Good afternoon, this is the Chorus Call Conference operator. Welcome, and thank you for joining the CIR Full Year 2022 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Rodolfo De Benedetti, Chairman of CIR. Please go ahead, sir. Thank you. Good afternoon, everybody. As usual, I would start with a brief introduction and maybe leave more time for Q&A, which is probably the most interesting part. I'd start on page four with the highlights. Recently, we had a shareholders' meeting that canceled about 170 million treasury shares. This is in line with what we have said in the past few years, i.e., that we would continue to take advantage of opportunities to reduce the share count as long as we see a significant gap between what we consider to be fair market value and where the shares are trading. This, together with the reduction of the stock statutory capital, gives us for the future the flexibility to continue this policy of buying back our own stock as we see opportunities in the marketplace. We have been doing this on a regular basis in the last 12 months. We also concluded a divestiture at the end of December. We announced the sale of part of our buildings in Milan, those that are not occupied by our headquarters. This was a building which was rented out that had a book value of EUR 11 million, and that we have agreed to sell for EUR 38 million. Closing of this transaction will happen in the second part of this year. We cashed in an advance payment when we signed the contract in December. In terms of the operating subsidiaries, we will go through the two businesses, but just key numbers: both KOS and Sogefi increased their top line last year. KOS continued a slow recovery after the COVID-induced slowdown. Sogefi had a good year, both in terms of growing the volumes, even if the overall car market was weak in terms of overall production levels. We had a boost because of price increases. We were able to pass on higher raw material prices and energy prices to our clients. This clearly had an impact on both top line and bottom line. In terms of results, strong contribution from Sogefi. We will see it later. We had a very good year last year. We're happy about that. KOS is still in a recovery mode. We're basically break-even, slight loss last year. We are continuing to see a gradual increase in the occupancy rate in the nursing home Italy segment. We're continuing to see a fairly weak market in Germany in terms of occupancy rates and a gradual comeback of the rehab business in Italy. Negative contribution from the holding company. This is basically due to lower or negative financial returns from our liquidity. We basically had a zero return on our liquidity, excluding the write-down on the GEDI 5% stake, which is much lower than the result that we had the previous year. We think we did relatively well given how bad the financial market performed last year, which proved the resiliency of our portfolio and the prudent policy that we always said that we would adopt. Clearly, results were not positive. This is what explains the swing in terms of the holding company contribution to the consolidated P&L. In terms of net debt, pretty stable, both at the holding company with a significant net cash position as well as on a consolidated level where we produce reasonable positive cash flows. We continue to invest, particularly in the KOS business through greenfield initiatives. In terms of outlook, we continue to see a progressive catch-up of the performance of KOS. Its frankly slower than what we would like to see, but that is the market. There are some regions and some units which have gone back to the 2019 numbers, but in some others, we are not there yet. There has been some significant cost inflation, mainly on the labor side, which is here to stay. There have been some increases in tariffs, but not enough. We think it is a long-term structural work that needs to be done and that we are doing with the cost management on a daily basis. We believe that Sogefi will continue to perform reasonably well this year. We're not particularly bullish on volumes. Our budget was not built on a significant increase in volumes. If that happens, that's going to be a plus. We will continue to keep a tight cost discipline, i.e., to pass on cost increases to our clients, which is clearly a challenging exercise, but we've shown that we've been able to do that last year. We will continue to work in that direction. On an overall level, if you go to page six, I will not comment on the consolidated P&L because I do not think it's particularly relevant, but just maybe a mention on the right side of the page, what I said earlier about the holding company financial assets. As you can see, there is a swing of about EUR 30 million, slightly less than EUR 30 million from 2021 - 2022, which is due to what I mentioned earlier, which is good results, good financial asset results in 2021, and a fairly mediocre one in 2022 in absolute terms. The EUR 5 million includes the GEDI write-down. Without that, as I said, we were kind of flat, which given our mix of assets was reasonably good given how markets have performed last year. On the bottom side, you have the contribution of the two operating businesses to P&L. As I said, KOS is round-break even. Sogefi had a positive contribution. The holding contribution went from plus EUR 16 million in 2021 to minus EUR 16 million because of what I just said earlier. Net result is substantially zero for 2022. On page seven, you have the net financial position where you have the breakdown as usual between the operating businesses. No major changes there. I'd say good cash flow generation at the Sogefi level with a decrease of debt. Reasonable cash flow generation at KOS. The increase in net financial position is due to investments, CapEx. At the holding company level, slight decrease due to the financial results on the one hand and the fact that we have invested. We have continued to invest in share buybacks. Since about 12 months ago, we've bought