Aeffe

Quarterly Report • May 10, 2018

INTERIM CONSOLIDATED FINANCIAL STATEMENT AT 31 MARCH 2018

Disclaimer

This Interim consolidated financial statement at 31 March 2018 has been translated into English solely for the convenience of the International reader. In the event of conflict or inconsistency between the terms used in the Italian Version of the report and the English version, the Italian version shall prevail, as the Italian version constitutes the official document.

SUMMARY

INTERIM CONSOLIDATED FINANCIAL STATEMENT AT 31 MARCH 2018	1
CORPORATE BOARDS OF THE PARENT COMPANY	3
ORGANISATION CHART	4
BRANDS PORTFOLIO	5
HEADQUARTERS	6
SHOWROOMS	7
MAIN FLAGSHIPSTORE LOCATIONS UNDER DIRECT MANAGEMENT	8
MAIN ECONOMIC-FINANCIAL DATA	9
FINANCIAL STATEMENTS	10
INTERIM MANAGEMENT REPORT	14
EXPLANATORY NOTES	15

Corporate boards of the Parent Company

Chairman

Massimo Ferretti

Deputy Chairman Alberta Ferretti

Chief Executive Officer Simone Badioli

Directors

Marcello Tassinari – Managing Director Roberto Lugano Daniela Saitta Sabrina Borocci Alessandro Bonfiglioli

President

Angelo Miglietta

Statutory Auditors

Fernando Ciotti Carla Trotti

Alternate Auditors

Nevio Dalla Valle Daniela Elvira Bruno

Board of Compensation Committee

President Daniela Saitta

Members Roberto Lugano Sabrina Borocci

Board of Internal Control Committee

President

Roberto Lugano

Members Daniela Saitta Alessandro Bonfiglioli

Board of Directors

Organisation chart

Brands portfolio

Headquarters

AEFFE

Via Delle Querce, 51 47842 - San Giovanni in Marignano (RN) Italy

MOSCHINO

Via San Gregorio, 28 20124 - Milan Italy

POLLINI

Via Erbosa I° tratto, 92 47030 - Gatteo (FC) Italy

VELMAR

Via Delle Querce, 51 47842 - San Giovanni in Marignano (RN) Italy

Showrooms

MILAN (FERRETTI – PHILOSOPHY – POLLINI – CEDRIC CHARLIER) Via Donizetti, 48 20122 - Milan Italy

LONDON

(FERRETTI – PHILOSOPHY – MOSCHINO) 28-29 Conduit Street W1S 2YB - London UK

PARIS

(FERRETTI – PHILOSOPHY – MOSCHINO) 43, Rue du Faubourg Saint Honoré 75008 - Paris France

NEW YORK

(GROUP) 30 West 56th Street 10019 - New York USA

MILAN

(MOSCHINO) Via San Gregorio, 28 20124 - Milan Italy

MILAN

(LOVE MOSCHINO) Via Settembrini, 1 20124 - Milan Italy

PARIS

(CEDRIC CHARLIER) 28 Rue de Sevigne 75004 - Paris France

Main flagshipstore locations under direct management

ALBERTA FERRETTI

Milan Rome Capri Paris London Shanghai

POLLINI

Milan Venice Bolzano Varese

SPAZIO A

Florence Venice

MOSCHINO

Milan Rome Capri Paris London Los Angeles New York Seoul Pusan Daegu

Main economic-financial data

		I Q	I Q
		2017	2018
Total revenues	(Values in millions of EUR)	81.4	96.1
Gross operating margin (EBITDA)	(Values in millions of EUR)	15.4	20.3
Net operating profit/(loss) (EBIT)	(Values in millions of EUR)	12.5	17.4
Profit/(loss) before taxes	(Values in millions of EUR)	12.2	16.9
Net profit/(loss) for the Group	(Values in millions of EUR)	8.1	11.3
Basic earnings per share	(Values in units of EUR)	0.076	0.105
Cash Flow (net result + depreciation)	(Values in millions of EUR)	11.6	14.8
Cash Flow/total revenues	Ratio	14.2	15.4

