Azimut Holding (Milan:AZM) Q2 2026 Earnings Call

0:00 Afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Azimut First Half twenty twenty six 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. Giorgio Meda, Chief Executive Officer of Azimut Holding. Please go ahead, sir. Thank you, and good afternoon, everyone, and thank you for joining us for the Azimut First Half twenty twenty six Financial Results and Business Update Call. I'm Jorge Omid, a Group CEO, and I'm delighted to welcome you to today's webcast.

0:51 Here with me, we have in our headquarters in Milan, Alessandro Zamboti, CEO and Group CFO and our Head of Investor Relations, Alex Sopera. So let me tell you that the first half of twenty twenty six has been another milestone period for Azimut. We have delivered a very strong operational performance, continuing our history of strong cash generative growth. At the same time, we have taken a massive transformative leap forward in executing our Elevate 2030 strategic plan. Today, we are not just presenting a robust set of financial results, we will also be explaining you the transaction in Turkey with YapiCredit that we announced yesterday and that establishes Azimut as the undisputed Italian champion of financial services worldwide.

1:40 So let's turn to Slide three, where we have the key highlights of this first half twenty twenty six. So if there is one key message I would like to leave you with today is this, Azimut's multi generation global platform keeps growing, keeps on firing on all cylinders. So we have generated €8,100,000,000 in net inflows for the first six months of the year. This is not just another strong figure. This represents 81% of our original full year target achieved in just six months. These commercial strengths coupled with our strategic M and A allows us to significantly upgrade our full year net inflows guidance to more than 35,000,000 and while confirming our net profit target of €550,000,000 for the year.

2:32 Speaking of M and A, you might feel that from my voice, I'm very excited to give you more insights later on how we have catapulted Azimut as the number two asset manager in Turkey through the acquisition of the AZIHFICREBY portfolio. And furthermore, in line with the strategic capital allocation framework under our Elevate 2030 plan, the Board just approved the launch of the first tranche of our share buyback program for €250,000,000 starting as early as next Monday morning. This program, which follows the €284,000,000 of dividends that we distributed at the end of May underscores our disciplined approach to capital allocation and our commitment to returning substantial capital to our shareholders.

3:21 So now let's move to Slide four for the details behind these numbers in H1. So here really the KPIs of our financial performance starting with total revenues €781,000,000 driven by a powerful 16% increase in recurring revenues. This demonstrates an exceptional quality and stability of our business mix, resulting also on an operating profit growing to €354,000,000 with recurring EBIT up 10% year on year to €310,000,000 On the bottom line, our reported group net profit stood at €242,000,000 while our recurring net profit, which represents the true core earnings power of our business increased by 6% to €249,000,000 Importantly, our global operations generated €37,000,000 in net profit, representing 15% of our total group net profit. This international growth is also evident in our assets with total client assets reaching a record €158,000,000,000 up 12% year to date fueled by more than €8,000,000,000 in net inflows out of which 53% came from our global operations.

4:39 For those who have been historically being skeptical about the scale of our international expansion, this is the definitive answer to why we invested and focused so much over the last ten years on investing outside Italy and this is today a visible result of our growth. Our Globals business has become the primary engine of our growth and we expect this contribution to accelerate significantly towards our Elevate 2030 plan. So moving swiftly to Slide five, where we have our net profit bridge for the first half twenty twenty six versus 2025. And we look really under the hood of our net profit development starting with our reported net profit of €240,000,000 in the first half of last year, where you can see how our core operational engine drove a €29,000,000 increase in recurring EBIT. That was also complemented by a €33,000,000 increase in performance fees driven by strong market performance both on funds and insurance products.

5:46 The strong performance was offset by, let's say, 63,000,000 in other non operating items below EBIT, which included several non recurring or accounting driven items such as conservative extraordinary write offs on proprietary investments in the second quarter, but Alessandro will detail on those later in the presentation. Despite these nonrecurring headwinds, the underlying power of the business shines through a recurring net profit rising by 6% to €249,000,000 highlighting the steady predictable compounding of our core franchise. And now let's look at the performance breakdown by business line in Slides six and seven. In Slide six, we have our reclassified the P and L by business line and reclassification that we have been now using for more than a year, where we have integrated the solutions, which represent the DNA of the firm, combining our proprietary product factories with our exceptional financial advisor networks in Italy and beyond, continue to act as our core powerhouse and command the superior stable recurring net profit margins of 69 basis points. Global Wealth Solutions is showing strong commercial traction across all the jurisdictions where we're operating and we see here how operating leverage is driven by excellent productivity and high net worth clients acquisition in our hubs in Singapore and Monaco

7:16 in particular. Our institutional and wholesale division has also expanded massively. Certainly, this is thanks to NSI and Nova, and we expect the full profitability to unfold progressively as these platforms mature. And finally, also let me highlight how our strategic affiliates continue to ramp up, representing a solid foundation of diversified global assets in the most attractive markets. And for the first year, this vertical is showing breakeven as opposed to what we have seen over the last few years. This is starting to pay back years of focus and investments. So focusing on Slide seven, we have our geographical verticals, where we really proved the success of our global diversification strategy.

8:04 Italy remains exceptionally strong, delivering €290,000,000 in recurring net profit driven by stable domestic inflows, robust recurring fees and strict cost control. Globally, our international operations are accelerating, generating €174,000,000 in revenues and €37,000,000 in net profit, which accounts for 15% of our total group net profit. If you compare this figure to 2019, when the international share represented less than 6%, it consider that once the Yapi Credit transaction is closed, this share is set to expand to nearly 30% of expected profit. So it's very clear how the recent transaction is a truly remarkable milestone in our global expansion.

