Azimut Holding Spa Ord

Good afternoon. This is the call school conference operator. Welcome and thank you for joining the APSIMOD holding first quarter 2025 results conference call. As a reminder, all participants are in 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 Giorgio Medda, CEO of APSIMOD. Please go ahead, sir.

Good afternoon, everyone, and thank you for joining us today for AdMob's first quarter 2025 results presentation. I'm Giorgio Medes, CEO of the group, and I'm pleased to be here with Alessandro Zambotti, our CEO at Group CFO, and Alex Topera, Head of Investor Relations. We had a very strong start to the year, and today we will walk you through our key developments, financial performance, and the strategic progress we have made in positioning azimuths for long-term growth and value creation. So let's get it started and move to slide three, please. So let me begin, first of all, with the key highlights from the first quarter of 2025, which marked a strong start to the year from a strategic, financial, and operational perspective. We recorded the best first four months in our history in terms of managed NAV inflows, raising 5.5 billion euros. out of $5.7 billion in total, almost three times higher than the same period last year. This performance underlines the strength of our diversified business model and global platform. Secondly, recurring net income increased by 13%, confirming the resilience and the quality of our core business, even as overall profitability was affected by lower variable fees compared to last year. From a strategic standpoint, we have strengthened our senior leadership team through the appointment of a renewed board of directors, reinforcing our governance as we prepare for the next chapter of growth, which I will expand on shortly. As many of you will have seen in the news recently, it has been a particularly busy period for us, We made two strategic acquisitions in the U.S., entered the Moroccan market, and just a couple of days ago announced that we are preparing to launch operations in our 20th country, the Kingdom of Saudi Arabia. Lastly, we made progress on the TMB transaction, which remained a strategic priority for the group, and this will be discussed in more detail later by Alessandro. I'm also proud and pleased to share that in the first quarter, we surpassed 1 million clients globally, another important milestone in Ademo's journey as a leading multi-generational financial advisory platform. Turning to the numbers in more detail on page four, our diversified business model continues to deliver solid results. Total assets have reached 107 billion euros at the end of April, with 73.3 billion in managed assets, up 4.4% since the beginning of the year, supported by strong net inflows and positive asset dynamics across all geographies. It's worth noting, though, that at the group level, we have faced some effects headwinds, in particular from the U.S. dollar, as well as certain emerging market currencies that have softened our total assets growth. Revenues in the first quarter came in at 321 million euros, driven by an 8% increase in recurring fees across all core markets, with particularly strong contribution from Italy, Turkey, Brazil, Singapore, and the U.S. On the profitability side, our EBIT stood at 141 million euros, and if you look at the recurring component, excluding performance fee, we posted a 6% increase, driven by higher volumes and discipline in cost management. Net profit reached €115 million, and on a recurring basis, we recorded a 13% increase versus the same period last year. This is a clear indication of our view of the strength of our core earnings. Finally, we continue to generate robust cash flow. With a cash flow to market cap ratio in excess of 13%, it is an annualized yield. This underscores our capacity to fund both growth and shoulder returns, still maintaining the possibility and the capability to entertain investments into future opportunities. Yet, we believe that the strength is not fully reflected in our current market valuation, offering, in our view, a clear disconnect and an opportunity for long-term investors. Turning now to governance on page five, I'm pleased to present the composition of our new board of directors for the 2025 and 2027 term. This renewal reflects both continuity and evolution, providing a strength and foundation to guide Azimut through its next chapter of growth. I would like also to briefly introduce myself, as well as my colleague Alessandro Zambotti. I joined Azimut in 2007, following over a decade in sell-side roles. Within the group, I've served as a portfolio manager and later led business development initiatives for our international operations starting in Turkey and Dubai. I've also led our global asset management business from Luxembourg, and three years ago I moved to New York, U.S., to support our global strategic expansion around the world. As for the board structure, we have confirmed the composition that reflects the balance of experience and independence in line with the best practices. five independent directors 50 female representation and two representatives from our new italian commercial organization highlighting once again the central role of our distribution network alongside alessandro myself both reconfirmed as board members and under the continued leadership of our founder the pietro giuliani as chairman We are committed to driving Azimut forward with discipline, innovation, and a long-term strategic vision. And let me tell you that we are thankful for the trust of our shareholders and very excited for what Leisa has for us. Let me now walk you through an important evolution in the way we represent the Azimut business, starting on slide six. This new structure is not just about simplifying a presentation. It reflects the fundamental shift in how we operate and communicate. And together with Alessandro, we commit to disclose our financials and business proposition in a clear way going forward. Azimut is a global, multi-generational financial advisory platform that we will continue to scale across geographies, asset classes, and digital channels. Our asset management as a service proposition puts investment performance for the benefit of our clients and product