Equita Group

Earnings Release • Mar 14, 2024

EQUITA Group FY'23 Results

March 14th, 2024 – IR Conference Call

Very Resilient Performance in FY'23 and Significant Growth in 4Q'23

Divisional Performance

Tough Year for Equities (Brokerage, Capital Markets) and M&A in Italy

(47%) vs AVG FY'13-FY'22 (€12.2bn)

(1) Source: AMF Italia (Assosim); MOT figures referred to the aggregate of DomesticMOT, ExtraMOT and EuroMOT. (2) Source: Dealogic; FY'22 figure excludes the right issue completed by Stellantis (€732m). (3) Source: Bondradar and Bloomberg. (4) Source: KPMG.

Better Performance compared to Peers, Implied Increase in Market Share

Comparison between Selected International Investment Banks and Advisory Firms vs EQUITA

FY'23 vs FY'22 (1 Jan – 31 Dec)		% Var Net Revenues	% Var Net Profits	Margin %
Investment bank	ABG Sundal Collier	0%	(13%)	14%
Investment bank	Baader Bank	7%	(68%)	2%
Investment bank	Goldman Sachs	(2%)	(27%)	17%
Investment bank	Jefferies (1)	(21%)	(66%)	6%
Investment bank	Morgan Stanley	1%	(19%)	16%
Investment bank	Piper Sandler	(7%)	(17%)	13%
Investment bank	Stifel	(1%)	(20%)	13%
Investment bank	UBS	18%	> 100% (excl.)	Excluded
Advisory firm	Evercore	(12%)	(46%)	10%
Advisory firm	Houlihan Lokey	0%	6%	15%
Advisory firm	Lazard	(12%)	(80%)	3%
Advisory firm	Moelis & Co	(11%)	< 100% (excl.)	Excluded
Advisory firm	Perella Weinberg	3%	< 100% (excl.)	Excluded
Advisory firm	PJT Partners	12%	(10%)	7%
	EQUITA	2%	5%	18%
	Mean - Investment Banks	(1%)	(33%)	11%
	Median - Investment Banks	(0%)	(20%)	13%
	Mean - Financial Advisors	(3%)	(33%)	9%
	Median - Financial Advisors	(6%)	(28%)	9%

Strong Results in All Divisions

Trend in Net Revenues since IPO and Divisional Performance (€m) Commentary

AM Fees Inv. Portfolio Perf. Fees

• Sales & Trading affected by the overall weak levels of investors' activity on equities, especially in Small-Mid Caps trading
• Client-Driven Trading & Market Making benefitted from higher levels of trading on bonds, certificates and derivatives
• Directional Trading recorded its best year since IPO, well-above average (€3.2m average '17-'22)
• Very resilient performance compared to the underlying market, with year-on-year growth impacted by the comparison effect with 2022.
• Capital Markets materially up year-on-year, partially offsetting the decline in M&A (and despite an increase in the number of mandates)
• Excluding one very profitable mandate closed in 2Q'22 by EQUITA K Finance, Revenues grew 19% in FY'23
• Revenue mix moving to AM fees from illiquid, proprietary assets (65% of FY'23 revenues)(1)
• Investment Portfolio contributed positively, also thanks to a capital gain arising from the purchase of an additional fund share in EPD at a discount to the NAV

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Investment Banking: Plenty of Growth Opportunities

Investment Banking Revenues since IPO (€m)

P&L and Focus on Cost Structure

Reclassified P&L (€m)

	FY'23	FY'22	Var % 23-22	4Q'23	4Q'22	4Q Var % 23-22
Client-related	76,7	82,3	(7%)	23,3	20,8	12%
Non-client (Dir. Trading)	7,4	2,7	176%	2,5	1,1	132%
Investment portfolio	3,4	1,2	190%	2,3	0,2	n.m.
Performance fees	-	-	n.a.	-	-	n.a.
Net revenues	87,5	86,2	2%	28,1	22,0	27%
Total Costs (1)	(63,4)	(60,9)	4%	(19,1)	(17,2)	11%
(2) Cost/Income Adjusted %	(71,5%) P&L	(70,7%)		(68%)	(78%)
Cost/Income %	(72,5%)	(70,7%)		(68%)	(78%)
taxes (1) Profit before	24,1	25,3	(5%)	9,0	4,8	86%
Taxes (1)	(7,0)	(7,1)	(1%)	(2,5)	(1,3)	99%
Tax rate	(29%)	(28%)		(28%)	(26%)
Minorities	(0,7)	(2,0)	(66%)	(0,1)	(0,5)	(77%)
LTIP	(0,3)	(0,9)		(0,0)	(0,9)
Net Profits	16,1	15,2	5%	6,3	2,2	193%
(1)(2) Adjusted Net Profits	16,9	16,2	5%	6,4	3,1	106%
ROTE	26%	29%				€0.35 dividend on Adjusted	per share in line with FY'22 (≈100% payout Net Profit)