about 22 million shares in the open market, which clearly reduces net financial position. On page eight, you have the simplified balance sheet. I remind you that those are on the left-hand side, those are book values for both KOS and Sogefi. Those are not our own valuations of those businesses. The private equity portfolio is pretty flat. You have on the right-hand side the composition. There were roughly EUR 12 million capital calls which were funded with roughly EUR 12 million of distributions. The net number is pretty much stable with no fair value adjustment. I remind you that we take here the NAVs that are communicated by the funds where we're talking about funds or if we're talking about direct investments, the latest fair market value. Other investments is the GEDI write-down that I mentioned earlier for about EUR 5 million. We did it because we have a contract which provides for a put-and-call agreement on this investment with a formula. Given the fact that the put-and-call exercise period starts this year, from an accounting standpoint, we needed to take into account the possible sale price of this investment. As you can see, you have the evolution of the holding company net cash on the lower side, on the right side, where you have the effect of the holding company cost, the buybacks, as well as the positive contribution from the real estate advance. Going to the businesses, I will go to page 11 and just comment a bit on the evolution of the cost numbers. Revenues increased because of an increase in perimeter. As I said, we continue to invest in new structures as well as organic growth and growth in occupancy, which clearly increased revenues for the same structures. As you can see, EBITDA is slightly up on the previous year. It's not really comparable to 2019 because of the perimeter. You probably want to focus more. I mean, the number that we look more is the EBIT number because of the accounting treatment for IFRS 16. EBIT is more or less in line with 2021. 2021 had some positive exceptionals due to real estate divestitures that we do not have in 2022. On the other hand, 2022 still has a significant contribution from public, when we go to the story in Italy. Public support both in Italy and in Germany for the lower occupancy rate of our facilities. This basically brings you down to a roughly break-even number and in terms of financial position, slightly higher because of the continued investment. As you can see, in terms of outlook, we foresee a continuous increase this year due to increased occupancy, even though we most probably will have lower contribution or zero contribution from public support, which clearly, when you go year-on-year comparison, will wait. On page 12, you have a breakdown of both businesses and geographies. I think it's quite self-explanatory. I think on the occupancy supply side, on the left side, as you can see, there's been about a 10-point increase on average from 2021 - 2022, which was expected. As you can see, we're still significantly lower than the 2019 number. As you can see, the December number is better than the average number. The exit velocity from the year is positive. We're not there yet. There is a significant discrepancy between regions in Italy. There are some regions which are back to the 2019 levels, but there are some which are clearly late. In terms of re hab, I think you have the revenues. The occupancy numbers are really very relevant. Acute care, same thing. As you can see in Germany, the occupancy went actually down from 2021 - 2022. On average, it is pretty much in line in December. We have increased revenues because we have increased the number of beds. One of the issues in Germany has been the availability of personnel because of high inflation in labor costs, but also a tighter availability of labor. In most cases, we could not either open or fill entirely structures because of scarcity of labor forces. On page 13, you have 2019, 2021, and 2022. You have it by, so it is a P&L where you have it by country. You have the Italian business, and you have the German business just to make them more comparable from year- to- year. A lot repeats what I said earlier, but as you can see, there has been some increase, but we're still some increase, I would say, mainly in Italy. We are lagging in Germany. We hope that the labor availability issue is in the process of being solved, but we're not there. Going to Sogefi on page 14, revenues were up, as I said earlier, quite significantly, about 17.5%, 4% volumes, and 12% prices and effects. EBITDA was slightly higher than the previous year, but EBIT was, I would say, significantly better. You might recall we discontinued the Argentinian filter operations in 2021, which had a significant effect on net income. This is what explains the significant jump in net income. I would say that in terms of mix, both regions and customers, no major change in the year. We think we have seen, at least for now, the worst in terms of raw material price increases last year. We have seen some softening in the last few months. Energy prices have come down, but we're probably going to experience higher energy costs this year because we benefited last year from some fixed prices that in some countries are going to run out either this year or next year. We still probably have some inflation on the energy side. We see a relatively solid market. The beginning of the year, the first two months were reasonably good and a bit above budget in terms of volumes, but the outlook is quite difficult to forecast. There are a lot of variables. There is a lot of volatility, and it is very difficult to read what our clients are telling us in terms of volumes. On page 15, you have a breakdown of the three divisions, and as you can see, there is a significant difference. The problem child of the portfolio is the suspension division, which was hit particularly by the higher raw material prices. This is the division which has the highest component of raw material costs on total cost and on