solutions across public and private markets at the center, enabled by technology and our global distribution networks. This new structure helps address market complexity, improves transparency, and allows us to better highlight the strengths of our long-term fundamentals. We believe our model is particularly well positioned to respond to the structural industry shifts thanks to our scale, geographic diversification, and alignment between performance and distribution. With this new presentation format, we aim to reposition investor perception and demonstrate that AdSense is not a collection of silos that is reliant on a single market, but a single high-performing platform with multiple levels of growth. Let's turn now to page seven. So how does this all translate in practice? What you see here is the blueprints of how we intend to represent the group going forward, an organizational matrix that mirrors how we actually run the business. On this slide, we present the total assets as of the end of April, structured by product lines across the top, from investment funds to digital asset management, and by key distribution channels along the left. This is more than a new reporting layout. It's a transparent and a light view of how our platform creates value, and over the coming quarters, we will also reflect the structure in our financial disclosure, giving investors greater clarity on growth, scale, and profitability across our core pillars. Moving on to slide eight, this slide gives you the geographic breakdown of our total assets as of April 2025. What's new is that alongside our traditional regional reporting, we are now showing separately the perimeter of our strategic affiliates, namely Sanctuary in the U.S. and AZNGA in Australia. These are businesses where we are no longer exercising diet control. but where we remain a strategic shoulder. By separating them, we reflect their distinct business models and highlight the long-term value potential. As you have seen, by the way, with the recent partial sale of ZNGA, these platforms offer a very meaningful room to scale and create upside over time together with our local partners. Turning to page nine, let me walk you through an important change in how we will report our assets and inflows going forward. We have introduced a simplified structure that better reflects how we actually run the business, cleaner, more intuitive, and free of double counting, giving investors a clear view of where growth is being generated. Going forward, our reporting will focus on five product categories, mutual funds, alternative funds, discretionary and advisory, life and pension, and strategic affiliates. As mentioned on the previous slide, we have carved out our strategic affiliates, Sanctuary and ZNGA, to reflect the distinct business dynamics and fundamentals. And at the same time, assets previously reported under custody and advice are now consolidated into the discretionary and advisory lines. Lastly, pension funds assets previously included in funds will now be reported under life of pension to ensure a clear attribution also consistent with our financial planning product offering. Let me be clear and repeat this once again. This is more than a technical update. It's part of a broader push to enhance transparency and ensure our disclosures are fully aligned with how we manage capital, allocate risk across our business platform, and deliver long-term value. Let's now move to page 10 to dive quickly into the year-to-date performance in terms of assets and inflows. On this page, you will see how our total assets have evolved since the start of the year under the new reporting methods. I won't go too much into the detail here, as we already published and commented these figures in our press releases, but I want just to highlight the strong demand for mutual fund solutions since the start of the year, supported by our networks and partners in Italy and Turkey. We recorded €5.7 billion of net inflows in the first four months, of which €3.4 billion were organic. This is the best performance in the group's history for this period. This underscores the strength and appeal of our offering across both mature and growth markets. And on the asset side, also, I'd like to mention that we closed April just shy of €107 billion. This certainly represents a marginal decline since year end, but is entirely and mostly due, in fact, to FX headwinds, particularly due to the U.S. dollar and some emerging market currency developments. These results, in our view, confirm the resilience of our core business and the effectiveness of our diversified model, delivering growth across channels, geographies, and client segments. Turning now on to page 11, here we introduce a new visual representation of what is driving our profitability in a more intuitive and transparent way. While Alessandro will go into the details shortly, I'd like to highlight a few points. First, our recurring operating business, after all costs, grew by a solid 6%, a strong signal of the health of our platform. Secondly, we received a solid contribution from our strategic participation, including dividends from our GP stake in business that I will also elaborate more into details shortly with the transaction that we have announced just yesterday with IPOS Capital. Finally, while the headline net profit shows a modest year-on-year decline, this is entirely due to lower performance fees. When we look at recurring net profit, so after stripping out the variable components and all the non-recurring items, we actually saw an increase of 13% to $112 million. Let's move now onto slide 12. This slide, along with the next one, marks another important evolution in how we present the business. What you see here is the current P&L breakdown by business verticals, a structure that we introduced with our full year results in 2022. While this representation helps illustrate the underlying dynamics of our platform at that time, We continue to scale across geographies and solutions. We have now recognized the need for a clearer, more actionable format, one that speaks to both our internal performance drivers and external investor expectations. Therefore, starting from this quarter, we are transitioning to a new framework, simpler in