board of statutory auditors 229,437 3.39%

Income statement

Interest expense 11,162,874 105,547 0.95%

Administrative costs 19,880,685 1,814,764 9.13%

Statutory auditors' fees 208,000 1.05%

Directors' fees 1,606,764 8.08%

Commission income (royalties) 2,000,000 2,000,000 100%

Other operating income and costs 1,756,617 1,753,517 100%

253

Section 7 – Other information

7.1 Dividends paid

The ordinary dividend for 2016 amounts to 1.50 euro per share.

7.2 Significant non-recurring events and transactions

During the year, Azimut Holding S.p.A. did not carry out non-recurring equity transactions

that were not disclosed in these notes.

There were no atypical and/or unusual transactions.

7.1 Auditing and non-auditing service fees

Pursuant to article 149 duodecies of Consob regulation no. 11971/99 and subsequent

amendments and supplements, the details of fees (net of VAT and expenses) due to the audit

company and companies within its network for auditing and non-auditing services during

2016 are as follows:

Service Service provider Fees

(Euro)

Audit PricewaterhouseCoopers S.p.A. 70,000

Certification services PricewaterhouseCoopers S.p.A. 14,000

Other services PricewaterhouseCoopers Advisory S.p.A. 5,000

Tax services for

compliance stamp on CNM

PricewaterhouseCoopers S.p.A. 3,500

Total 92,500

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

254

ANNEX A

Equity investments

Name Carrying amount at

31/12/2016 Stake

Voting rights

Registered office

Total assets Total

income Shareholders’

equity

Profit/(loss) for the most recent

year Listed

Assets

A. Wholly-owned subsidiaries

AZ Fund Management SA 3,239,925 51% 51% Luxembourg 166,583,797 477,320,459 73,523,572 223,141,829 NO Mutual funds

AZ Life Ltd

10,012,150 100% 100% Ireland 6,579,069,990 63,660,299 87,968,645 20,545,689 NO

Life insurance

Azimut Capital Management SGR S.p.A. 306,099,173 51% 51% Milan 226,392,621 163,630,324 91,512,080 26,806,416 NO

Mutual and speculative funds management

AZ International Holdings SA 203,485,552 100% 100% Luxembourg 203,410,058 1,751,152 203,053,962 -1,167,165 NO Equity investment management

Azimut Global Counseling S.r.l. 1,510,000 100% 100% Milan 479,474 438,436 131,737 -437,522 NO Advisory services

Azimut Enterprises Holding S.r.l. 11,788,442 100% 100% Milan 10,851,855 0 10,850,703 -800,640 NO

Equity investment management

Augustum Opus SIM S.p.A. 10,000,000 51% 51% Milan 8,825,484 8,104,659 4,652,070 2,979,753 NO Unsecured placement and order receipt

Futurimpresa SGR S.p.A. 2,469,900 55% 55% Milan 4,876,164 1,477,271 4,473,748 243,992 NO Mutual funds

Azimut Financial Insurance S.p.A. 1,000,000 100% 100% Milan 30,125,807 18,601,034 -4,985,568 - 5,908,687 NO Insurance agent

Azimut Partecipazioni S.r.l. 3,068,303 100% 100% Milan 79,350,828 75,361,804 77,129,980 74,275,885 NO Equity investment management

Note:

The difference between the carrying amount and the value under the equity method for the investees Azimut Capital Management SGR S.p.A. and AZ Fund Management SA

refers to the revaluation performed after reallocation of goodwill arising from merger generated in 2002.

On behalf of the Board of Directors Chief Executive Officer

(Sergio Albarelli)

255

Annex B Statement of significant equity investments pursuant to art. 125 of Consob regulation no.