sales. This is the division which does not have aftermarket and has the highest concentration on the European market, which has been the weakest in terms of geography. We are going through a major restructuring and downsizing of that business in terms of industrial footprint, but that takes time. We expect this year to see some progress, but it is going to be a multi-year effort to bring this division back to historical profitability. I remind you that this business used to be a quite profitable one up to a few years ago. I think the market deteriorated. I think management made some mistakes in terms of contracts that were taken at prices that did not guarantee sufficient margins. All this takes time to reestablish. I would say the standout performance came from filtration. Filtration had an almost 10% EBIT margin, which in this business put us in the best in class in terms of profitability with very strong cash generation, relatively low investments, significant contribution from the aftermarket, which had a very good performance because of the aging of the park and the weakness of the OE market. Air and cooling performed well, continues to gain market share. This is a division which is going through a strategic repositioning of its product offering from internal combustion engines to EVs. We have gained some significant contracts both in hybrid platforms as well as EVs. This is the division where over the next medium term, we expect the biggest change in the composition of the business. I would pause here not to take too much time and open it up to your questions. Thank you. This is the CIR Conference. Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone with a question may press star and one at this time. The first question is from Nicola Cavalli of Equita. Please go ahead. The line of Mr. Cavalli has dropped. As a reminder, if you wish to register for a question, please press star and one on your telephone. We have a question from Gian Marco Gadini of Banca Akros. Please go ahead. Yes. Can you hear me? Yes. Thank you for taking my question. I was wondering how are you dealing with inflation, particularly in Italy, and how tariffs are being increased, if any? I have read and I have heard that tariff increases were limited in 2022. Do you think this is a lever you can act on, and we will see the effects in 2023 and beyond, or there is little room to increase prices, let's say? Thank you. Excuse me. Is this your question related to which business? Pardon. For the KOS business, and particularly in Italy. Okay. I would start to answer this, and then maybe I'll ask Michele to complete. As you know, in CIR we have two businesses in Italy. We have a nursing home business where prices are a combination of administered price. Those are fixed by the regions for any level of service that we provide. They are the same for all the operators. They are typically reviewed by the regions on an annual basis. Historically, they have traced inflation. On this part of the tariff, there are some regions that have increased tariffs recently to take into account the significant cost inflation. It is an uneven situation in the sense that it did not happen in every region, and it did not happen with the same magnitude. It is really, I would say, a local issue. Every region is different. You have the private tariff that operators can add on top of what is paid out by the National Health Service. Here, too, there are differences in regions. There are regions where you are totally free to apply the private component of the tariff. There, it is really a question of competitiveness, supply and demand, and your ability to pass on those price increases. Clearly, this is more challenging when your occupancy rate is low, as it has been for us since COVID. Obviously, you have to make a determination of volumes versus prices that depends on each local structure and the competitive environment that you operate in. You also have regions where you do not have that ability. The private component is not freely set by the operator. It is not up to the market. Those are the most difficult regions because you do not have that lever in terms of price increases. I do not know if that answers your questions, but in a nutshell, there is some flexibility to pass on price increases, but that is limited, and that is not everywhere. Michele, do you want to add something on this? Just to complete the picture on Italy, we have an acute care business. In that case, the remuneration is almost 100% public. There is a limited portion of private business. In that case, the remuneration is set at national level rather than regional level. There is now an ongoing revision of the rehab tariffs going on at national level, and we are expecting an increase of those tariffs, hopefully in 2023. Of course, all of these tariff increases, both the one that I just talked about and those at regional level for nursing homes, did not fully compensate for the cost inflation that we experienced in 2022. We had a very steep increase of the energy cost, which is very relevant for cost. Plus, we had an increase in the cost of certain professional categories, in particular, the professional nurses. That kind of inflation already materialized, and it has only been compensated in part. Because the jump was quite high, we expect the adjustment of tariffs to happen over multiple years and not to happen all at once, unfortunately, and not in every region simultaneously. It will be a probably gradual adjustment over the next few years, and we'll have to fight for it at the association level, so the operators' associations level, with the individual authorities responsible for those tariff increases. As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Daniele Ridolfi of Kepler Cheuvreux. Please go ahead. Yes. Good afternoon to everybody. I have a few questions, if I may. The first one on the negative holding company contribution, which was EUR 17 million at net profit level, if I understood correctly, is referred only