Earnings Call: Q1 2021

May 13, 2021

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Azimba Holdings First Quarter twenty twenty one Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Mr. Gabriela Blaise, CEO of Assumut Holdings. Please go ahead, sir. Thank you very much, and good afternoon to everyone. We will go through the usual presentation as quickly as possible in order to leave you as much time as possible for Q and A. So if we take Slide number four, we highlighted three key metrics. First, net weighted average performance to clients, net of fees, 4.2% year to date, 200 basis points ahead of the index. Net inflows of EUR 10,300,000,000.0 in total and EUR 1,800,000,000.0 in managed products, of which EUR 400,000,000 in private market funds. And net profit of EUR 97,000,000 or 100% vis a vis the first quarter twenty twenty. Slide number five, we highlighted a bit of a recap of what has been done over the last year or so with a number of different initiatives, both in the M and A, business development, financial results. Context, we would like to highlight in terms of the strategic rationale of what we're doing in terms of M and A, we are trying to increase the footprint of our presence in the countries in which we operate and or in the asset classes in which we invest such as the private market initiatives in The United States. And more recently, the deal with a venture capital firm that we know since many years, Piche and Toono, which will enable us to cover better the venture capital environment and tech environment in Italy. Moving to Slide six. We have recurring fees that are 2 and 18,600,000.0, 13% year on year, and it's the new record level that we have achieved. And total revenues up 20% to $273,000,000. If we look on the right hand side of the slide, you can see how recurring revenue have progressed from EUR 193,000,000 to EUR $219,000,000 or EUR 25,000,000 more, of which, I would say, two third is explained by Italy and one third by our foreign operations. As far as the margin is concerned, we have continued the recovery since the drop of last year following the COVID emergency that started in March, and we're now standing at 181 basis points. Turning to Slide number seven, expenses. We are quite pleased with the development of the distribution costs despite an increase in assets of 4,000,000,000 quarter over quarter and recurring revenues going up 13%, we have contained the increase from EUR 93,000,000 to 96,000,000. And this is obviously a constant payout to the network, so 40% of the fixed management fee, whereas the all the costs associated to the network also due to the continuous limitation from COVID have been contained pretty well in Q1. SG and A, as we have highlighted in the past several times, as far as the constant perimeter is concerned, costs are flat, if not slightly down, whereas there is an increase of 6.7% due to EUR 4,300,000.0 of M and A transaction, which were concluded and were not present in Q1 twenty twenty. And I'm mainly referring to transaction in The United States and or Australia. Moving to the right hand side of the slide, you see how there is further development of the cost line that is, in total, 160,000,000 of the total operating expenses with the costincome ratio down to 40% versus 50% in Q1. Moving to Slide number eight, the net profit. This is the best quarterly net profit in history for the company. We have reached EUR 97,000,000. If we look at the recurring net profit, this is stands at 86,000,000. And as many of you are curious to understand how well are we performing in terms of returns to clients. We have shown this in the first slide, 4.2% net. What does it translate this for the company is a potential performance fees that will eventually catch in at the end of this year. As you know, the new pricing is working on an annual basis of a solid figure, which we will see in the development of the year, how much we will be able to end up with. But we are pretty in satisfied with how things have progressed in the first quarter. And indeed, we see the EUR $350,000,000 target as reached with normal market conditions, as we pointed out several times. Slide number nine, net inflows. This is has been a very solid quarter in terms of net flows, even excluding the consolidation of Sanctuary Wells in February 2021. Thanks to funds and insurance flows that have increased from $628,000,000 in Q4 twenty twenty to almost double in Q1. Solid development also in the private market. We still have a lot of funds that are in the fundraising phase and a few others that will be launched from June onwards, which makes us remain positive as far as the asset gathering activity in the private market segment is concerned. Slide number 10. We reached almost EUR 73,000,000,000, which equals to EUR 12,500,000,000.0 more vis a vis the 2020, so four months ago. Total international business stands at 35% of the total of our total assets, so EUR 25,600,000,000.0 and EUR 2,400,000,000.0 are coming from the private market. As I've already stated, the EUR 10,300,000,000.0 net flows or if you prefer EUR 3,400,000,000.0 organic. And we're also very pleased by the fact that 87% of our total assets under management are linked to mutual funds, alternatives and life insurance products. Turning to Slide 11, focus on the private market. We have experienced a growth of 4x versus the beginning of 2020. Products the number of products today are 18 products. Some