Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Anima Holding First Half 2024 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 their telephone. At this time, I would like to turn the conference over to Mr. Luca Mirabelli, Head of Investor Relations. Please go ahead, sir.
Thank you. A very warm welcome to everyone connected, and thank you especially for devoting your attention to our results on Midsummer Day. Without any further waste of time, I would leave the floor to Alessandro Melzi d'Eril, our CEO, for his initial remarks, and then, of course, we will open the line to your questions. Thank you, Alessandro. You can go ahead.
Thank you. Thank you, Luca. Hi, everybody. Thank you for attending our mid-year conference call. I will bring you through our presentation, as always. So we'll start from page 2, from highlights. First of all, almost EUR 198 billion of assets reached, +7% if compared to the end of the first semester last year, EUR 13 billion up if compared year-on-year. The net income flows register are slightly negative, EUR 300 million, but this is, as we said more than once during this year, is affected by -EUR 2.1 billion of flows in the so-called wrapping category, a low economic impact category of assets that is not really linked to our commercial effort. We will get back on it. If we do not consider and we do not consider actually this wrapping component, the commercial trend is very positive, as we weren't seeing since quite a while.
Our performance in terms of fund is substantially in line with the industry category, and we are doing pretty well, and this has brought our funds, many of our funds, above high-water mark performance fees. If you look at financials, almost EUR 240 million of total revenues, +47% if compared to last year. Of course, this is thanks also to generational performance fees that continued throughout the second quarter, and it's also thanks to the consolidation of two months of Kairos and six months of Castello. EBITDA, approximately EUR 176 million of Adjusted EBITDA, +50% approximately if compared to last year. The margin is slightly diluted at 73.6% due to acquisitions that has a higher cost/income if compared to our historical Anima. Almost EUR 119 million of net profit, plus almost 90% if compared to last year. Excellent cash flow generation.
As always, we know that this company is generating a massive amount of cash. The cash flow remains always at double-digit net of deposits. If you go to page three, just to show you the new growth structure after the inclusion in the perimeter of Kairos, basically under the umbrella, the Anima Holding umbrella, today we have several brands. First of all, Anima, our historical company, has more than 100 retail distribution agreements, mainly focusing in managing this type of agreements, so mainly serving an affluent client base and a certain type of institutional, namely pension funds, typically here in Italy. Kairos, one of Italy's most renowned asset management brands, a brand very much focused on high-net-worth individuals, private banking, certain type of wealth management, and we will continue to focus the company and the brand in this target market.
All our alternative illiquid world, Anima Alternative plus Castello, managing real estate and other illiquid type of assets, EUR 4.4 billion of assets today, focusing again in terms of client base on certain type of institutionals and net worth individuals or ultra-net worth individuals. Looking at our assets, page 4, the split of our AUM, let's say that we changed a little bit the highlight of our assets in order to represent also the type of client underlying our distribution model. Basically, we decided to split into B2C, B2B2C, and B2B. So I think this is more clear also for you to better understand how our assets are distributed. On top of that, of course, we also included Kairos and all the alternative assets.
What I believe this table shows is that Anima has been able to diversify in the last years its source of assets and source of revenues, and we continue to do so, growing and diversifying. These are our targets for the future. Looking at page 5, mutual funds in terms of investment performance, slightly below the industry average. As I said before, this is absolutely explained by a different asset mix. We know that our client base is more conservative, and of course, the performance in our asset mix is in line with our client profile. Page 6, in terms of net flows breakdown, we have some first sign of equity comeback in the second quarter. As you can see from the table, we are slightly positive in terms of equity fundraising.
I think, as I said more than once, I think this will increase with a decrease of interest rates. Of course, the decrease in interest rates is decreasing the interest for fixed income solutions, for pure fixed income solutions, and this will increase and bounce back the demand for equity solutions. The flexible negative number is absolutely explained and fully connected to the wrapping category that we see in a couple of pages. Page seven, as I said before, the overall number is not showing the reality of our commercial effort and the reality of our results, because if you look at the B2C retail net inflows, basically the distribution through banks of our products, we are registering numbers that we weren't seeing since 2015. So we did the first half is better than the last eight years, basically the full year of the last eight.
