Half Year 2024 Exor NV Earnings Call
Yeah.
Operator: Welcome and thank you for joining Exor's half-year 2024 results conference call. Please note that the presentation materials and the related press release are available for download on Exor's website www.exor.com under the Investors and Media Financial Results section, and any forward-looking statements made during this call are covered by the safe harbor statement included in the presentation material.
Speaker Change: Welcome and thank you for joining excellent half year 'twenty 'twenty four results conference call.
Speaker Change: Please note that the presentation materials and the related press release are available for download on X. Those website www dot XO dot com under the investors and media financial results section on any forward looking statements made during this call are covered by the safe Harbor.
Speaker Change: Statements included in the presentation material.
Operator: As a reminder, all participants are in a listen-only mode. Later, there will be a brief question-and-answer session. Please note that this conference is being recorded.
Speaker Change: As a reminder, all participants are in a listen only mode.
There will be a brief question and answer session.
Speaker Change: Note that this conference is being recorded at.
Operator: At this time, I would like to turn the conference over to Exor's Chief Financial Officer, Guido de Boer. Sir, you may now begin.
Speaker Change: At this time I would like to turn the conference over to Ed.
Speaker Change: So as Chief Financial Officer, Keith or Paul.
Speaker Change: You may now begin.
Guido Boer: Thank you, Melanie, and good afternoon to everyone. Thank you for joining us today for this presentation of Exor's half-year results of 2024. So starting with the main highlights for the half year, our net asset value increased to 38.3 billion at 30 June, up from 35.4 billion at the first of January, and the main drive of this has been the positive performance of our listed companies, as we'll see later in the presentation. Net debt was equal to 3.7 billion at 30 June, down from 4 billion at the beginning of the year. It decreases due to the cash flows from dividends being concentrated in the first half of the year.
Ed: Thank you Melanie.
Speaker Change: Good afternoon to everyone and thank you for joining us today for this presentation of <unk> half year results of 2024.
Speaker Change: So starting with the main highlights for the half year.
Net asset value increased to $38 3 billion at 30 June.
Up from $35 4 billion at the first of January.
Speaker Change: The main driver of this has been the positive performance of our listed companies as we'll see later in the presentation.
Speaker Change: Net debt was equal to $3 7 billion at 30 June down from <unk> at the beginning of the year.
Speaker Change: Increase is due to the cash flows from dividends being concentrated in the first half of the year.
Guido Boer: And with that, also our loan to value improved to 9% at 30 June, down from 10% at the beginning of the year and driven by a lower net debt, as well as obviously the increase in our gross asset value net of cash and equivalent. And finally, as we previously announced, as of the first of January, Exor reports as an investment entity on their I first 10, and later in the presentation we'll provide details regarding this change in reporting, as mentioned, which will make our financial report more concise, clear, and aligned with the way in which our stakeholders, including you, are analysts and investors evaluate Exor.
Speaker Change: And with that also our loan to value.
Speaker Change: Improved two 9% at 30 June down from 10% at the beginning of the year.
Speaker Change: Driven by a lower net debt as well as obviously the increase in our gross asset value that.
Speaker Change: In our discussion of cash.
Evelyn.
Evelyn: Finally, as we previously announced as of the first of January extra reports has an investment entity in their eye for ascent.
And later in the presentation will provide details regarding this change in reporting as mentioned, which will make our financial report more concise clear and aligned with delay.
Evelyn: In which our stakeholders, including you our analysts and investors evaluate exar.
Guido Boer: So moving to the net for share performance compared to our benchmark. You know our main financial objective is to grow net per share and outperform our benchmark to MCI World Index. In the first half, our net per share increased by 9% compared to 40% delivered by the MCI World Index. If you look at the growth, unfortunately, just before the half year end, the Ferrari share price dips a bit, and given the weight in our portfolio, that reduced our net per share. I'm very happy, obviously, that Ferrari performed very strongly since then and definitely outperformed the MCI, so we should be well on track for that.
Evelyn: So moving to the left for.
Evelyn: Our share performance compared to our benchmark.
Evelyn: Our main financial objective is to grow NAV per share and outperform our benchmark to MSCI World Index.
Evelyn: In the first half our NAV per share increased by 9% compared to 40% delivered by the MSCI World Index. If you look at the graph. Unfortunately, just before the half year end.
Evelyn: So that the share price dips.
Evelyn: <unk> a bit given the weight in our portfolio that reduced our NAV per share.
Evelyn: I am very happy obviously thats performed.
Evelyn: Performed very strongly.
