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Earnings Call Analysis
Summary
Q2-2024
In the first half of 2024, Fiera Milano exhibited solid growth with revenues increasing by 9% to €144 million, despite negative seasonal effects. The company reported 37 exhibitions and 67 congresses, driving a 31% rise in EBITDA to €54.6 million. Strong performances in exhibitions and congresses offset the negative calendar impact. The company's strategic plan aims for revenues between €250 million to €255 million and EBITDA of €70 million to €75 million for 2024. Additionally, its net financial availability is projected between €60 million to €65 million.
Good afternoon. This is the Chorus Call conference operator. Thank you for joining the Fiera Milano results as of the first of June 2024 conference call. [Operator Instructions].
At this time, I would like to turn the conference over to Mr. Vincenzo Cecere, Head of Investor Relations and Sustainability. Please go ahead, sir.
Good evening, everyone, and welcome to Fiera Milano's First Half 2024 Results Conference Call. This Vincenzo Cecere speaking Head of Investor Relations and Sustainability and I'm here with Francesco Conci, CEO; and Massimo De Tullio, CFO of Fiera Milano.
Presentation today will be structured in 4 sections. During the first section, Mr. Francesco Conci will give you an overview of the business and update on progress of the strategic plan, main financial highlights and 2024 outlook. Then Mr. Massimo De Tullio will go through the additional results in financial fields in greater detail.
On a final note, an update on sustainability will also be provided. At the end of the call, you will be invited for a Q&A session with the management available for your questions. At this point, I will give the floor to Francesco Conci, CEO, for the key messages of the H1 2024 results. Please, Francesco, go ahead.
Good evening, everyone. Welcome, and thank you for joining the Fiera Milano First Half 2024 Results Conference Call. I'm very pleased to present you a very positive set of results for the first 6 months of the year. With 37 exhibitions, 67 congresses, more than 836,000 square meters sold, the group has delivered a solid growth. Revenues have reached EUR 144 million, reflecting an increase of 9% or EUR 12 million growth compared to the first semester 2023. This result is particularly significant given the less favorable season calendar effect with the sense in this semester, for example, of the biennial odd-year Tuttofood or the multi-year ITMA. The very positive news is that the good performance of the exhibitions and congresses more than compensated the negative calendar effect.
To share you -- to share with you some numbers, the growth in revenue of EUR 12 million resulted from the performance effect of EUR 22 million, reflecting a like-for-like growth of 19% compared to H1 2023. This was driven by a 14% increase in sold area and 26% rise in services, along with a strong performance in the Congress business, which grew by 8%. An unfavorable seasonal calendar effect accounted for EUR 10 million, which was completely compensated by the very positive performance effect.
EBITDA has shown a notable increase, reaching EUR 54.6 million marking an improvement of EUR 13 million, resulting in a 31% growth compared to H1 2023, mainly due better revenue performance and lower energy costs. Net income from continued operations, so excluding the nonrecurring capital gain coming from the Tuttofood transaction, stood at EUR 22.6 million, a growth of EUR 15 million compared to H1 2023.
Finally, talking about -- taking into account the distribution of EUR 10 million dividend in the second quarter and the new advance and payment regime from rent, which required us to pay 3 installment in the first semester, our net cash availability decreased by EUR 70 million. After an overview of the numbers, let me give you an update on the progress of our 2024-2027 strategic plan and share some positive news on the strategic front.
As you may recall, as part of our strategic plan for 2024-2027, we committed to launch 3 new exhibition by 2027. In June, we probably announced NetZero Milan and as Expo-Summit dedicated to decarbonization in the industrial sector. This event is scheduled for 2025 and aims to bring together industry leaders to discuss and advance our collective effort towards a sustainable future. The strategic move also reinforces our commitment to integrating sustainability into our business model.
By launching an event entirely dedicated to sustainability dams allow us to actively participate in striving sustainable practices across our industry. Additionally, I'm pleased to share the Fiera Milano with its Convention Center, Allianz MiCo, has been chosen to host in 2027, the European Society of Cardiology Congress, the world's largest Cardiology Congress and with more than 50,000 participants expected. This is a remarkable success for Fiera Milano and further confirms Milan's reputation as a preferred destination city for a larger medical scientific congresses. This achievement underscores Fiera Milano's growing appeal and competitiveness on international scale.