This is very important to me because this is showing the healthiness of our numbers of our results of this semester, and this is coming mainly from our strategic and commercial partners, banks, but it's also a demonstration of the stronger interest of clients, of the client base for managed solutions. Again, of course, I think this will become even more stable and sustainable with a further decrease in interest rates. Page 8, looking at profitability. Again, looking at where our flows come from, a large part of flows comes from higher profitability clients, end users, retail clients, typically banks, pension funds, and institutional mandates, while the assets that we lost, the wrapping component, so funds of funds of the house or Class I insurance mandates are assets with a very low profitability, negligible or very low profitability.
Just to remind you that the wrapping component, basically the vast majority of wrapping outflows are represented by funds underlying other funds of the group. Typically, target dates historically they were investing. The equity component through a funds of funds mechanism, given that in the last couple of years we were able only to sell full fixed income targeted funds, we had the expiration of these older funds with a duplication of assets, while the inflows were only counting for one because we hadn't this mechanism of funds of funds investing. Page 9, consolidated P&L. As I said before, almost EUR 240 million of revenues, plus 47%. This includes a couple of months of Kairos and six months of Castello if compared to last year. Of course, there is a strong contribution, EUR 46 million of performance fees, while last year the contribution was negligible.
Proper expenses affected the revenues component by the two acquisitions, by the consolidation of the change of perimeter, basically. EBITDA adjusted +51% if compared to last year, always including the two acquisitions. Another thing to remark on dividends, at the bottom of the table, these are dividends from our stake in Monte Paschi. As you may remind, we subscribed a couple of years ago, the capital increase. We still own approximately 1% stake in the bank, and the EUR 3 million are the dividend paid by the bank for the first time since years. Net income, almost EUR 119 million, almost +90% if compared to last year. Looking at the right side of the page, margins, the profitability of AUM increased.
This is explained by a mix factor, very important thing, so a favorable asset mix factor, and of course, it's further boosted by Castello and Kairos that has an average profitability higher than the Anima one. Looking at cost, we increased the top line, but we also brought in with the acquisitions company with a higher cost income if compared to Anima, and this is slightly increasing our cost income ratio at performance fees that still remain among one of the industry lowest. Net financial income, just to remind you that in 2023, we registered a EUR 4 million one-off revenue because we decided to unwind the, well, we closed bank financing with the unwinding of the hedge and derivative. And this year, of course, we don't have any extraordinary. The net financial income is basically the investment of our illiquidity in bank deposit and current accounts and BTPs.
Looking at tax rate, the tax rate is unusually low. This is explained by a badwill income that is not taxed. The badwill is related to the Kairos acquisition. A lower level of dividend coming from subsidiaries and the related taxation, and a step up of goodwill related to the Castello acquisition, we decided to, again, to pay in advance taxes that will provide us with a long-term benefit in terms of taxation, and this is registered with a net income increase or lower taxation of EUR 6 million in the quarter, in the semester. Page 10, just to give you a net income bridge in order to be more clear on differences from last year to 2024, I would say that the main explanation for the jump in terms of net income are performance fees, very important, and other EBITDA, of course.
Other EBITDA, meaning increase in revenues, net commissions, and other revenues, and the badwill revenue that I already explained. Page 11, total revenues, ex performance fees. This is a table showing the trend of total revenues by quarter. All sources of revenues are increasing, following, of course, the asset trend. There is a structural increase in other income since beginning of 2024, following the internalization of some services, of some back office services that we re-internalized, and this has brought a significant increase in terms of revenues. These are part of the actions that we did in the last couple of years in order to extract further efficiency at company level in difficult periods. Looking at personnel expenses, page 12, costs are stable apart from variation of perimeter, of course.
We registered a spike in the last year for quarter due to the new national labor contract, as you may remind, but apart from that, now we are on a stable trend. Variable component is, of course, related to the spike is related to the trend of performance fees, to the strong increases of performance fees compared to last year. Page 13, net financial income, we continue to improve. We have been able to continue to extract value from the investment of the illiquidity sitting on current accounts of the company.