structure, yet more granular. And I'll show you this objective view on the next slide. On slide 13, you see a simplified overview of our Q125 performance versus the same period last year, applying our new reporting structure. As mentioned earlier, we now present a more detailed geographic breakdown of the international business, while also separating out our strategic affiliate perimeter. Let me briefly analyze a couple of takeaways without going into the numbers. In Italy, we saw a 15% increase in total assets, which translated into higher recurring revenues. However, the bottom line was affected by lower performance fees compared to a very strong Q1 in 2024. Internationally, we have achieved a meaningful uplift in profitability thanks to asset growth, strong recurring revenues, and a contribution from dividends received on our GP stakes. The results underscore the strength and the scalability of our diversified business model. And let me now turn to the next slide where I will highlight the product pipeline that is expected to support further growth in the coming quarters. So on slide 14, you see how we are scaling innovation across asset classes, geographies, and digital channels. On the public side, we are launching seven new use strategies, rolling out a refreshed suite of private insurance solutions under the name of Ademot Life Collection. And we are accelerating onboarding with all set distributors across key hubs like Dubai, Hong Kong, and Singapore. Notably, we are also launching the China UAE ETF link with China Universal Asset Management, one of the largest independent managers in China. It is a very bold move that reinforces our capability to leverage cross-border partnerships. On the alternative side, we continue to deepen our capabilities with new vintages for our flagship private equity infrastructure portfolios and strategies. The debut of our capital solution suite, the launch of a corporate venture capital initiative, and the revamped offering in Turkey and Brazil, where we are already managing over 550 million euros in niche private market strategies. This pipeline reflects the breadth of our platform and certainly our ability to innovate and deliver value across all client segments along the market cycle. And on the following slide, we also showcase the different initiatives that we have undertaken across digital business developments. Last month, we launched in Italy MetAdvisor, a new tool allowing clients to engage with the Gen-TK AI and have a relationship with their financial advisors for everything being related to their portfolio. Last month, we also launched Azimuth Next Generation Advisory, an AI-driven portfolio construction that will constitute a very significant part of our offering in the coming months. In February, we launched Azify, a digital wallet in Brazil that also includes a stable coin offering. And we have also continued since the beginning of the year to expand the product offering of the AZ Invest. a digital fund distribution platform in Egypt that now captures almost 20% of all the new clients in the country. And also, following the end of the summer, we'll be expanding the offering of BYs in Belgium and Luxembourg after the success that we had in Italy. Let me now move on to our international expansion on slide 16. And I'd like to start with Morocco, the transaction of that at the end of March saw us acquiring 25% in RedMed Capital, one of the largest independent managers in the country, and 1.7 billion euros of assets under management, a 3% market share. Let me remind you that Morocco today is one of the most developed asset management industries across all emerging markets, with a 33% growth annually over the last 30 years. Morocco is also the African country with the highest millionaire growth rate over the last 10 years. This is a strategic investment, a plug-and-play for the group. Consider that Morocco and Europe, they have a very well-established relationship. This transaction will allow Azimut to expand its distribution capabilities into Morocco, leveraging its European product factories. Two days ago, also, we have announced the attainment of the principal approval to operate as a fully-fledged onshore asset management company in Saudi Arabia. Operations will start in Q3 2025, unlocking significant new growth opportunities in the kingdom. But let me tell you, Azimut has been already operating in the country since 2020 with the management of institutional mandates today in excess of $400 million. But we are looking really to expand to benefit from the very sizable retail opportunity with the local asset management industry in excess of $260 billion expected to grow by 50% over the next 50 years. And obviously, needless to say, the possibility of raising from within the country to address and penetrate the very significant pool of institutional assets. Also, yesterday we have announced a very exciting strategic development in the U.S. On slide 17, we highlight the details of our increased investments in high-cost capital. As announced, we raised our stake from 15% to 56%, taking a controlling interest in a business that we know well, and we have seen growing six-fold in AUM since our initial entry. With close to 650 million euros in AUM and a contract record in private equity and venture capital, Hypost is not only a growth story, but a very powerful platform for us to further scale our presence in the US alternative space. This transaction also deepens the alignment between our two firms. More importantly, Mark, a very important step in our partnership with David Moroz and Mark Bezos, we will both increase their ownership in Azimut, further reinforcing our partnership. David, in addition to his role as a high-post CEO, will also serve as a senior advisor to ACP, supporting our broader GP stakes business. Meanwhile, Mark will become head of strategic partnerships and a board member of Azimut U.S. Holdings. Looking ahead, IPOS is planning to launch two new funds by year end, further expanding its product offering and opening new opportunities for value creation across our ecosystem. This concludes my part for now, and I now hand over to Alessandro, who will give you some insights into the progress of the new bank transaction. Thank you.

