Good afternoon. This is the Chorus Call Conference operator. Welcome, and thank you for joining the Anima Holding Q1 2023 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. Alessandro Melzi, CEO of Anima Holding. Please go ahead, sir.
Thank you very much. Thank you, everybody, for attending our Q1 2023 Conference Call. As usual, I'll bring you through our presentation, and then I'll leave you. We'll have some time for our Q&A session. I will start from page four of the presentation with some highlight. First of all, just to highlight that the total AuM increased by approximately EUR 5 billion in the quarter. This is a good news in respect of what happened last year. Net flows are influenced by a repositioning of our client base, more towards fixed system products. We suffered an exit of a large mandate, pension fund mandate, in the quarter that affected our institutional net flows.
If you look at the performance, back to black, so the weighted average performance in the quarter is positive. We have steady, stable margins, even though we suffered a decrease in fees because of lower average AuM in the quarter. Total revenues, anyway, ex-performance fees were up both in respect, in terms of profitability, in terms of business point, were up both on QoQ on year-on-year. This is also thanks to the gross flows and the connected trading and administrative fees. The EBITDA stable over 70% in terms of margin, thanks to our resilience of the top line and our structural cost efficiency. Resilient cash flow. The company continued to generate a high amount of cash, as demonstrated last year, and will continue to do so also in 2023.
Page five, looking at the structure of Anima, we had some, we have some change to highlight in the last, that happened in the last period. If you look at the shareholder structure, first of all, we have some new entry in the last two, three months. As you can see from the chart, BAMI is still the largest shareholder with almost 22% of the capital. Poste Italiane, 11.6%. Fondo Strategico Italiano entered in the, in our shareholder base in February through a reverse accelerated bookbuild, 9.5%. Cartesio, 3.4%. All the shareholders have today expressed director, at least a director in the renewal of our board in March.
We have a composition of the board today that is expressing and is representing clearly our shareholder base. The government is still very much independent. The chairman plus other six directors are independent over 11 directors in total. If you look at the structure of the group, we also had some change in terms of companies, in the sense that we merged, effective since 1st of January 2023, Anima Asset Management Limited, so our Irish company, has been merged in Anima Alternative. Hopefully in the next few weeks, we'll be able to close our Castello acquisition that we released in February. 80% of the company will be acquired, and now we are only waiting for the approval of Bank of Italy.
Business by segment, page six. 50/50 retail institutional. Nothing particular to be highlighted. As always, this BAMI and the NPS representing the largest part of our retail business. Page seven, looking at the performance of our funds. The WAPT is below the average of the industry in the quarter. This is mainly due to the lower equity exposure of the company compared to the sector. We, as you know, and, as highlighted in the right, on right part of the page, on the chart, we, the key focus of our assets is on flexible and balanced, with bond increasing in the last period, and then we'll get back on it. Page eight, flows.
If you look at the highest part of the, of this page. I think that one of the key elements of the quarter is that we are back to. We are positive on the retail, if excluding the WRAP component, and then we'll look at the WRAP more in detail. I think this is a very important sign because we are seeing that our client base is still active. There is a lot of DoS activity, and the networks are keeping, maintaining the retaining the assets pretty well, even if you take into consideration the period that is not easy for the sector. I think this is a clear positive sign also for the looking in the future.
On the institutional side, as we said before, we suffer a loss of a large mandate. That is explained on the lowest part of the page. Apply Pension Fund, we lost a EUR 400 million mandate on the pension fund side. This affected clearly the net flows of the quarter. Page nine. Looking more in details in terms of asset classes. Net flows, as you can see, highlight repositioning towards fixed income. This was expected by the increase of interest rates. We got back structuring products, full fixed income products.
I think that this could be for us is not a negative, because as we always said, I mean, we are a company with a large component of fixed income, and having positive interest rates is a positive in medium term for us. We suffered last year, of course, because of the mark-to-market, today we look at the future in a positive way. Flexible funds, negative. This is due to the WRAP. As I said before, we have a negative component coming from the WRAP because the WRAP, you may remind, is used by the company. Investment of our funds in funds of the house is used to manage in a more efficient way the equity component within targeted funds.
Given that the equity component within targeted funds is decreasing significantly, we suffer outflows coming from this component, the WRAP. We have to highlight that this component is in terms of profitability, is not affecting the company because we cannot double charge fees to the client if we invest in funds of the house. Looking the equity flows, we remain positive thanks to the strong effort we did in the last years on the PAC accumulation plans. Page 10. Rate environment, as I was saying before, if you look at the chart, these are the new funds that we... On the left side is a fund launched last year. On the right side is a newly launched fund that raised EUR 1 billion single fund.