of them are still, as I said, in the fundraising phase versus six in early January twenty twenty. Total assets are EUR 2,400,000,000.0 split across credit, 1,200,000,000.0 private equity, 900,000,000.0 and our infrastructure fund that has almost EUR $250,000,000 while the venture capital is EUR 130,000,000. As you can see, this is split between Italy and The U. S, where in The U. S, we are progressing very well in terms of management of the existing funds and potential new fund launches in the coming quarters. Slide number 12, we wanted to give you a snapshot of the Synthetic Bank project. This is something that has been launched at the beginning of the year with a number of different products. In the middle, you see a laptop, which basically tells you how this Synthetic Bank project works with the technology of our partners, Vorso, Creighton and EPYC, thanks to algorithms that enable us to be extremely efficient in terms of timing of the lending process. On the left hand side, you see a number of different products that we have, the digital lending fund, which is focusing on guaranteed loans and commercial credits and the private debt fund, the multi strategy that is embracing performing and non performing direct lending and special situations investment. And then the capital solution funds, which has been launched with the help of Neo Zenich and other several preserved alternative investment funds. All of this will be channeling loans to SMEs. We have a target of 1,200,000,000.0 between 2021 and 2025. We're also so far, we have managed to reach $450,000,000, and this position us as a leader in the direct lending also thanks to the partnership that we have successfully completed. The yield that we expect to provide is at least 5%. And this is a project that will be rolled out in the coming years with a very high degree of attention. Turning to Slide 13. Another initiative we have launched in February is the first security token issued by an asset manager in the world. It is a digital securitization of loan portfolio of Italian SMEs. These loans are originated by Borsa del Credito. They are guaranteed by the Medio Credito Centrale, which basically guarantees 90% of the portfolio. And the token is is a negotiable token. Actually, we have done the first transaction yesterday. And it's it's thanks to the partnership of Signum Bank that we can enable this first venture in the tokenization world. It gives us why why did we do all of this? It it provides diversification, and it provides alternative solution to our clients. And in essence, we have the possibility to speed up the ownership of a financial asset and simultaneously ensuring the transferability to investors of the asset itself through the distributed ledger technology. What does this produce? It produces lower cost and decreases the limitation of the intermediation. Turning to The U. S. Venture. We have closed the Hypost transaction in the first quarter. Hypost is has been founded by Mark Bezos and David Morris in 2019. They have set up this with the backing of the family offices of these two families, And they are involving a number of different institutional investors in the vehicles that are about to be launched. And things are progressing well, and we're quite pleased with the interaction with David and Mark. On the sanctuary front, we have completed finally the transaction in February. So we have consolidated Sanctuary just for one month. Assets since the announcement have grown 39% up to the April to EUR 9,700,000,000.0. And they are continuing to recruit significant partner firms with a decent pipeline still up to August, which is quite visible. So these days, have EUR 11,000,000,000 of assets in The U. S, 28 investment professionals, 80 employees and 140 financial advisers. Moving on to the asset management side. We wanted to give you an update on the ESG activities that we are continuously doing, mainly in our Luxembourg platform, but this is also involving our Italian asset management company as well as some initiatives that we have in Brazil or in Egypt with impact funds. So these days, all our funds have an internal scoring where they invest up 95% is of the investment are investment grade ESG. All the funds have adopted the exclusion list. So we are pretty in line with this new piece of legislation. And we are finalizing the implementation of the best in class list. Last but not least, we have applied to all our funds the engagement policy. So these days, all the fund range in Luxembourg are compliant. If you look on the following page, it tells you how the 11,000,000,000 or more than 40% of our Luxembourg products are spread across different asset classes across fixed income equity, alternative and allocation. We do have our alternative funds in Italy, the infrastructure fund that is ESG compliant as well as the pension fund that is following ESG principle in the investment process. As I mentioned, we do also have an impact fund in Brazil and an ESG fund in Egypt. Turning to Slide 18, performance net to the client in excess of 4%. From 01/01/2019, our clients are enjoying 14% of net returns net of fees. So despite the drop of March, we've been able to fully recover that, thanks to the work of our global asset management team. Page 19, you see the usual representation of the different macro asset classes, equity, fixed income allocation and what we call liquid alternatives. On the equity side, we have been able