8:55 Our global operations are no longer just a long term option. They are highly profitable reality that generate stable diversifying cash flows across 20 countries. Very often when I'm talking to you, I always keep hearing this argument that because of this diversification, Azimut deserves a discount. We believe that these results would improve the actual Azimut deserves a premium to its valuation considering the substantial reality of these figures. So now let's turn to the most exciting chapter of today's presentation and moving to Slide eight, where we really go through the rationale behind the transaction that we announced yesterday. In Turkey, as I mentioned, this is a transformative milestone for the Azimut Group. Yesterday, we signed a binding agreement to acquire 100% of the IP Credit portfolio, Yonetimi, the asset management subsidiary of the IP Credit Bank that is the fourth largest private bank in the country. And this acquisition, by the way, represents the largest deal that the group has made so far and there are very good reasons why this is the case.

10:07 Certainly, we need to look at this transaction in combination with our existing business in Turkey, Azimut PORFOI, combining Yapi Credit PORFOI and Azimut PORFOI, we are creating a EUR 29,000,000,000 national champion, establishing what will become the second largest asset merger in the country and elevating certainly Turkey to our third largest market globally by assets under management. I'd like to make a point here, yes, we'll be the second in terms of assets under management that will be the first private asset management in the country, consider that number one is an entity controlled by the state banks with everything that results in this respect when it comes to the product and marketing proposition of that institution.

10:57 So at the core, at the center of this important financial transaction, there is a fifteen year exclusive distribution agreement that is essentially a long term strategic alliance providing Azimut's global investment platform with exclusive access to YAPI Credit's Tier one network of over 18,000,000 clients, one-eight. So this is a pretty, pretty massive. More importantly, we have also implemented street safeguard mechanisms and we have aligned incentives. And when it comes to the protection, I want to mention that we have a comprehensive protection system and an explicit AUM targets that structurally lock in our operating margins and secure our total asset base from day one. So combining this protection with a growth linked earn out structure, we have ensured a perfect alignment of interest with our partners giving us highly visible recurring cash flows that are set to deliver 65,000,000 to €75,000,000 in pro form a net income in 2026 as well as an average 10% earnings per share accretion between 27,000,000 and €29,000,000 and that is before we take into account any synergies.

12:13 So from a financial standpoint, as I said, this is the largest acquisition of the group to date. But apart from being very accretive, it's also an incredibly disciplined use of our capital. The $3.00 €5,000,000 consideration implies a very attractive seven times P multiple on 2026 estimated net income. And certainly, it's very important to mention that we have already secured a financing structure. And certainly, we will provide specific details on that at the later stage while the closing of the transaction approach. But it's very important for me to stress that now our pro form a gross debt remains well below one time EBITDA preserving our pristine credit profile and financial flexibility.

13:01 So moving to Slide nine, what I really to explore to highlight for you why Turkey, why we believe Turkey is a large and attractive market poised for sustained growth. So I mean, for some of you, Turkey might seem like an unconventional choice. Obviously, that goes beyond the fact that you have been operating in the country since 2011. And what I'm about to describe now is something that we lived and we have experienced as contributed significantly to our earnings growth over the years. So this is not simply a representation of things observed or looked from a time to a massive way. This is something that we lead. And certainly, let me tell you that Turkey is one of the most compelling and dynamic growth stories in Europe today. First, demographics.

13:47 Turkey represents the largest population in Europe with 86,000,000 people, the youngest and fastest growing population in the continent that, as you know, is a pretty strong demographic fundamental structure for our business. Turkey maintains also one of the lowest public debt to GDP ratios in Europe at just 24 comparing very favorably with what we know well for the rest of the union, and that provides the country with substantial fiscal headroom and economic flexibility that in the past has already proven to be a key enabler of growth and stability even despite adverse market condition. The combination of demographic, energy, economic growth and fiscal discipline makes Turkey a uniquely compelling market for assets and wealth management. And we see that better represented in Slide 10, where we look at the economic KPIs of the macro fundamentals of the country where we can really see how since 2020, the country has undergone a highly successful policy pivot that has restored international investor confidence, particularly following the twenty twenty three presidential elections, the economic authorities add what we can define without doubt a U-turn in terms of implementing a disciplined policy shift, anchoring the currency to a managed depreciation path and bringing inflation progressively

15:17 under control. This stabilization has led to a significant rerating of Turkish credits, any Turkish asset classes, in particular, the five year CDS spreads tightened dramatically dropping from their 2023 peaks to the current level, so two thirty five basis points that in history is one of the lowest level ever recorded. And certainly reflecting this structural improvement, all the rating agencies have recognized that the situation had changed and all of them, they have upgraded the credit rating of the country, maintaining a positive outlook. So certainly, this economic rerating provides a highly supportive backdrop for our combined operations at FoBoard has been essentially what you can see in Slide 11, a pretty major change in the asset management industry that has, over the last few years, experienced a period of extraordinary rapid expansion.

16:19 Certainly, driven by high interest rate environment and growing investor sophistication, total assets under management have grown from $49,000,000,000 in 2020 to more than $310,000,000,000 as of June 2026, representing a massive 40% compound annual growth rate or essentially an increase of six times in ad currency over the last six years or so. So, we are talking about here ad currency figures. We're not talking about Turkish lira inflation driven figures, I'm talking about hard currency real value growth for an industry that has also reflected in a pretty major growth and expansion also in terms of commission revenues rising to more than $1,100,000,000 with a very similar growth rate in the same period of time. The market is currently dominated by banks' captive managers with the top five commanding a combined 50% market share of which Yapi Credit portfolio, the company that we have announced yesterday will be acquired by the group holds 8%.

17:30 So we expect as rates and inflation will keep normalizing over the next coming years, we are anticipating really a structural shift in investor demand away from money market funds toward the domestic and foreign equities and alternative products. It is exactly where our combined entity will excel and is best positioned to capture the highest margin flows. So let me go on Slide 12 on describing what the IP Credit portfolio is. As I said, the fifth largest asset measure in the country, managing approximately $26,000,000,000 in assets and an 8% market share that represents approximately the same market share that Yapi Credit Bank has looking at the total banking assets in the country. The platform features a highly institutionalized product suite spanning 136 funds, including 17 pension funds.