In fact, potential candidates have been evaluated based on 20 tangible criteria, going from venue-related assets, sustainable measure and programs, strategic location and logistics. [indiscernible] international front in the first semester, we launched 2 new exhibitions in Brazil. Fruit Attraction, a joint venture with IFEMA MADRID and Esquadria with NĂĽrnbergMesse. Both the exhibitions have achieved the results that exceeded our expectation.
As a key initiative in our strategic plan to enter the entertainment business, we confirm that Fiera Milano Live [indiscernible] successfully hosted 10 of 11 international concert. With the final event scheduled for September 2024. These concerts have been well received by audience and have reinforced our reputation as a premier location for large-scale entertainment.
In conclusion, we are pleased to announce that in September 2024, our office will move to the modern and functional [indiscernible]. This relocation is a key priority of our 2024-2027 semi strategic plan for human capital development. I mean to create a more efficient work environment and promote a culture of sharing and collaboration. There will be no significant economic impact from the relocation. At this point, before leaving the floor to Massimo for the business and financial review, I would like to provide you with an update on 2024 guidance.
Given the positive outcomes from a recent event and promising forecast for the rest of the year, we are optimistic about the future. Congress results have surpassed expectation, indicating for the full year 2024, a double-digit growth. This along with strong service momentum, very positive international performance, especially in Brazil and reduced energy costs has significantly boosted our confidence. As a result, we anticipated reaching the upper end of our revenue and EBITDA 2024 guidance.
Revenue. Revenues of EUR 250 million to EUR 255 million, up from previous range of EUR 245 million to EUR 255 million. EBITDA EUR 70 to EUR 75 million, up from previous range of EUR 65 million to EUR 75 million. Additionally, we have improved by EUR 5 million. Our net financial availability guidance to EUR 60 million to EUR 65 million from the previous EUR 55 million to EUR 60 million.
At this point, I will leave the floor to Massimo for the business and financial review. Please, Massimo.
Thank you, Francesco, and good evening, everyone. Well, as Francisco already mentioned during this semester, Fiera Milano delivered a very positive set of results. And before we get into details of the performance effect and calendar effect at the consolidated level, which will help you to understand the dynamics of this semester.
Let's first take a brief overview of our divisional performances. We will briefly cover the Italian and foreign exhibition business as well as the congresses, providing what we call the divisional legal entity view at Slide #8.
So let's start from the Italian exhibition business. As you can see, we experienced a revenue growth of 8.4%, moving from EUR 110 million in 2023 to EUR 119.4 million in 2024. This result has been achieved despite the negative current asset, let's say, caused by the absence of the multiyear of each month, multiyear exhibition this month, and also from the absence of the biennial event year Tuttofood in this semester. And this FX is negative FX has been partially offset by the presence of the biennial Mostra Convegno Expocomfort and Transpotec & Logitec.
The divisional EBITDA saw a significant growth as well. There was an increase from EUR 33.3 million in H1 2023 to EUR 42.9 million in H1 2024 million. This was a growth of 29%, which was largely due to the positive revenue trends that we have already discussed and was also have from lower energy costs. This lower energy cost is due to different impacts. On one side, we have the, let's say, unitary cost, which is lower compared to the previous year. And on the other side, we are saving we are, let's say, benefiting also from a more favorable climate. So we needed for life energy, let's say, to cool our pavilion during the second quarter exhibitions.
Moving to the foreign exhibition business. The foreign exhibition business has shown a remarkable progress with a revenue growth of 45%. We went from EUR 3 million in H1 2023 to EUR 4.3 million in H1 2024, which was a growth of EUR 1.4 million. This growth is primarily due to the successful exhibition in Brazil such as Exposec, which show a 10% increase in occupied square meters compared to the H1 2023. And we also add the first addition -- the first successful addition of Fruit Attraction and exhibition managed with a partnership with IFEMA MADRID and Esquadria, an exhibition in partnership with NĂĽrnbergMesse.