I think this is, as I said before, for the back office activity, I think this is the demonstration of our capability as a company to maximize the value in all the situations, in all the market situations, because I think the company has a DNA of trying to extract value from all the income statement items in all the situations. Page 14, consolidated NFP. Basically, the trend of our NFP is following the trend of our income statement, so the strong cash generation of the company is demonstrated year per year. The NFP that we are registering here, reporting here, includes the payment of dividend in May to shareholders, almost EUR 80 million of dividend, approximately EUR 14 million of share buyback. This is part of the ongoing EUR 14 million program. Today, we reached EUR 25 million of buyback, so we are in line with our expectations.
The buyback probably will be terminated, will be completed by mid-September approximately. EUR 7 million of substitute tax and so on and so forth. I think that the, as I said, I'm always saying that, but I strongly believe so, is our NFP leaves the company open to all the strategic potential development, so extraordinary transactions. So we have, I think, still a huge capability to pursue potential additional transactions, of course, if available. Page 15, closing remark. I think that we did a very positive first half from all points of view. We worked very well in the last two years, with difficult years, of course, as we all know, and now we are reaping the fruits of the work that we've done. Net inflows outstanding in quantity because, as I said before, this was the best looking at our retail B2C, was the best year since 2015.
In quality, because, of course, we are raising money where we need to raise money, where it's more profitable, where it's more important for us and for the future of the company. This is also shown by the AUM profitability because we are improving our product mix, and we believe it's not a short-term trend. Castello is bringing, well, we did a lot of work, a massive amount of work in integrating the company in the last year. We launched successful initiatives. We are launching in Castello and Anima Alternative several ililliquid initiatives. We're working a lot with a big synergy, with a huge synergy within the group in order to exploit all our selling capabilities and product capabilities. Of course, Castello is also bringing a higher profitability and a different trend of assets with more stability, so we are very happy of the acquisition. Kairos as well.
I think that Luca said Castello, but I think this, of course, it was a Castello, and I think that we started very well. The company is reacting very well to the acquisition. We have been able to stabilize a situation where the previous, let's say, previous shareholder, I mean, left the company a little bit without leadership coming from the shareholder. And I think that we are now stabilizing the situation, reinvesting in people, technology, and we'll continue to do so in order to relaunch the company that has a brand very important in the country and with a strong potential. Fiscal optimization, I mean, is not only fiscal optimization. As I said, this company has a DNA in order to exploit all the potential opportunities laying on the table, on the fiscal side, back office, investing in illiquidity.
So, I think that our company is very good in exploiting at best the weapon as in hand. Cash flow, another demonstration again of our capability to generate cash. The company has always been generating a massive amount of cash also in difficult years. Now, benefiting from a different market environment and from different results, we will continue and we will increase our cash flow generation capability. And of course, as a derivative of cash flow generation, today we have an unleveraged balance sheet that gives us all the flexibility, the potential flexibility in order to catch potential opportunities on the market in terms of acquisition and remunerating our shareholders accordingly and in line with the guidance that we provided, absolutely in line with the guidance we provided in May. So happy to hear your question, and go ahead, please.
Yes, please. So if we can open, I know that we already have some registered askers, so this would be the time to open the Q&A session. Please go ahead.
Thank you. This is conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Gianluca Ferrari, Mediobanca. Please go ahead.
Yes, thank you. Good afternoon, Ciao Alessandro. The first one is on the B2C retail flows, the EUR 1.15 billion at page 7. I know you don't usually comment about your distributors, but I was wondering if we can see the contribution more of BAMI or Paschi, or it is equally split, or if you can give us a bit of color on that. The second is on the improvement in margins ex Castello ex Kairos. You mentioned in the chart that there is a better mix explaining this, but actually, if I look at the asset mix at page 5, the same chart last year was showing more flexible and lower bond funds. So in terms of breakdown by category, what has gone up is the percentage of bond funds in the mix.
So how should we read this improvement in margins? Is there maybe link to an entry fee component of target maturity products, or there is any other reading of that increase in margins?
