Azimut Holding Spa Ord

Good afternoon. This is the Chorus Call Conference Operator. Welcome and thank you for joining the Azimut Holdings first half 2025 results presentation. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions by pressing star and 1 at any time. Should anyone need assistance during the conference call, they may signal an operator by pressing star and 0. At this time, I would like to turn the conference over to Mr. Giorgio Meda, Chief Executive Officer. Please go ahead, sir.

Thank you very much, and good afternoon, everyone, and thank you for taking the time and joining us today for AdMob H1 2025 results presentation. I'm Giorgio Meda, CEO of the group, and I'm pleased to be here with Alessandro Zambotti, our CEO, a group CFO, and Alex Popera, our Head of Investor Relations. General comment before we dive into the slides, this has been a defining semester for Azimut. We have exceeded expectations across the board and have to say navigated very volatile market conditions, and this has been possible only courtesy of our resilience and discipline. At the same time, we have laid the groundwork for the group's next phase of growth, and I think what we have seen in the last six months both very well for what lies ahead for us. So let's move to slide three, please. So let me begin with the key highlights of the first six months of 2025, which marked a very strong start to the year from a strategic, financial, and operational perspective. We delivered a record 8.2 billion euros in managed net inflows, the highest first-half figure we have ever achieved. Alongside this, our recurring income has grown by 18% year-on-year, and that is a testament to the resilience and scalability of our platform, even in very challenging market and macro conditions. But our progress goes far beyond financials. During the semester, we successfully introduced a new organizational matrix that has allowed for greater transparency, improved accountability, and a streamlined reporting structure, as we will discuss in detail later in the presentation. We also made tangible progress on simplifying our business verticals, particularly in the U.S. with the transaction of North Square Investments that we have announced last week, around SHIELD that we announced just yesterday. Throughout this period, we have remained focused on executing several strategic business development initiatives, such as the key strategic partnership with DNI Next to promote Italian access globally, particularly in the energy sector. And we have forged several distribution agreements with leading financial institutions throughout our global hubs, or the release of our exciting digital strategy. Lastly, but not very important for For our progress, we have moved forward on the TMB transactions since our key announcement at the beginning of May. This remains a strategic priority for the group and obviously will be discussed in more detail later by Alessandro. And finally, given the strong underlying performance in the first half, our confidence in our product pipeline for the second half and obviously our execution capabilities we have upgraded our target for both net profits and net inflows. So, moving to the next slide, and before we dive into the strategic and operational updates, let me take a moment to highlight our group's strong financial performance in the first half of 2025, which clearly reflects how we are firing on all cylinders across all metrics. At the end of June, total assets reached 113 billion euros, up 11.1 percent year-to-date. The inflows for the period were 9 billion euros, of which 43% came from our international operations. That is a clear demonstration of our global scale and distribution capabilities, and despite effects headwinds, as we will elaborate later on. Total revenues have stood at 646 million euros, which require revenues growing by 7.1% year-on-year. That has been supported by our strong fee-based model and growth across all core markets, with particularly strong contributions from Italy, Turkey, Brazil, Singapore, and the U.S. As far as operating profits is concerned, EBIT came at 291 million euros, with recurring EBIT increasing by 8.6% versus the first half of last year, driven by higher revenues and an overall disciplined approach to cost management. Importantly, 18% of net profits were generated outside Italy, and that is a very meaningful step from the 15% in the same period last year. That, if you want, further confirms our international expansion strategy is now bearing fruit. These figures put us in a very strong position to continue executing our long-term growth agenda at the same time creating value for shareholders. Now, moving on to the two following slides, we show you what was the recently introduced visual representation of what is driving our profitability in a more intuitive and transparent way. So as we focus on a quarter-on-quarter view, Q2 showed a very balanced picture with broad-based growth across recurring revenues, selective performance key contribution, and disciplined cost management. And that, as I said earlier, confirms the resilience of our diversified platform. Instead, as we look at the year-on-year bridge for net profit, as we show in slide six, we set out to highlight two things. In the first half of this year, we delivered a reported net profit of 240 million euros, compared to 321 in the same period of the last year. That needs to be explained. Obviously, this comparison is significantly affected by non-recurring items, most notably the capital gain from the sale of our stake in Kennedy Lewis, And as such, it's important that throughout this call and for the broader analysis in general, we will focus solely on recurring growth, which fostered a strong 18% year-on-year performance as a result of our continued expansion across the globe. Moving to the next slide, you will see how our total assets have evolved since the start of the year under the new reporting method. I won't go too much into the details here as we have already published and commented these figures in our press release, but let me highlight if you think essentially the strong demand for mutual fund solutions since the start of the year. supported by our networks and partners in Italy and Turkey, and a very sustained momentum in our wealth management operations in Dubai, Monaco, and Singapore, as well as there is a very strong momentum across our institutional franchise. At the end of June, our total assets have reached 113 billion euros, up nearly 5% since the beginning of the year, despite significant FX headwinds. So, this is something that we need to mention. Obviously, we have all commented about the depreciation of the U.S. dollars since the beginning of the year, the steepest decline since 1973, a 14% depreciation, coupled, you know, also with some local currencies performance, such as for the Turkish lira, minus 27% year-to-date. That has obviously impacted, you know, the value of our assets during the year. And when you look at our business, obviously we lost 5.5 billion euros on the total assets in euro terms. Nonetheless, the message that we want to send across is very clear. Despite material effect pressure, we have still grown by 5% year-to-date, and that is thanks to the strength of our net inflows and performance. And what is even more remarkable to highlight is that this growth has been driven almost entirely by organic flows, which have amounted to 6.3 billion euros in the first half alone. Just to put that in perspective, that is approximately 68% of what we had achieved organically in all of 2024. And this is the first of inflow results for the azimuth history in terms of performance, the strongest inflow results in our history. So these results confirm the resilience of our core business, and certainly the fact that our diversified model is delivering growth across all channels, geographies, and client segments. Turning now onto page eight, as you might recall, what you see here is the blueprint of how we intend to represent the group going forward. This is an organizational matrix that mirrors how we actually run the business. And on this slide, we present the total assets as of the end of June, structured by product lines across the top, from investment funds to digital asset management, by key distribution channels along the left. As we already said during our Q1 earnings call, this is more than a new reporting layout. This is a very transparent and aligned view of how our platform creates value, and as promised on the next slide, we are giving greater clarity to the financial community on growth, scale, and profitability across our core pillars. As you can see in slide 9, increased transparency into the earnings potential of our platform is