Anima Holding SpA (ANIM) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Anima Holding First Half 2021 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Alessandro Melzi D'Eril, CEO of Anima Holding. Please go ahead, sir.

Hello, hi to everybody. Thank you for attending our First Half 2021 Conference Call. I will start, as always, with our presentation. And I will start from Page 4 with the 2021 highlights. First of all, I would like to mark the -- to highlight that in the first half 2021, we marked our highest level in the group history for total AUM, fixed fees and total revenues and net profit. We reached almost EUR 198 billion of assets with plus EUR 1.1 billion of net new money in the semester, EUR 232 million of revenues, EUR 188 million of EBITDA, plus 30% on the first semester of 2020 and almost EUR 130 million in terms of net income, plus 80% as compared to last year. One of the -- another important thing that I would like to highlight on the first semester is that net flows are back to positive and moreover, are positive on the retail side, and we keep a positive outlook for the second semester of this year. 2021 net profit, we see that in terms of guidance for this year, we see already the potential to be above next -- last year. Page 5. In terms of net inflows, as I was saying, the net inflows are strongly positive in the first half, so EUR 1.1 billion approximately. Retail, still negative, but strongly increasing the performance. We are positive in the -- on the retail side since April. And so we hope and we believe that we'll be able to think positive on the retail very soon. Institutional continued to perform very well and positively. Page 6. In terms of business segment, nothing particular to be highlighted, 28% of our AUM on the retail side distributed for the -- for retail networks, approximately EUR 55 billion of assets. Institutional, 72% of our AUM, EUR 143 billion of assets. Our strategic partners on the retail side accounts for 88% approximately of the retail. Page 7, looking at our investment performance. We continue this year to increase the distance with the average of the market, the Italian industry. So we increased our capability to overperform the Italian industry, reaching 4.4% in terms of average WAP on the first 6 months of the year. But another very important feature that I would like to highlight is that looking at our breakdown by category, bond and cash are -- compared to the market are significantly below in terms of percentages on the total. This means that our capability to bring our clients and our networks on more risk and more equity has -- was positive in the last 6 months, at least. Looking at numbers, Page 9, consolidated P&L. Total revenues up 25% as compared to last year, 23 -- EUR 232 million approximately with a strong component of performance fees, almost EUR 71 million. EBITDA, up 30%, up to EUR 188 million in the semester. Net income up -- at 80% as compared to 2020, EUR 130 million approximately. Adjusted net income, plus 32%, EUR 125 million approximately. If you look at margins on the right side of the page, the retail margin is up as compared to last year. Last year was 25.2 basis points in the second quarter 2020. Institutional margin continued to grow, mainly due to the profitability that we already explained more than once of the equity component of targeted funds that we invest through fund of funds mechanism. So these basically are funds coming from the retail, but that we account as institutional because I invested from targeted fund distributed on the retail. Total margin up year-on-year in the second -- on the second quarter if compared to 2020. Looking at the cost/income, we continue to perform very well, also excluding performance fees. And therefore, we continue to keep our -- and to demonstrate our capability to keep costs under control. On the income tax side, in Q2, we -- as we already communicated to the market 1 month ago, we registered a positive one-off of almost -- or approximately EUR 24 million linked to the tax relief on our intangible assets. So this would be a one-off and is taken into consideration in our adjusted net income. Page 10. Net fees, on the left side of the page. Looking at our net fees, we registered our highest historical level in the current quarter. This was driven by net fees. And so this is very important for us if we're looking forward also. In terms of personnel expenses, the increase is almost entirely linked to the higher contribution of the variable compensation estimated. These are mainly linked to the performance fees -- higher level of performance fees and the overall group result. Page 11, a focus on fixed fees. Core fixed fees continues to grow. And as I said already, are at the historical maximum, even if we have an average retail AUM lower almost by EUR 1 billion. And this is due to the gross mix effect -- to the gross savings effect, meaning that we have a higher component of equity in our portfolio. So we are -- we reached our historical max in terms of equity on the mutual fund side. In terms of institutional margin, the increases are mainly due, as I already explained, to the wrap component. The wrap components are funds, typically equity funds invested by other funds of the house and accounted as institutional in our numbers. Placement fees, almost back to normal. We registered EUR 2.2 million in the quarter, EUR 3 million last quarter. So this year, we are running at a speed that is very similar to the 2019. Positive trend in terms of administrative expenses, these are items mainly related to the group customer base and the churn of portfolios. Looking at our financial position, net financial position, we continue to generate a quite significant amount of cash. The consolidated net financial position is minus EUR 84 million at the end of the outlook. We are -- this strongly -- strong generation of cash of the company and the strong additional flexibility following the issuance of our second bond in May, are providing us with full optionality for capital allocation in terms of ordinary dividends and buybacks and of course, provide us with flexibility in terms of possible extraordinary transactions. So getting to closing remarks. In this first half, Anima registered a very strong semester in terms of financial indicators, and we demonstrated once again that our company is strong in delivering results. And besides the financials, one of the most important elements of this result is the return to positive flows on the retail side. We are very happy of that. BAMI is performing very well. Monte dei Paschi is performing very well because we turned to a positive half. So looking at some -- last year, we said at the end of the year that we are suffering because of the low visibility of the client base on the market because of the COVID restrictions of the vaccination still to come. Now that the visibility is increasing and that the situation is normalizing, we are seeing clients back to our proposal in terms of asset management product. This also proves in our idea that the customer were not investing because of macro uncertainties, basically, and not because of a lack of interest in our model or in the model of our clients, mainly banks and post offices. On the institutional side, we continue to perform very well, the flows remain robust, and we have additional mandates in pipeline for the second half. So we -- this is also why we keep a very positive, let's say, outcome for the rest of the year. The strong cash generation, exceeding also our expectations will require thoughts about capital return to shareholders. In addition to the normal median, our guidance, just to remind you, is 50% of consolidated reported net income. This year we will be as impacted by the tax relief, as already explained. And this talk will need to be done before year-end, also depending on what will happen on the extraordinary transaction scenario that is moving every day. So I remain available for your questions.