The last one is, on your speech, you mentioned lower dividends from subsidiaries to explain the decline in the tax rate, if I understood correctly. Can you elaborate a bit more what is the incidence of this lower dividend upstream and why it was so, given that numbers were certainly better this semester? Thank you.
Ciao Gianluca. Here I am. Well, on net flows, well, BAMI and Paschi are doing very well, both of them. But I have to say that also our partners, Crédit Agricole Italy and all the smaller banks are doing very well, so far better than last year. So I would say that the trend is coherent looking at all our set of partners. Of course, BAMI and Monte are contributing, given also the size and the importance for us, are contributing the largest part of the positive number.
If you look at margin mix, well, the mix, first of all, what I meant with the mix is that given that we had a decrease in the Class I large mandates we have, traditional life insurance, this has brought an increase given the lower profitability of these assets that brought an increase of our average profitability. But elaborating a little bit on that, it's true that we lost more flexible and today we have more fixed income as a category, more fixed income product than flexible. But first of all, the flexible that we lost were mainly related to the wrapping component with a very low profitability for us, almost negligible.
Second point, the fixed income component, the fixed income categories today are richer because if compared to the previous situation where we had zero or negative interest rates, today we are able to launch fixed income products, typically target date with an increased pricing, absolutely sustainable by the expected return of these funds, but an increased pricing far higher than before. So these are the elements that are sustaining or increasing our average profitability.
Is there also an entry fee component in the target maturity?
Yeah, there is an entry fee component, but this is shown at page 11. The net placement fees, this is the part of this is basically what we retain when we place target date. So as you can see, I mean, yeah, of course, it increased if compared to the previous year, so there is a slight increase, but it's a part of the explanation.
Yeah, yeah, yeah. That's very clear. Thank you. The dividend infragruppo, the infragruppo dividend, hold on, that I'm looking at the notes that Luca is. Do you want to explain it?
Yes, please. Although I have to partially contradict you, so I hope that I still have a job after this. But the infragruppo dividends are actually raising the tax rate a little bit, not to a very significant level, but they pertain to, of course, to the previous year. So this year, the holding company received roughly EUR 200 million versus the EUR 180 million in the last year. And these dividends, of course, are not shown in the P&L, but they are subject to taxes, so they do marginally increase the tax rate.
The dividend that Alessandro had in his mind was the MPS dividend, Monte Paschi dividend, which is taxed at a much lower rate than our regular revenues, around 4%. So that dividend has actually a diluting effect on our tax rate. I will send my CV around and hope that you will be kind.
Grazie, Luca.
Gianluca is happy with the answer. You still have a job, so thank you.
Thank you both.
The next question is from Alberto Villa, Intermonte. Please go ahead.
Good afternoon. Thanks for the presentation. Going back to inflows, clearly a strong first half of the year for retail. Are you expecting this trend to continue? Maybe you can anticipate something about what has happened in July.
And yesterday, in the presentation Poste, I was also outlining a very strong net inflows into asset management in the first half and was pointing out that in the second part of the year, there will be probably less asset management and more insurance. I was wondering if you will capture this opportunity also on the insurance side from Poste. The second question is still on inflows. Should we expect the funds underlying fund component to continue to have the same, let's say, amount of magnitude in the coming months where we should expect this factor to decline going forward? And the last one is related to the performance fees that clearly were very strong.
Maybe I was wondering if there is any contribution from the acquisition in terms of performance fees and how should we model in the future the potential contribution that could come from Kairos specifically in terms of performance fees? Is all end of the year? Maybe you can elaborate a little bit on how we should look at this going forward. Thank you.
Ciao Alberto. Look, well, July we did very well. I think that the trend is continuing. As far as I can see, the performance in terms of net inflows is solid. We continue to raise money and the banks, the activity is continuing. We are doing very well also on the we did very well in the last period also on the institutional component, so I think July is strong.