realized by showing you the economics behind our different distribution cohorts. Let me walk you through a few key highlights here. Integrated solutions, that is our core vertical, which includes Italy, Brazil, Mexico, and And Turkey continues to be our powerhouse and commands superior margins that are driven by the vertically integrated business model and market leading positions that we have in these geographies. Global wealth that comprises our hubs in Monaco, Dubai, Singapore, Switzerland, and the U.S. is becoming an increasingly important growth engine. These are very high potential markets, while margins are slightly below last year. due essentially to business mix and the impact of effects across different geographies. We are building the foundations for long-term value with our unique proposition, scalable operations, and what is very sophisticated client demand. Then we have institutional and wholesale that is gaining traction. This segment brings together our institutional initiatives across Latin America, Asia, Italy, and EMEA. And while its margin is aligned with the industry average, the strategic importance of this business is rising. And this is a source of innovation, distribution diversity, a partnership such as the contribution from NOVA. And taking a step back, what is important is the overall picture. We are building a multi-engine platform where each business line has clear accountability, strategic intent, and a pathway to scalable profitability. And all of this while maintaining and improving a very healthy group level recurring net profit margin of 43 basis points. In short, our platform is now more transparent, more balanced, and certainly better positioned than ever to capture global opportunities. On the following slide, slide 10, you see the simplified overview of our H1-25 performance versus the same period last year, applying our new reporting structure that we had already introduced with our Q1 results. With these two new representations, we strongly believe that it should be easier for investors and analysts alike to understand the key business drivers of our business and how we are creating value every day. I won't go into the details too much as these numbers and if he knows to speak for themselves, but what I want to emphasize here is the following. The overall picture is one of a truly global platform where each region is progressing along its growth path, supported by strong governance, scalable systems, and local leadership. We don't want to longer be just an Italian asset manager with international ambitions. We are a global group with local excellence and financial architecture to compete and win across all markets. So let's now move on to our exciting corporate business development. I want to start with the slide 11, you know, the partnership with NSI that we announced mid last week. This partnership marks a very pivotal moment in our U.S. strategy where we are building a highly integrated scalable B2B2C platform rather than a traditional B2C model. which we believe is the best suited to the dynamics of the U.S. market. And SI is an exceptional fit for our group. Like Hadley, it operates as an integrated asset management distribution firm and carries an outstanding reach and execution capability set. Its unique positioning enables NSI to capture what is the ongoing structural growth of all U.S. and wealth asset management industries, managing a broader range of products and penetrating even deeper into its distribution networks. More importantly, in slide 12, we want to show what is the strategic ambition and the strength of our positioning in the U.S. and how this is turning into a very critical pillar of our global strategy. Our U.S. platform has reached now a performance total of $50 billion in assets and positions us among the few international players with a fully integrated asset management and distribution model across the country. Certainly, this is the result. of a long-term vision and discipline execution is also the result of work done over the years where we have built piece-by-piece diversified synergistic and scalable architecture. On the asset management side, we operate across both public and private markets, while on the distribution side, we have created a powerful multi-channel approach. Our RIA service platform, led by Sanctuary Wealth, is today one of the most respected in the U.S. It continues to grow at an incredible pace. And also, I want to mention our diet presence in the RIA space, with Azimut Apis and Azimut Genesis, so advisory-led businesses that speak to our heritage and long-term alignment with clients. We believe that this integrated approach allows us to cover the entire value chain, from investment strategy and product manufacturing to advisory services and direct client engagement. The U.S. obviously has an immense potential, is also a very complex market, and we believe that scale will come over time, but we also believe we are uniquely positioned to compete, not as a niche operator, but as a credible long-term player in one of the world's most dynamic markets. So, in short, we are just getting started in the U.S., but the foundations that we have built built are strong and the opportunity ahead is very significant. Another exciting news, fresh off the press from yesterday, is where we announced that Azimut sold its stake in Round Shield Partners to Horizon Streets. With the sale of our stake in Round Shield, Azimut completes its second GP stake exit in just 16 months. confirming our ability to generate real liquidity and value from the lower middle market segments. After exiting Kennedy Lewis to Goldman Sachs in 2024, this latest deal, that is a strategic sale to Harrison Street, shows we can monetize our GP stakes across different buyer profiles, and this is just in a few years. Together, the two exits have delivered a DPI of 2.9 times, an IRR of 60%, placing Azimuth among the top performing players in this space. Azimut remains fully committed to the GPE State Strategy, an area that has been a focus for our business since 2019 through our experienced New York-based team, and it will remain strongly committed to our emerging manager partners, Hypost and Broadlight, both of which operate with high growth potential and a clear focus on attractive long-term secular industries. Also, let me touch briefly upon slide 14 on the very exciting partnership that we have recently announced with ENI, one of the largest energy companies globally. The partnership with ENI has a very clear target, you know, raising 100 million euros starting in September, to be deployed in the clean tech and energy transition industries. This is a partnership that sees Azimut, who is an Italian excellence in the world, to invest in the most exciting and promising investments in key sectors and industries for the global economies. This is also testament to the ability of Azimut of signing partnerships with Italian players who have a very strong reputation in the world markets where they operate. I want to mention here our partnership with Ferrari. It resulted starting in 2023 with the launch of Automobile Heritage Enhancement Fund that is the world's first and only evergreen investment fund for historic super and hypercars, a fund that has raised commitments to date of almost €200 million and delivered a performance to investors to date of approximately So our growth journey as a global investment partner continues partnering with the country's leading innovators in their respective sectors. And the last point I'd like to mention is the publication of our digital strategy white paper that I'm assuming most of you have received via email at the beginning of this week. This is an 80-page report where Azimuth is elaborating and discussing and providing an outlook on how digital developments are essential to redefine the engagement with clients and to draw the lines of our business in the years to come. It is an opportunity to see what Azimuth has been building over the last few years in the digital space, certainly with focus on AI, blockchain, and the development of cloud services or tools working even on the metaverse. I'd like to mention here in slide 16 something that is not very known to the public apart from the clients who have decided to entrust us through digital channels. I'd like to mention here, as I mentioned, digital solutions that are already live in the market. real apps that I've seen over the last three years gathering more than 50,000 clients that have been empowered by Azimut platforms around the globe to access asset management investment solution as well as a broader scope of financial services. I will pause here for a second and I will hand over to Alessandro for a detailed review of our H1 results.