to the write-off of the participation in GEDI, while on the liquidity, you have zero return if you can confirm it, and also if you can provide the book value of the participation in GEDI at the end of 2022. The second question on the public reimbursement for COVID-19 losses in 2022. I was wondering if you can provide an indication on the size of this reimbursement in Italy and in Germany. Last, on the net debt of CIR, which increased to EUR 180 million, I was wondering if you can provide an indication of the CapEx and on investment in M&A in 2022, and also if you can provide some guidance on the maintenance and development CapEx for KOS for 2023. Thanks. Okay. I'll start, and then I give it to Michele. Hold Co results, you have on page 6, shareholding plus 16 in 2021, minus 16.5 in 2022. The difference between those two numbers, which is roughly EUR 30 million, is what you have just above, which is Hold Co financial assets, which were 24.7 positive in 2021 against 5.1 negative in 2022. That difference is almost EUR 30 million. This number includes the GEDI write-down. As I said, without the GEDI write-down, that number would have been close to zero. The swing between the two years is about EUR 30 million, which means that the rest, which is basically the holding company costs, were pretty much the same, slightly lower from 2021 to 2022. The book value of GEDI, Michele? EUR 1 million at the end of last year, at the end of 2022. Yeah. With that reimbursement, we had a similar figure for cost of state reimbursement. It was EUR 34 million last year. It is EUR 30 million this year. In Italy, it was quite flat at EUR 13 million. In Germany, it was EUR 21 million last year and EUR 17 million this year, keeping into account that this support was stopped in the month of August in Germany. This includes both reimbursement for lost revenues as well as reimbursement of extra costs due to COVID. There was also a question on the net debt of KOS. Yes. With regards to the cash flow, of course, you also have some indication on page 7. You can see in the table at the bottom of the chart of the slide, you have KOS-generated funds from operations, EUR 35 million positive, a negative income of working capital, which we think is temporary, of EUR 12 million. We have ordinary CapEx of EUR 20 million, which is quite stable over the years, and we think it's going to be a similar number for next year. We have spent a little bit more than EUR 20 million in cost in development. This includes two acquisitions in Germany and the development of four greenfields, which is ongoing. It has started in the previous years, and it will be concluded in 2023 and sometimes even before. Thank you. The next question is a follow-up from Gian Marco Gadini of Banca Akros. Please go ahead. Yeah. Thanks. Quick follow-up on, again, on KOS. Given that, if I understood correctly, the main driver for the recovery margin should be at least one of the main drivers should be the increase in occupancy. Could you give us kind of an indication of the operating leverage, the degree of operating leverage you have? What is the benefit you expect from, let's say, 1 percentage point additional occupancy in terms of revenue, particularly with this cost base? If you have this information, you can disclose it. Thanks. This is not the information we are sharing in this detail. Of course, increasing occupancy is a major lever because the costs are quite fixed, especially the fixed cost base related to the minimum staffing that we need to keep in the nursing homes. There is quite some operating leverage. This is not the only factor which would be in play in 2023 and beyond. As we said before, there is going to be also an adjustment between costs and tariffs, which will have to take place. The adjustment on costs has already largely happened. There will be probably a bit more related to the renewals of labor contracts, which are long overdue, and this will happen in 2023. The adjustment of tariffs is not very predictable, as we said before, in Italy, and quite fragmented in terms of decision process. It is a bit better in Germany. In Germany, we also have an increase in the labor costs, which already materialized. This increase was given as a way also to be able to recruit more of these skilled labor figures that are needed also to increase occupancy. If we are not fully staffed, we cannot increase occupancy, and this was one of the major drags on the recovery of occupancy in Germany. Now we have increased these salaries. We are starting to see some benefits on recruiting, and we have renegotiated the tariffs. In Germany, it works differently. In Germany, we can show the increase on the cost, and we can have, through a dedicated negotiation for each structure, an increase in the tariff which is allocated to that structure. This has already taken place for the salary increases. It will have to take place over the next 12 months for the remaining part of the cost inflation, and in particular, the energy costs and the facility costs. The process of adjustment is not immediate. It will take some time. Even there, because in Germany, the level of base profitability is granted by this cost-plus mechanism, but it is lower than in Italy. You have a more predictable mechanism, but a lower margin, which is granted at the end. The increase in occupancy is even more relevant in Germany. You can have an adjustment of tariffs, but you need to run at close to full occupancy to be profitable. We will probably confirm, as of now, the targets that we have given for Germany, provided that we reach again the level of occupancy which we had in mind, which is, like for Italy, close to 95%. As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. Mr. De Benedetti, there are no more questions registered at this time. Thank you very much for all of you to have participated in this call, and have a good day. Ladies and gentlemen, thank you for joining the conference. It's now over. You may disconnect your telephones. Thank you. Thank you.