Poste, we do not account Poste as B2C, so the number, the EUR 1.1 billion that we showed before is not including Poste. With Poste, we did a product that did very well in the last three months. As they said, of course, they will focus more and we know that, I mean, they told us they will focus more on the insurance component for the last part of the year, but we work with them also on that part, so I'm not particularly worried. In any case, this is not affecting the B2C item that we showed before. But I'm positive with Poste to continue to work very well and I'm positive also to have a positive number from here to the end of the year with them. Not considering the life traditional component, the Ramo Primo. Wrapping, yeah, should be decreasing and is decreasing a little bit.
Well, the trend underlying to this component is, I mean, how can we stop this component to affect us is, well, first of all, we need a little bit the interest rate to go down in order to restart with products target date including an equity component. And we also started managing the AIF component of these funds through a funds of funds mechanism, so this will probably counterbalance a little bit this item. I think that for this year, we will continue to have this component affecting our numbers. Probably with a lower magnitude, but still, this noise will be there for the next few months. In terms of performance fees coming from Kairos, yeah, that there is a contribution. It's not a huge contribution. It's also because we have to consider that we only have 2 months of Kairos included in our.
Okay. Since we also received a question via email regarding the contribution of Kairos to the commissions, I believe this is the perfect time to disclose them. As expected, because it was largely proportional to the numbers that we announced about Kairos at the time of the acquisition, the total commissions were in the range of EUR 5 million, of which a little bit more than EUR 1 million was in performance fees and the remainder was in management fees. This is for the two months. For the two months, exactly. This is one fifth of the regular year, of course, talking about management fees. In terms of performance fees, time will tell. Sorry. I don't know if you need to complete the answer.
No, no, no. I'm fine. Okay. Okay. No,
thanks a lot. Bye-bye.
Thank you. Bye.
Thank you.
The next question is from Filippo Prini, Kepler. Please go ahead.
Good afternoon. A couple of questions. First, on your variable cost, is it correct that at some point, variable cost, should there be a sort of cap? And if performance fees on clearly on annual asset management will go on, you should not reflect the same level of variable cost that you've seen in the first semester? And the second is most clarification. Could you confirm that the 50% dividend payout will apply to also these one-off component of the second quarter, I mean, the badwill of Kairos and the fiscal take-up of goodwill of Castello? Thank you.
Thank you very much. Hi, Filippo. Well, on variable cost, if there is a cap, yeah, there is a cap. Of course, there is a regulatory cap for bonuses and then there are, let's say, certain type of mechanism of payout to managers related to the funds they're managing.
I think that the cap, I mean, we are absolutely not close to the cap as of today. So there is still space for the bonuses to grow, of course, if we see more revenues coming, more performance fees coming. The 50% guidance, of course, is applied to the, as I said, the recurring consolidated net income, so also including the extraordinary components.
Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one on your telephone. The next question is from Adele Palamà, UBS. Please go ahead.
Yes. Hi, good morning. A couple of questions from me. So the first one is, if you can give us a guidance on the other revenues, given that the run rate seems to be higher and in line with the previous quarter. And then, sorry, this question was already asked, but just a clarification on the management fee margin expansion. I mean, do you expect the 17 basis point to remain sort of stable from this point onwards, or if there is any impact from the management fee of the AUM from Kairos on that expansion? And that's it. Thanks.
Well, the guidance on other revenues, the other revenues are sort of linear. So we expect more or less, I mean, because there are several components within the other revenues, but they should be the revenue profile should be linear during the year, more or less.
Of course, also related to the assets, but if the assets will continue to grow or stay there, you should expect the trend of the other revenues to continue as in the first part of the year. On the management fees, what was the question? The margin expansion. The margin expansion, of course. Yeah. We should expect actually a little bit of increase, technical increase coming from the fact that we will consolidate Kairos that has a higher margin in terms of top line. We'll consolidate Kairos on the full year. It's a small effect. Apart from Kairos and swing in the class one traditional life insurance, that is difficult for me to forecast. Apart from that, I don't expect a major increase from now on.
Okay. Thanks. Can I add another question? Sorry. Into the other expenses, which is the contribution from Kairos for the quarter?
Hold on. Negligible. Negligible. Negligible. 40,000.
Yeah.
Around 40,000. Yeah. Around 40,000. So negligible.
Okay. Thanks.
The next question is from Azzurra Guelfi, Citi. Please go ahead.