to overperform, thanks to a good decision from our fund managers of being overexposed and enjoying the rally that we have witnessed in the first three months of the year. We are cautiously moving away from riskier stocks, although remaining invested. Today, we are around 40%, 42% equity exposure. But we I would like to say that eventually, are less exposed to the volatility of the equity market. Fixed income, the index is down 0.8%. Our fund managers have been able to do a fantastic job there with a positive performance year to date of plus 1.2%. And this is mainly thanks to the active management style and the exposure to some emerging markets. Allocation combines basically the fixed income and the equity component. And thanks to the active management style, we are able to perform with a plus 6% year to date versus the index 4%. In the liquid alternatives, not much to say vis a vis what I've already mentioned in the last call. The index is very widespread and we mainly focus on the correlated strategies and strategies that invest in commodities. So the comparison is not very appropriate, but we still represent this in that last chart. On Slide 20, not much to add, although there has been a big rebound from our side in terms of net new money as a percentage of AUM. Considering the acquisition of Sanctuary, this would have gone outside of the slide, but we are representing it in distant way. Slide number 21, focus on our financial advisory network, 64 hires. We have done a lot of activity to pre pensioning our advisers. I've seen some concerns that eventually the churn is somehow higher than usual. But from our side, this is not impacting the flows nor anything within the network in terms of motivation I have to say that if you look at the Asthoreti data, net flows per FA are still showing a very good development of AdSimov vis a vis our listed peers and the average of the industry, although there has been a catch up from the listed peers in the 2021. As we've seen all of us, the data are quite supportive for the entire industry. If I look at our network specifically, average age across wealth managers and people and financial advisers is in line. Assets under management on average EUR 18,000,000 versus EUR 50,000,000 for our wealth managers and 90% of what they manage is in managed assets. I'm leaving the floor to Alessandro for the usual Q1 financials. Yes. Thank you, Gabrielle. We can move to Slide 23, where we have the consolidated reclassified income statement. As already mentioned at the beginning of the presentation, we closed the quarter with a consolidated net profit of €97,000,000 two times the 2020. This is a great result also considering that we are almost flat in terms of other core fees. Therefore, the increase that we are showing is linked to our solidity, our attention on cost and our growth in assets under management. Back to the total revenue, we increased by EUR 45,000,000 comparing to the first quarter twenty twenty with the operating cost that increased by EUR 7,000,000 with a net operating profit of EUR 38,000,000. The increase of total revenue can be simply explained by a few lines, I would say, the recurring fees that strongly increased compared to the first quarter twenty twenty of about 25,000,000 This is coming from the strong evolution and the strong growth in terms of assets under management in Italy and outside Italy, EUR 16,000,000 almost from the Italian business and EUR 9,500,000.0 from the foreign business. Another important variation can be addressed at the level of the insurance revenue. Again, here, the variation, almost EUR 17,000,000 is explained by the EUR 2,000,000 almost EUR 2,000,000 of new recurring fees and the €15,000,000 are coming from the variable fees. At the level of cost, distribution cost increased by 2,700,000.0 This increase is completely in line with the evolution of the recurring fees. Nothing changed in terms of remuneration. We are absolutely consistent. What we are benefiting and therefore, offset partially the variation is mainly explained by the less activity in terms of cost and marketing cost that we are addressing on our financial advisers. So we are helped, I would say, by the contingent situation that we are living. On personnel and SG and A, we are increasing cost of EUR 3,600,000.0. But if we consider that EUR 4,300,000.0 are coming from the new perimeter that we are considering linked to the M and A, as already mentioned by Gabrielle, I would say that at the end of the day, the variation is negative. So we are taking and we are maintaining what we told you in the past. So it's our attention on cost and the discipline that we fix internally. Moving on the, let's say, nonrecurring business at the level of the interest income. We have a positive effect of EUR 6,000,000. This value can be split by EUR 1,000,000 of fair value option, EUR 1,000,000 are coming from dividend of our minority stake and EUR 3,000,000 is coming from the active management of our liquidity in our our own funds. We are flat at the level of the non operating cost and the interest expenses. Moving to the net financial position. We are positive at the March 2021. We have a net financial position of EUR 147,000,000. And the variation that you can see from December 2020 it's simply explained by the effect, the contribution of the net profit of the quarter. We have no variation in terms of treasury shares. And in the following weeks, we will pay