So thank you, Giorgio. Good afternoon to everyone. So moving to slide 70, let me now walk you through the key financial developments for the first half of 2025. So starting with revenues, we recorded an overall increase of approximately 9 million euro compared to the first half of last year. This growth was primarily driven by a 7 percent or 36 million euro increase in recurring fees. So, a solid performance that reflects the continuous expansion of our asset under management and administration despite what volatile market that we see in the market during the first half of the year. So, in particular, we note that our Luxembourg tab, so the open-ended funds and the private market funds, contributed 8.6 million euros and 6.3 million euros So, a reflection, again, of our continuous platform build-out and the NAS products offering. So, the level of discretionary portfolio management and the advisory increased by 3 million euros compared to last year. And as well, the international operations added 18 million euros to the top line. Here, the U.S. stands out with 8.54 million euros from Kennedy Capital and as well 0.7 million euros from IPOS, following the perimeter changes that characterized the first half of the year. But as well also behind on that, Brazil, Singapore, and Turkey, which all recorded positive organic growth. Quarter-by-quarter revenues were up by 1 million euro, a balanced result considering the effect impact and also the perimeter changes in the U.S. and softer market conditions in Q2. That shows again our resilience, our revenues, even in uncertain conditions. So the level of the variable fees contributed less in the half-year period, 6 million euro less compared. to the previous period. Despite this, Brazil, Turkey, and Monaco made a solid contribution during the semester, more than offsetting the negative impact of the Fulcrum fees. Then looking to the insurance revenue, the headline decline of 23 million here and here, and this is entirely due to the lower performance fee. From the positive side, we can see that there is a positive recurring insurance revenue, that increased by over €5 million, and this is reflecting again the after-growth and the product mix. And furthermore, with current market conditions and looking to our performance achieved during July for our clients, we see a robust 3Q25 outlook for performance in this segment. And then to conclude the revenue section, the adult revenue remains broadly flat year-on-year. So to sum up, again, our revenue performance in the first half shows the power of our diversified global platform and our ability to grow even more in a challenging environment. So then on the following page, we show the evolution of cost. The overall, we note an increase of around €20 million plus 6%. Starting with distribution costs, we recorded an increase of about 18 million euros. This variation was mainly driven by tiger distribution expenses in line with the growth in recurring revenue both in Italy and across our international business. We see an increase in provisions for valuable incentives to the Italian financial advisor and additional costs related to the T&V project. Personal costs increased by approximately 3 million euro, and this reflects the continued cost discipline and the stable evolution of our Italian operation. And as well, ongoing investment to support international expansion, including the perimeter effect from the integration of Kennedy Capital, was netted by a positive foreign exchange . Finally, depreciation and amortization together with provision remain broadly unchanged compared to the previous year. And it is worth noting that Q2 2025 benefited from the release of a provision related to a legal case, which had offset part of the normal increase of the cost during the quarter. Moving then to the next slide, we conclude the income statement analysis with recurring EBIT and recurring profit, which increased by 9%. or 22 million euro, and 18 percent, so 36 million euro. This trend, as I like to say, the strong of the robustness of the business, not only in terms of the current impact, but also through contribution below the EBIT. And we have 21 million from asset and portfolio performance, including these evaluations in accounting elements through the revaluation of the majority stake in IPOS and Kennedy Capital. €12 million from fair value option and equity participation, that includes also sanctuary and Australia. €6 million from dividends from GP stakes and affiliates, €6 million from the net interest earned, and then a negative impact of €2 million from the IFRS 17. So now let me turn to the net financial position on slide 20. At the end of June 25, our balance sheet remained strong and debt-free, even after significant investments and shareholder distribution made during the period. We closed the first half with cash and cash equivalent of $643 million. compared to almost $1 billion at the end of March and $750 million at the end of the year 2024. The variation reflects the seasonability of our cash flow and deployment of capital across strategic areas. Overall, we have a net financial position of approximately $642 million with a negative variation of around $110 million compared to December 24. This change is due to the positive pre-tax results contribution of 329 million, but we need also to consider the deployment resources across the four key areas. So, first of all, we received 68 million euro in proceeds from the partial disinvestment of our stake in ZNGA. We invested 50 million euros primarily into M&A and platform development, including the expansion of Kennedy Capital, Thai Postal Trust US, but also Italy and Brazil. Third, we paid out 170 million euros for tax advances, stamp duties, and contributions to the actual reserves. And then lastly, we returned a total of 354 million to shareholders. And these 323 million through the ordinary dividends and payments on participating financial instruments, and 31 million for share buyback, repurchasing 1.4 million shares at an average price of 23 euro. To conclude, our balance sheet remains well capitalized and positioned to support continued growth and shareholder recovery. Finally, on slide 21, So a quick update on the TMB project. We are simply confirming that we are actively working with Bank of Italy on the contractual documentation, the future structure of TMB, with the goal of moving quickly into the final and more detailed phase. So now in this phase we are dealing with the pre-filing with Bank of Italy. And we remain obviously focused and the expectation is completing the transaction at the end of the year. To conclude, we would like also to remark again the expected outcome of the disposal, so around 1.2 billion potential total consideration for the disposal of an 80% stake to FSI and the co-investors. 2.4 billion revenue guarantee in the next commission for the time with a minimum of 12 years, and then almost 20% retained stake in TNBs offering potential for the value of . And with this, I hand over to Giorgio for the final part of the presentation.