As you clearly can see, the portfolio of the funds skew towards fixed income on the one launched this year. Meaning that today we have returns is on the fixed income component. Clients are asking for protection, this is what we are structuring for the clients. As you can see from the EUR 1 billion growth on the fund, is something that is very well seen by the networks and the clients themselves. Page 11. Getting back for a moment on the WRAP component. As I was saying, the WRAP is used by the company to invest, moreover, mainly on the targeted funds, to invest the equity part of the asset allocation.
If you want to, in a target date fund, if you want to cover the equity component, we do it buying funds of the house. We cannot double charge the fees, this has no impact on the profitability of the company. Of course, this may affect optically the net flows of the company. This will go forward in the next few months because it's difficult to exactly make a preview on how the WRAP will go given that we are, we continue to structure new funds, full fixed income funds, and we have a decrease in terms of equity component within target dates. Numbers, page 13. An highlight of our consolidated P&L. Total revenues decreased by 9%, following the decrease of average AuMs.
The Direct Assets -14. Net income flat. Then we'll get back to it. You look the margins, the margins are slightly positive. This is mainly due to a favorable product mix in gross flows. Focus on actively managed products. We have a very, very small component of low tracking error. In fixed income, there is not only, I mean, the component of fixed income has not only invested by our clients through full fixed income products, but also through balance funds are our historical solutions, the most sold to our client base. Looking at the cost income and the program, and our ability to keep cost under control, we continue to be at the top in terms of European peers in terms of efficiency.
The cost income excluding performance fees is still attractive, and this cost income shows, is excluding performance fees but including bonuses and variable compensation. Interesting to highlight that we got back to a positive trend in terms of investments of the liquidity and mark-to-market of our liquidity invested in our funds. I was saying that the net income is flat. In effect, we have a positive contribution of lower taxes paid because last year, you may remind, we said that we had very high taxation coming from the fact that the dividend distributed intragroup last year were insisting on a very high net income of 2021.
This year we have the counter of this effect, so the dividend, the intragroup dividend distributed, comes from a net income or a 2022 net income that is far lower and therefore we are paying less taxes during the year. In other words, our tax rate is getting back to a more normalized level. Page 14, management fees. Management fees reflect lower AuM in the quarter compared to the Q1 of 2022. This is fully explained by the effect. Slight increasing fixed component of salaries, of personal cost. This is mainly due to investments in HR, front office sales and the alternative business that, as you know, is a key investment for the group today. Page 15, looking at EBITDA and cost efficiency.
EBITDA plus performance fees increases quarter-on-quarter, notwithstanding the higher variable compensation accruals and mainly due to our cost efficiencies. In fact, if you look at the cost efficiencies and the cost under control and the ability to keep cost under control on the right side of the page, you can clearly see that the increase in operating expenses is fully explained by investments in marketing. We continue to invest in marketing activities because we believe that this is the moment to be very close to our distributor, and this will bring, I think, important results in the next near future once the situation will stabilize. Page 16, net financial position.
The net finance, the consolidated net financial position includes the EUR 71 million dividends to be paid in May 2023, already approved by the AGM. It does not include instead the EUR 60 million we will pay by the 80% of Castello, because this is still subject, as we were saying, to the authorization of Bank of Italy. The main case, our robust cash generation and cash position, allows the company to have a strong flexibility in terms of extraordinary transactions, buybacks, potential buybacks and treasury plan, share consolidation and potential debt reduction. Final remarks, page 18. I think that the Q1 of this year is characterized and showed once again our strong residencies in terms of margins and cash flow.
The net new money is around EUR 0, I think, a strong positive highlighted by the fact that we are positive on the retail side. This is clearly for us very important. As we said before, and as we showed in, on the institutional side, we may have sometimes bumpy flows, we believe that we'll get back to a positive path during the year. The main part of the year will the focus of the company will be in continuing to pursue growth without deteriorating our top line. We are very, we will keep a strong eye on that. Tighter cost control because this is something that we have to be focused on also given the inflationary pressure that we have.
Organic and M&A growth on the alternatives. I want also to highlight something regarding the last three years, because looking at the, what we did in the last three years in my first mandate, I think this is also an important starting point for what we have and for what we have in mind for the next three years. Starting from the retail segment, one of our key goals was to bring positive on or stabilize our retail segment. Even in a volatile and very difficult environment, we have been able to bring back the retail to a growth path. We have been able to stabilize a very important relationship, one with Banca Reale where we brought back flows to positive. We had to manage the change of control of Crédit Agricole Italia.
We have been able to sign in December a revised agreement with Crédit Agricole Italia. Now we got back to a growth path, the relationship with them. We are very happy from that. We have been able to sign six new five years part-partnership that are bringing impressive results. We are fairly confident that we'll be able to sign additional partnership in the next few weeks. Page 20. We also worked a lot in terms of visibility of the company. I think that this has brought some result in terms of attention of our shareholders and availability to invest further more in the company. Banco BPM in the 3 years invested about more than 5%, a little bit more than 5% stake in the company.