Evelyn: Since then.
And definitely outperformed the MSCI, so we should be well on track for that.
Guido Boer: And that's obviously a measurement for a half year, and a 9% for a half year is nice, but we aim to deliver long-term compounded results.
Evelyn: And Thats, obviously, a measurement for for a half year.
Evelyn: And 90% for a half year is.
Evelyn: It's nice, but we aim to deliver a long term compounded results.
Guido Boer: And if we look at our track record since inception, net per share has been growing at a compounded annual rate close to 19% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared to 12% compared We also measure our absolute performance based on total shareholder return, which has been growing at a compounded annual growth rate of 20% since inception.
Evelyn: If we look at our track record since inception less per share has been growing at a compounded annual rate close to 19% compared to 12% for the mcl six.
Evelyn: We also measure our absolute performance based on total shareholder return.
Evelyn: Which has been growing at a compounded annual growth rate of 20%.
Guido Boer: So we've moved on to the composition of NAF and starting with drivers of change in our growth as a value. Our growth as a value increased by 3.3 billion or 80% in the first half, out of which 2 billion came from increases in valuations and 1.3 billion was driven by dividend inflows. If we look at its components, listed companies presented around 80% of our gap, and the main drivers of performance also for growth in periods with an increase in value of 2 billion, while we made additional investments of around 0.6 billion. The remaining increase has been driven by other components of gap, which are unlisted companies' investment and others, which will detail further in the coming slides.
Evelyn: Sure.
So we have moved into.
The composition of Nash and starting with drivers of change in our in our gross asset value.
Evelyn: Our gross asset value increased by $3 3 billion or 8% in the first half.
Evelyn: Out of which two 2 billion came from increases in valuations and $1 3 billion loss driven by dividend inflows.
Evelyn: If we look at it its components listed companies presented around 80% of our gas.
Evelyn: And the main drivers of performance also for growth in the periods.
Evelyn: We didn't increase in value of 2 billion, while we made additional investments of around 0.6 billion.
Evelyn: The remaining increase has been driven by all other components of GAAP, which are unlisted companies investment and others, which will detail further in the coming slides.
Guido Boer: So if we move to the bulk of our growth as a value or listed companies, the increase in value of our listed companies of 2 billion or 6% has been driven by a very mixed performance, not a single company that 6% of growth. The main contributor has been Ferrari going up 25% in the first half; Philips performed very strongly with 12% up, and Iveco with 29% up. The loss still on this declined by 13% and C&H by 15% in the first half of the year. In the first half, we also increased our investment in Philips by 622 million; out of about 500, was through additional share purchases, and 121 came through a dividend, which was paid in shares.
Evelyn: So if we move to the bulk of our gross asset value of our listed companies.
Evelyn: The increase in value of our listed companies of 2 billion or 6%.
Has been driven by a very mixed performance not a single company.
Evelyn: 6% of growth.
Evelyn: The main contributor has been forgotten going up 25% in the first half Phillips.
Evelyn: Philips perform very strongly with 12% up and Iveco with 29% up.
Evelyn: And lastly, Atlantis declined by 13% and <unk> by 15.
Evelyn: First half of the year.
In this first half we also increased our investment in Phillips.
Evelyn: By 622 million out of which a bit above 500 walk through additional share purchases and 121 came through.
Evelyn: Dividend, which was paid in shares.
Guido Boer: So, with that, we reached a shareholding in Philips of 17.5% for which we spent approximately 3.3 billion euros, and which at today's share price has a value of 4.5 billion. So, in a bit over a year of when we crossed 15%, we're now sitting at approximately 1.2 billion gain on this investment. Also in the first half, we became a long-term investor in ClareVate, reaching 10% share holding and a board seat, and due to that, we reclassified ClareVate from others to companies. If we then move to the unlisted companies, which went up in value or no balance sheet by a bit below 70 million or 2%.
So with that we reached a shareholding in Phillips of 17, 5%.
Evelyn: For which we are.
Evelyn: Spent approximately $3 3 billion euros.
Evelyn: And which at today's share price has a value of $4 5 billion. So in.
Evelyn: And a bit over a year.
Evelyn: When we cross 15%.
Evelyn: Now sitting at approximately $1 2 billion gain.
Evelyn: On this investment.
Evelyn: Also in the first half we became a long term investor and clarified reaching 10% shareholding and a board seat.
Evelyn: Due to that we reclassify classifieds clarified from others to companies.
Evelyn: If we then move to the <unk>.
Evelyn: Listed companies.
