flatexDEGIRO AG

Good day and welcome to the FLYTEX Digital Analysis call for the preliminary half-year figure 2022 conference call. Today's call is being recorded. I would like to turn the conference over to Frank Niehage. Please go ahead, sir.

Yes, good morning, everyone. A warm welcome from my side here out of our office in Frankfurt together with Achim Schreck, my colleague who is heading IR. in the call as well as my colleague Mohamed Shahour, the CFO is joining us from the associate office. We are happy to share with you a bit more details on our half year figures. And like always, I will start with a rather brief and general introduction and then hand over to my colleague, Mohamed Shahour, who will then run you through our presentation. And yeah, let me briefly start with the geopolitical situation and I don't want to spoil your day. but you all know we are in tough times with a war in Europe and with interest rate hikes and inflation going up and everyone fearing recession. So very, very challenging times. However, we are very proud that we could show that our business model is a very robust one and that we have great clients. What does that mean? If we look at the first quarter, Our clients only dropped with respect to the assets under custody with us 2%. And then within the second quarter altogether here today, the assets of our clients only dropped 13%. You all are aware that a lot of indices globally dropped more than 20%. And our tech industry shares dropped 30% to 40%. So what does that prove? That our clients are rather, as we always say, above average, well financially educated. They are not the young kids on the block with 20 years, but they are rather end of 30 and beginning of 40 and have seen crisis like that. And they are not doing that bad. And obviously, I don't have to explain much about book losses and realized losses. We see with respect to the trading activity of our clients rather normalized times. And when I talk about normalized times, then I'm referring to before COVID. And if we look back in the history of our company, the last 10 years before COVID, our clients were trading in average in the range of 34, 35 trades in rather low volatility times. This is a bit what we've seen in the first and second quarter of this year. However, I think our top line has decreased slightly, but we are very proud that the bottom line came up and that we were proud to present a half year profit, which already exceeds the full year profit of last year. I think that's a very strong message and that distinguish us from a lot of other neo-broker businesses who are still losing money and who are not profitable. We are, as you know, highly profitable. Having said that, let me briefly touch our marketing situation. And again, we are very proud to have renewed this year our engagement with Borussia Mönchengladbach for FlatX in Germany. And we also announced only recently that we're going to do the same main sponsoring with Sevilla in Spain. Obviously, in Sevilla, we're going to advocate with our brand Digiro, which is relevant and responsible for international growth. And in Germany, we continue to use Flatex for sponsoring reasons. Important to mention is that our activities in sports sponsoring are fully in line with our budget this year. And the total amount we spent this year for both Sevilla and Gladbach is not more than 20% of our total budget. So very healthy, fully in line, and to us a great opportunity, especially if you take into account that since we started two years ago with Gladbach in Germany, The relevance and awareness of our brand, the brand awareness has increased by 300% already, and it's continuing to increase. And this morning, a great journalist mentioned that we do so well that FlatX Diageo wins a new client every minute. And I think to win a new client every minute, to me, is a great message and should give you comfort that we do allocate our marketing budget in the right direction. So that goes to marketing. And then let me move over to a bit of discussion and rumors and, you know, recent press articles about capital allocation and M&A. I think if you know that our cost per clients do not exceed 100 euro per client, and if we do the math and win 1 million clients, then we are talking about 100 million marketing budget. You all know how some of our competitors do evaluate their clients, and only for calculation purposes, and I know it's early in the morning, if we buy a million clients, probably the price per client is at least 1,000 euros, some even 2, 3, 4, and 5, but for calculation purposes, let's use the 1,000, we would have to pay a billion for buying that amount of clients. I think from a shareholder value point of view we all agree that wouldn't make any sense. So we are not interested to overpay anything at this point in time and we will not grow by M&A at the moment because organically we grow faster, faster than three of our competitors together in Europe and for such a low cost per client acquisition that we think that is the right direction to go ahead. If there would be any opportunity to grow inorganically, we would definitely look into it and we have the right resolutions in place to increase capital up to 50% if necessary. But then again, we don't see any necessity nor any opportunities right now. Moving on then to our capital allocation situation. Out of last year, we are already sitting on 220 million. If you add the net profit of this year, of the first half year, it's right clear that by the end of the year, we're going to exceed 300 million excess cash. And we were asked many times now, what are we doing with that amount of money? And the obvious is that we review whether we can start share buyback programs or dividend or a combination thereof. And this is what we do in the second half of the year. Obviously, you are all aware of we would need a shareholder resolution for that. So that requires an extraordinary shareholder meeting. And obviously, we would need approval of the regulator in a regulatory environment if we would buy our shares. So this is all under review and in process. And we will notify you accordingly once things are ready to be notified. But we believe that's what you expect for management to do and management is on top of things and is doing this. This is a bit a general introduction. As I said, I'm quite proud that our clients are not getting that nervous and that our clients know what they are doing. And I'm also proud that our employees are working so hard and we are still hiring people. A lot of our competitors have to lay off people. Here again, we distinguish ourselves from the rest of the pack and Mo will now take over and shift gears and run you through the presentation. Thank you so far and over to you, Mo.

Thank you very much, Frank, and good morning, everyone.