18:28 The company has been benefiting in the past from exclusive distribution access to Yapi Credi Bank's Tier one network of seven thirty branches across the country and over 18,000,000 customers. And this massive retail and institutional distribution power has generated an exceptional financial track record between 2023 and 2025. And let me tell you that the assets have grown over the same period by 74% annually, revenues by 40% and net profit has delivered an outstanding 57% annualized growth rate in the same period. The Yapikaya portfolio is a pretty well run company, highly efficient, high growth and immensely profitable machine with approximately 70 professionals and have always made a remark created always a remarkable track record of operational excellence.

19:26 And now let me actually give you more details in Slide 13 regarding Azimut Holding Turkish business. This is the first time and certainly we feel proud and immensely delighted in providing some look through on the performance of our Turkish business. We have never provided access to single countries financial performance, but here we feel compelled to do it. And I want to show you how Azimut portfolio since 2018 has been an incredible story of growth, certainly driven by highly successful independent and high margin platform operating in a country with its own logics, with its own dynamics, but with a strong backing of our global group. Through disciplined organic growth and successful acquisitions, Azimut portfolio has become the profitability leader within the group. Our assets under management have grown over sixteenfold since 2019, reaching now more than EUR 6,000,000,000, while net profit in the same period has grown 22 times to €24,000,000 last year and expected to be a fairy this year. Azimut portfolio operates as a high value independent platform with 44 financial advisers, serving nearly 1,700 retail institutional clients supported by physical footprint of regional liaison offices in Ankara,

20:57 Izmir, Bursa, a boardroom and having certainly a distribution reach with the retail market in the country with approximately 46,000 investors in its funds. Unlike the bank captive players, our asset mix is highly sophisticated with discretionary portfolio management representing 53% of our assets, delivering what is an incredibly competitive and profitable margin profile. So let's look now in Slide 14, what will be the combined, let's say, pro form a representation of both businesses, the AZIHFID and Admiral Profoy coming together. The combined platform I mentioned earlier will manage €29,000,000,000 or $33,000,000,000 in assets. From a profitability perspective, the combined business is expected to generate €65,000,000 to €75,000,000 or 75,000,000 to $85,000,000 in net income for 2026, And that is essentially representing a figure that takes into account, let's say, for the transaction and is excluding any synergies that I will detail later can be pretty meaningful and material.

22:20 Yapi Credi portfolio will immediately benefit from Azimut's world class sophisticated manufacturing capabilities, and we will inject our proven expertise in the Discretion Portfolio Management business and strategies to transition retail clients into higher margin solutions. We will certainly have a specific focus on real estate and private equity alternative funds, allowing us to capitalize on Turkey's rapidly growing demand for alternative assets. Again, here, a number that we have never commented before, but when you look at our admin portfolio assets under management today, 5% is actually accounting for alternative investments. I mean, Turkey has taken the same path of our Italian business in this respect. Essentially, we will be bringing our global equity funds expertise to take investors providing them seamless offshore access through our Luxembourg product hub. This is a clear blueprint for transforming massive scale into high margins profitability.

23:24 So on Slide 15, I want to just mention briefly touch upon what are the potential synergies that could improve the financial impacts that I mentioned earlier. First of all, as I said, there will be an amazing cross selling opportunity through Yapi's credit captive distribution network. Second of all, that is very important. As we will expand our product suites, we will be able to achieve a better price mix and certainly to transition what is an existing business for Yapi KA portfolio into a higher margin product suite. And third, there is certainly a material opportunity to rationalize both personal and non personal costs.

24:15 I mean, Yapi Perfoy, as I said, is a pretty well run company, a costincome ratio of 25%, but combining two asset management businesses will allow here really to duplicate to eliminate any duplication and have it certainly a pretty major impact on what is already a low cost income ratio by bringing that even further down. So Slide 16, some sort of qualitative and last remarks on this transaction. Azimut becomes the second asset measure in Turkey. The first, if you take out from the peers panel, the largest that is controlled by the state banks.

25:05 This is a transaction that transforms Azimut's global network. Certainly, it makes us grow in Turkey, but it gives also another, let's say, proof of how Azimut is positioning itself as a trusted asset management platform for a leading financial institutions operating across its global footprint. It's very important to say that this transaction comes with an exclusive fifteen year distribution agreement that will allow us to certainly get an extract growth from this Tier one market reach of the bank, but certainly providing a very meaningful visibility in terms of earnings, in terms of cash flows. The transaction itself, as I mentioned, based on the EUR $3.00 5,000,000 consideration implies a seven times multiple earnings that is an absolutely attractive level for a transaction of this type, even for a high growth market like Turkey. And the transaction brings an average 10% EPS accretion over the next three years, but starting with year one immediately at this level that I want to reiterate includes any financing costs for the transaction, and it excludes any potential synergies that are very likely to be a slacked. Just to wrap it up,

26:37 I want to just mention that this transaction proves that the power of our global vision is in the making, is not longer a free or a dream, a free option. A dream is something that is happening today. Our international assets after the consolidation of Yape Porfoy will stand above 50% of our total group assets. And when you look at our earnings, we have accelerated our path towards generating 30% of our expected earnings from global operations under our elevated 2030 roadmap. I want to say that this is a definite proof that Azimut is a true Italian champion of financial services worldwide.

27:23 We are a global multi generational advisory platform present in 20 countries chosen by more than 2,500,000 private clients globally, well networks as some of the largest institutional investors globally to manage their assets. With this, I'm going to hand over to Alessandro that will walk you through our financial results. Alessandro, the floor is yours. Yes. Thank you, Giorgio. So we go back to numbers. So we can move to Slide 17. And it is a pleasure to present the financial results of a truly outstanding first half for the Azimut Group. And as usual, we will begin with the evolution of our top line performance. During the first half, the group recorded total revenues, so it's exceeding €780,000,000 representing an outstanding 21% year on year growth compared to the first half of twenty twenty five.