Focus on Personnel

	FY'23	Var %
Costs (1) Personnel	(41,9)	(42,2)	(1%)
FTEs (End of Period)	195	188	4%
Comps / Revenues	(47,9%)	(48,9%)	(2%)
Normalized Comps / Revenues	(49,5%)

Focus on Operating Expenses

	FY'23	FY'22	Var %
Operating Costs	(21,5)	(18,7)	15%
Information Technology	(6,3)	(6,2)	1%
Trading Fees	(3,1)	(2,9)	6%
Non-Recurring (anniversary…)	(0,8)	-	n.a.
Other (marketing, governance)	(11,3)	(9,6)	17%
Cost/Income % (1) Cost/Income Adjusted % (ex. non-rec.) events…)	(72,4%) (71,5%) Non-recurring items, mainly linked to the 50th anniversary of EQUITA (new visual identity, new website,	(70,7%) (70,7%)	Other costs up 17%, driven by higher marketing and inflation on contracts

Results since IPO

Successful Track-Record since IPO

Successful Track-Record since IPO

What's Next

Mitigants

What's Next

ket ar M	Market Scenario	▪ Still difficult global environment (war, inflation, recession…) Soft start of the year in terms of trading volumes on mid-small caps ▪ and ECM transactions in Italy Challenging fund-raising environment for alternative, illiquid assets ▪	▪ Higher interest rates are now digested ▪ Ongoing simplification to ease access to capital markets, potentially increasing liquidity in financial markets ▪ Large portion of debt to be refinanced in 2024-2025 €40bn of M&A transactions announced in the Italian market ▪
	Global Markets and Research	Fixed income desk benefitting from increasing positioning and ▪ investors' appeal on bonds Equity volumes on mid-small caps expected to recover ▪	Expansion of research coverage on Italian and European listed ▪ companies
es u n ve Re	Investment Banking	▪ Strong pipeline in M&A, both in mid-market, large and public transactions Capital Markets activities expected to improve in 2H'24 ▪	▪ Increase in positioning, thanks to recent senior hirings, contribution from senior advisors and new areas of expertise (EQUITA Real Estate) ▪ Consolidation of Group's presence in Rome
	Alternative Asset Management	Growth in illiquid proprietary assets following fundraising of ▪ EPD III and EGIF Focus on capital deployment investing in private capital ▪ opportunities, on the basis of current interesting pipeline	Positive contribution to Net Revenues from the Investment ▪ Portfolio and carried interest from 2025
osts C	Group	No other material additions of workforce or investments needed ▪ ▪ Adequate structure to benefit from increase in business volumes, revenues and net profits (operating leverage)	Further optimisation of rental spaces ▪ ▪ Focus on business-related marketing to boost revenues with clients
y g Strate	M&A & Strategic Initiatives	▪ Scouting of external growth opportunities with bolt-on acquisitions, in Italy and abroad ▪ Preliminary discussions with EKF to acquire minorities and extend the partnership	▪ Always open to strategic partnerships that could accelerate growth of the business

