Azimut Holding Spa Ord

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

Good afternoon to everyone, and thank you for joining us. As usual, we'll go through the presentation as quickly as possible and leave room for Q&A. So let's start on page number four. We provide you with a recap of the last six years. As you can see, going through volatile markets where, just as a reminder, we went through COVID geopolitical risks, increasing interest rates and so on and so forth. And on top of that, we had to change the fee structure, which casted some doubts on the sustainability of our business model. Well, despite all this, this year we have recorded the highest level of revenues and the second highest level of net profit, which has led to deleverage process, which was announced back in 2019 when we took out the leverage of up to 900 million. And through the organic cash flow generation, we ended this year with the full repayment of all the debt commitments that we had. And despite all this, we have proposed to pay a dividend of 1.75 euro per share, which is in line and consistent with our dividend policy and takes into account the solid results and the fact that we are now debt-free in our balance sheet. Clearly, we also remain committed to invest in growing the business further as well as use buyback to enhance total shareholder remuneration. On page number five, again, taking a long timeframe, this is a company that's doubled AUM every five years since 20 years now, growing in Italy and overseas, comprising today asset management and distribution networks in 19 countries. And we will continue to pursue this growth trend in the future. On slide number six, a snapshot of the flows. You can see this broken down by regions, 3.9 billion out of Italy, 1 billion out of the EMEA region, with especially Turkey and the UAE making more than 60% of That amount, as well as Monaco, worth noting a good inflow trend during the entire 2024, thanks to the recruitment of some private bankers. The Asia-Pacific region with 1.5 billion, clearly the lion's share is thanks to our Australian setup. which has also benefited in terms of M&A, but we will see this in a second. The Americas with $3 billion. Here, again, the U.S. has contributed significantly, both in terms of organic as well as M&A. And Brazil, which fully came back after that complicated 2023. This with the M&A of 8.9 billion of which 2.8 billion belong to Australia and 6.1 billion belong to the US. We concluded the year with 18.3 billion net new money for the entire 2024. Moving to slide number seven, just as a reminder, we took a strategic decision back in 2010 to have an international footprint. in order to benefit in terms of AUM growth, in terms of breadth and diversification of our investment teams as well as our capability to generate performance for our clients. And this has led to reaching 52 billion of assets under management and a number of investment hubs across all the main geographical regions with clear benefits in terms of investment ideas and contribution to the performance of clients. Moving to slide number eight. This is a just a snapshot of how things have evolved in terms of breakdown of recurring revenues vis-a-vis performance fees as You might remember back in 2019 During the investor day we stated that the performance fees would have been following the change in the fee structure in the region of five to ten percent of total revenues and as you can see 7% has been a particular good year in terms of performance fees with $100 million generated over 2024, although it's important that our forecast has proven to be correct also in this circumstance. Moving to slide number nine, a quick highlight of the full year 2024 revenues. I will focus on the full year while Alessandro in a minute will look at the quarterly development of Q4. Just a note before we dive into the numbers, you should bear in mind that the full year 2024 number of total revenues do not take into account 15 days in December following the deconsolidation of AZNGA numbers, which account for roughly 6 million of revenues. So starting from the recurring fee component, we have a platform expansion which has benefited both Italy and our overseas operation. In fact, The delta vis-à-vis the previous year is for 79 million. 36 million are related to Italy, mainly driven by private markets, which explain 25 million of the 36 million, and the advisory services and usage funds that are contributing for the other 10 million. As far as the foreign operations are concerned, the delta is of 48 million vis-à-vis the previous year, and I would say that 70% of that is explained by the combination of the development in Turkey as well as in Australia. Moving to the variable fees, we have 48 million versus 18 million, so plus 30 million the year before. Of the 48 million, I would say that 30 million belong to Italy, 28 million are related to our overseas operation across a number of different countries, but worth mentioning Turkey, Brazil, and Switzerland. And then we have to account a negative fulcrum of 10 million. Last but not least, we had a positive performance from private market products, the Automobile Heritage Enhancement Fund, which had a positive print of a sale of one of the assets within the fund. Moving to the insurance fees, we have 