the dividend. Therefore, we will, in fact, obviously, the cash. I will leave back to Gabriel. Thank you very much, Alessandro. As always, summary and outlook, Slide 26. We try to picture graphically where we stand vis a vis the EUR $350,000,000 target, which we take very seriously, as always. And if we divide the EUR $350,000,000 by EUR 4,000,000, we can see how we are ahead of what is a mathematical exercise. Clearly, Q1 has benefited from a number of different aspects that we have tried to summarize in the previous slide. We are seeing Q2 or at least so far since the beginning of Q2, an ongoing progression of what we have observed in Q1. So far, so good. Obviously, the performance fee element is a big variable, which we'll know just at the 2021. As far as net flows are concerned, we are organic at €3,400,000,000 vis a vis our objective of at least €4,500,000,000 in line with 2020. I think the next couple of months will still be solid months in terms of activity, both on the fund side as well as our price market initiatives as well as our international operations. So we will see how things evolve, but we can eventually come back to you with an update on the figure when we speak again in July. The business is constantly evolving, but we're able to maintain a very profitable company with 80 basis points of net profit over total manager AUM. And this is the combination of a number of different factors. First and foremost, the quality of the people that we have within the company, both in Italy and abroad, the innovation and product launches that we're able to do and the effective effectiveness of our distribution channels to address or readdress the allocation of our clients. Going forward, $350,000,000 is the target on Slide 28. Under normal market condition, we stress this because, unfortunately, this is the only variable that we are not able to control. On the Italian side, the product development will is ongoing, public and private. We have three new funds on the pipeline that will be launched on the private side, a number of funds on the public side and reorganization that is almost completed. And all this will be improving the network efficiency. Recruitment is ongoing. We still have a number of options that are under negotiations. 64 FAs means also that we have hired, I would say, a good chunk of that is referring to young guys or sons and daughters of colleagues that will be the future of the business, and we're quite pleased with that. So the absolute numbers tend to increase the overall figure, but the quality is more important than ever. Top line margin is expected to remain consistent. So far, we do not see major swings as far as the margin is concerned. But again, markets will eventually drive the volatility within in the margin. International business, I said the global asset management team is working as a reality by now. It's a fact that we have 150 colleagues around the globe working together, sharing information and sharing ideas, which are benefiting obviously the results that we can produce for our clients. We are developing integrated businesses in mostly or almost all of our countries, Australia, U. S, Brazil, Turkey, Egypt and so on and so forth. I think the improvement in profitability that we have started to see is something that will stay with us for some time, again, albeit the volatility in the emerging markets. Lastly, private markets, 2,400,000,000.0. Honestly, I think this figure would be higher at the end of the year. It depends how successful the new fund launches will be, but we expect to meet at least 3,000,000,000 mark by the end of the year. Actively fundraising on different products across the alternative space. This is something I mentioned several times. You will see some closing before the summer starts. And so actually, the monthly close that we issue is not including all this fundraising activity that we are mentioning now. That's it from us, and we'll leave the floor to you for any Q and A. And The first question is from the line of Villarberto with Intermonte. Please go ahead. Hi, good afternoon, Ciao, Gabriele, Alessandro. A few questions from my side and congratulations for the results. The first one is on the insurance revenues that are showing a very, I mean, impressive progression and growth. I was wondering if you can give us an idea of how important is the variable component there in the first quarter and how we should look at this line item going forward if the result of the first quarter is something that we shouldn't take as granted for the next quarters? Or how we should look at it? Thank you. The second one is on the profit guidance of €350,000,000 Of course, that's based on normal market conditions. I was wondering if you have any idea what is the floor of net profit even in, let's say, seriously adverse market conditions given the growth of the company and so on? We have seen other years of very tough markets and negative performance and so on. And it has had a big impact on Agimut profitability. My feeling is that the change in the fee structure structure and and the the growth growth and the diversification has somewhat improved the, let's say, resiliency of your profit to adverse market conditions. So I don't know there is any kind of sensitivity you can share with us on that. And finally, it's more kind of a question on something I'm not very familiar with, which is the token stuff. And if you just can give us an