28:23 This is a fantastic top line expansion, was driven by a solid 16% increase in our recurring fees, which rose by €92,000,000 to reach €653,000,000 driven by solid AUM growth, except our ongoing platform expansion. And looking at the main drivers, first of all, our global business has continued to expand and can grow by €58,000,000 year on year. And this is actually this was driven by changes in our consolidation perimeter and specifically adding €25,000,000 from NSI, 2,000,000 from NOx and €11,000,000 combined from the consolidation of Kennedy Capital, Post, alongside robust organic growth in The U.

29:09 S, Singapore, Brazil and Turkey. Second, Italy delivered a very robust domestic contribution, charting €34,000,000 year on year. This solid organic performance was broad based across all of our core business lines, spanning open ended mutual funds through the alternative assets and the next generation advisory services and also we would like to mention also Nova. Moving to the performance fees from our Fund Solutions increased by €5,000,000 year on year to reach nearly €80,000,000 driven by strong investment results in Turkey and Monaco, which effectively offset the negative impact of the full CONFIRM mechanism. And turning to the insurance revenues, we achieved a year on year increase of €31,000,000 to reach €91,000,000 This outstanding performance was driven by an exceptionally strong second quarter, which generated €28,000,000 in valuable insurance fees, complemented by nearly €3,000,000 in recurring insurance revenue.

30:17 Finally, the entry commission and the other income rose by €8,000,000 to reach €30,000,000 and this is primarily supported by higher entry fees inflows from our international hubs and in particular Singapore, the Switzerland and Monaco business. So in general, what I would like also to mention is the evolution quarter on quarter basis to highlight our underlying operating momentum. On a sequential basis, we achieved to be rolled revenue growth of approximately €40,000,000 This incorporates a €50,000,000 increase in the recurring fees, a €20,000,000 expansion in the insurance revenue and €6,000,000 in aggregate performance fee. In terms of domestic recurring fees, our Italian operation grew by 7,300,000 quarter on quarter led by open ended funds, which contributed €4,500,000 supplemented by a €1,800,000 increase in private markets management fee and approximately EUR 1,000,000 from Nova.

31:22 It's also our international operation also delivered strong sequential growth up by EUR 8,000,000 quarter on quarter. The main contributors were The U. S. With an increase of €4,000,000 reflecting the successful ramp up of AZIH, Monaco with €1,600,000 Singapore with €1,200,000 and Turkey with €1,000,000 So now moving to next slide, let us analyze the evolution of our operating expenses compared to the first half twenty twenty five. Total cost increased by approximately €74,000,000 an evolution directly correlated with the expansion of our business scale and the revenue growth we have just outlined.

32:11 Let's examine the individual components. So first, we start with the distribution cost increased by €21,000,000 year on year to reach €244,000,000 reflecting the direct growth of our recurring revenues, both in Italy and abroad, and including a €6,000,000 perimeter effect from AZIH. In Italy accounted for a €6,000,000 increase, while the international business contributed €50,000,000 Second, looking to the personnel and the SG and A expenses, we have an increase by €44,000,000 to reach €165,000,000 This reflects the combined effect of consolidation perimeter changes totaling €25,000,000 primarily a gain in U. S. For €21,000,000 including on one side the €15,000,000 from NSI, EUR 6,500,000 from AIPOS and Kennedy Capital and as well as we mentioned for the revenue Brazil for EUR 1,500,000 and in general we have an organic cost growth of EUR 19,000,000.

33:24 The organic cost in Italy remained virtually flat reflecting our disciplined cost management in domestic operation, while the international organic growth was mainly driven by Turkey, Brazil and UAE. It is critical to highlight that organic cost in Italy remained virtually flat, again, as I mentioned before, so important to remark this point. Third, depreciation and amortization increased by €88,000,000 year on year to reach €80,000,000 which includes a €2,000,000 perimeter effect from AZIH. The remaining increase is primarily a baseline comparison effect as the second quarter of twenty twenty five benefits from a provision release following favorable legal resolution.

34:10 So if we take out the effect of this positive one off D and A evolution is broadly in line. And again, trying to give you also an overview of the evolution of the group quarter on quarter, distribution cost rose by EUR8 million, in line with the recurring revenues. SG and A and administrative expenses remaining linear with a low growth of €2,000,000 This again to remark as well the point related to the cost discipline. Moving to on the Slide 19, so moving below the operating line, the net impact of financial items and the non operating costs for the first half of the year was negative by €80,000,000 which represents a market improvement compared to the negative €38,000,000 recorded in the first half of twenty twenty five.

35:09 This net performance was driven by three primary components. First, a non cash IFRS 17 adjustment of approximately €10,000,000 second, other non operating cost of €5,000,000 and third, it's €8,000,000 related to the fair value option, equity participation and portfolio performance, which was impacted by €25,000,000 extraordinary, no recurring write off on property investment in the second quarter. To provide some strategic context, these write off relate to two specific venture capital holdings, one in technology and the other one in medtech sector. So as a global platform, we manage our property portfolio with the highest level of financial discipline, while investment activities naturally carry risk. So our track record demonstrates our ability to capture extraordinary upside, as we did with our investment in Candelin Lewis, which returned first time third times our initial capital and generated a capital gain of over $160,000,000 So, disciplined capital allocation means taking H and I conservative and proactive approach to valuation when necessary.

36:28 By electing to write down these assets now, we clean our slate, protect the quality of our balance sheet and ensure our financial report remain a present reflection of our core recurring profitability. And then our adjusted tax rate stood at 21.7% for the first half of twenty twenty six and we are guiding to a full year tax rate approximately 24%, 25%. Putting it all together, the group achieved a reported net profit of €242,000,000 and we are reflecting the true structural earnings power to our business. Our recurring net profit grew by a remarkable 6% year on year reaching €249,000,000 Moving to Slide 20, we present our net financial position, which remain tightly robust positive of €750,000,000 While this is lower compared to both the previous quarter and the end of last quarter, it is that a result of active capital allocation shareholder return initiatives.