		31 December	31 March	31 December	31 March
		2016	2017	2017	2018
Net capital invested	(Values in millions of EUR)	227.6	240.8	229.0	244.1
Net financial indebtedness	(Values in millions of EUR)	59.5	64.4	50.6	53.8
Group net equity	(Values in millions of EUR)	135.8	143.5	146.1	157.4
Group net equity per share	(Values in units of EUR)	1.3	1.3	1.4	1.5
Current assets/Current liabilities	Ratio	1.8	2.1	1.9	2.1
Current assets less invent./Current liabilities (ACID Test)	Ratio	0.8	0.9	0.8	1.0
Net financial indebtedness/Net equity	Ratio	0.4	0.4	0.3	0.3

Financial statements

Income statement at 31 March

(Values in units of EUR)	Notes	I Q	% on	I Q	% on	Change	%
		2018	revenues	2017	revenues
REVENUES FROM SALES AND SERVICES	(1)	95,227,257	100.0%	79,565,346	100.0%	15,661,911	19.7%
Other revenues and income		900,169	0.9%	1,847,505	2.3%	( 947,336)	(51.3%)
TOTAL REVENUES		96,127,426	100.9%	81,412,851	102.3%	14,714,575	18.1%
Changes in inventory		( 2,923,519)	(3.1%)	3,186,101	4.0%	( 6,109,620)	(191.8%)
Costs of raw materials, cons. and goods for resale		( 23,681,590)	(24.9%)	( 24,921,918)	(31.3%)	1,240,328	(5.0%)
Costs of services		( 25,139,610)	(26.4%)	( 21,059,501)	(26.5%)	( 4,080,109)	19.4%
Costs for use of third parties assets		( 6,485,503)	(6.8%)	( 5,878,868)	(7.4%)	( 606,635)	10.3%
Labour costs		( 16,877,799)	(17.7%)	( 16,099,614)	(20.2%)	( 778,185)	4.8%
Other operating expenses		( 672,919)	(0.7%)	( 1,193,356)	(1.5%)	520,437	(43.6%)
Total Operating Costs		( 75,780,940)	(79.6%)	( 65,967,156)	(82.9%)	( 9,813,784)	14.9%
GROSS OPERATING MARGIN (EBITDA)	(2)	20,346,486	21.4%	15,445,695	19.4%	4,900,791	31.7%
Amortisation of intangible fixed assets		( 1,624,107)	(1.7%)	( 1,661,089)	(2.1%)	36,982	(2.2%)
Depreciation of tangible fixed assets		( 1,319,324)	(1.4%)	( 1,216,292)	(1.5%)	( 103,032)	8.5%
Revaluations / (write-downs) and provisions		( 52,734)	(0.1%)	( 48,833)	(0.1%)	( 3,901)	8.0%
Total Amortisation, write-downs and provisions		( 2,996,165)	(3.1%)	( 2,926,214)	(3.7%)	( 69,951)	2.4%
NET OPERATING PROFIT / LOSS (EBIT)		17,350,321	18.2%	12,519,481	15.7%	4,830,840	38.6%
Financial income		145,159	0.2%	448,713	0.6%	( 303,554)	(67.6%)
Financial expenses		( 595,600)	(0.6%)	( 732,048)	(0.9%)	136,448	(18.6%)
Total Financial Income/(expenses)		( 450,441)	(0.5%)	( 283,335)	(0.4%)	( 167,106)	59.0%
PROFIT / LOSS BEFORE TAXES		16,899,880	17.7%	12,236,146	15.4%	4,663,734	38.1%
Total Income Taxes		( 5,055,993)	(5.3%)	( 3,532,559)	(4.4%)	( 1,523,434)	43.1%
NET PROFIT / LOSS		11,843,887	12.4%	8,703,587	10.9%	3,140,300	36.1%
(Profit) / loss attributable to minority shareholders		( 559,362)	(0.6%)	( 564,787)	(0.7%)	5,425	(1.0%)
NET PROFIT / LOSS FOR THE GROUP	(3)	11,284,525	11.9%	8,138,800	10.2%	3,145,725	38.7%

