Azimut Holding Spa Ord

Good afternoon. This is the College School Conference Operator. Welcome and thank you for joining the APSIMOD Holding First Half 2024 Results Conference Call. As a reminder, all participants are listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on the telephone. At this time, I would like to turn the conference over to Gabriele Blais, CEO of APSIMOD. Please go ahead.

Thank you very much. Good afternoon to everyone. As always, we will go through the presentation as quickly as possible and leave time for Q&A. So if we start from slide number four, you have a very quick snapshot of the key data of our first half results. Ten billion of net inflows, 1.7 times more than what we have achieved in 2023. It's interesting to note how if we look at the Italian system, either if you pick the associazioni data, you can notice a net outflows in the same period of 2024 for 13.4 billion, whereas if you take the associati data, so the network of financial advisors, the same number, in the same period goes to 25.3 billion or 8 billion into managed flows. So quite exceptional in terms of the results we have achieved. And it's another confirmation of the reason why we came out of these two organizations. in order to better reflect the global scale the group operates currently. Moving to the revenue, $702 million, mainly driven by recurring revenues and performance fees, which have developed nicely year over year. EBIT at 312 million, 9% up versus the first half 2023. And finally, an adjusted net profit, which again is adjusted, as you have been noticing for quite some quarters now, to exclude the accounting impact of the IFRS 17, and we'll have more on that later. The growth in the net profit has been benefiting from the organic growth as well as the capital gain on the sale of the minority stake in Kennedy Lewis. Slide number five, we just wanted to come back to the Kennedy-Lewis transaction and reflect on what has been the development on the market following the announcement. In more than 13 years, we have been questioned on our international strategy and investment. Over time, we have increased our disclosure and the granularity of information we were providing to the market. Yet when it comes to actively manage our participation, the value creation is either totally ignored or we are under judgment because the sale of Kennedy Jewelry Steak is tied to our cash position and the ability to repay our debt. We will see later that we have ample room to meet our commitments when they fall due. And the significant value creation we have generated for our shareholders, $225 million out of $60 million invested, has been clearly ignored by the market and we look forward in any case to sharing with you similarly exciting news in the near future. Moving to slide number six, the usual snapshot of our total assets and net inflows. These have benefited from our diversified business platform. Growth comes both from our managed solution in private and liquid products, as well as our advisory services across 18 countries. We want to highlight on the bottom part the inflow generation capabilities, which we can detail on slide number seven. As you can see, Starting from Italy, 1.5 billion of net inflows with the robust flows coming from private markets, both in terms of funds as well as club deals that have been set up and operated in the first half, as well as incremental growing contribution coming from the unique credit partnerships. On the EMEA side, positive demand from the UAE with the bulk of the flows that you note of 171 million, as well as Switzerland, which has partly offset the outflows coming from Turkey and Egypt, where we expect the second half to become much more positive in terms of contributions. On the Asia-Pacific region, we have an ongoing strong expansion of our platform in Australia with the bulk of the $748 million linked to the flow generation coming from Australia, as well as good solutions out of Hong Kong, and we will speak about that in a minute. On the Americas, the main contributor has been Brazil with outstanding results. Again, we will comment this in a second. And as far as our US business is concerned, The number out of the U.S. should be read in conjunction with the acquisition as well as the GP staking and fund closings that we have been achieved. All this brings to $10 billion of ad flows in just six months. Just a quick update on two of the foreign markets we mentioned in China and Hong Kong. We have been very pleased with the results generated out there. Much of that has been related to the QDLP scheme, the Qualified Domestic Limited Partnership. It has been introduced in China in 2012. And this is a scheme that allows asset managers, foreign asset managers to be precise, to raise funds in China and for the investment in foreign funds. So basically you bring domestic inflows and savings of Chinese people into foreign funds. This is the only way officially that you can invest in foreign funds. Through these very interesting times, Azimuth has received the license and has launched the first fund in 2023. We are very pleased to be among the top 10 asset managers among the 47 that have QDLP licenses with several hundred million dollars already collected. When it turns to Brazil, as you may recall, we have been talking in the last year about the corporate default of Locas Americanas and how this has impacted the flow environment in the industry as well as across our fund range. We had experienced the first half that was pretty tough in the second and first half that was pretty tough in 2023. And thanks to a very diversified product platform as well as good fund performance, we were quite certain that we would have been able to invert the trend. This has actually taken place. So in the first half, you can see how we have more than recovered the loss in flows that were experienced. I'm also very pleased to say that the work of our colleagues down in Brazil from the distribution to the production perspective will deliver a very, very significant number also in the month of July, which we will publish at the beginning of August. Moving to slide number nine, the usual snapshot of our total assets, the first time we reach Overcome the 100 billion in assets has been achieved with the month of June. When it comes to the geographical split of our foreign operations, you can see how U.S. is now extremely relevant with 24.4 billion at the end of June in terms of assets under management and Australia of 9 billion