Additionally, the Cape Town Art Fair in South Africa performed very well with a 6% increase in occupied square meters. When looking at the EBITDA, we saw an even higher increase. We moved from EUR 0.4 million EBITDA in H1 2023 to EUR 2.6 million in H1 2024. So there was an increase of more than EUR 2.3 million which has been driven basically from the revenue growth that we were mentioning before.
And on top of that, we also had the positive impact coming from the JV in China, the JV managed with [indiscernible], and the result of the JV was increasing by more than EUR 1.4 million approximately, and it was mainly due to the better result of Leather Fair and also the let's say, favorable calendar impact of Domotex, which was, let's say, last year was held in the second semester, and this year was moved to the first semester.
Moving to the large division. So Congresses, even for Congresses, we are speaking about very good performances. We have seen a revenue growth of 8.6%. We see revenues moving from EUR 24.4 million in 2023 to EUR 26.5 million in 2024. This increase is primarily due to the higher revenue from recurring events such as Salone del Risparmio, Salesforce and AWS Summit along with the additional revenue from a higher number of nonrecurring events, including EASL, SIRM and the Zurich Convention. This grew a somehow offset by the absence of the EAU conference, which took place in H1 2023.
The divisional EBITDA of Congress increased by EUR 1.1 million, which equates to an increase of 13.5% can be basically attributed to the positive revenue trends along with lower energy costs compared to the H1 2023.
So looking at the consolidated level, I think it could be useful to move to Slide #9. In order to better understand the calendar effect and the like-for-like growth of both the [indiscernible] and organized exhibition so moving from what we have seen here, so a legal entity view to a more business line and managerial perspective. So we have tried in this chart to -- let's say, to summarize the impact of the contribution of each division to the growth of the revenue.
So again, we are pleased to report a solid growth of EUR 12 million compared to H1 2023, which represent, as we already said, a 9% year-over-year increase. When we look into detail and we can see that this growth has been composed by several key factors.
First factor, we experienced a very high performance impact. We grew by EUR 22 million in a like-for-like just like-for-like comparison, compared to the first semester of 2023, which translates to a remarkable 18%, 19% growth versus H1 2023. How this growth goes down. But we -- when looking at the growth in terms of open events, we see [Technical Difficulty] of 24% increase in the revenues coming from the [Technical Difficulty] million increase coming from the [indiscernible] exhibition, we are looking to a like-for-like increase of 10% compared to the last edition coming from revenues from sold area.
And even when we look at the minus EUR 3 million coming from the services, when we take out the negative calendar effect, we scored a very impressive 26% growth in terms of like-for-like on services. It's also remarkable to notice that Congress is, as we already mentioned, are growing by 8.6% compared to last year. So this is a EUR 2 million increase and last but not least, we increased also by EUR 4 million in other businesses like the foreign business.
So we mentioned before the growth from Brazil, driven by Exposec Fruit Attraction and Esquadria, but we had also the positive launch of the entertainment division. So we also the Fiera Milano live concerts. And this brought additional revenues clearly compared to last year. as well also with the other activities that we are managing outside, let's say, the venue. So all the fitting activities that we are mentioning that we are managing also during some other mobility clearly had to reach this additional revenue.
Despite all this, clearly, let's say, despite of this positive impact, we had to discount and we have to face also the calendar impact, which was unfavorable, as Francesco already mentioned and the impact, the unfavorable impact was more or less EUR 10 million, and this was mainly due to the absence of ITMA, as I was mentioning before, which covered more than 120,000 square meters in 2023. This negative impact is also due clearly to the absence of biennial Tuttofood, which covered last year, 60,000 square meters and to offset -- to partially offset this impact, we have counted this year on most convenient expo comfort with 86,000 square meters and Transpotec with 26,000 square meters.
So in summary, despite the challenging seasonal factors, our strong performance in [indiscernible] services and Congress business has driven a remarkable growth in revenues, underscoring our resilient business model.
Now I would just, let's say, show you an example in Chart #10 of some of the exhibition that scored an increase compared to the last addition. So you can see on the left side of the chart, the growth coming from the organized events. The growth that was mainly driven by better performance of Milano Home and Quick&More, the performance coming from BIT that increased square meters sold by 7% as well as PTA and Next Mobility Exhibition.