Evelyn: Which went up in.
Evelyn: Value on our balance sheet by.
Evelyn: <unk> below $70 million or 2%.
Guido Boer: This changed us primarily from additional investments in tag energy, new life net, and JD for approximately 124 million, which was partly offset by fair value. of the investments that we did on our portfolio. And as you know, as an investment entity, we report our companies all at fair value, and in line with the past, unlisted companies are valued using the method that best reflects the company's most recent fair value. And in general, this is done, especially for the larger companies, by an independent valueator, also to ensure the consistency and the primary valuation methods are our market notebooks combined with other valuation techniques such as SDCF, for example.
Evelyn: This change was primarily from.
Evelyn: Additional investments in <unk> energy newer livelihood and Jody for approximately $124 million.
Evelyn: Which was partly offset by fair value adjustments.
Evelyn: Omar on our portfolio.
Evelyn: And as you know as an investment entity. We report we report our companies all at fair value.
And in line with the past unlisted companies are valued using the method that best reflects the company's most recent fair value.
Evelyn: And in general business has done, especially for the for the larger companies by an independent Valuator.
Evelyn: Also to ensure the consistency.
Evelyn: And the primary.
Evelyn: Valuation metrics are market multiples.
Evelyn: Combined with other valuation techniques, such as S. Tcf workshop.
Guido Boer: So moving to the performance of investments and others, investments which includes both Lingoto as well as our venture activities increased by value by 281 million euros or 10%, largely because of the positive performance of the public funds of Lingoto by 228. And also, we continue to invest in Lingoto, as well as in ventures for a total of 75 million. In the other category, which includes liquidity and other assets, the changes were driven by the positive performance of the reinsurance vehicles, which we received as part of the transaction with Covea to sell Partnerry. We partly monetize this for an amount of 287 million.
Evelyn: So moving to the performance of investments in others.
Evelyn: Investments, which includes both lingo tau as well as our venture activities increased by value.
281 million euros or 10%.
Evelyn: Largely because of the positive performance of the public funds of <unk> by 228.
Evelyn: And also we continue to invest in <unk> as well as in ventures for a total of $75 million.
Evelyn: In the other category, which includes liquidity and other assets. The changes were driven by the positive performance of the reinsurance vehicles.
Evelyn: Which we received as part of that transaction with co pay up to sell partner re.
Evelyn: Sure.
We partly monetize this for an amount of $287 million.
Guido Boer: And the remaining reinsurance vehicles have been performing very strongly, with a mid-to-high teen CAGR since receipt. And you'll see a small positive translation effect due to a favorable Euro-USD exchange rate. The negative performance of the listed securities for 280 million, which is a partly Clarivate in a bit of Forvia, was partly upset by the sale of securities for 74 million, which was principally disposed of from the bulk of the maximum shares that we have. And further, there was an increase in cash and cash equivalence for 691 million, which were driven by free cash flow generation, as well as proceeds from the reinsurance vehicle redemption, as I mentioned earlier, as well as the sale of listed securities and the bond that we issued earlier in the year.
Evelyn: And the remaining reinsurance vehicles have been performing very strongly.
Speaker Change: With a mid to high teens.
Speaker Change: CAGR since since receipt.
Speaker Change: And Youll see a small positive translation effect due to a favorable euro USD exchange rate.
Speaker Change: And the negative performance of the listed securities for $280 million.
Speaker Change: Which is partly clarified and the bidder for via <unk>.
It was partly offset by the sale of securities for 74 million, which was principally.
Speaker Change: Disposal from.
Speaker Change: The bulk of the Masimo shares.
Speaker Change: We help.
Speaker Change: Further there was an increase in cash and cash equivalents for.
Speaker Change: $691 million, which are driven by free cash flow generation as well as proceeds from the reinsurance vehicle redemptions I mentioned earlier.
Speaker Change: As well as sales listed securities and the bonds.
Speaker Change: And that we issued earlier in the year, partly offset by the investments we made in the period.
Guido Boer: Partly upset by the investments we made in the period. If we move to our net financial position, at the half year, we had a net position of 3.7 billion, which was down from a net debt position of 4 billion at the start of the year. The main driver of this positive net change has been the strong free cash flow generation during the first half, which includes one billion of dividend proceeds from companies, and 400 million of proceeds from the reinsurance vehicles, as well as sales of listed securities.
Speaker Change: If we move to our net financial position.
Speaker Change: And at the half year, we added a net position of $3 7 billion.
Which was down from a net debt position of $4 billion at the start of the year.