Reclassified balance sheet

(Values in units of EUR)	Notes	31 March	31 December	31 March
		2018	2017	2017
Trade receivables		49,263,246	42,064,915	42,535,885
Stocks and inventories		97,830,154	97,817,891	95,032,574
Trade payables		( 58,886,830)	( 68,618,776)	( 53,566,708)
Operating net working capital		88,206,570	71,264,030	84,001,751
Other short term receivables		28,418,177	26,914,468	25,838,250
Tax receivables		4,099,127	5,411,024	3,441,672
Derivative assets		-	-	-
Other short term liabilities		( 18,037,889)	( 17,642,193)	( 15,439,215)
Tax payables		( 7,329,377)	( 3,611,468)	( 9,201,710)
Derivative liabilities		( 532,737)	( 997,532)	-
Net working capital	(4)	94,823,871	81,338,329	88,640,748
Tangible fixed assets		58,486,504	59,104,297	60,820,087
Intangible fixed assets		108,369,682	109,678,612	113,832,815
Equity investments		131,558	131,558	131,558
Other fixed assets		3,167,419	3,564,214	3,720,441
Fixed assets	(5)	170,155,163	172,478,681	178,504,901
Post employment benefits		( 5,892,309)	( 5,916,166)	( 6,185,113)
Provisions		( 2,455,754)	( 2,415,237)	( 2,384,253)
Assets available for sale		4,551,341	436,885	436,885
Liabilities available for sale		-	-	-
Long term not financial liabilities		( 733,116)	( 787,692)	( 446,000)
Deferred tax assets		14,199,884	14,335,779	12,962,343
Deferred tax liabilities		( 30,524,846)	( 30,436,700)	( 30,770,208)
NET CAPITAL INVESTED		244,124,234	229,033,879	240,759,303
Share capital		25,371,407	25,371,407	25,371,407
Other reserves		122,419,654	116,229,168	116,951,026
Profits / (Losses) carried-forward		( 1,663,267)	( 6,957,390)	( 6,956,308)
Profit / (Loss) of the period		11,284,525	11,490,343	8,138,800
Group interest in shareholders' equity		157,412,319	146,133,528	143,504,925
Minority interests in shareholders' equity		32,866,302	32,306,940	32,862,981
Total shareholders' equity	(6)	190,278,621	178,440,468	176,367,906
Short term financial receivables		( 1,420,000)	( 1,420,000)	( 2,257,181)
Cash		( 25,931,227)	( 22,808,913)	( 13,216,389)
Long term financial liabilities		18,294,840	22,079,795	25,478,753
Long term financial receivables		( 2,518,354)	( 2,591,605)	( 3,346,708)
Short term financial liabilities		65,420,354	55,334,134	57,732,922
NET FINANCIAL POSITION	(7)	53,845,613	50,593,411	64,391,397
SHAREHOLDERS' EQUITY AND NET FINANCIAL INDEBTEDNESS		244,124,234	229,033,879	240,759,303

Cash flow

(Values in thousands of EUR)	Notes	I Q	F Y	I Q
		2018	2017	2017
OPENING BALANCE		22,809	14,521	14,521
Profit before taxes		16,900	18,939	12,236
Amortisation / write-downs		2,943	13,876	2,877
Accrual (+)/availment (-) of long term provisions and post employment benefits		17	( 594)	( 356)
Paid income taxes		( 1,114)	( 12,230)	( 1,029)
Financial income (-) and financial charges (+)		450	3,757	283
Change in operating assets and liabilities		( 17,258)	( 6,509)	( 17,427)
CASH FLOW (ABSORBED)/ GENERATED BY OPERATING ACTIVITY		1,938	17,239	( 3,416)
Increase (-)/ decrease (+) in intangible fixed assets		( 315)	( 1,102)	( 362)
Increase (-)/ decrease (+) in tangible fixed assets		( 702)	( 2,732)	( 660)
Investments and write-downs (-)/ Disinvestments and revaluations (+)		( 4,114)	-	-
CASH FLOW (ABSORBED)/ GENERATED BY INVESTING ACTIVITY		( 5,131)	( 3,834)	( 1,022)
Other variations in reserves and profits carried-forward of shareholders'equity		( 6)	( 1,131)	( 405)
Dividends paid		-	-	-
Proceeds (+)/ repayment (-) of financial payments		6,301	( 2,241)	3,557
Increase (-)/ decrease (+) in financial receivables		470	2,013	264
Financial income (+) and financial charges (-)		( 450)	( 3,758)	( 283)
CASH FLOW (ABSORBED)/GENERATED BY FINANCING ACTIVITY		6,315	( 5,117)	3,133
CLOSING BALANCE		25,931	22,809	13,216