While on the right-hand side of the Chart #10, you can see the main improvement coming from some of the hosted exhibition. So you can see how better did [indiscernible] in Q1 with a 11% increase, mid of which increased by 21% and Milano Unica by 27%. So it was clearly a very positive impact coming from the volumes.
Now I'm going to provide in the next chart in the financial review some deep, let's say, dive on our financials. Now if we go to the income statement on Chart #12. Well, you can see here in the first line top line revenues, but we have already, let's say, already commented on this. So we scored EUR 144.4 million with an increase of EUR 12.2 million, which equates to a 9% increase. And as we already mentioned in a like-for-like comparison, let's say, we clearly increased by more than EUR 12 million, we increased by, let's say, EUR 22 million.
Moving to the EBITDA. While we are scoring EUR 54.6 million compared to the EUR 41.6 million of last year, so an increase of 13%. We see clearly a very significant increase and this increase represented 31% growth compared to 2023. The strong growth was driven by better performance on revenues, as we commented already basically on all the older division.
We also had the benefit of lower energy costs and lower consumption of energy, thanks also a favorable climate impact. And then we had also in a positive contribution to the EBITDA coming from the JV with an over mass. So basically due to the better result of Leather Fair and as we were mentioning before also the anticipation of Domotex Asia in the first semester compared to last year.
In terms of financial management, we saw as well an improvement of EUR 1.3 million, mainly driven by higher rates on the liquidity that we managed this year. I remind everybody that we have a net financial -- positive net financial availability last year but also in this semester. Our net result for the period coming from continuing operations amounted to EUR 22.6 million. This compare to a EUR 13.4 million -- sorry, this compared to EUR 9.2 million in H1 2023. So it represented EUR 13.4 million increase compared to last year. While if we look at the net result, in the net result, we are slightly lower than last year because of the absence basically of the positive impact of the Tuttofood operation.
I will now move to the balance sheet. So the Chart #13. And I would basically focus on the change on the net working capital. In this quarter, we have seen, say, a change in net working capital by almost EUR 20 million, which was caused by, let's say, at least 3, 4 main reasons.
First of all, we had a reduction in trade and other receivable by EUR 11 million and an increase in inventory and contracts in progress by EUR 1.1 million. So this was positive in terms of cash and, let's say, net working capital variation. But at the same time, we faced a reduction in trade payables by EUR 17.5 million, which is related to the payment of trade payables connected to the Q4 2023 events.
At the same time, we faced a, let's say, forecasted decrease in advances by EUR 7.2 million, and this is clearly due to the seasonality that we faced every year. This reflects a balance between increasing advanced invoice to customers for upcoming events and in particular [indiscernible]. And at the same time, we faced a decrease for event that has been hosted in the first half of 2024. So the net of these 2 impact is a negative of EUR 7.2 million.
And then we also faced the decrease in current liabilities by EUR 6.4 million, which is mainly due to a reduction in liabilities to organizer. So you know that we manage the invoice and the cash collection for our organizer, then we have to give back the money to our organizers when this happens and depending on the cutoff of the semester, we can have also this kind of negative temporary impact.
So all in all, our net financial position has moved from EUR 81 million approximately at the end of 2023 to a net availability of approximately EUR 60 million or EUR 64 million at the end of June, resulting in a free cash flow decrease of EUR 17.3 million, which is mainly due to basically the movement in net working capital.
But if we want to have also a view in terms of, let's say, cash flow in terms of cash flow, we can say that we scored an EBITDA of EUR 54.6 million when we consider the cash out coming from the rentals, we have to account for EUR 42.5 million cash out. It worth to remember that this quarter, we had to pay an additional installment to come back to what the contract basically was always stating. So we had a temporary change during COVID and for the consequence -- the consequence 2 years. But now we have come back to the regular let's say rules for payment. So basically we pay an additional quarter basically.
We had this net working capital negatively impact of approximately EUR 21 million that I was explaining before. And then we have also to consider that we have [indiscernible] dividends in the second quarter for almost EUR 1 million. So all in all, this explains why we have gone down from EUR 81 million to EUR 64 million.
Then looking at the financial ratio stability indicators. We see basically both on the current assets over the current liabilities and the other ratios. So the equities over the fixed assets, we see a stable situation. In terms of current assets and current liabilities, the index worsened slightly due to the fact that the semester provided a negative cash flow payment of an extra rent installment as it was explaining before.