Thank you, Giorgio, and good afternoon to everyone. So from my side, let's move to slide 18. Again, here we just simply re-propose the same slide that we already proposed in the last two calls. The aim is just to underline again that the purpose of this transaction is not driven by a specific element or driven by a specific condition, but we have three options on the table and we are still running the project in this way. Therefore, the aim is still focused on Real one of the objectives that is to create more value for clients, shareholders, financial advisors, and employees, and also capitalizing on assets that are currently outside the admin perimeter. This is important to help me also on the following slide where we just give you an update on the exclusivity agreement that we still have with FSI. As you probably remember, there was a deadline within the end of April. This exclusivity has been extended to the 20th of May. On one side, the part of the due diligence is completed, but on the other side, we are still negotiating and finalizing the transaction. Therefore, at the moment, for the information that we can share, following also the sensibility of the information, We just, you know, it's able to give you a better view, but just related to the fact that we extended the exclusivity period. Then the other information are still the same. Therefore, we expect, you know, to obtain the banking license within the end of the year, and the aim of the project is what I mentioned before. So moving to numbers, so moving to slide 20, Here we just try to give you the big picture of the consolidated results of the group for the first quarter of 2025. Then we will go in detail. Therefore, I will not spend additional time through the single line of the numbers here. But I just want to give you an update on the fact that relation to the first quarter 24, we created a new column that is following the adjustment related to the consolidation of ZNGA. That means that to have a better comparison of the numbers, we take out the line-by-line contribution of AZNGA through the first quarter 24. And also here you will see at the end the recurring net profit that we introduced, I mean it has been introduced by Giorgio at the beginning, is a new way to look to the numbers of the group of focusing on the recurring business. So the other way, taking out the effect of the variable fees or no recurring effect like fair value option, non-operating cost, and as we always do also taking out the effect of the IFRS 17. So in this way probably we expect that in the future you will have a better understanding of the evolution of the recurring business. So moving again to more details, here you have the slide related to the revenues. Total revenues, I mean, comparing the two quarters, the first quarter of 25 with the first quarter of 24, overall you have a decrease of 2 million. But then if you consider, let's say, the single variation, you can see that there is a solid growth in recurring fees, plus 8 percent, that in absolute value, 20 million more. This is thanks to the Italian, let's say, perimeter. So across to all the business lines, we benefit to a positive increase in terms of mutual fund recurring fees, plus 6 million, and alternative funds, plus 4 million plus additional positive effect from the portfolio management or the advisory fee. And also we have a positive contribution thanks to our international business led by Turkey, Brazil, Singapore, US that provides and contributes for the growth of the recurring fees by 8 million. In terms of performance fees, you can see that the fulcrum was negative, €1.4 million in the first quarter of 2025 compared to the €1 million positive of the first quarter of 2024. And also, if we look to the insurance revenue, it's true that we see a decrease of 80 million, but again, last quarter, so the first quarter of 2024, was benefiting by 28 million of performance fees. That is not contributing at the same level this year, this quarter, because it's just 5 million euros. Therefore, the real positive message here is, again, that despite the volatility of the market that we are facing, we are increasing our recurring revenue by 17%. That is almost 4 million euros compared to the first quarter, 24. And then, just to conclude, the other revenue, we are almost stable thanks to the contribution of our company investment banking business. Moving to the next slide, we have details in relation to the cost. You can see an increase of $6 million overall. We have $9 million more in terms of distribution costs due to an increase of the recurring revenue, again, as I mentioned before, in Italy and abroad. of almost 3 million euro, and a target provision from variable incentive to Italian FTA of almost 4 million euro. On personal and the CNA, we have an increase of 6 million. Again, a link to the evolution, as you remember, as you always say, the international business is also impacting this line of the P&L. to the evolution of the business, we have an increase of 4 million around this line. And then we are flat on the amortization. So then moving to the next slide, here we have EBIT and the net profit. You see, again, a positive variation of 6% of the EBIT and 13% on the recurring net profit. And it's also thanks to the fact that at the level of the finance income, we have a positive contribution of almost 14.5 million, and it's mainly explained by 4 million dividends from GP stakes and affiliates, 3 million Euro realized and unrealized gain and losses on our own investment, 3 million Euro net interest earned, 3 million fair value option, But again, I would like to underline once again the important result, the important increase of the recurring net profit by 13% year-on-year. Following slide, net financial position. We have a positive and almost €1 billion of net financial position. As you can see, we have an increase compared to December 24 of €232 million. As we always do, we try to reconcile the variation starting from the net profit before tax, so €145 million. plus the $68 million that is cash that we received during the first quarter at 25 related to the transaction of the ZNGA, so are linked to the proceeds that we cashed in during the quarter. We proceed, I mean, we continue our investment activity. Therefore, we have less than $80 million through M&A, and then a positive reimbursement of STEM duties by $40 million. Therefore, these three amounts should reconcile the variation that I mentioned. Okay, I mean, I'm going to give back to Giorgio for the conclusions.