Thank you, Alessandro. So, to conclude this presentation, let me turn to our upgraded target. So, we look into the second half of the year with very strong confidence. includes 15 new product launches across public market, private market, insurance, and the club deal. And in parallel, we also are rolling our AI-powered financial planning tools designed to enhance the effectiveness of our financial advisors and deliver personalized solutions at scale for our clients. From these initiatives and our commercial partnerships, as well as wealth management solutions, we expect to generate an additional 4 to 7 billion in organic inflows. And in parallel, we anticipate 14 billion euros from M&A, driven primarily by the upcoming closing of the NSI transaction expected by year end, and the Morocco deal that has been completed in the last few days. So, we record the inflows already achieved and clear visibility on the remainder of the year. We are upgrading our 2025 net inflows guidance to between 28 and 31 billion euros. And let me tell you that this is nearly three times our original target and reflects the strength and scalability of our global platform. So, turning to the last slide, you know, following the results of the first half, We also revised in our 2025 net profit target to above €1 billion. The previous guidance was for approximately €1 billion. So with €250 million already delivered in the first six months, we have reached 60% of the original lower end guidance that we provided at the beginning of the year. giving us clear momentum going into the second half. But more importantly, I believe this performance should lead the market to reassess expectations about ASIMO's recurring net profit, not only for 2025, but also for the years ahead. Our operating model is proving to be more scalable, more diversified, and certainly more resilient than ever. As such, 2025 net profit is projected to exceed a billion euros, and let me remind you that I am dependent on T&D receiving authorization to operate in 2025, that is the base case, and obviously being subject to the final accounting treatment of the transaction upon closing. So looking ahead, the next appointment is for the beginning of November. November 6th, to be precise, when we will present our new strategic targets and update our shoulder remuneration policy. And at the same time, we will also release our nine-month results. So all in all, this will mark the beginning of the next phase in ASIMO's value creation journey, and I can only encourage you to stay tuned. And with this, we are opening the floor for questions. Thank you.