37:33 Specifically during the period, we deployed €89,000,000 in M and A and strategic investments, euros 58,000,000 in tax advances, euros $352,000,000 in ordinary and preferred dividend distribution and then €60,000,000 in shares buyback. Probably the news is that in line with our commitment to maximizing shareholder value, the Board of Directors has today approved, as mentioned before George, the launch of the first tranche of our new share buyback program for up to €250,000,000 scheduled to start at the beginning of August and to be completed within the next six months and represent exactly a half of our total €500,000,000 authorized buyback capacity. This launch marks another milestone in executing our strategic capital allocation framework.

38:23 More importantly, it directly delivers on our It's Elevator 2030 plan, reinforcing our former commitment to return approximately 25% of the group market capitalization to shareholder through a combination of dividend and share buyback with subsequent share cancellation over the 2627 period. This program is a powerful complete testament to our exceptional cash generation, our robust balance sheet, our absolute focus on driving long term capital appreciation. And now we can move to Slide 21. So before handing the call back to Giorgio, let me provide a brief strategic update on the T and B transaction. We have extended our framework agreement with FSI until 12/20/2026.

39:10 The customary follow-up assessment by the Bank of Italy regarding the previously agreed remediation plan was completed in early July, and we are currently awaiting the official report from the regulator to formally conclude this stage, which represents a key prerequisite for obtaining regulatory approvals for the overall transaction for the component authorities. Based on our current progress and highly collaborative and positive nature of our ongoing regulatory engagement, we remain fully confident that the transaction will be completed within the end of the year. So with that, I will hand the call back to Giorgio. Etienne, thank you. Thank you, Alessandro. And the last slide, Slide 22, just a look through of our guidance upgrade in terms of net inflows for 2026.

39:57 We are upgrading the original €10,000,000,000 target to €35,000,000,000 target, at least €35,000,000,000 target, resulting from the impact of the acquisition of Yapi Credi that we expect to be closed following regulatory approvals by October, November this year and an organic upgrade in our inflows of at least €4,000,000,000 If you compare this slide to what we have shown last year, same time, you would find a very similar upgrade. So we are really looking to continuing delivering strong commercial momentum and certainly to benefit from what we are able to achieve in terms of non organic growth as well. And with this, I will open the floor to any questions.

41:17 The first question is from Gianluca Ferrari of Mediobanca. Please go ahead, sir. Yes. Thank you very much. Ciao, Giorgio. Four questions for me, please. The first one is Page seven, when you give the verticals by region. I was wondering what happened in the global business looking at the dynamic of assets, the dynamic of revenues and the dynamic of EBIT and net profit. It seems that something on the cost base has changed this year, and I was wondering what was that and if it is a one off item or something more structural. The second is on the deal you made in and announced yesterday. I was curious to hear some thoughts on the hyperinflation.

42:08 What are the currency risks there? How you are isolating ForEx risk? And how are you hedging this kind of risk? The third question is if you can help us in modeling in a bit more predictable way the net interest income for 2026 with all the moving parts, the derivatives and stuff like that? And if in the extraordinary items, we should expect only, let's say, the level of first half as a run rate for full year? And the final one is you are reiterating the EUR $450,000,000 net income guidance ex extraordinary items. What are you considering extraordinary in the first half? Is the write offs in the technology and medtech is the only component we have to isolate in the EUR $450,000,000.

43:00 And linked to this, can you remind us how much you invested from your prop investments as seed money in venture capital overall? Thank you. Okay, Jean Luc. I'll take some of your questions and leave Alessandro for the others. So Page seven, you rightly pointed out, we have increased assets and operating margins or operating earnings have not increased linearly. This is something that we already commented for Q1. I mean, decreasing assets reflect the consolidation of NSI. We said at the very beginning that the first quarters transaction or following the consolidation of the assets would have implied a dilution in margins as the platform gets integrated into the group as a number of, let's say, one off nonrecurring items are absorbed over time.

44:07 And obviously, we are not going into the details now of NSI financials, but we have already seen a material improvement in the second quarter versus the first quarter. And we see that continuing unfolding over the next few months. We're expecting NSI to be contributing positively to the net income we provided at the time of the acquisition some guidance in terms of EPS accretion, all those outstanding. We were mentioning back then that we're expecting a 5% EPS accretion over the first two years. All that is standing. It's a pretty large firm, more than $22,000,000,000 of assets, a lot of products, a lot of counterparties that are linked to launch of new products.

44:55 We launched at the end of June two of the first five active ETFs built for the American market. Let me tell you that we had a very strong sales response, more than $150,000,000 invested in these two products in the first month. All this is resulting in some, let's say, headwinds that, as I said, will be absorbed as the business keeps integrating and keeps growing. And there's no change whatsoever in our view on how this will contribute to our earnings. In terms of the deal in Turkey, look, the numbers that we are showing here are all accounting for hyperinflation accounting. Sorry for the double repetition, but one thing I want to tell you that hyperinflation accounting is expected to be discontinued in 2027 as inflation has normalized.

45:54 There's one key aspect when it comes to the asset management business. Hyperinflation accounting had a very limited impact in general. The numbers that we have shown are already post those adjustments. But the beauty of this business is that we invest in assets, we invest in locally denominated asset classes that obviously start with a base return that is the local interest rate yields, and that is reflected inflation. So whatever you might see in terms of inflation essentially provides, let's say, naturally hedged at the fund performance level as funds always start with the risk free rates, if you look at this now in excess of 40%.

46:45 So even if the currency depreciates, as has been depreciated by the interest rate differential, we have through the organic development as much as the ability to beat the market, this incredible growth delivered on top of any currency devaluation. That is very, very important to remember. Turkey has not experienced any major currency volatility for the last five years, almost six, and that is the result of the normalization in the macroeconomic policies implemented by the Central Bank. And we think that, that will continue and there are no reasons to expect this to be a problem. But even if some is worried about these problems, we have been there since 2011. We have experienced all sorts of volatility in the markets, in the country, resulted that every single time something is happening, even if that is bad, have been able to turn that into an opportunity for our business.