Fondo Strategico Italiano decided to invest buying 9% stake. The Capital Group bought an additional 2% stake in the company. This is without taking into consideration the cancellation of shares bought back by the company itself. Page 21. In terms of shareholders remuneration, we already highlighted this feature in the final year results presentation. Between 2019 and 2022, we carried out buybacks for a total of more than EUR 200 million, 2020 and 2021. We canceled more than two-thirds of the share issues issued in 2018, when we did a capital increase to finance almost EUR 1 billion acquisitions at the time.
On top of that, we have been able to pay more than EUR 300 million of dividend, bringing our dividend yield stable and close to 6%. I think that the company has been able to grow, to pay back the shareholders and also developing itself in terms of from a strategic standpoint. Page 22. With a strong focus on alternatives, there is a new way, there's a new path, growth path for us. We already discussed and publicly the fact that we wanted to expand in this segment, and we established Anima Alternative SGR in 2020 when we started our journey.
In 2020, we also set a target for to reach EUR 2 billion-EUR 3 billion in 3 years, also through M&A. We have been able to reach this target because of closing the deal with Castello, we will reach EUR 4.2 billion of assets in the sector, in segment, covering private debt, real estate, renewable energy, and real estate credit. We want to do more. We continue to do so, I think that this is in any case, is a very interesting potential for the, of the company. I am done. I've finished. I'm fully available for your questions.
This is the Chorus Call 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. We kindly ask you to use the handset when asking questions. Anyone who has a question may press star and one at this time. The first question is from Elena Perini from Intesa Sanpaolo. Please go ahead.
Yes. Good afternoon, and thank you for taking my questions. I've actually three questions. The first one is on the outlook on the team flows for the following months. You said in the press release of April that you are positive in the short term. Can we expect that the following months could replicate the result of April, which was if I remember well, the first month of positive sign for from mutual funds, so for AuM, AG class one. The second question is on your need on gross cash.
Can you give us some indications on the levels of this field? The third one is about a press article that we read this morning reported by MS on an investment by Castello Asset Management again in the real estate. I imagine that this belongs to the former strategy of the company. I would expect them in the following years to refocus also on the alternative side ex real estate. Could you elaborate a bit on this? Thank you very much.
Right. Okay. Thank you, Elena. Starting from the outlook, well, I'm fairly positive, more over on the retail side, as I was saying, because I'm seeing that the networks are reacting, well, are defending pretty well, and are pushing even though we know that we are in difficult period. We have the competition of the BTPs. It's not easy. I'm fairly positive because I'm seeing that we are slightly positive almost on all network, on all channels, even though slightly positive. This tells me that in a more stable situation, we can get back to an interesting growth. If you look at the institutional, apart from the plus one traditional life insurance, we suffered the loss of a large mandate. It happens.
I mean, sometimes you win, sometimes you lose. We expect to have to get back to a positive. I'm not worried at all. I think that we can do better in the line for many months. Difficult, to be honest, to give you a number. We are also this component, this WRAP component that is not affecting the profitability because is basically zero impact in terms of profitability, but is difficult to understand how it will go because the trend, we have different trends. On one end we have this component, equity component invested by our funds, by the funds, that is going to zero because we are structuring full fixed income targeted funds.
On the other end, we have other positive, potential positive on the WRAP. I mean, this may could be a little bit more difficult to be foreseen. In terms of gross cash yield, we are on average, today we reached 2.5% yield in terms of investment of our liquidity. We are happy in a way that we got back to a positive returns, coming from the cash that we have there. The press article, well, the press, Castello is pursuing its strategy. The strategy was set before our deal.
We talk daily with them, of course, because we have between signing and closing. I don't expect any type of problems. We are already working together to develop the strategy and the company. This is the type of investment mentioned on the article. One of the type of investments that made Castello, brought Castello to 4 billion of assets. I think is, I think that we continue in this direction. We try not only to develop the real estate, but we try also to enlarge the asset classes, manage asset classes, bringing on board teams or maybe in the future doing some other acquisition. This is the direction in the sector.
We're very happy because we think that the deal and the company are top class companies and they give us an exposure to new asset classes managed and to. I think that we'll be able to exploit the same synergies, putting together our products with the new asset classes that we are managing, we will be managing.
Okay. thank you very much. A follow up, if I may. you mentioned, because the line was not, so good, 2.5% yield?
Yeah. 2.5.
Okay. This is on the EUR 650 million, approximately of cash that you had, at the end of March?
On average, yes. On average.
Okay. Okay. Thank you very much.
No problem.
The next question is from Alberto Villa from Intermonte. Please go ahead.