Changes in shareholders' equity

(Values in thousands of EUR)	Share capital	Share premium reserve		Other reserves	Fair Value reserve	IAS reserve	Profits/(losses) carried forward	Reamisurement of defined benefit plans reserve	Net profit/(loss) for the Group	Translation reserve	shareholders' equity Group interest in	Minority interests in shareholders' equity	Total shareholders' equity
BALANCES AT 31 December 2016	25,371	71,240		27,435	7,901	11,459	( 8,883)	( 1,130)	3,641	( 1,262)	135,772	32,298	168,070
Allocation of 2016 profit / (loss) Dividends paid Treasury stock (buy-back)/ sale	- - -	- - -		- - -	1,715 - -	- - -	1,926 - -	- - -	( 3,641) - -	- - -	- - -	- - -	- - -
Total comprehensive income / (loss) of 1Q 2017 Other changes	- -	- -		- -	- -	- -	- -	- -	8,139 -	( 406) -	7,733 -	565 -	8,298 -
BALANCES AT 31 March 2017	25,371	71,240		27,435	9,616	11,459	( 6,957)	( 1,130)	8,139	( 1,668)	143,505	32,863	176,368
(Values in thousands of EUR)	Share capital	Share premium reserve	Cash flow hedge reserve	Other reserves	Fair Value reserve	IAS reserve	Profits/(losses) carried forward	Reamisurement of defined benefit plans reserve	Net profit/(loss) for the Group	Translation reserve	shareholders' equity Group interest in	Minority interests in shareholders' equity	Total shareholders' equity
BALANCES AT 31 December 2017	25,371	71,240		- 29,150	7,901	11,459	( 6,957)	( 1,173)	11,490	( 2,348)	146,133	32,307	178,440
Effects deriving from the application of IFRS 9							621				621		621
BALANCES AT 1 January 2018	25,371	71,240		- 29,150	7,901	11,459	( 6,336)	( 1,173)	11,490	( 2,348)	146,754	32,307	179,061
Allocation of 2017 profit / (loss) Dividends paid Treasury stock (buy-back)/ sale	- - -	- - -		6,817 - -	- - -	- - -	4,673 - -	- - -	( 11,490) - -	- - -	- - -	- - -	- - -
Total comprehensive income / (loss) of 1Q 2018 Other changes	- -	- -	( 384)	- -	- -	- -		- -	11,285 -	( 243) -	10,658 -	559 -	11,217 -
BALANCES AT 31 March 2018	25,371	71,240	( 384)	35,967	7,901	11,459	( 1,663)	( 1,173)	11,285	( 2,591)	157,412	32,866	190,278

Interim management report

In the first quarter of 2018, consolidated revenues amount to EUR 95,227 thousand compared to EUR 79,565 thousand in the first quarter 2017, with a 19.7% increase at current exchange rates (+20.3% at constant exchange rates).

In the first quarter of 2018 consolidated EBITDA amounts to EUR 20,346 thousand (with an incidence of 21.4% of consolidated sales), compared to EUR 15,446 thousand in the first quarter 2017 (19.4% of consolidated sales) recording a good improvement in profitability of EUR 4,900 thousand (+31.7%). Such improvement is mainly driven by the sales growth of both divisions.

At 31 March 2018 operating net working capital amounts to EUR 88,207 thousand (26.9% of LTM sales) compared to EUR 84,002 thousand at 31 March 2017 (29.6% of sales). The decrease in the percentage on sales is mainly related to the positive dynamics of commercial receivables and payables of the first quarter 2018.

Net financial indebtedness decreases of EUR 10,545 thousand from EUR 64,391 thousand at 31 March 2017 to EUR 53,846 thousand at 31 March 2018. The indebtedness decrease compared to the first quarter 2017 is mainly related to the better economic results and a better management of net working capital.