idea of what is the potential opportunity there for the company. It's something pretty new for at least for the Italian market on the retail side. And I'm pretty curious about what are your ambitions there? Thank you. Thank you, Alberto. So insurance revenue, first, I would like to point out the fact that we have raised assets up to April of $147,000,000 and total assets in insurance revenue stands at $6.5 $6,600,000,000 year to date. We had a number of years in the past where this product range suffered for a number of different aspects. And this is finally a turning point where we're able to raise money and perform very well in terms of the different products that we have. So we see an evolution in that line based on the growth in the assets and definitely also in terms of performance fee generation. How much of that is repeatable, it depends on the markets for some extent. But there is a strong support from the growth and the perception that we have and we see coming from the network as far as these products are concerned, which has been pretty changed from a reorganization that we have completed last year and is about to be completed the last couple of things during 2021. Profit guidance and the floor, it's pretty difficult to answer, but my perception is that the stickiness is there. Obviously, we are capable of retaining our clients within the managed products. We've demonstrated this in the past. Obviously, what triggers the volatility in the market triggers the swings in the basis points that we can extract out of our assets, but because of a more conservative asset allocation. We have seen from last year how things can revert back to the cruising speed of 178, 180 basis point margin. So eventually, time will tell if with the new pricing scheme, the resiliency is more and as we expect to the tune of what we expect. So in my mind, the profile of our P and L has improved substantially, which makes us more kind of solid in terms of the investment that we want to make and the evolution that of the business going forward. On the token, the potential are huge simply because behind the token, there is the blockchain technology that enables us to be a lot more efficient and to overcome some of the typical hurdles on behind the financial transaction. You have to go to the notary, you have to have a number of different gatekeepers aligned in order for the transaction to finally be completed. Here is technology that triggers everything in seconds at a fraction of the cost of the typical transaction. It is something that can be applied virtually to anything. We did this first attempt of creating this token, which will be used within our products, not sold directly to our retail clients. It's a first attempt. As you see, it's just EUR 4,000,000, 5,000,000. But as as with all the strong innovative development, we want to first be sure that is tested well and works. And and then we can deploy this on a on a mass scale. I I believe that and we believe that the blockchain technology will slowly but thoroughly create a lot of advantages within our industry and not just our industry, but time again will tell if we're on the right side of history or we're just too much ahead of it. Okay. Thank you very much. The next question is from the line of Santoro Domenico with HSBC. Please go ahead. Hi there. It's Domenico, HSBC. Thanks for the presentation. I do have a number of questions. First of all, coming back to your guidance of $350,000,000 I know that you are not going to raise the guidance as of now or make any comments, but let's rephrase the question. What needs to go really wrong in order for to disappoint on the net profit target? In other words, given the fears on inflation in the market, steepening of the curve, what is the part of your business that it might be a bit more exposed to the market dislocation, if any? The second question is on the cost. Can you give us you mentioned the Century is consolidated for one month. So I'm just wondering what's the contribution of Century on cost and fees as well given the consolidation for one month only. I just want to understand, I mean, you're doing very well on the cost side and because the other part of the business is, of course, reducing is doing well. So I'm just wondering whether this number for the quarter is a clean number for the next or we should consider a bit more given the consolidation of Century. Then a bit of a color on the margins evolution. I mean, how would you expect this to evolve? Apart from the regardless of the mix, I mean, we don't know what happens with the market, right? If I noticed that the equity component has gone up, but I just wonder, given the mix of products that you intend to distribute, how should we expect margins to evolve going forward? And then on the I know it's an annoying question. Allow me to ask again on the payout, which is very low. I just noticed that it was ex performance fees in the insurance component, 40% in the second quarter last year, 40% again in the third, and then there is a little bit of catch up in the fourth quarter. I just wonder whether this is correct, is going to happen the same for this year? And on what is based this catch up in the ultimate part of the year in the fourth quarter? Thank you. Sorry for the long question. No, no problem, Domenico. Thank you for the questions. On the guidance, what can go wrong? God knows what can go wrong, I have to say. Honestly, we were a