161 million of total insurance revenues, so 50 million more than a year before. We can explain this 12 million for the recurrent fee component, thanks also to the AUM development. And then 38 million belong to the performance fees, which in total have accounted for 57 million of performance fees in 2024. Last but not least, other fees and entry fees of 44 million, broadly in line with what we had achieved the year before. Corporate and investment banking activities have reached almost 20 million euros of fees. Moving to the cost side, also here an initial statement. We have, as you can see in the slide, an increase of 13% of cost. Although to better represent the underlying industrial development of the cost, We wanted to highlight that in the full year 2023, we have to take into account the fact that we released 12 million of provisions, which are not repeated this year. While in 2024, and we will dig into the details in a minute, we had incurred 7 million of extraordinary costs or one-off costs. So if we strip those items from 2023 and 2024, we would see a cost growth of 10%. So moving to the breakdown of the cost. Distribution costs are 432 million, of which, or better, 43 million more than a year before. of which 35 million belong to Italy. And I would say, roughly speaking, 30 million of that is explained by the fact that the revenue have increased and therefore we have a linear relationship with the rebate that we provide to advisers out of our management fees. And then we have incurred some higher variable incentives for our network. As you can imagine, the year has been a good year. We have variable incentive remuneration plans that are linked to our net profit generation. And when we overcome our target, there is an overperformance element that we have to factor in. We also had to incur some one-off costs to some selected FAs, thanks to their performance. And last but not least, we are incurring some higher marketing and event costs, especially linked to the TNB project, i.e. the bank project that we have discussed several times. In terms of foreign operations in the distribution cost, we had an increase of 8 million, and this is, I would say, broadly in line with the growth and development in the recurring revenue line that we have commented before. As far as the SG&A line, 347 million versus 310 the year before, so an increase of 37 million. 8 million of these 37 million are related to Italy, mainly I would say 3 million linked to variable remuneration, whereas there is an increase of 5 million related to IT and operational costs, which we can explain with the growth of the business. The foreign business has increased by 28 million SG&A, and the lion's share here is from Australia as well. as we have noted before. The provisions are back at the normal level after the release of the 12 million in 2023, so we have closed the year at 37 million. Moving to slide 11, the EBIT progresses by 11% to 653 million, or an EBIT margin of 44.4%, roughly stable with the year before. As you have noted throughout the year, and we have been able to comment, this year the finance income line has become quite significant, mainly following the capital gain on the sale of the 20% stake in Kennedy Lewis, as well as the partial sale of the EZNGA transaction. We have had... positive net interest income, as well as a contribution from realized and unrealized capital gains losses on our property investments. Last but not least, dividend from GP staking business of $7 million, which is, I would say, 70%, 80% explained by the U.S. business in hold. Moving to the adjusted net profit and we provide the adjusted net profit just to take, to strip out the IFRS 17 variation consistent with what we have done the year before. So we closed the year at $588 million in terms of adjusted net profit or $576 million reported, an increase of 29% and a very healthy 57 basis point net profit margin. Moving to slide 12, once again we provide, and as you may recall, our dividend policy is based out of the recurring net profit, which strips out a number of extraordinary or one-off items, including performance fees, fair value options, unrealized gains and losses, and the capital gains of the two transactions that we have mentioned before. So we reached 405 million which is twice the level we had back in 2019. And the highest recurring net profit that has therefore led us to propose 1.75 per share dividend for a total of 251 million or up to 251 million that will be paid as usual in May 2025. The next slides are here for your perusal, and I would tend to skip the details of these slides, but you can see the breakdown by verticals, Italy International, private markets, and fintech. As you can see, there has been a development in the average assets across all the four verticals. In terms of total revenues, you note a stable margin across the board with probably one positive exception that is related to the private market development thanks to the evolution that we have had over the past years in terms of private market growth of assets and therefore this is reflected also in a very healthy revenue evolution. In terms of EBIT, once again, stable margins across the board with the exception of the private market. that is posting a significant increase. And last but not least, in terms of