11971/1999

Reporting date: 31 December 2016

Name Country

Stake

Type of ownership

Share/quotaholder % stake

1. Azimut Capital Management Sgr S.p.A.

Italy Azimut Holding S.p.A. 100 Direct ownership

2. AZ Fund Management SA Luxembourg

Azimut Holding S.p.A. 51 Direct ownership

Azimut Partecipazioni S.p.A. 49 Indirect ownership

3. AZ Life Ltd Ireland Azimut Holding S.p.A. 100 Direct ownership

4. Azimut Global Counseling S.r.l. Italy Azimut Holding S.p.A. 100 Direct ownership

5. Azimut Enterprises Holding S.r.l. Italy Azimut Holding S.p.A. 100 Direct ownership

6. Augustum Opus Sim S.p.A. Italy Azimut Holding S.p.A. 51 Direct ownership

7. Futurimpresa Sgr S.p.A. Italy Azimut Holding S.p.A. 55 Direct ownership

8. Azimut Financial Insurance S.p.A.

Italy Azimut Holding S.p.A. 100 Direct ownership

9. Azimut Partecipazioni S.r.l. Italy Azimut Holding S.p.A. 100 Direct ownership

10. AZ International Holdings S.A. Luxembourg Azimut Holding S.p.A. 100 Direct ownership

11. AN Zhong (AZ) IM Hong Kong AZ International Holdings SA 100 Indirect ownership

12. AN Zhong (AZ) IM HK Hong Kong AN Zhong (AZ) IM 100 Indirect ownership

13. AZ Investment Management Shanghai AN Zhong (AZ) IM 100 Indirect ownership

14. Compagnie de Gestion priveè Monegasque

Monaco AZ International Holdings SA 51 Indirect ownership

15. CGM Italia SGR S.p.A. (formerly CGM Italia SIM S.p.A)

Italy Compagnie de Gestion priveè Monegasque

51 Indirect ownership

16. Katarsis Capital Advisors SA Lugano AZ International Holdings SA 100 Indirect ownership

17. Eskatos Capital Management Sarl

Luxembourg Katarsis Capital Advisors SA 100 Indirect ownership

18. AZ Swiss & Partners SA (formerly AZ Swiss SA)

Switzerland AZ International Holdings SA 51 Indirect ownership

19. AZ Sinopro Investment Planning Ltd

Taiwan AZ International Holdings SA 51 Indirect ownership

20. AZ Sinopro Investment Planning Ltd

Taiwan AZ Sinopro Investment Planning Ltd

51 Indirect ownership

21. AZ Sinopro Insurance Planning Ltd

Taiwan AZ Sinopro Investment Planning Ltd

51 Indirect ownership

22. Atheneaum Ltd Singapore AZ International Holdings SA 100 Indirect ownership

23. AZ Brasil Holdings Ltda Brazil AZ International Holdings SA 100 Indirect ownership

24. Quest Partecipacoes S.A. Brazil AZ Brasil Holdings Ltda 60 Indirect ownership

25. Quest Investimentos Ltda Brazil Quest Participações Ltda 60 Indirect ownership

26. Azimut Brasil Wealth Management Holding S.A. (formerly AZ FI Holdings)

Brazil AZ Brasil Holdings Ltda 100 Indirect ownership

27. M&O Consultoria Ltda Brazil Azimut Brasil WM Holding SA 100 Indirect ownership

256

28. Futurainvest Gestão de Recursos Ltda

Brazil Azimut Brasil WM Holding SA 100 Indirect ownership

29. AZ & Partners Gestão de Recursos Ltda (formerly BRZ Gestấo de Patrimônio)

Brazil Azimut Brasil WM Holding SA 100 Indirect ownership

30. Azimut Brasil Wealth Management Ltda

Brazil Azimut Brasil WM Holding SA 89 Indirect ownership

31. Azimut Portfoy AS Turkey AZ International Holdings SA 100 Indirect ownership

32. AZ Mexico Holdings S.A. de CV (formerly AZ Profie SA)

Mexico AZ International Holdings SA 94.2 Indirect ownership

33. Mas Fondos S.A. Mexico AZ Mexico Holdings S.A. de CV (formerly AZ Profie SA)

94.2 Indirect ownership

34. Next Generation Advisory PTY Ltd

Australia AZ International Holdings SA 53.81 Indirect ownership

35. Eureka Whittaker Macnaught PTY Ltd

Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

36. Pride Advice PTY Ltd Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

37. Lifestyle Financial Planning Services (LFPS) PTY Ltd

Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

38. Eureka Financial Group PTY Ltd

Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

39. Pride Financial PTY Ltd Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

40. Wise Planners PTY Ltd Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

41. Domane Financial Advisers PTY LTD

Australia Wise Planners PTY Ltd 53.81 Indirect ownership

42. Financial Lifestyle Partners PTY Ltd

Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

43. Harvest Wealth PTY Ltd Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

44. RI Toowoomba PTY Ltd Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

45. Empowered Financial Partners PTY Ltd

Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

46. Wealthwise PTY Ltd Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

47. Priority Advisory Group PTY Ltd

Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

48. Sterling Planners PTY Ltd Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

49. Logiro Unchartered PTY Ltd Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

50. Aspire Pty Ltd Australia Logiro Unchartered PTY Ltd 53.81 Indirect ownership

51. On-Track Financial Solutions Pty Ltd

Australia Next Generation Advisory PTY Ltd

53.81 Indirect ownership

52. AZ Sestante Ltd (formerly Ironbark Funds Management (RE) Ltd)

Australia AZ International Holdings SA 76 Indirect ownership

53. AZ Andes S.p.A. Chile AZ International Holdings SA 90 Indirect ownership

54. Sigma Funds Management PTY Ltd

Australia AZ International Holdings SA 51 Indirect ownership

55. AZ US Holding Inc. United States AZ International Holdings SA 100 Indirect ownership

56. AZ Apice Capital Management LLC

United States AZ US Holding Inc. 70 Indirect ownership

AZ Industry & Innovation S.r.l. in liquidation

Italy Azimut Holding S.p.A. 40 Direct ownership

Programma 101 Sicaf S.p.A. Italy

Azimut Enterprises Holding S.r.l.

22.49 Indirect ownership

257

Siamosoci S.r.l. Italy Azimut Enterprises Holding S.r.l.

22.1 Indirect ownership

Cofircont Compagnia Fiduciaria S.p.A.

Italy Azimut Enterprises Holding S.r.l.

30 Indirect ownership

Club 2 Investimenti S.p.A. Italy

Azimut Enterprises Holding S.r.l.

17.9 Indirect ownership

On behalf of the Board of Directors

Chief Executive Officer

(Sergio Albarelli)

258

Certification of the separate 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 2016 separate financial statements. 2. The evaluation of the adequacy of the administrative and accounting procedures for the preparation of the separate financial statements at 31 December 2016 is based on a process designed by Azimut Holding in line with the Internal Control – Integrated Framework model issued by the Committee of Sponsoring Organisations of the Treadway Commission, an internationally accepted reference framework. 3. The undersigned also represent that:

3.1 the separate financial statements at 31 December 2016: - were prepared in accordance with the International Financial Reporting Standards

endorsed by the European Commission pursuant to Regulation (EC) 1606/02 of the European Parliament and Council, of 19 July 2002;

- are consistent with the accounting books and records; - give a true and fair view of the financial position and results of operations of the issuer;

3.2 the Management Report contains a reliable analysis of the operating performance and results,

in addition to the situation of the issuer, and a description of the main risks and uncertainties to which it is exposed.

Milan, 09 March 2017 Chief Executive Officer Manager in charge of financial

reporting

(Sergio Albarelli) (Alessandro Zambotti)