Explanatory notes

Income statement

1. Revenues from sales and services

First quarter 2018 vs 2017

In the first quarter of 2018, consolidated revenues amount to EUR 95,227 thousand compared to EUR 79,565 thousand in the first quarter 2017, with a 19.7% increase at current exchange rates (+20.3% at constant exchange rates).

(Values in thousands of EUR)	I Q		I Q			Change
	2018	%	2017	%	Δ	%
Italy	45,318	47.6%	38,336	48.2%	6,982	18.2%
Europe (Italy and Russia excluded)	20,641	21.7%	17,971	22.6%	2,670	14.9%
Russia	2,882	3.0%	2,559	3.2%	323	12.6%
United States	4,914	5.2%	5,904	7.4%	( 990)	(16.8%)
Rest of the World	21,472	22.5%	14,795	18.6%	6,677	45.1%
Total	95,227	100.0%	79,565	100.0%	15,662	19.7%

The following table details the revenues by geographical area for the first quarters of 2018 and 2017.

In the first quarter of 2018, in Italy the Group records sales for EUR 45,318 thousand corresponding to 47.6% of consolidated sales, registering a very positive trend and posting a growth of 18.2%.

Sales in Europe increase by 14.9% (+15.0% at constant exchange rates), contributing to 21.7% of consolidated sales.

The Russian market, representing 3.0% of consolidated sales, increase by 12.6% (the increase remains unchanged at constant exchange rates) to EUR 2,882 thousand showing a good recovery compared to the previous period.

Sales in the United States are equal to EUR 4,914 thousand, contributing to 5.2% of consolidated sales, posting a decrease of 16.8% (-11.0% at constant exchange rates). This change is mainly due to the slowdown in sales in the department stores.

In the Rest of the World, the Group's sales total EUR 21,472 thousand, amounting to 22.5% of consolidated sales, recording an increase of 45.1% (+45.9% at constant exchange rate) compared to the first quarter 2017, especially driven by healthy trend in Greater China, which posted a 67.8% growth.

The following table details the revenues by brand for the first quarters of 2018 and 2017.

(Values in thousands of EUR)	I Q		I Q			Change
	2018	%	2017	%	Δ	%
Alberta Ferretti	10,664	11.2%	9,588	12.1%	1,076	11.2%
Philosophy	6,595	6.9%	5,564	7.0%	1,031	18.5%
Moschino	64,562	67.8%	53,282	67.0%	11,280	21.2%
Pollini	10,043	10.5%	8,444	10.6%	1,599	18.9%
Other	3,363	3.6%	2,687	3.3%	676	25.1%
Total	95,227	100.0%	79,565	100.0%	15,662	19.7%

In the first quarter of 2018, Alberta Ferretti brand increases by 11.2% (+11.6% at constant exchange rates), generating 11.2% of consolidated sales, while Philosophy brand increase by 18.5% (+19.3% at constant exchange rates), generating 6.9% of consolidated sales.

In the same period, Moschino brand sales increase by 21.2% (+21.8% at constant exchange rates) contributing to 67.8% of consolidated sales.

Pollini brand increases by 18.9%, (+19.1% at constant exchange rates), generating 10.5% of consolidated sales, while the other brands sales increase by 25.1% (+27.1% at constant exchange rates) contributing to 3.6% of consolidated sales.

The following table details the revenues by distribution channel for the first quarters of 2018 and 2017.

(Values in thousands of EUR)	I Q		I Q			Change
	2018	%	2017	%	Δ	%
Wholesale	71,172	74.7%	57,507	72.3%	13,665	23.8%
Retail	21,543	22.6%	19,948	25.1%	1,595	8.0%
Royalties	2,512	2.7%	2,110	2.6%	402	19.0%
Total	95,227	100.0%	79,565	100.0%	15,662	19.7%

By distribution channel in the first quarter of 2018, wholesale sales increase by 23.8% (+24.4% at constant exchange rates) contributing to 74.7% of consolidated sales.

Sales of our directly-operated stores (retail channel) amount to EUR 21,543 thousand with an increase of 8.0% (+8.5% at constant exchange rates) contributing to 22.6% of consolidated sales.