Speaker Change: The main driver of this posted net change has been the strong free cash flow generation. During the first half which includes one day of dividends received from companies and 400.
Speaker Change: Fair enough proceeds from the reinsurance vehicles as well as sales of listed securities.
Guido Boer: Guido Boer. During this first half, we continue to maintain a disciplined capital allocation. This came for 900 men from deploying capital into companies, ringletters, and ventures. Buying back shares for 130 million euros as part of the 1 billion buyback program, which we announced a year ago, as well as paying a dividend for approximately 100 million to our shareholders. Other changes include a negative 57 million euros, mainly financial income, mainly financial expenses for 24 million, management cost for 10 million, and other net changes for 23 million. And obviously, we pay close attention to our expenses, and we have a name to keep management cost below 10 basis points of our gap, and based on the first half performance on an analyzed basis where approximately around six basis points for the estimated landing of the year.
Speaker Change: During this first half we continue to maintain a disciplined capital allocation.
Speaker Change: And this game for 900 man from deploying capital into companies Lingo and ventures.
Speaker Change: Buying back shares.
$130 million.
Speaker Change: As part of their 1 billion buyback program, which we announced a year ago as.
Speaker Change: As well as paying dividends for approximately 100 men.
Speaker Change: To our shareholders.
Speaker Change: Other changes include a negative.
Speaker Change: 57.
Speaker Change: Million euros, mainly financial income.
Speaker Change: Hum.
Speaker Change: Sorry, mainly financial expenses for 'twenty formal management cost for $10 million and other net changes for $23 million.
Speaker Change: And obviously we.
Speaker Change: We pay close attention to our expenses.
Speaker Change: And we have an aim to keep management cost below 10 basis points of our gas.
Speaker Change: And based on the first half performance on the annualized basis, we're approximately around six basis points.
Speaker Change: For the estimated lending of that of the year.
Guido Boer: If we then go to the investment entity reporting that we apply from the start of the year, we prospectively apply this reporting, so no restatement of the 2023 accounts, with first-time application in this half-year results. So, in line with IFRS requirements, we deconsolidated our portfolio companies where we exercise significant influence or control, and we account for them at fair value, with changes recognized in the income statement. And subsidiaries that provide support services to MV in relation to management of the investments, they continue to be consolidated on a line-by-line basis. So the real holding activities are still consolidated, and all our investments are at fair value on the balance sheet and flow through the P&L.
If we then go to the investment entity reporting that we apply from from the start of the year.
Speaker Change: We prospect prospectively apply this reporting.
Speaker Change: So no restatement of the 2023 accounts.
Speaker Change: With first time application in this half year results.
Speaker Change: So in line with the Iowa fresh requirements, we deconsolidation with our portfolio companies.
Speaker Change: We exercise a significant influence or control and we account for them at fair value with changes recognized in Indiana.
Speaker Change: In the income statement.
Speaker Change: And subsidiaries that provides support services to envy.
Speaker Change: In relation to our management of the investments they continue to be consolidated on a line by line basis under real holding activities are still consolidated in all our investments are at fair value on the balance sheet and flow through through the P&L.
Guido Boer: As I mentioned earlier, figures for June 23 have not been restated, but to facilitate comparability of measures, NAF and its components at 30 June 24 are compared to first of January 2024, to have a like-for-like comparison. The result of this investment entity change is that the metrics that we use to represent our financial performance, so GAF, NAF, and GrossDead, are now equal to IFRS measures, so GAF is equal to total assets, NAF to equity, and GrossDead to borrowings and other financial abilities, which are all the tips. And the other benefit is that our financial statements are much easier to read, with relevant information for you.
Speaker Change: As I mentioned earlier.
Speaker Change: Figures for June 23 have not been restated.
But to facilitate comparability of measure naphthalene, it's components at 30 June 'twenty, four or compared to first of January 2024.
Speaker Change: To have a like for like comparison.
Speaker Change: The result of this investment LPG change.
Speaker Change: The metrics that we used to represent our financial performance, so gas naphtha and gross debt are now equal to IRS measures.
Speaker Change: Gas is equal to total assets.
Speaker Change: <unk> to equity <unk>.
Speaker Change: Gross debt to bar borrowings and other financial liabilities, which are all the types.
Speaker Change: And the other benefit to hit our financial statements are much easier to read to it relative relevant information for you.