47:55 The fact that we are a global manager helps investors to look at diversified portfolios and basically provide them a way to hedge any local risk through our portfolio management capabilities. Now you were asking about the net interest income for 2026. We didn't catch whether you were referring to YAPI portfolio or you were looking at the group level and depending on which one of the two, either me or Alessandro will reply to that question. Hello?

48:52 Gianluca, we didn't hear you. Janluca? Hello? Hello? Can you hear us? The next question is from Bill Alberto. Please go ahead, sir. Hi, and thanks for taking my questions. Hi, Giorgio, Alessandro. Have a few. Thanks for the deep dive on the equity portfolio, very helpful. I was wondering if you can give us some more color about the expected growth of the business going forward. I've seen a tremendous growth in the last three years of the AUM, but a slowdown in growth in the first half of this year. I know, maybe there are specific reasons for that. But going forward in your expectations, what we should bake in terms of expected AUM progression going forward? And well, any additional color you can provide us on the agreement distribution agreement with the bank would be particularly helpful because it's one of the most relevant

50:24 point of the deal, I guess. And secondly, still on Yapi Credi, I understand that there are also earn outs and other considerations. Maybe you can detail a little bit better how they could work if they kick in and the seven time NPE multiple is based on the initial consideration. So just to understand the final amount that could be paid in case everything goes in the right direction. And the second question is on the fact that you are operating now in 20 countries and some of them are now contributing significantly to your results, other are a little bit less relevant.

51:16 So I was wondering if you are considering some sort of rationalization in terms of the portfolio of countries in which you operate or you believe there are opportunities in all the 20 countries you are currently operating? The third question is more related to the, let's say, updated target on net inflows, which is obviously impacted by M and A, but stripping out the M and A component, it seems quite conservative. This is aligned with what you have been doing in terms of guidance on net inflows. But I was wondering if you can provide us on outlook on what was the trend in July and if you expect organic or same perimeter net inflows to continue to be solid going forward. And the final question is a more generic one on margin evolution going forward.

52:20 We've been hearing about potential pressure, but at the end of the day, probably also market contributed positively on mix and so on. In general, in your view, are you experiencing any pressure on margins in any of your jurisdictions? Thank you very much. Okay, Alberto. Can you confirm that you can hear us? Yes, I can. Okay, cool. Okay, because we lost Gianluca earlier, but we will come back to him offline. So going through the very long list of questions, but hopefully, we have an answer for all of them. So in terms of growth assumptions for YapiCare portfolio, I mean, it happens that businesses can grow at different rates over the medium and long term.

53:12 What happened over the last first month, it was actually the first two months of 2026 has been, as a matter of fact, compensated by very robust growth over the last couple of months at the end of the first half. So our basic assumption that through the distribution agreements, we can achieve between 710% organic growth for YAPI credit portfolio assets. This is significantly below what the company has delivered over the last few years and reflects what is our underlying view of organic potential for the market. But it can be easily higher, but this is what we have reflected in our valuation and base case scenario.

54:02 For distribution agreements, look, there are a lot of things in that distribution agreements that we have put under the label of safeguard mechanisms. Essentially, have very clear rules, if I can define them. So in terms of margins, we have a baseline margins defined below which the bank will have to essentially compensate in terms of lower retrocessions from our part. To say that, on the other hand, we provided them an incentive to shift the product mix towards different solutions.

54:49 So they have, if you want, in this respect, an alignment of interest in improving the underlying, let's say, the profitability of the business. When it comes to the assets, similarly, we have said some thresholds below which there will be initially a compensation calculated and representing the basis for lower retrocessions over the short term. There are even threshold below which we might be entitled to some compensation as opposed to the original consideration. I have to say that all this has been negotiated with the bank, but we generally believe that none of these thresholds will actually kick in.

55:43 We have really sort of felt during the negotiations that is a genuine focus from the bank's management to use asset management in this partnership with Azimut to increase the market share, both for the banking business and the asset management business. So we really believe it's good to sleep at night to know that there are things that will protect us, but to say that this transaction represents even for the bank and I feel they've been very open yesterday commenting as they want to start really anew as far as the asset management business is concerned following this transaction. The earn outs will be relatively limited.

56:32 We are expecting for the first five years an overall amount of EUR 20,000,000. The way the earnouts work is based on certain targets of growth. So there are really milestones is more of an asset kicker system. So as soon as certain thresholds are hit, then the bank gets consideration. To give you a ballpark measure of how these are now calculated for the €20,000,000 that amount will be paid if the bank increases organically by 75% the existing assets under management. So we are talking about obviously an earn out that is important financially, but there is a very compelling case in terms of growth as far as the different milestones have been set for that to be paid. We also have for the longer term, we didn't really want to leave anything unattended in terms of incentives. We also defined a system where we already agreed that beyond this initial five years, there will be an alignment in terms of commercial incentives.

57:48 The business will continue growing. I wouldn't call this out now, I would call it more as higher retrocession, but something that will not impair or affect the overall profitability of the business. So the seven times P multiple is calculated on the $3.00 €5,000,000 consideration. I told you €20,000,000 is the maximum earn out to be paid over the first five years based on these growth targets. We will acquire business that will have some cash in it. And certainly, the cash is also part of the consideration on top of what I mentioned, but it's cash against cash. So it doesn't really account for the multiples calculation.

58:34 And then you asked a very fair question. You are now in 20 countries. So is there any plan to exit some or to rationalize? I have to tell you that it's very hard for me right now, not because I'm an optimist by nature, but it's very hard for me to think that Azimut will never leave any of these countries for the simple reason that the business is operating as a truly integrated platform. It doesn't matter whether in Taiwan, we have a relatively small business as opposed to Singapore. We have a lot of cross border relationships. We have a lot of interactions between different teams within closer countries within same regions.