adjusted net profit, we are benefiting from the growth that we have seen above and clearly below the operating line. The private markets also take into account the capital gain from the Kennedy-Lewis transaction. whereas the FinTech and corporate investment banking activity has accounted for a very conservative approach of a write-off of a participation we have. Moving to the business update on slide 18, you see here the usual weighted average performance clients have had in 2024. a 9%, almost a 9% net of fees weighted average performance in excess of the industry, and we continue to overperform also on a medium-term period by roughly 80 basis points in excess of the benchmark. On slide 19, you have the usual representation of our Luxembourg usage funds only, which provide for a breakdown by category and underlying assets of how we are managing clients' money and exposure. Just as a note, do bear in mind that this varies quite frequently also given the volatility in the market. development in our AUM in the private market side, taking into account in the second quarter of 24, the deconsolidation of Kennedy-Lewis in past life. And now we stand at 6.4 billion AUM, of which you can find in slide 21, the breakdown by asset class and region with Italy accounting for 81%, again, following the deconsolidation of Kennedy-Lewis. and international business, mainly the US and Brazil accounting for 19%. Very balanced in terms of asset class with 26% of private equity, 30% private debt and infrastructure for 30%. As we have been discussing private markets quite extensively in the last six years, we thought that we would like to provide you some of the very initial exits that some of our funds are delivering. These are obviously not an indication of what will be the final returns of the funds, but just a snapshot of what inside those funds and how they are performing when they they managed to get some deals done and exit materialized. So I'm not going to comment on each one of them, but as you can see on the first slide, two significant transactions worth 34 or 60 million euros have provided for significant money on money or IRR returns. that hopefully will continue also with the other participation in those funds. On slide number two, you see across the different type of funds, so from private equity to venture capital to some pre-booking structures that we have launched and exited are providing significant returns in terms of money on money as well as IRR. Moving to slide 25, just we're re-proposing here the same slide we used in early November 2024, just to highlight the three ways in which we can complete the bank transaction, so the spin-off and listing, the sale to a financial partner, the sale to a banking partner. I will not go over again on the pros and cons of each one of them, but we just wanted to simply reiterate that this transaction will take place one way or another, and our beacon will simply be to create more value for our shareholders. Where do we stand? We stand that in December 2024, the spin-off has been approved by the Board of Directors. We have entered exclusive agreement with FSI, which has been signed. And we stated that the transaction value after taxes is in line with the initial estimates over time. Just as a quick reminder and clarification, If you recall, we had indicated a value of 1.8 to 2.2 billion for the 100% growth of tax, which translates into 1.2 to 1.5 billion net of tax. Of that, we have stated that we will be or we are working to sell up to 80% of TNB and therefore receive the proceeds over time as is customary for this type of transactions. The extensive due diligence is underway and there are no things worth mentioning. So from our side the process is on track with key assessments and evaluations that are being finalized and we are looking to provide further updates in the next couple of months. We do understand that you are very keen to get more information and that we should provide this on a constant basis, but given the complexity of the transaction and the many moving parts, we just wanted to reassure that things are going ahead, that we have very open and constant dialogue with the authorities about it, as well as with our potential partner. with whom we are in negotiation. The company and we therefore expect to obtain the banking license in the second half of 2025 and as always we are very much committed to creating value for our stakeholders. The envisage use of the proceeds which have been discussed in the past as well is to primarily invest in organic growth, both in Italy and abroad, to strengthen the networks of financial advisors, as well as to develop IT solutions, as well as advanced advisory services for the benefit of the business and our clients. On top of this, we will therefore also invest in inorganic growth, as we have always done up to now, in Italy and abroad, in asset management and private markets, as well as in the corporate and investment banking businesses. The other element of the use of the proceeds are dividend and share buybacks. we will continue to remunerate shareholders with dividends as well as use buybacks to unlock additional value and address market undervaluation, which we continue to see. I will leave the floor now to Alessandro for the financials and then take back for the output.