Si, ciao, good afternoon, and thanks for the presentation and congratulations for the appointment. I was just wondering if the new board with the new shareholders also represented in the board is, let's say, pursuing any different strategy from the past? You already mentioned the representation that will be in continuity, but maybe the entrance of these new shareholders may add something to the picture of the company strategy going forward. That would be helpful if you can elaborate. Then secondly, in general, there are many challenges, et cetera, discussions on the potential ban on inducements, et cetera, if you can update us on your thoughts on those matters. Thank you very much.
Yeah. Thank you, Alberto. Well, in term... new shareholders, well, first of all, we are working on the strategy of the company for next years. We started to work in these days. At board level, we will set the new, the strategy. I think that the new shareholders, or even also the current, the previous shareholders, I think that I hope that we like the company to grow because this is one of the key added, one of our key goal since ever. I think that all our shareholders can add and bring value.
In terms of strategy, I don't have anything to add in the sense that we have to discuss the strategy with the board, and we set our goals in next few months for the 3 years coming. We are happy, of course, to have such large, this type of shareholders, the new one and the previous one, because of their standing, because of their financial power. We feel that this is a plus, strong plus for the company to have such shareholder base today. That's it, I would say. In terms of ban on inducements , we...
Where we are, as far as I understand, is that we are waiting for the European Commission to come out with a proposal of directive. This should happen, if I remember well, 24th of May. They postponed. They were supposed to do something beginning of April. They postponed the date to 24th of May. My view is that what I mean, what the commissioner declared is I mean, I do not agree with a position. I think that the current system and the current model is not perfect, we all know. We work a lot to get it better.
If it one, if it two, we had, we changed a lot the face of the sector and more to come. I think that ban on rebates would be disruptive for the sector and for the clients, because we have to remind that ban the rebates, the experiences that we can see in U.K., in U.S., I mean, there are total different, total different markets if compared to continental Europe. Experiences have positive and negatives, where the negatives are that the lower part of the client base is totally abandoned by the sector. In countries like Italy and continental Europe anyway, with I would say a lower financial culture, general financial culture, I think that this could be a threat for the client, significant.
What we expect is that they will make a proposal. I don't think. I mean, they said they will not go for the ban. They will. I'm speaking because the Commission is expiring beginning of next year. I don't think they have a lot of time. Therefore, we expect not to see anything disruptive to come out, also because they will need to get the approval and the approval of the Parliament and of the Commission itself. This is what I see and what we are discussing also at association level. Anyway, until 24th of May, we don't have anything sure.
Thank you.
Okay.
The next question is from Guru Chaudhry from Citi. Please go ahead.
Yeah. Hi. Thanks for taking my question. I have two. Just one on flows. What would you say in terms of retail clients? I mean, what is their risk appetite? Are they just looking for yields, or is there any particular shift that you are seeing? On that only, is there any difference from the different networks, I mean, like from Amundi or Credit Suisse Italia in terms of net flow? One follow-up in terms of cost outlook for this year. In last call, you told us it should be around low single digits, so it has changed or still maintaining the same? Thank you.
Sorry, I have to complain, but the line is very much disturbed, so I wasn't able to get your questions.
Hello?
If you, if you can repeat the questions because actually the line is very much disturbed, it's very difficult.
Yes, sure.
to get your voice.
I wanted to check in terms of behavior of retail clients, I mean, what are their risk appetite? Are they just searching for yields, or are you seeing any structural shift in how they invest? Any difference from the different networks Anima is serving, like from BAMI or Crédit Agricole Italia, I mean, flows in terms from them. My second question is, this is on cost. Last quarter you said it should be a low single digits for 2023. Is it still unchanged or you are seeing any update on that please? Thank you.
Right. Okay. In terms of risk appetite of the clients, as I highlighted in the presentation, clients are moving towards in fixed income. They're getting back to fixed income. They ask for protection. In fact, apart from the trend that we are seeing in the market, of people buying directly BTPs, what we are seeing in terms of products sold by the networks, these products are to do with full fixed income. With a far lower equity component. This is what we are seeing. The networks, they are following these trends. Maybe they are also leading these trends because they don't have a clear view over on the equity side. What we are discussing with them is always, we launch full fixed income products.
If we launch, for instance, a target date funds. The equity component must be covered through accumulation plan. Accumulation plan on one end, that is the right product, the most suitable product for our client base to invest in the markets, we believe. On the other end, target date funds for fixed income. With diversification, of course, this means govies, corporate, et cetera. If you look at cost, the low single digit guidance, I think that is still, is still... I mean, we continue to see it as reachable, and we will continue to focus on it. We, and even more in a tougher way in the next few months, yes.
Okay. Thank you.
For any further questions, please press star and one on your telephone. Mr. Melzi, there are no more questions registered at this time.
Okay. Many thanks. Thank you all for the, for your attention, and see you at the six month in July. Bye-bye.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect safely.