year ago in a lockdown scenario, and we were slowly recovering from a drop in the financial market that pushed our net weighted average performance down to minus 16%. I remember back in June, we were down between 24%, and then we recovered everything towards year end and closed positive by plus 1.2. So I have no crystal ball at hand. And in order to impact the EUR $350,000,000, which we were reiterating our previous guidance back in March and July in 2020. We're doing the same here. We're saying we did a very good first quarter. I think everyone in the company is extremely satisfied by the way the fund managers, the network, the employees, anyone just reacted to a good 2020, which we closed the EUR $382,000,000. Somehow people could say, but these guys are probably satisfied. They won't make it. But we're here. We're working very hard. We're putting ahead of our clients investment solutions that are innovative, and we want to reach the $350,000,000 target. Again, we don't control the market. The market can abruptly change and things can go very bad. If I hear what our fund managers are saying is inflation can rise, interest rates can rise. We have a very opportunistic approach at this time of the year as far as our exposure and riskiness within our portfolios. But we consider potential drop in the market as an opportunity to build back some of the positions that we scaled down. So eventually, we are kind of still in the constructive phase of the market without any major concern over the medium term as far as 2021 is concerned when it comes to the financial market. So to us, the guidance is at reach. We're not moving the needle, but we're seeing short term volatility as an opportunity to potentially re increase our exposure. Factory contribution, I would say, negligible in the sense that between what we have consolidated in terms of revenues and costs, it's slightly negative, but to the tune of 1,000,000. So nothing major there. As you have seen, assets have increased dramatically. So in the moment, they are investing so heavily in growth. The results are somehow penalized. But this over the medium term will be completely overturned. Mix of products and margin evolution. I think what we have seen again, if you take a long investment horizon is quite of a resiliency in terms of how we are capable of managing the up and down of the margins. The mix of products about to be launched does not compromise the margin profile overall that we have. So nothing should change when I look at the product launches. And I would say that the higher recurrent fee component and the higher and the stickiness of the assets, given the product market initiative should create longer term visibility on our capability of retaining the margins and generating management fees. Payout to the network, honestly, I understand the question and we are maintaining the same payout to the network. Nothing has changed. What is changing is still in 2021, the first quarter, there is limited activity that we can do in terms of gatherings, in terms of events, in terms of marketing expenses. Just consider that in the first quarter last year, we had a convention the annual convention with 2,000 people gathering in the same place for two days with all the costs associated, which are not there this year simply because we did the same thing over two days, but over three days, but digitally at a fraction of the cost with exactly the same results in terms of outcome, if not better, because people were very pleased with the way we handled the convention. So all in all, the trend is a trend that is consistent with the growth of the recurrent fee component versus Q4. Q4 had an element of variable component simply because we didn't do just the target, but we overcame the target by more than $80,000,000 And this has to be somehow gratified to the people that work in this company. Can I just ask where I mean, has things distend now, the 4% growth in terms of guidance and costs still makes sense or In terms of SG and A, I think it makes sense? What could change is the different perimeter in terms of M and A transaction and or special investment that we could make in the private market initiative. But other than that, it's reasonable. Understand. Thank you very much. My pleasure. The next question is from the line of Lamin Hubert with Bank of America. Please go ahead. Hi, good afternoon. I just got a couple of questions. Sorry to go ask you again on the acquisition costs. Again, it was yes, I think you explained why it was lower in the quarter due to limited activity around marketing and gatherings, etcetera. If we expect life to kind of go back to normal towards the end of the year, should that percentage of the distribution costs against recurring fees go up? And how much do we think we should be thinking go up by? That's the first question. And second question is on M and A. You've done quite a bit of M and A over the last several months. Do you expect to do more M and A in the near term? What would you have in the pipeline? And what type of areas would you consider expanding into? Thank you, Hubert. Thanks for the questions. On the distribution costs, honestly, given the overall situation, although very improving even here in Italy, we don't see a pickup of, let me say, the cost associated with the network up to, I would say, September. We are halfway through Q2. Then there is a summer break, which typically has a less intense