59:19 We have a lot of things happening between The U. S. And Brazil, between Europe and The Middle East. So we have passed that sort of position where we're looking at the words as a globe with flags planted on the ground. We are really operating the business as a global platform. And today, the geographic breakdown represents very little in terms of what we are doing every day. And as a matter of fact, the business lines are more representative of the approach of strategic focus that we have on the day to day business. Now you also were asking in terms of the trends for the net new money, I mean, for the upgraded guidance.

1:00:20 Look, think you have seen over the last couple of months, conditions being a little bit jittery. Think there is a bit of reckoning across a number of sectors, I mean, reckoning. This volatility cannot be overlooked. We are not concerned. We are not scared. We don't think that we are in face of any major systemic correction. Yet, risk propensity, portfolio construction and commercial activity might be affected. So I think it's pretty reasonable, actually very sensible for us to take the conservative path in terms of upgrading our guidance. We don't want to hide. We don't want to sort of low ball to impress you later.

1:01:10 We did the same thing last year. We ended up very much close to what we told you at the end of July, and we are doing the same this year and market conditions are the main reason why we have taken this stance. And that's it. I don't know whether we have left any question unanswered. No, maybe on margins, if you have any comment on margins. Look, I mean, has been very often we talk about the evergreen funds. This has been an evergreen question, what's happening to our margins and what's happening to fees. It would be silly for me to tell you that we don't feel any pressure.

1:01:56 Let me tell you that we are able to cope with the pressure very well. It's always a mix match of top line being sometimes exposed to the competitive forces of the market and our ability through cost management to overcompensate for that. The margin mix of Azimut will remain always within this 35 to 45 basis point range. These are the baseline of our Elevate 2030 plan. There might be seasonality, there might be acquisition, there might be things that might affect this temporarily. But I think that we do not see anything major to shake the house and even expected changes in regulation in Europe with the retail investment strategy, although we only read about these changes.

1:02:43 So, we have not really seen any actual directive or law enforcement, but we know that we will be able to adjust and to accommodate with our operating performance for any pressure on fees. Okay. Thank you, Georgi, for the detailed answers. Thank you. The next question is from David De Giuliano of Equita. Please go ahead, sir. Hi, good afternoon and thank you for taking my question. I have just two as many of them were already answered. The first one is on Turkey. How much room do you see for margin improvement over the coming years from the upselling initiatives you may have? And the second one on net inflows during second quarter, we have seen a progressive slowdown in mutual fund inflows in May and June. Can you provide some indication on the underlying dynamics, in particular, qualitative split of the dynamics of the various moving parts, including Nova, if possible? Thank you.

1:03:51 Okay. I'll take the first question as we work for the second. So in terms of upselling or pricing mix, let me be very factual here. Average management fees in the market are below 1%, clearly affected by money market funds. To say that Yapi credit portfolio has been always compared to its peers, good performer. Average management fees between 1.1%, 1.2%. But then I look what we have been able to achieve with Azimut portfolio above 1.4% historically. So if I look at translation of the business and ability to work with the same mix that we have been able to implement with our clients. I think the top line can certainly 10% to 20% upside that we can deliver over the short and the medium term. Nothing would be automatic, but certainly the distribution agreement has been built in a way where the bank is opening the doors of the branches to our teams. And certainly, there will be a lot of education with their personnel, with the clients as well. One thing I didn't mention, I mentioned that briefly only when we're talking about alternatives.

1:05:11 Turkey right now is experiencing what is very fast growing stage when it comes to alternatives. I have to say investors preferences, particularly among a network of individuals resemble significantly what we see in other more mature markets. There is maybe because of the country, this or the country, an entrepreneurial spirit. So there is an entrepreneurial culture. And our network news are very ready to put the money at work in illiquid investments, private equity, venture capital, private debt. And the bank itself is looking to add these products to the mix offered to their clients. And these are products like elsewhere that have significantly higher fees. We start always with 2% and something that Azimut portfolio, our affiliate has been able ready to seize as an opportunity over the last eighteen months. We have now approximately $300,000,000 of alternative investments for our clients.

1:06:15 And the way we have been able to engage with them, certainly what we have learned in Italy, The U. S. Today is very conducive of effective marketing an effective marketing proposition with clients, and we will translate that and we'll bring that to Yapi credit network. Obviously, we are talking about a very significant asset base there. So I'm not expecting to get to 5% of Yapi credit portfolio investing to alternative assets. But in the business plan that they presented to us, there was more than a double digit exposure to alternative investments. So I think we can work toward that. Yes. Taking the second question, I mean, looking to the last quarter evolution of the net inflows, but in particular, as you were mentioning on the mutual funds, to be honest, we don't really see a particular, let's say, problem or issues.

1:07:05 To be honest, probably we're more frequent having particular and positive results over the last twelve fifteen months. So probably the fact that in the last quarter were a bit lower make you a bit afraid on the evolution is not probably the case. Obviously, mutual funds I mean, we, in general, suffer a bit in Brazil. You know that credit funds has a bit of volatility. The market sometimes happen. And as well also, we should consider that, like in May, we had this fantastic growth in alternative funds with the in two days, we grow I mean, we had net new money in one club deal of EUR 175,000,000.

1:07:53 So all in all, I think that the evolution we see back in the second quarter is remain positive. As well as I mean, well, we should consider looking forward for the next quarter, we will probably end up with the seasonality of I mean, that like August and July, people are a bit lazy, let me say like this. But mean, we look positive for the as we mentioned, looking also to the guidance that we present. Thank you. The next question is from Elena Perini of Intesa Sanpaolo. Please go ahead. Yes.

1:08:40 Good afternoon and thank you for taking my questions. Of all, consideration about your transaction in Turkey that in terms of dimensions size, both regarding AUM and net profit seems to be very similar to what you can lose through T and D. So also optically, it is a good good result even considering that the margins are different and can improve. Talking about the T and B, my first question is about an update on the results.