[Operator Instructions] The first question is from Gian Luca Ferrari with Mediobanca.

The first question is on the news of the day. So I'm referring to UniCredit opening to BMPS. I think the CEO mentioned the fact that the objective with reference to product factories is to improve the agreement. So my question for you is, what could you bring to the table of the UniCredit's CEO? What could be the proposal in terms of new businesses or things like that? If you can elaborate a bit on that, it would be really helpful. The second one is on the other piece. I think in your speech, you said that this is mainly due to the so-called [ your equity ] portfolio. It seems that the run rate this year is on a much higher basis. So my question is, is that because your banking partners are having a higher rotation on their portfolios? Or it is because pricing has changed in a certain way? Or there is any other technical factor explaining that? Is it fair to say that EUR 9 million per quarter is now a kind of sustainable run rate for this line of the P&L?

All right. Thank you, Gian Luca. On the first question, your question of the day, what we can bring to the table for to UniCredit. Anima is the first Italian independent player in the asset management business, is the largest. And I think that also based on our reach on the market, we have almost 100 agreements on the retail side. And our capability demonstrated in the last 10 years, I think that we can bring a lot in terms of products, performances and structuring. We know how to structure and what are the suitable products for the client base need to grow a bank. We did it for many banks and also for Poste Italiane. And so I think that we are best-in-class there. Control services. Again, we serve many, many networks. We onboarded in the past several networks, also very large, again, Poste Italiane. Our services are recognized as best-in-class in terms of paying off the networks, in terms of marketing pools, in terms of customization of services for all our clients. Remuneration, this is another feature of the business. In terms of remuneration, we also provided to our partners, long term partners, remuneration, very interesting, let's say, similar-to-captive, similar or better than captive businesses. And therefore, I think that also there, we can provide to UniCredit the repricing, a very interesting proposal. So we will see. In terms of other fees, let's say that EUR 9 million per quarter, I think, is a sustainable run rate level. And in the other fees item, there are 50 different things. But again, the largest voice is very much linked to the churn of portfolios to the coupon that are, let's say, paid in by the very different funds. So I think that EUR 9 million could be assumed as a good guidance.

The next question is from Luigi De Bellis with Equita SIM.

Two quick questions for me. The first one, can you elaborate on the management fees margin for both retail and institutional assets for the second half? And on the net interest trend expected for retail and institutional for the next couple of months?

Luigi, yes, I will start from the net interest. Well, net interest in the first couple of months what we are seeing is that we are doing well, both from the retail and on the institutional. Institutional is a little bit more banky because institutional depend very much on when new mandates coming to force. Retail is more if you know, steady, but I expect positive results with different marketing to be assessed going forward. So that's why I said that my guidance remains positive because looking at our net interest daily, I see that the trend is positive, more or less across all our clients. And moreover, we are our largest client, but this is the most important thing. In terms of management fees, the quarter was a good quarter because if you compare our -- the second quarter with the first quarter, we are a little bit higher. My guidance in the last call in May was of a margin stable to increasing. And luckily, it was like that. And why? Because of -- because the market stayed up, and we know that this is very important for our margins. And because the client -- what we are proposing to our clients, our products with a component -- with an increasing component of equity. As you said in the last 2 to 3 years, we are pushing a lot on our stimulation plan and on our targeted funds, we've embedded an accumulation of risk. And this is something that is going very well and it's something also that sustain our aim for the client and profitability for our company.

The next question is from Alberto Villa with Intermonte.

A couple of questions. One is on the final point on your closing remarks, when you talk about potential initiatives to increase the remuneration of shareholders. Are you thinking more about stating a buyback or paying a special dividend? How do you look at this kind of a decision? You will wait until it's clear whether you're going to invest into extraordinary deals or is a decision you may take even in the coming months? And the second question is more going back to the potential transaction between UniCredit and the Monte dei Paschi. The CEO of UniCredit today remarked many times that they are looking at a subset of the bank. So I was wondering in this kind of scenario, your current distribution agreement with Monte dei Paschi, how much prospect you indicated for UniCredit do not want to carry on doing business with the current partner of the Monte dei Paschi on the distribution side?