euros. Moving to slide number 10, we dig into the numbers of this first semester result of 2024. As usual, I will try to give you some color on the numbers and then Alessandro will comment more on the second quarter results. Total revenues are up 9%, €701 million in the first semester. Looking at the top right of the page, you see the breakdown. where management fees are 990 million almost, a progression of 19 million year over year. The bulk of this, almost 16 million, is explained by our foreign business, with, I would say, the main contributors being Australia, Turkey, and Monaco, as well as a change in perimeter of almost 5.5 million euros. As well, we had a positive contribution from Italy of 2 million. The dynamics are explained by strong growth in private market fees. offset by some lower fees from public funds due to the switch and year-over-year AUM development. When it comes to performance fees, we have booked 8.6 million euros in performance fees. The majority are generated from our foreign businesses. with Turkey and Brazil explaining 90 plus percent of this number, which have also contributed to offset a slightly negative full crew mechanism on our Luxembourg-based funds. Moving to the insurance business, 82.8 million, a progression of 28 million, of which 2 million comes from recurrent fees progression and 26 million from higher performance fees year over year. Lastly, the margin profile, margin has decreased as we've been able to comment over the last quarter vis-a-vis last year. This is mainly linked to a mix and market effect. By now, we can say that the erosion of the margin has stabilized in Q2 2024. Moving to the next slide, page 11, snapshot on the cost and EBIT on the cost. We have 390 million of total cost of which 205.6 million of distribution cost or a progression of 10 million year over year. And as usual, we will be providing a clear understanding of how this has evolved Italy, $6.6 million is related to an increase in cost from Italy or the Italian business, of which $1 million more related to the rebate to the network, which is hand-in-hand with with the development of the revenue line that we have just commented, whereas 4 million more is related to rebates to third parties, as we have already mentioned in Q1, related to the placement of some market products to institutional investors, as well as fees to affiliates for the management of some of our sub-funds. We do have recorded in Italy slightly higher marketing costs for less than a million related to some initiatives on the network. When it comes to our foreign business, the higher cost distribution cost is just 2.5 million and this is mainly linked to the distributions. Turning to personnel and SG&A, 167.4 million or a progression of 17 million year over year. The bulk of it is explained by our foreign business, almost 14 million. of which 9 million belongs to higher personal cost, mainly linked to some change in perimeter as well as ongoing investment in growing our platform. There is also in this, let's say, 2.5 million of negative FX contribution related to some currency exposure in some countries that have produced this negative contribution in the first semester. Lastly, depreciation and amortization of 17 million, a progression of 5 million year over year. I have to say that we are back to normal level after the release. We have benefited in the first half of 2023 as well as across the whole of 2023 in terms of releasing provisions that were experienced last year. The EBIT is at $311.5 million, a progression of 9% with a stable 44% EBIT margin. Moving to slide number 12, a solid operating activity below the line. On the finance income, as always, we have provided you the breakdown of the key drivers behind the 155 million, of which I would say the vast majority is explained by the proceeds from the sale of Kennedy Lewis, as we have already commented. as well as 1.4 million of proceeds coming from another divestment at an Italian tech company we have achieved in June. Moreover, dividends from the GP staking business is positive by 4 million. We do have a positive net interest income of 8 million euros. and then realized and unrealized gains losses on prop investment is negative by 4 million. We do have an impact of the IFRS 17 of 7 million over the semester of which 1.5 million is related to Q2. Moving to the net profit line, $322.5 million. If we readjust the IFRS 17 impact, we land at $330 million or a progression of 43% year-over-year and a hefty margin of 69 basis points. Moving to the breakdown of the verticals as we have been now quite precise to provide you twice a year. You can see the average total assets in Italy, mainly the benefit is coming from the azimuth activity in terms of commercial activity in promoting private market funds, as well as the beginning of the unique credit distribution of novice funds across their networks. From the international perspective instead we have continued to grow thanks to our organic as well as M&A if one can recall the true independence contribution of 6 billion euros. Moving to slide number 14, total revenues. We have an increase in revenues across all the four verticals. Italy is supported by insurance as well as private market products. I would suggest you to read Italy in private market in strong conjunction because of the main activity done from our Italian network in generating private market revenues. By now, private markets have achieved 10% of our total group revenues. International instead has developed nicely, makes up more than 20% of our total revenues with solid revenue generation in the semester from Australia, Brazil, and Turkey. Moving to slide 15, the EBIT development. Italy, including private markets, follow a similar trend vis-à-vis our revenue growth that we have just commented. while the international discounts higher costs due mainly to the changing perimeter and ongoing investment to grow the franchise leading to a stable EBIT margin. Finally, slide 16 on the adjusted net profit development. So we reconcile what is the 330 million. Net profit is clearly impacted by the sale of Kennedy-Lewis and the proceeds that were generated, while Italy with private markets have benefited also from organic growth. International profit growth trends toward our target of 150 million annualized by year end as we stand at 50 million in the first semester. Moving onwards, slide 18, we have the usual snapshot of our weighted average performance delivered to client net of fees. On a medium-term