1:09:33 Don't know if you have already provided them because I was disconnected for a while due to technical issues. Then regarding Turkey, I understand that your target in terms of net profit is already net of the cost of the financing. Is it also net of the cost of hedges because I imagine that you have some? And then if you can provide us an AUM breakdown in terms of currencies. So are them or in currency?

1:10:22 Or I imagine that there will be also an exposure to euro to dollar or something like that. Then on banking distribution, it seems that it is going to be a key driver for you. I'm referring to Nova and also to this agreement in Turkey. Are financial advisers going to remain prominent for your distribution model? Or are you thinking about something different? And finally, on your private markets, you had EUR 25,000,000 write offs on two specific investments.

1:11:15 Would you expect to be in the need to take other provisions? Or it seems that your investments are going quite well. Thank you very much. Okay. Then I will answer to some of your questions starting with Turkey. Yes. So when we talk about net income and the expectation that we have disclosed that is post financing. So that is taking into account what we see following conversation with a lender, the cost of these debts. So that is certainly already reflected.

1:12:01 That assumption does not include for any hedging. As I mentioned earlier, asset management businesses have a natural hedge in terms of what the revenues do as opposed to where inflation is and interest rates are. And as you know, currency depreciation is function of interest rates, so everything basically gets fixed naturally at the top line level. Having said that, and you asked a fair question today, approximately 45% of the assets of YAPI portfolio are investing in that currency assets. Turkey has a very vibrant and dynamic euro bonds market. So these are bonds issued in dollars or euros by local issuers and are a staple of any portfolio for local investors. So in a way, if you want, there's also an hedge in that respect because of the underlying assets invested by the portfolios.

1:13:01 When it comes to the strategic question regarding Azimut's walking away from the financial advisors business, the answer is absolutely not. We have four business lines, what we call integrated solutions is essentially the typical onshore business, integrated platforms, product factories with a proprietary network of advisers catering to upper affluent, lower net of individuals. This is a business that's obviously made Azimut very successful in Italy, and we are replicating with equal success in Turkey, in Brazil, in Mexico, in Egypt, in Taiwan. And we will keep focusing on these segments because we believe there is so much value in the integrated asset management platform as opposed to resorting to a pure wholesale business, asset measures serving supermarkets away from where the clients are with everything that entails, particularly when market conditions worsen.

1:14:04 What you will see is certainly, Azimut's been very keen to seek strategic partnerships. Nova, obviously, is very known to all of you. YAPI credit portfolio is what we have commented extensively today. But let me tell you that in Brazil, we have a strategic partnership with XP that is the second largest financial products digital distribution platform. These are true partnership, they are a key driver in our performance, operating performance in the country. In The Middle East, we have now almost a ten year long partnership with Abu Dhabi Islamic Bank for everything being Sharia compliant asset management solutions, and we do that only with them. In Asia as well, we have a partnership with the Maybank, that is the larger financial institution in the Southeast of the continent.

1:14:58 These are partnerships that we never comment on because they are certainly smaller as opposed to what Nova Yapi credit could be, but they're already part of our business. So we are developing this reputation in the markets to be credible, to be performing, to be a good partner. And I think that's stemming from our independence and alignment of interest. We are as good as the performance for our clients, and I think that is driving all these strategic agreements. And then, Alessandro Referring to T and B. So we have not mentioned before, let's say, the evolution in terms of P and L, but I mean, we can share the fact that the net profit is around €30,000,000 at the end of June twenty six, so with a positive trend compared to last year.

1:15:55 This thanks to positive evolution of the AUM in terms of net new money and as well market effects. So in general, the division is running positively compared to last year. Also referring to the private markets, yes, I mean, we decided to be very conservative this first half, as I mentioned before. I mean, looking also to the way I mean, the accounting principle, do not move the fair value of the assets. But on the other way around, I mean, we keep a conservative approach when you talk about cost, costless impairment. So we don't see future, I mean, additional negative adjustment, hopefully positive.

1:16:48 So that's the results of what has been I mean, the approach of the group for this first half. The next question is from Ubert Lam of Bank of America. Please go ahead. Hi, good afternoon. I've got three questions. Firstly, on the deal in Turkey. Can you talk about the funding costs for the acquisition Turkey or what would you expect it to be around? The second question is on terms of leverage, how much more leverage are you willing to take for Azimut Group?

1:17:36 And lastly, saw that you have for the write down you've taken on your balance sheet. Were there also client funds that were invested in these assets and has need to be written down as well? Just checking where it really came from. So I'm going to take the first two. What we see today, it's around 2.53% cost of the debt. Referring of the leverage, normally what we have seen in the past is 2.5x the EBITDA. So we have big margin if we see I mean, we look to our EBITDA today to leverage the company. But at the same time, we keep as well our conservative approach.

1:18:28 So that's for the first two. Sorry, and as far as the exposure of our funds to some of the positions that you have been conservatively marking down. Let me tell you, negligible. So as a matter of fact that these were warehousing investments. In some cases, Azimut has been involved in helping startups and businesses to take off, really bringing these businesses to eventually our clients only once a certain profitability and certain assumptions of their underlying business cases were proven. This, I think, is a pretty legitimate position and always in protection of clients' interest.

1:19:16 So by the way, I think for accounting purposes, we are really subject to very strict rules and very rarely, if never, you will see such an approach applied to private equity and private debt. And let me tell you, this position will be written down now, but can be written back at some point. And we already proven in several instances how we have been able to extract meaningful value from this proper book. Okay. So clients will have no real impact? No, no. Absolutely. You guys say virtually nil. Okay. Thank you. The next question is from Giovanni Razzoli of Deutsche Bank. Please go ahead.

1:20:06 Thank you. In the interest of time, I'll just keep my questions and then we can take them offline. Thank you. Gentlemen, there are no more questions registered at this time. So thank you very much for attending this call, and we are here to wish every one of you an amazing and beautiful summer, and we look forward to meeting you on the road or on calls after the break. Thank you very much.

1:21:05 Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.