Thank you, sir. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. The first question comes from Giovanni Razzoli of Deutsche Bank.

Good afternoon, everybody. I have two questions and one clarification. The clarification is in slide number 19. If Alessandro can share with us what was the, out of the 43 million euros of financial income, finance income that you reported in the first half, what was the impact in the second quarter? And in particular, if you can clarify what is the 21 million euros that you booked in from assets and portfolio performance and how much of this is in the second quarter. The other two questions are more of a strategic favor. I was wondering what is your appetite now for bolt-on acquisition and the pipeline that you have of acquisition like the one that you've made on MSI. You have invested 100 million euros. It seems to me that it's a very, very smart move to consolidate your presence in the States, combining and other assets that you have. What shall we expect from here? Do you still see other deals like this one? Clearly, I'm asking you this in the context of the upcoming presentation of the new distribution strategy in November, so we can have an idea how much focus is on acquisition, GPI stakes, and potential improvement in the distribution strategy. And the final question on the TNB transaction, I don't know whether you can comment on this, but Bloomberg a couple of weeks ago reported that a mainstream IT player in Italy would have shown an interest to buy an up to 5% stake in TNB to play the role of technological partner. Can you confirm this news? Is that something that is a reliable report or not? Thank you.

So let me start with the details of the $28.9 million of finance income that we booked in the quarter, in particular. I was sharing with you the accounting effect, I would say, driven by the consolidation of the IPOS acquisition and Kennedy Capital. So, both of them contributed almost $6 million in the quarter, and in particular, through the consolidation of IPOS. So, that is the main one that is let me say, contributing to the variation. And then, in general, the valuation per value portfolio, that means the liquidity that we manage around our cooperation in Italy and also internationally. So, again, there is a positive contribution in fair value from Turkey, from Ireland, and as well from Atmut Holding, I would say, so the level of the holding. On top of that, we have also the positive contribution of the interest rate coming from the pure liquidity that we have on the current account.