Appendix

Balance Sheet

(€m)	FY'23	9M'23	1H'23	1Q'23	FY'22	1H'22	FY'21	FY'20
Cash & Cash equivalents	130.5	75.1	74.0	106.3	107.9	125.3	136.1	117.2
Financial assets at fair value with impact on P&L	77.4	99.3	95.5	90.4	111.7	79.6	49.2	43.8
Financial assets at amortized cost	101.2	122.5	144.6	128.0	99.6	97.1	91.4	86.1
Equity investments	0.6	0.0	0.0	0.0	0.0	0.0	0.0	0.1
Intangible assets	26.6	26.7	26.8	26.8	26.9	27.1	27.2	27.5
Tangible assets	6.0	5.7	5.8	6.0	4.1	4.6	5.2	6.2
Tax assets	3.2	4.9	5.3	8.1	7.5	4.7	4.4	3.1
Other assets	34.1	36.0	34.0	39.4	41.7	42.1	1.9	1.6
Total Assets	379.7	370.3	386.1	405.0	399.5	380.5	315.6	285.8
Debt	213.9	203.0	220.0	222.5	221.3	197.4	175.6	171.3
Tax liabilities	1.3	1.6	1.1	5.3	3.6	3.4	6.0	2.2
Other liabilities	50.8	64.1	66.1	62.7	64.4	87.7	27.9	21.7
Employees' termination liabilities	1.9	2.0	2.2	2.2	2.1	2.1	2.4	2.3
Allowance for risks and charges	3.2	2.4	2.1	3.8	3.8	3.2	4.4	2.7
Total Liabilities	271.1	273.1	291.4	296,5	295.2	284.8	216.3	200.1
Share capital	11.7	11.6	11.6	11.6	11.6	11.6	81.3	76.8
Treasury shares	(3.2)	(3.2)	(3.2)	(3.3)	(3.9)	(4.0)	(4.1)	(4.1)
Reserves	80.0	78.5	78.2	96.3	79.4	76.5	69.9	65.4
Net Profits of the period	16.8	10.3	8.1	3.8	17.3	11.7	22.1	12.9
Third parties' equity	3.2	-	-	-	-	-	-	0.1
Shareholders' Equity	108.6	97.2	94.7	108.5	104.3	95.7	99.3	85.7
Total Liabilities and Shareholders' Equity	379.7	370.3	386.1	405.0	399.5	380.5	315.6	285.8
ROTE %	26%	22%	23%	26%	29%	38%	44%	27%
IFR %	499%	579%	538%	550%	489%	648%	587%	N/A

Why Us?

Some Reasons to Invest

Successful Track-Record since IPO

	Key Metrics	2017 (IPO)	March 2024	Variation
				3.3m shares distributed to professionals to: ▪ Execute M&A deals
	No. of shares	50.0m	51.3m	+1.3m ▪ Serve incentive plans required by applicable
Share Capital	No. of treasury shares	4.7m	2.7m	regulation +2.0m ▪ Align interests of new senior hirings
	No. of outstanding shares	45.3m	48.6m	+3.3m
				+7.3% outstanding shares (6.8% dilution)
Key Financials	Adjusted Net Profits	€11.2m	€16.9m	+€5.7m +51% vs IPO
	Adj. Earnings per share (EPS, fully diluted)(1)	€0.242	€0.345	+€0.103 +42% vs IPO
	Management and Equita professionals	54% / 60%	40% / 54%	Management still the largest shareholder with 33% stake and 47% of votes in the
	Of which Management Pact	38% / 42%	33% / 47%	Shareholders' Meeting
Ownership Structure	Float / Market	37%/ 40%	55% / 46%	Significant increase in market float
(% share capital / % votes in the Shareholders' Meeting)	of which Significant Shareholders (Fenera Holding)	- / -	5% / 7%
	Of which Families, Entrepreneurs and institutions (May'23 - Placement)	- / -	11% / 8%
	Treasury shares	9%/ -	5% / -

Disclaimer

Il presente documento ha natura strettamente riservata e confidenziale.

I destinatari, ricevendolo, acconsentono a non riprodurre, riassumere, descrivere o consegnare a terzi, né ad esso far riferimento con qualunque persona senza la preventiva autorizzazione scritta di EQUITA Group S.p.A. o di qualsiasi altra sua controllata parte del Gruppo ("EQUITA").

Per la preparazione del presente documento sono stati utilizzati dati e/o informazioni che EQUITA ritiene affidabili; tuttavia, né Equita né altro soggetto terzo indipendente ha verificato le informazioni utilizzate. Il presente documento non è, e non può essere inteso, come un'offerta, od una sollecitazione ad acquistare, sottoscrivere o vendere prodotti o strumenti finanziari, ovvero ad effettuare una qualsiasi operazione avente ad oggetto tali prodotti o strumenti EQUITA non assume pertanto alcuna responsabilità in merito alla veridicità, completezza, accuratezza dei dati e delle informazioni poste a base delle valutazioni contenute in questo documento, né in relazione alle eventuali conseguenze dannose derivanti a soggetti che abbiano fatto affidamento su qualsiasi affermazione, conclusione od opinione contenuta in questo documento.

Nulla di quanto rappresentato nel presente documento può o potrà essere considerato una garanzia o un'indicazione dei futuri risultati economici, finanziari e patrimoniali di ciascuna società Le opinioni e le stime contenute nel presente documento sono state espresse ed elaborate da Equita sulla base dei dati e delle informazioni ad oggi disponibili e delle attuali condizioni dei mercati finanziari nazionali ed internazionali. Tali opinioni e stime sono pertanto da considerarsi preliminari e soggette ad eventuali integrazioni e/o modifiche.

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