Thank you, Gabriele. As we anticipated, following the full details provided in relation to the 2024 results, I will focus on the last quarter of the year and I will try to compare it with the third quarter and try to give you more details on the evolution of the business. So overall, the total revenue increased by $63 million, the operating cost by $15 million. Therefore, overall, the operating profit increased by $48 million, with a revenue margin on the AUM that increased by three basis points. And as well, the operating margin is nowadays close to 47%. Back to some details of the single line of the P&L, the recurring fees increase of 10 million compared to the third quarter, 24. Again, here I recall the message provided already by Gabriele related to the consolidation of the Australian business. Therefore, we are missing almost 6 million in terms of increase of the recurring fees. Therefore, overall, we can, if we, I mean, this element overall, the increase of the recurring fees are coming 50% from Italy and 50% more or less from the international business. So the level of the variable fees, almost €39 million in Q4. Following also the note, we have a stronger performance of the individual managed portfolio and pension fund. and that provide, let's say, almost 30 million euro in terms of variable fees, and as well the international business produced their contribution to this line with 13 million euro, mainly in Turkey, Switzerland, and Brazil, with a net impact, negative impact of the program for 3.8 million. The other income provide us a bit of increase compared to the last quarter, thanks again to a better conclusion of the year at the level of the investment banking activities. And as well, the additional revenues demonstrate a strong increase of almost $11 billion, thanks to an higher contribution in terms of performance fee for $6.3 million, and as well from the recurring fees by $5 million. At the level of the cost, distribution cost, again, we have a note three. We have a general increase of $13 million. $8 million are coming from the Italian perimeter, and $5 million from the international one. And as well, as already anticipated before, we have higher variable incentives to a phase. We definitely cost at the level of the bank. the project TMB, and Tiger marketing and event costs. We have personal HG&A costs that are almost flat, but as well here, we should take into account the consolidation benefit. Therefore, the other way that we commented, the increase of the revenue, as well here, we benefit for around $4 million less cost. that are compensated by higher variable compensation to the investment team globally linked again to the particular and positive growth in terms of performance. Moving to the next slide, we have the last part of the P&L. In the finance income, we have almost 24 million positives that are generated by the contribution of the capital gain generated by the transaction of the DAZ and GA, the fair value option that contributed by 11 million, the interest on the cash accounts that has a positive effect and impact on the quarter by 6 million, and as well the contribution of your 10 dividends from GP Stakes. Non-operating costs, we have a significant increase, 12 million compared to the last quarter, compared to the third quarter, 24. And here we have the impact of the transaction costs related to the TMB project that we, again, already explained we are still running with the involvement of different advisors. And as well, we moved the write-off of the discontinued back-end program in Italy. Moving forward, we moved to the net financial position. As you can see, compared to the last year, 2023, we doubled our net financial position. In mid-December, we repaid the bond for $500 million. If we try to reconcile the evolution of the net financial position starting from 2023, we should add the contribution of the profit before taxes, so 822 million. We take out the M&A activities and transactions for 40 million. We take out the dividend paid during the year, 160 million, and as well the significant amount paid In tax, that we already explained last quarter, how is evolving the element related to the tax, we are almost reconciling the level of the net financial position at the end. A few slides relating again to the dividend. So on the left side, we remark and we recall our current dividend policy that is ending now in 2024. Therefore, a new dividend policy will be presenting in 2025. And then on the right side, we remark, let's say, the level of the contribution of the proposed dividend with a significant reduction I mean level of recurring GPS and as well as dividend yield of 6.7%. And then last but not least, the increasing of the evolution of our dividend paid to our shareholders year on year where we demonstrated the discipline of the group to continue to invest and repay the bond as we did at the same time which we did at the end of the year. At the same time, we aligned the remuneration of our shell orders in line with the results achieved. I'm going to leave back to Gabriele for the outlook.