I'll pick up on the other two questions, Giovanni. The first one is regarding our appetite for non-organic growth. Obviously, Azimut will be continuously looking to grow. Certainly, as opposed to the previous five years, now we have achieved what is a pretty remarkable footprint. across 20 different markets. As we have seen more recently, when we announced our expansion to Saudi Arabia, that was essentially a greenfield initiative. It took us two years to complete. but we didn't have really to invest money apart from obviously engaging with authorities and lawyers. I mean, the typical administrative work that you do in this situation. So certainly we look to consolidate what we have built so far. And I think we have a scale that will allow us to deliver organic earnings growth out of what we have today. Never say never, but, you know, if the acquisition certainly will be more of the Bolton nature that you mentioned. What we have done with NSI goes exactly to this direction, something that makes our US platform stronger, more effective, certainly an enabler of growth, but complementing what we have done over the last few years. Obviously, it's a very major transaction in financial terms, and as we are today, we do not see anything of the same scale happening in the short or the medium term. When we will update on our targets at the beginning of November, we will certainly provide a view of where we see potential areas of development for the firm, and we might provide you guidance on what is our commitment on that respect. As far as, you know, the press articles that you mentioned, you know, we can only talk about the things that we know, and the only thing that we know is that we negotiated the TMP transaction with one party only, and that was FSI. So, obviously, we don't know and we are not aware of anything else happening around it. And, you know, the binding terms were signed by FSI, and, you know, we stand by what we know, as I said.

Thank you.

The next question is from Gianluca Ferrari of Mediobanca.

Yes, hi, good afternoon. Three for me, please. The first one is on the 5.2 billion inflows, 5.1, sorry, reported in Italy year to date. I was wondering if you can break it down between organic growth, recruitment, and potentially NOVA, how much NOVA contributed in the 5.1. And again, on NOVA, Can you give us a sense on what could be the contribution for full year 2025 and potentially what kind of dilution should we put in our models considering the 50 basis points guidance on those flows? The second question is on the new net income guidance, the above 1 billion. If I recall correctly, you originally said you were including what was your assumption of the earn out to be cashed in. So my question here is how much of the 1.2 billion is included in this new guidance? And the third and final one is on personnel and G&A. It was a very, very low number what you reported in Q2. So, considering these 122 million of personnel in G&A in the first half, how much we can consider this number in the first semester sustainable for the full year? Thank you.

Gianluca, I will pick up your first question, and then I will leave Alessandro to respond to the other two. As far as our Italian business, most of our growth is organic. So I have to say this has been very much a business generated by our current footprint. I think you all understand the curiosity around the contribution of Nova, but you will understand that it's very hard for us to provide visibility on clients' contribution to a business. We would never do that for any client. I think Nova is a private factory that has been set up within a partnership with Unicredit. And I think Unicredit might be happy and able to give you an answer to this question. But let me tell you that in general, this is a business that just started up. There is essentially a very negligible contribution to our earnings. So to talk about dilution in terms of margins, I think probably would be almost a meaningless conversation considering the early stage of the partnership. I think the past we guided for Nova business to generate between 40 and 50 business points and I think I'm on AUM and we see this still as a very solid guidance for the years to come. Okay, thank you.

So for the, I mean, referring to the net profit guidance, I mean, we slightly increased, let me say, we go forward at the $1 billion reference, mainly driven by not really to the fact that we changed, let's say, the effect or the consideration of the TMB impact, but it's more of the current business that we are running. It is demonstrating very clear action policy results. Therefore, we end up with a positive view that we have to the end of the year.

Can we know how much is the TNB included in that guidance?

In this guidance, I mean, we are running around 600 million impact on the TNB.

Okay. Thank you.

So back to the cost, so back to the Personal Changes G&A, as I was explaining for the Q2 evolution, We clearly mentioned the fact that despite the increase of the perimeter, so we were expecting, anyway, an increase in terms of cost. We were benefiting a positive impact. Therefore, going forward, we expected, anyway, an increase of the cost going forward, so in Q3 and Q4. but let's say keeping the normal level of evolution through also what we are doing in the business in general. So the guidance that we also present at the beginning of the year, I think that we can keep it as a reference for the moment.

Thank you very much.

The next question is from Alberto Villa of Intermonte Sim.