activity. And then eventually, we even hope that at some point, we could do something with our network and have a way to go back to normal life. So I would say that up to September, it's somehow not nothing material should happen. So I would tend to see this distribution cost evolution of the marketing cost pretty under control. M and A, this gives me the opportunity of eventually explaining why we just paid EUR 1 of dividend. And when I say just is indeed, we did a very strong net profit last year. We paid a dividend in 2020 and we're paying the same dividend in 2021. But this is because we see a lot of opportunities. We see that we have options to invest in the business, both in the regions in which we are present and in the asset classes that we want to develop. And we have debt, and we want to repay the debt. So this is something we want to stress all the time. And if you put everything into the context of how much cash flow we're generating and you add up the numbers, you see how things are progressing as we want, meaning we are generating cash to remunerate shareholders with decent dividends and decent dividend yield. We are able to fund investment by our own. And we will be repaying the debt as and when they fall due. Great. Thank you very much. My pleasure. The next question is from the line of Perini Elena with Intesa Sanpaolo. Please go ahead. Yes. Good afternoon. I've got some questions, and I'm sorry if you have already answered them, but I was disconnected for some some time. First of all, about your insurance revenues, if I remember well that you also factor in the performance fees, which are not subject to the new scheme. So I was wondering if you could provide us with the amount of the performance fees included in the result of insurance revenues for the first quarter. And what kind of run rate we can imagine for them going forward? Then another question was about your April net inflows and in particular your assets because they grew a bit less than the amount of net inflows. So I was wondering if there was some kind of performance effect or it was more an issue of exchange rates due to the fact that you have a significant exposure in terms of foreign business? Thank you very much. Thank you, Helena. Insurance revenue, as I was saying before, we have developed the business pretty consistently since the beginning of the year with EUR 150,000,000 net flows into that product range, reaching EUR 6,600,000,000.0 assets under management. We do see a benefit from this kind of uplift as well as indeed, as you were pointing out, the contribution of performance fees, which have sustained the revenue line. Going forward, what we can expect is the buildup of the assets to continue. And then whatever is going to happen on the markets will impact positively or negatively the revenue line going forward. As far as the net flows are concerned, there is a slightly negative monthly performance in April, nothing major. But mostly, what explains the variation is the FX movement, which somehow has to be taken into consideration when looking at our figures in euros, given that nowadays 35% of the assets are linked to assets in currencies other than euro. So we somehow have this impact that we have to factor in, given the fact that we are not hedging our currency exposure at any level. Okay. Thank you. My pleasure. The next question is from the line of Bairaktari Angeliki with Autonomous Research. Please go ahead. Good afternoon. Thanks for taking my questions. First of all, if I may also ask on the gross management fee margin increase quarter on quarter. I see that the equity component has increased, but I was wondering, I mean, the margin increase is quite substantial around four basis points. So was it is there any chance that this was driven also by private market funds that may have a much higher margin or anything else? Is there any sort of nonrecurring element in there? And also going forward, as you will start sort of consolidating Sanctuary for the full quarter from next quarter, what should we expect in terms of margin? Is it fair to expect some margin dilution the back of the sanctuary assets? And then second question on the ESG AUM that you've disclosed of $11,000,000,000 Are all of these classified as Article eight or nine under the European SFDR? And last question on personnel costs, which were 19% higher year on year. Could you give us some color on what drove this increase, please? You. Thank you, Felipe. I'll try to answer it first to the last question where you asked about the SG and A line, right? Yes, exactly. Yes. I was I broke that into the personnel expenses that you disclosed in your press release today. Yes. So if you take Slide seven on the presentation that I flipped through, you see how indeed costs are up 6.7% year over year because of the EUR 56,200,000.0 that compared to EUR 52,700,000.0. But if you change if you take out the change in the perimeter that has been occurring between one year, You see how costs are down 1.5% because we are extrapolating EUR 4,300,000.0 linked to M and A activity. Okay. Yeah. I I get that there is there is the m and a scope effect. I guess what I was after is if I if I look at your sort of detailed p and l in the press release that you released today, I can see that personal expenses are 31,600,000.0, and they were 26,500,000.0 in q one twenty. So that's a big increase there. This fully explained with the change of the perimeter