Royalty income is 19.0% higher than in the corresponding period of the previous year, representing 2.7% of consolidated sales.

2. Gross Operating Margin (EBITDA)

First quarter 2018 vs 2017

In the first quarter of 2018 consolidated EBITDA amounts to EUR 20,346 thousand (with an incidence of 21.4% of consolidated sales), compared to EUR 15,446 thousand in the first quarter 2017 (19.4% of consolidated sales) recording a good improvement in profitability of EUR 4,900 thousand (+31.7%). Such improvement is mainly driven by the sales growth of both divisions.

EBITDA of the prêt-à-porter division amounts to EUR 14,781 thousand (equal to 20.5% incidence on sales) compared to EUR 11,915 thousand in the first quarter 2017 (equal to 19.4% incidence on sales), recording an increase of EUR 2,866 thousand.

EBITDA of the footwear and leather goods division is positive for EUR 5,565 thousand (representing 17.4% of sales), showing a 57.6% increase compared to EUR 3,531 thousand in the first quarter 2017 (representing 13.9% of sales), with a EUR 2,034 thousand rise.

3. Net profit for the Group

First quarter 2018 vs 2017

In the first quarter 2018 the Group has posted a net profit of EUR 11,285 thousand compared to a net profit of EUR 8,139 thousand in the first quarter 2017 with a EUR 3,146 thousand improvement (+38.7%), thanks to the improvement in operating profit.

Segment information

Economic performance by Divisions

At international level, the Group is divided into two main business sectors:

• (i) Prêt-à porter Division;
• (ii) Footwear and leather goods Division.

First quarter 2018 vs 2017

The following tables indicate the main economic data for the first quarter of 2018 and 2017 of the Prêt-à porter and Footwear and leather goods Divisions.

(Values in thousands of EUR)	Prêt-à porter Division Footwear and leather		Elimination of	Total
		goods Division	intercompany
I Q 2018			transactions
SECTOR REVENUES	72,114	32,027	( 8,914)	95,227
Intercompany revenues	( 2,276)	( 6,638)	8,914	-
Revenues with third parties	69,838	25,389	-	95,227
Gross operating margin (EBITDA)	14,781	5,565	-	20,346
Amortisation	( 2,236)	( 707)	-	( 2,943)
Other non monetary items:
Write-downs	-	( 53)	-	( 53)
Net operating profit / loss (EBIT)	12,545	4,805	-	17,350
Financial income	139	57	( 51)	145
Financial expenses	( 281)	( 365)	51	( 595)
Profit / loss before taxes	12,403	4,497	-	16,900
Income taxes	( 3,731)	( 1,325)	-	( 5,056)
Net profit / loss	8,672	3,172	-	11,844
(Values in thousands of EUR)		Prêt-à porter Division Footwear and leather	Elimination of	Total
I Q 2017		goods Division	intercompany transactions
SECTOR REVENUES	61,360	25,379	( 7,174)	79,565
Intercompany revenues	( 2,013)	( 5,161)	7,174	-
Revenues with third parties	59,347	20,218	-	79,565
Gross operating margin (EBITDA)	11,915	3,531	-	15,446
Amortisation	( 2,189)	( 689)	-	( 2,878)
Other non monetary items: Write-downs	-	( 49)	-	( 49)
	9,726	2,793	-	12,519
Net operating profit / loss (EBIT) Financial income	154	398	( 103)	449
	( 526)	( 309)	103	( 732)
Financial expenses Profit / loss before taxes	9,354	2,882	-	12,236
Income taxes	( 2,618)	( 914)	-	( 3,532)

Prêt-à porter Division

In the first three months of 2018, revenues of the prêt-à-porter division increase by 17.5%, at current exchange rates (+18.3% at constant exchange rates) to EUR 72,114 thousand. This division contributes to 70,7% of consolidated revenues in the first quarter of 2017 and 69.2% in the first quarter of 2018, before inter-divisional eliminations.

EBITDA of the prêt-à-porter division is EUR 14,781 thousand in the first quarter of 2018 (representing 20.5% of sales) compared to EUR 11,915 thousand in the first quarter of 2017 (representing 19.4% of sales), recording an improvement in profitability of EUR 2,866 thousand.