I will start from potential initiatives and paybacks. Well, what I was trying to say in the closing remarks is that buybacks is one of the opportunities, of course. We are today full of cash, as you know. And we are, as I said, more than once in the last month, we are, of course, looking at the scenario and the M&A scenario, let's say, moving around us. So I think that the scenario, the landscape will be more clearer in the next 2 to 3 months. And so we are starting to finger on what to do, depending on the different potential outcomes. One of the outcomes also could be the reactivation of our buyback. We are not thinking today -- as of today to a special dividend. UniCredit and Monte dei Paschi, again, I don't know about the structure of the wheel. I mean, we will see, of course, I mean, I read in the press release as everybody, and I don't know anything else -- any more detail. So we'll see how will be the structure. Again, what I can say is that we are in a sector where the model for the banks is to have captive business or multi-partnership business. We integrate today as a multi-partnership business. And I think that I'm as the first -- the largest independent Italian operator is best-in-class to serve clients such as in UniCredit. So I think that we will be able to play a role, and I hope that we'll be able to play a role based on our capabilities and on what we did with many other clients.

Your next question is from Elena Perini with Intesa Sanpaolo.

Yes. I've got one question about an update on your ESG offer and the assets under management that you have under this type of products?

Yes. Well, the -- our ESG offer, as you -- we remind, last year, we started with a new system of funds, initially 3 funds, today, 4 funds, totally focused with more stringent ESG filters, let's say. These type of funds reached EUR 2.5 billion of assets under management. So i.e., EUR 2.4 billion. So I think that we had a significant success and are performing very well. So we are absolutely happy of the performance in terms of net inflows of our funds.

[Operator Instructions] Your next question is from Fabrizio Bernardi with Bestinver.

I would go back to the questions asked before about the current distribution agreement with Monte dei Paschi. Maybe I didn't get the answer. But is there any sort of, I don't think so, but the exclusivity regarding this agreement that may, in any case, protect Anima should UniCredit by 100, 200, 300, 500 or all the branches of Monte dei Paschi? I mean I agree on the open platform, in the sense that today, Mr. Orcel has said that he doesn't want a vertical integration of the business in terms of distribution for that company. But in any case, is there anything -- any color you may give us about the distribution agreement and the magnitude of protection that this may give you?

Yes. Well, the distribution agreement is an exclusive preferential access as described in all our documents associated on and so with the French access on the network of Monte dei Paschi. So we don't have specific sections in case of, I don't know, structure of the transaction that may happened that I have not envisaged. It depends how it works. We'll the transaction. So there's no change of contract clauses. So we will see. I mean, it's very difficult for me to think different scenarios or transaction structure something that I'm not needing actually. So the contract, it's a contract with the bank with an exclusive French access with no change of contract clauses.

Your next question is from Angeliki Bairaktari with Autonomous Research.

Just 3 follow-ups, if I may, please. On the partnership with Monte Paschi, there was an announcement in June from Monte Paschi, which said that the Board has actually mandated the management of the bank to negotiate with Anima, a potential strengthening of the relationship or potential extension, for example, beyond 2030. Is that something that you are still discussing? Or have those discussions now effectively being paused because Monte Paschi's management is busy with the UniCredit discussions, and you will review your discussions once we know the outcome of the potential combination between UniCredit and Monte Paschi? And that's my first question. Second, can you give us an indication, given today's -- the end of July, could you give us an indication of the next flows in July, especially with regards to the retail networks? And third question, could you give us an update on the alternatives business segment that you launched recently, especially what is the level of AUM that you currently have in that business?

Yes. Well, first question, the renegotiation, you're right. Monte dei Paschi issued a press release for number -- well, mid-June. We are discussing Monte dei Paschi. I mean, we were discussing it yesterday. So let's see. What I expect is that discussion would be put on hold probably. And then we see what will happen on the major transaction. This is my expectation, but I'm not sure about that. And the second question was closing, closing July. Yes, we are positive both from the retail and on the institutional. The press release will be issued in few days. On the current business, we -- the current business, we started up the business last year, and we raised -- we exit on the market in the first close-ended fund part of that fund. With the fund among commitment and self-commitment is raised EUR 150 million -- a little bit more than EUR 150 million. That was our target. We already started the investment. We invested EUR 40 million already and additional EUR 10 million are -- become very soon. So we are investing very quickly, and the fundraising is almost over. We are working on a second fund again, on the private side. We hired the leader of the team, the leader of the meeting. And we will -- we hope to exit on the market within year-end with this new fund in terms of fund raising.

Mr. Melzi D'Eril, there are no more questions registered at this time.

Okay. Thank you very much for your time and your attention, and see you soon. Bye-bye, and have a good summer.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.