Hi. Good afternoon. Two quick questions. One is on cash flow. You have demonstrated still strong capital generation, and I was wondering if you would prefer to consider or if you see opportunity for other small acquisitions for the strengthening of your strategy into alternative, for example, or if you would be more inclined on capital return. The second one is on Kairos, and it's really more a color one than a number. Is there anything that surprised you once you have started to consolidate Kairos and you are now into the company and how this is reacting, and how do you think you can accelerate the asset growth and efficiency? Thank you.
Ciao, Azzurra. Well, acquisitions, let's say, acquisitions are in our DNA. Sometimes I say we are condemned to grow because I believe that in this sector, size matters. It's important to have a critical mass in order to be able to compete. So I think we will continue to scout and to look for opportunities. Given the acquisition we have done in the last years, today we are able to look at different types of acquisitions. So we are not only looking for the typical annual target companies, asset management companies related to or linked to distribution that could be acquired and integrated very quickly with strong cost synergies, but always targeting the same market, the same type of clients. To be simple.
But now we also may look at potential target on the alternative business in order to enlarge our platform or to exploit synergies on the asset classes we already manage, or looking at potential boutique to strengthen the Kairos capabilities, for instance, in order to be able to sell, to have more weapon to compete, more products to be sold to our clients. As well as, for instance, increasing our—this is one of our targets—increasing our private banking network, of course, always targeting ultra-high-net-worth individuals, but maybe also adding new colleagues in order to be able to catch additional assets. So these are targets that we have in mind. We don't have nothing concrete today. We are working a lot on the integration of the companies we acquired, so we already have many things to do. We don't have a preference of doing acquisition or remunerating our shareholders.
We want to do both. We know that we have and we want to remunerate our shareholders. I think we have the opportunities to do so, and we will continue in this direction. Colleagues are reminding me that we did a very small—no, we're not. We're looking at very small acquisitions in the real estate, for instance, just to give you an idea, that will be closed in the next few days. Very small shop, just EUR 2 million investment, just to give you an idea. But this is just to tell you that we are active in several types of markets today. Kairos, what we found in the company, no surprises. I think that, I mean, we knew Kairos pretty well. We also—as a person working in Kairos, we know the Italian market is small, so we know each other pretty well.
We have been able to retain all the most important people, all the people that we wanted to retain. So no surprises from this standpoint. The mood has changed very quickly in a positive direction. So I think that we have all the underlying to do very well. Now we have to work. I mean, it's only two months.
The next question is Luigi De Bellis, Equita SIM. please go ahead.
Hi. Good afternoon. Just one question left for me on Kairos and Anima Alternative. Just a follow-up. If you can elaborate on your expectation on the evolution of assets under management net inflows by year-end for the two entities, do you expect a material contribution to net inflows already this year or next year? Thank you.
You mean Anima Alternative and Castello on one side and Kairos on the other?
Yes. I suppose. Okay.
Well, the positive contribution of net inflows is already there. Castello is positive. Kairos is positive. Two months, but it's positive. Not big numbers, but I mean, we are happy to see that in proportion to their sizes. These are important signs and important contributions. What we released to the market and we said to the market in terms of target in our first quarter call was that we expect to double the size of the asset of these, let's say, of the Kairos plus alternative perimeter in five years and doing the, in terms of EBITDA, doing times four. This is our target that we believe is achievable. The signs that we are seeing from the first month, the first year of the case of Castello are very positive, and so we are absolutely, we strongly believe that we can reach these targets.
Thank you.
Mr. Luca Mirabelli , there are no more questions registered at this time.
Okay. Thank you. Well, we think that we delivered most of the messages that we wanted to deliver. We hope they will be well received by the market. As usual, the investor relations office is available for any inquiries or in-depth analysis of any of the topics we touched on today. So I would like to take the chance to thank Alessandro for his time today. Thank you, especially you in the audience, for your time today. And the next appointment will be on November the 6th for our nine-month results, which hopefully are going to be at least as exciting as this. Thanks.
Thank you.
Thank you. Bye-bye. Bye, everybody. Happy holidays. Bye-bye.