Hi, good afternoon. A couple of questions from my side. The first one is on the Americas region. Now you reached a new setup, thanks to also this last announcement on North Square. So 50 billion of total assets, which also include the sanctuary. I was wondering if you can give us an idea of what is the earnings capacity potential of this new setup you have compared to what you show in slide 12, so based on 13 billion of assets and also if you can give us more color on what could be in the future the contribution of North Square to the results of of this region. That would be helpful also to model for the future the contribution. Second question is again on the net inflows guidance, 4 to 7 billion, excluding M&A. Is that fair to assume that the contribution will continue mostly to come from what we have seen already in the first half in your expectations. So again, organic contribution in Italy, NOVA partnership, or there is something that we should bear in mind about what you expect to be the contributor to NetInflux going into the next month. I think these are basically my questions. Thanks.

Thank you, Albert. I'll try to answer both questions. So, regarding the Americas, obviously, again, here, at the beginning of November, we will certainly be providing more visibility on what our ambitions are there. But if you were to model this, you know, in the short term, I think you should expect growth for the assets of NSI in the region of 10% per annum. That is something realistic for the next three to five years with an average profitability in terms of net income on AUM of approximately 25 basis points. That is actually in line with what we have right now. So I think we should not expect anything diluting our overall business. As I said, that is an engine of growth and a very major enabler to address a very wide audience in the U.S. comprising of RIAs, warehouses, broker-dealers, investment consultants. It's a pretty major deal when it comes to having top access to different distribution channels. And as far as our expectations for net inflows, you know, the 4 to 7 billion euros, I think, you know, the math here are very simple. You know, at the bottom of this range, you would expect a business to continue to show growth. You know, we have to be mindful that we have August and September ahead of us that traditionally are low contributors to the overall production in our business. But, you know, we continue working. There is one obsession that everyone has in Azimuth, and that is growing the business every day. So there is no vacation or summer holiday that will impact our commitment, our determination. I have to say that as we are a global organization, Today, it's the summer on this part of the world. It's winter somewhere else, so people keep working every day. I think the range reflects, at the bottom, a realistic yet conservative assumption for the next few weeks, a few months, sorry, at the top end, a continuation of what we have seen year to date.

Okay, thank you. Maybe you can update us on the trends on July net inflows as well, or it's too early?

Well, obviously, we will release July inflows in the next few days, but you should not expect anything that is too far from what you have seen over the last couple of months.

Okay. Thank you very much.

The next question is from Elena Perini of Intesa San Paolo.

Yes, good afternoon and thank you for taking my questions. I have only one left, which is about the resiliency of your management fees, which was for me a positive surprise. Considering that the second quarter started quite in a in a difficult way due to Liberation Day and so on. Then what are your expectations for the second part of the year to have steady growth? What could be the challenges for this very important line of your P&L? Thank you.

I'll pick up your second question and maybe I'll ask Alessandro for the first. Actually, I didn't really catch exactly what you were asking. Maybe Alessandro got it better than me. So as you mentioned, Liberation Day was obviously a market event that disrupted certainly performance and created very volatile market conditions. I think when I look across the board, the performance that we have generated across all the products segments has been remarkable. I think this is down to, you know, diversification at the end of the day. And, you know, we have been able, particularly when you look at Italian markets, to initially sort of decouple from the overall performance of the industry that, as you know, is very much geared into fixed income, low-risk solutions. We are more of an equity house when it comes to Italy, but after the initial bleep, we have then caught up and closed the sort of performance gap that we had accumulated. over the first few weeks of April. As we look at the rest of the year, you know, we remain positive. The house view is constructive. Obviously, we have 220 portfolio managers. It's not that all of them think the same, but in general, when we look at our investment committees, we are advising clients, you know, adding risk to portfolios. But markets are open every day and we can change our views if the circumstances require. But let me tell you something that Alessandro briefly mentioned, that is for your models and earnings outlook for Q3 because of negative performance around Liberation Day and our ability to catch up with markets, delivering positive performance versus market, obviously we have now a very strong outlook for performance fees for Q3. And I think that will show for our nine-month results. Certainly that is the case for what we see at the end of July, you know, touching wood that will continue being the case also for August and September.

So referring to the Q2 recurring fees, probably the real explanation goes through the fact that we are consolidating Kennedy Capital, that we were consolidating in the first quarter just for one month. Therefore, here we have a full quarter of the contribution coming from Kennedy Capital on one side. And probably also we were able, as we were mentioning before, also to recover the underperformance on the market quickly on one side, and as well, thanks to our exposure on private markets, for sure we kept, let's say, the level of the management fees protected, you know, from the volatility of the market. So the combination of those elements gave us these positive and incredible results for the core.

Okay, thank you.

The next question is from Hubert Lam of Bank of America.