I was mentioning before. Okay. Okay. That's what I wanted to check. Thank you. Yeah. Yeah. Absolutely. Yeah. So then going backwards, the ESG AUM article eight and nine, yes, confirmed. They are compliant with the with those two articles, and we are very pleased with that because we've been able to do so in a very short period of time. Sanctuary consolidation, if the question is, does it dilute your margin of the overall business? Well, the answer in the short term is yes, of course. They are in the investment phase, and they are not yet embracing the integration between production and distribution that is the guiding principle of our business model. So in the short term, I'm not expecting a margin uplift. What we are expecting from Sanctuary in 2021 is almost negligible contribution to our P and L. And then assuming a normalization of the pipeline of the investment and the growth and the fact that they will start to use potentially our production centers down in U. S, we will see a stronger contribution in absolute numbers to our P and L. Gross management fee, the four basis points. No. I have to say this is there there's no script source there. It's it's the product mix. It's the fact that the network has focused their attention on insurance products, managed funds, our own funds especially, and this is driving the margin uplift. So once again, looking at these things over just the quarterly variation, whether positive or negative is a very short time frame. But this time, worked in favor of of the commercial activity that the network is doing. So the plus four basis point is something we take home and are quite happy about. Next question is from the line of Prine Filippo with Kepler. Please go ahead. Yes. Good afternoon. I've got two questions. A couple of summary. The AUM increased a lot to $9,700,000,000 at the April. Despite that, you confirm a neutral contribution to your net profit for this year. This is due to the growing cost or something else that is not compensated by the increase of AUM? And still on Santori, just if you can share us some perimeter for the full consolidation for the next quarter. Is it fair assuming a sort of 1% gross margin with the commission, passive commission that could be 7080% of the gross commission? And the third one is on your net finance position. You mentioned the paydown of debt. You've got a bond that's maturing in 2022. Should we suppose that this bond should be fully paid down and not rolled over with a new one? Well, at this stage, we're not assuming a rollover of the bond. So we are going ahead with what we have shared with you in the past in terms of repaying down the debt and adopting this discipline. In terms of the sanctuary increase, it's not one plus one equals two all the time because when you hire an adviser, you incur the cost and then the assets are transferred over the following eighteen months. Typically, this is what happens also at Sanctuary and therefore, the revenue generation is builds up over time. So in this case, if we see the sanctuary evolution, you should go a bit beyond just the increase in assets and increase in revenues equals the cost. Margin, I would say, yes, as far as we know the business today without the integration with the production that I was mentioning before. And eventually, this is something that creates an opportunity rather than concerns us just because it dilutes the overall margin profile. Thank you. My The next question is from the line of Erina Spanos with Berenberg. Please go ahead. Yes. Hi. Thank you for taking my question. So net inflows have been strong so far in the year, and I presume the key driver to this was the strong gross sales. I was wondering if you could comment on the level of redemptions or withdrawals you have seen so far in the year. I mean, it similar to previous years? Or have you also seen an improvement in the stickiness? And if I add to that, would you also expect a sort of uptick in the withdrawals given the profit taking element? Thank you. Thank you, Panos. Well, if I compare the level of redemption of last year same period and throughout rest of 2020, it was very low and unusually very low. And this is mainly due to the fact that client inertia and the stickiness of our financial advisers played a big role in the diminishing the gross outflows. And this is typically what we have observed historically in very negative markets over the past. This year, so far, they have a slight increase, but nothing substantial. And we're still not up to the same level. Consider that if we look at our network in terms of financial advisers, I give you a number that provides you an indication of how widespread is the activity behind the financial advisers. 75% of them are in the are posting positive net outflows net inflows, sorry. And this is unusually high, let me say, and it is also supporting the results in terms of performance that we're providing to clients and the investment solutions that we are allowing them to have and to propose to clients. So all in all, slightly lower gross outflows and a very positive contribution from a very large number of financial advisers in terms of the net loss contribution. Thank you. My pleasure. Ladies and gentlemen, there are no more questions registered at this time. I will now pass the floor to management for any closing comments. Thank you. We thank you for your time, and we look forward to speaking to you again at the July. Bye bye.