Guido Boer: Obviously, this change in importing has had a material impact on the control rate of financial statements, and in the next slide, we showed the details of the one-off process. Smith Impact. This positive impact is 11.8 billion positive, of which 12.15 results from the difference in carrying amounts of the investment previously consolidated or accounted for using the equity method and their fair market value. And for a negative 374 million resulting from the reversal to the income statement of the OCI reserves of the entities deconsolidated and no longer accounted for equity. As we mentioned during our last call, this new reporting presentation is aligned with the way we measure our performance and on the basis of which we take capital allocation decisions, and it's based on the KPIs, including the management incentives.
Speaker Change: Obviously this change in reporting has had a material impact on the consolidated financial statements and then the next slide we show the details of the one off positive impact.
Speaker Change: This positive impact is.
Speaker Change: <unk> 11, 8 billion positive of which $12. One five results from the difference in carrying amount of the investment previously consolidated are accounted for using the equity method.
Speaker Change: And their fair market value.
Speaker Change: And for a negative 374 million, resulting from the reversal to the income statement of the OCI reserves.
Speaker Change: Of the entities deconsolidation and no longer accounted for at accuracy.
Speaker Change: As we mentioned you're our last call. This new reporting presentation is aligned with the way we measure our performance.
Speaker Change: And on the basis of which we take capital allocation decisions and is based on the Kpis, including management incentives I hope is going to give you a more clear insight.
Guido Boer: I hope it will give you a more clear insight in our financial performance.
Financial performance.
Guido Boer: This concludes the formalized comments that I wanted to make, and with that, I'm pleased to open for Q&A.
Speaker Change: This concludes.
Speaker Change: <unk>.
Formalized comments that I wanted to make.
Speaker Change: With that I'm pleased to open for Q&A. So Melanie. Please. Please proceed with opening for questions. Thank you. We will now begin the question and answer session. If you have a question. Please press star one on one on your touch screen.
Operator: So Melanie, please proceed with opening for questions.
Operator: Thank you.
Operator: We will now begin the question and answer session. If you have a question, please press star 1 and 1 on your touch-tone phone. Once again, if you have a question, please press star 1 and 1 on your touch-tone phone.
Speaker Change: Once again, if you have a question. Please press star one on one on your touch 10 fine.
Operator: Please stand by while we compile the Q&A's view. Once again, if you wish to ask a question, please press star 1 and 1 on your touch-tone phone. That's star 1 and 1 on your touch-tone phone.
Speaker Change: Please standby, while we compile the Q&A screen.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: So.
Speaker Change: Yeah.
Yes.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Once again, if you wish to ask a question. Please press star one on one on your Touchtone Sutton.
Speaker Change: One on one on your Touchtone phone.
Operator: Thank you.
Speaker Change: Keith.
Speaker Change: Oh.
Speaker Change: Oh.
Operator: We will now commence with our first question. Please stand by.
Speaker Change: We will now commence with our first question. Please standby.
Speaker Change: Okay.
John Perez: Our first question comes from the line of John Perez from Kepler Chevrolet. Please go ahead. Your line is open. The line of John Perez is open. Please go ahead with your question.
Our first question comes from the line of John Paris from Kepler Cheuvreux. Please go ahead. Your line is open.
Speaker Change: The line of John Paris is open. Please go ahead with your question.
Operator: As there's no response, we'll move to the next question. Please stand by. Once again, that's star one and one on your touch-tone phone if you wish to register a question.
This does no response, we will move to the next question. Please standby.
Speaker Change: Okay.
Speaker Change: Once again Thats star one on one on your Touchtone phone if you wish to register a question.
Guido Boer: There are no questions at this time, so I'll hand the call back to Guido for closing remarks.
Speaker Change: There are no questions at this time, so I'll hand, the call back to Keith for closing remarks.
Guido Boer: I'm very pleased that it was so clear, but I already saw some notes. I think you need the message in the half-year press release came across well, so I hope that we disclosed more transparently for you. If you have any further questions, please feel free to reach out to the IR team directly, and we can address any questions that you have.
Keith: I'm very pleased.
Keith: That it was so clear.
Speaker Change: Okay.
Keith: I already saw some some notes I think can lead the message in the half year.
Keith: S release came across well, so I hope that.
Keith: That we disclosed.
Speaker Change: More transparency for you if you have any further questions. Please feel free to reach out to the IR team directly.
Speaker Change: And we can address any questions that you asked so thank you for joining this call and look forward to speaking you again.
Guido Boer: So thank you for joining this call and look forward to speaking to you again at the year-end results or any time earlier before that.
Speaker Change: At the year end results or anytime earlier before that thank you.
Operator: Thank you.
Operator: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.
Speaker Change: Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.
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