Hi, thank you for taking my questions. I've got three. Firstly, on slide 20, where you talk about your net financial position, you mentioned $117 million payment for taxes and others, including actuarial reserves. Is it possible to give us some more clarity in terms of the breakdown in terms of these costs within this number? It seems like a pretty significant sum here. Second is also on this slide. You mentioned $618 million of net financial position at the end of June with $640 million of cash. Just checking how much of that cash can be used for deployment in terms of capital return. Is it entirely fungible? is the question. And lastly, if you can give us an update on the number of financial advisors you have in Italy, and then just what have the trends recently been in terms of financial advisor headcount? Thank you.

Okay, you know, I'll pick up your second question regarding, you know, cash. In our balance sheet, in the past, we guided in terms of cash available overnight, so money that we can really take out from our bank accounts with no impact on the business in the region of 60%, the overall amount. Obviously, the rest will be for working capital, regulatory requirements, and cash that you need to run the business as it should. So 60-40, that would be the sort of split.

And the level of the taxes, I mean, it's difficult to decline every single contribution in terms of tax. I mean, we are in an environment where we are present in 20 countries, therefore with different rules, with different mechanisms. There are situations where you also have to anticipate the further tax that you, let's say, see in the future. Therefore, It's a split or different amount that we have obviously paid during the first half. And at the level of the number of financial advisors today, we have 1,779 financial advisors in Italy.

So according to, I think my numbers, that number's been trending down over the last six months. It's just... wondering, you know, the trends there.

Yeah, yeah, you're right. It might be trending down, but, you know, assets are, you know, growing. So I think, you know, the guys who are left are doing a better job than those who have gone. So I think we're pretty okay with that.

Fair enough.

Thank you. Also, you should also take into account that these are not people You know, leading, you know, to the competition, you know, there is also an aging factor in our financial advisors base that is the case for even our competitors. Sometimes that is a very normal occurrence. Advisors leave the company, but they leave the portfolio with, you know, other advisors who are part of AdSense. So it's sort of transition and transfer the portfolio to former colleagues.

Thanks.

The next question is from Luigi de Berlis of Equica.

Hi, good afternoon. Two questions left for me. The first one, if you can provide some guidance on the evolution for the coming quarters in terms of insurance revenues and distribution costs, and also what you are assuming in the guidance, in the low end of the guidance in terms of performance fees. The second question, thank you for the additional callers on the business line, very helpful. Referring to the slide number 9 and 10, how do you see the profitability to move forward in the different business line, which are the main business engine that will drive growth going forward in your view? Thank you.

Luigi, so I will take the second and leave Alessandro with the first. So when you look at our breakdown, our view in general is that we are able to maintain this margin. If you were to ask me whether growth will be diluting what is the current level, it might happen, but we will be adding assets and business to a pretty consolidated base, and as such, dilution shouldn't really be too apparent. Certainly, we work always taking pride of our ability to provide integrated solutions to our clients. That is in itself the very reason why we are able to maintain and sustain margins that we see at the end of the day in line with the industry. Very often when people look at our business, There is a sort of misunderstanding where people look at the top line and, you know, they try to draw conclusions regarding, you know, potential pressure on our fees. But when you look at the bottom line, I think we do a pretty decent job and, you know, we're always operating as a lean organization. But we see these levels, you know, very sustainable in the fact that we are integrated. makes our business to be much easier. Obviously, nothing will be possible without performance. And at the end of the day, this is what clients look at the end, whether we are making money for them. I mean, if that is the case, you know, they're very happy to pay our fees.

So, in relation to the insurance revenue and evolution, as Giorgio was mentioning, we see a positive, I mean, we have a positive view on the performance fees. Therefore, in Q3, we expect a positive contribution from the performance fee. Obviously, the market could change. Therefore, it's something that we see at the end of July. But, you know, we don't like to bet on the performance, so we always try to to keep a lower expectation of what we could do without having any negative effect in the future, I would say. So, at the level of the guidance, again, positively, we are positive on the quarter, and also the variable fees, as you, I mean, we always do, we keep a level of 15 million euros per year, as we do normally. So, we would like to keep, let's say, the same level. And at the level of distribution costs as well, obviously, we expect an increase because we expect to grow. But, I mean, keeping, again, the same guidelines that we presented at the beginning of the year. Thank you.

For any further questions, please press star and 1 on your touchtone telephone. Mr. Mehta, there are no questions at this time, so back to you for any closing remarks.

Fantastic. Thank you very much everyone for joining this call and obviously we wish you all a great summer and talk to you next time. Bye.