Footwear and leather goods Division

Revenues of the footwear and leather goods division increase by 26.2% from EUR 25,379 thousand in the first quarter of 2017 to EUR 32,027 thousand in the first quarter of 2018.

EBITDA of the footwear and leather goods division is positive for EUR 5,565 thousand (representing 17.4% of sales), showing a 57.6% increase compared to EUR 3,531 thousand in the first quarter 2017 (representing 13.9% of sales), with a EUR 2,034 thousand increase.

Balance sheet

4. Net working capital

At 31 March 2018 operating net working capital amounts to EUR 88,207 thousand (26.9% of LTM sales) compared to EUR 84,002 thousand at 31 March 2017 (29.6% of sales).

The decrease in the percentage on sales is mainly related to the positive dynamics of commercial receivables and payables of the first quarter 2018.

5. Fixed assets

The change in fixed assets, that decreases from EUR 172,479 thousand at 31 December 2017 to EUR 170,155 thousand at 31 March 2018, is determined by the investments related to the maintenance and stores' refurbishment and by the amortisation of the period.

6. Shareholders' equity

The balance sheet shows a shareholder's equity that changes from EUR 178,440 thousand at 31 December 2017 to EUR 190,279 thousand at 31 March 2018.

Changes in shareholders' equity are presented in tables at page 13.

7. Net financial position

Net financial indebtedness decreases of EUR 10,545 thousand from EUR 64,391 thousand at 31 March 2017 to EUR 53,846 thousand at 31 March 2018.

The indebtedness decrease compared to the first quarter 2017 is mainly related to the better economic results and a better management of net working capital.

Other information

Earnings per share

Reference earnings

The calculation of basic and dilutive earnings per share is based on the following elements:

(Values in thousands of EUR)	I Q	I Q
From continuing and discontinued activities	2018	2017
Earnings for determining basic earnings per share Dilutive effects	11,285 -	8,139 -
Earnings for determing dilutive earnings per share	11,285	8,139
(Values in thousands of EUR)	I Q	I Q
From continuing activities	2018	2017
Earnings for the period	11,285	8,139
Earnings from discontinued operations	-	-
Earnings for determining basic earnings per share	11,285	8,139
Dilutive effects	-	-
Earnings for determing dilutive earnings per share	11,285	8,139

In both first quarter 2018 and 2017, there is no evidence of dilution of consolidated net earnings.

Number of reference share

	I Q	I Q
	2018	2017
Average number of shares for determing earnings per share	101.486	101.486
Share options	-	-
Average number of shares for determing diluted earnings per	101.486	101.486

Basic earnings per share

Group net earnings attributable to holders of ordinary shares of parent company AEFFE S.p.A., amounts to EUR 11,285 thousand (March 2017: EUR 8,139 thousand).

Dilutive earnings per share

The calculation of diluted earnings per share for the period January - March 2018, matches with the calculation of basic earnings per share, as there are no tools with potential dilutive effects.

Measurement basis

The main accounting policies and measurement basis adopted in preparing the consolidated financial statements at 31 March 2018 are the same used in preparing the consolidated financial statements at 31 December 2017.

Significant events subsequent the balance sheet date

After the 31 March 2018 no significant events regarding the Group's activities have to be reported.

Outlook

The Group is focused on a constant organic growth path for proprietary brands and the continuous progression of revenues and profitability, both in prêt-à-porter and footwear and leather goods divisions, demonstrates the effectiveness of our stylistic proposal along with management and investments strategies implemented. Considering that the Fall/Winter 2018-2019 season sales campaign ended with an increase of 12%, we continue to look forward positively.

Atypical and/or unusual transactions

Pursuant to Consob communication n. DEM/6064293 dated 28 July 2006, it is confirmed that during the first quarter of 2018, the Group did not enter into any atypical and/or unusual transactions, as defined in that communication.

Significant non-recurring events and transactions

During the first quarter of 2018 no significant non-recurring events and transaction have been realized.

The executive responsible for preparing the company's accounting documentation Marcello Tassinari declares, pursuant to paragraph 2 of art. 154b of the Consolidated Finance Law, that the accounting information contained in this document agrees with the underlying documentation, records and accounting entries.