basis, we stand at 24.3% or 4% more than, almost 4% more than the industry. And year-to-date, the performance net of the fees is at 5.27%. Following slide. You see the usual representation of our AUM development in private market. Not much to comment beyond what we have already mentioned. We stand at 6 billion. The growth in the second quarter has been achieved thanks to some private market products, Club Ds, that have been closed. The usual breakdown in terms of asset class on slide number 20, you see how in terms of asset class we are very much balanced in terms of split after the sale of Kennedy Lewis which had a very heavy weight on the private debt component. Moving to slide number 21 and 22, we wanted to provide you some color on some new products that have been recently or very recently launched. The first one is Azimut Diversified Corporate Credit ESG. This is a fund that We bring debt capital to Italian SMEs. It's a closed-end fund. It has an ESG tilt, which is something very interesting, especially because this fund is dedicated to institutional investors for the asset-gathering activities. and it is something that we will continue to promote in order to reach our very interesting target in terms of total capacity of the product at the end of the year. Moving to slide 22, this is a fund that has been launched a couple of days ago. It's the first fund to invest in companies that promote improving living conditions and well-being of people with disabilities with a special focus on employment inclusion. We're very proud of this product. It has very interesting features, not just because the investors can donate 50% or 100% of the distributed proceeds of the fund, but because we have been able to gather a number of partners in order to unfold a very thorough investment strategy that is embedded in this fund. Moving to slide number 25, we wanted to provide you with a quick update on the new bank. As you can see, beyond April and May, in July we have finalized the decision on the tech platform that the bank will be using. So it's a leading solution also used by other digital banks and we have just signed this agreement. We are also in the finalization steps of an agreement with a bank that will allow financial advisors both of Absymut as well as the new bank so the entire 1,850 advisors to collect deposits starting from September, which will then be transferred at no cost to the new bank with the client's prior consent. This means that we will start the asset gathering of the deposit base sooner rather than later. It does not depend on the negotiation with the financial or banking partners and should provide more visibility on the capability of the bank to generate the uplift in revenues and profitability. I will leave now to Alessandro for the usual comment on the financials.

Thank you, Gabriele. We can move to slide 26. As you can see, you have the Standard Consolidated Castified Income Statement, and as mentioned by Gabriele at the beginning, I will focus on the second quarter evolution. Starting from total revenue, as you can see, we have a flat variation compared to the first quarter. but it's probably important to underline how we were able to reach the same level of revenues because we have, obviously, a lower contribution in terms of performance fee, particularly from the insurance revenue, covered a bit from the variable fees, so we have negative contribution of performance fees of 14 million, therefore, We covered this difference thanks to the increase of the recurring fees of 12 million. As per the note, it's driven by growth in Italy and as well from the international business. And we would like to underline the contribution from Australia, Turkey, and Monaco. At the level of the other income, we are almost flat. And as well, back to the variable fees, we have positive contribution of 7.5 million Again, following the note, thanks to Turkey and Brazil in particular. For the insurance revenue, as I was saying, we have a lower contribution in terms of performance fee, and as well we have a positive contribution from the recurring insurance revenue for $2.3 million. At the level of the cost, we have an increase of $10 million. which again, due to the fact that we have a lower contribution from the performance uncovered by the recurring, obviously, the recurring fees goes through cost of DFA. And in particular, at the level of the personal and the GNA, you can see that we have a 12 million increase compared to the first quarter. And this is mainly linked to the higher cost abroad. and higher provision as well at the level of variable incentive and its investment on HIT in Italy. Revenue margins are two basis points lower compared to the first quarter. Therefore, I would say almost in line. And we can then move to July 27, where In the second quarter we already mentioned the main driver, the main contributor of the positive effect below the operating profit is due to the transaction of Kennedy Lewis and this transaction has to be read also considering the non-operating cost where we have almost 3.5 million and as well with the minorities effect because The management benefits from the transaction at the level of, let's say, cost, but also holding part of the equity of the company also to follow the correct representation of the P&L goes to the minority chef tech. The income tax, again, growth compared to the first quarter linked to the transaction of Kennedy Lewis, where we have all-in-all income 25% impact at the level of the gain that we generate from the transaction. At the level of the profit margin, as you can see, we have created four basis points. Therefore, we grow 34 basis points compared to the first quarter, 24. Moving to the next slide, we have the net financial position as usual. We have a positive net financial position of $636 million. The main drivers are explained below. So we have the positive contribution in terms of increase of cash due to the transaction of Kennedy Lewis. We continue our investment in acquisition for $35 million. We have paid taxes in advance for $84 million, and we paid dividends for $160 million. To reconcile the variation that we have compared to December 23, where we have $245 million, we can start taking into consideration the $457 million of net profit before tax. And taking out the dividend, the M&A transaction, the benefit of Kennedy-Lewis can only know we should have explained the variation between the two periods. I'm going to leave back to Gabriella for the conclusions.