At this point, I will give you, again, an overview and a reminder, let's say, on our strategic plan guidance as Francesco already anticipated based on the result of the first semester and the visibility that we have on second half. We have been able to communicate an improvement of our estimates for expected results for 2024. So given the positive outcomes from recent events and the promising forecast like for instance -- sorry, and also considering the expectation of further improvement on the Congresses, for instance, where we expect a double-digit growth.
We are able to review our guidance for revenues and EBITDA in the upper part of the range. So basically, we see revenues now in the range of EUR 250 million to EUR 255 million while before, it was EUR 245 million to EUR 255 million and EBITDA in the range of EUR 70 million to EUR 75 million, while the previous range for EBITDA was EUR 65 million to EUR 75 million. Additionally, as already mentioned, we have improved by EUR 5 million our net financial availability guidance to EUR 60 million to EUR 65 million at the end of 2024.
Now I will leave the floor to Vincenzo for a brief note on sustainability.
Thank you, Massimo. Just a very quick update on the sustainability initiatives we took during the semester. So in the first quarter, we inaugurated one of the largest rooftop photovoltaic clients in Europe. Just to give you some numbers, 50,000 panels installed at 330,000 square meters of coverage and 22 gigawatt hour of production. We also obtained the environmental certification, and this will help us to reduce our environmental impact coming from our operations.
We also obtained 2 very relevant award in sustainability. The first one was the ESG Identity Corporate Index 2034, and we positioned the Fiera Milano as the #1 among the mid-cap listed companies. Second one was a sustainability award regarding the business so was related to the exhibition industry. We were awarded as Industry Partners award best partner for growth for our stakeholders.
I believe we have concluded with the presentation, and we can start with the Q&A session.
This is Chorus Call conference operator. [Operator Instructions]
The first question is from Simonetta Chiriotti from Mediobanca.
So I have a couple. The first one is on the second half of the year. If you could highlight, which are the main changes in the calendar, which are the main things that we have to bear in mind when looking at the coming quarters?
And secondly, if it is possible to make a rough comparison of the first half numbers with the normal year similar. So another even year to highlight how the business is progressing when compared with the same calendar so without calendar effects.
Okay. Simonetta. So about what we expect in the second half of the year, clearly, this is an event year so it's not the most, let's say, favorable one. We will for sure have a higher negative impact coming from calendar. So let me remark, we had EUR 10 million negative impact in terms of revenues in results. We are expecting a EUR 50 million almost negative impact in the second half of the year. Why this? Because we will basically miss compared to the last year, we will miss host. We will miss [indiscernible], we will miss [indiscernible], and we will miss [indiscernible].
So the three, the first three are biannual events. So clearly, they recur in the odd year and they are missing in the even one. And the last one plus is a multiyear event. So it will recur in 2026. At the same time, the only additional event, let's say, compared to last year will be, let's say, the most representative one will be [indiscernible] that we will have also [indiscernible], but the net impact of the one missing and the one present had not -- that are present this year and they were missing last year is clearly highly negative and is mainly due to us, which is our best show in terms of revenues and financial.
So this is what we have to bear in mind. At the same time, we count on, let's say, progressing and improving our like-for-like performances as we did already in the first semester. So we expect this negative impact to be counterbalanced -- partially counterbalanced by performances coming from the Exhibition division and Congresses division. Clearly, we will not manage to offset completely this huge calendar impact, but this was already included, I mean, in our guidance.
Sir, can you repeat me the number in Euro million in the second half?
We will have at least EUR 50 million negative calendar impact in terms of revenue.
EUR 50 million ?
EUR 50 million, yes.
Okay.
This already included basically in our guidance. So we consider that we end up last year with EUR 284 million, and our guidance now is for EUR 250 million to EUR 255 million. We have already discussed this impact in our guidance.
The second question is about the comparison with 2018. So somehow, we are speaking about the comparison with pre-COVID. Well, compared to pre-COVID basically, we have, in this quarter, I would say, even a widely better result. Let's say that in 2018, First of all, 2018 was not completely comparable with 2024 because we had in the first semester, we had the Innovation Alliance. We -- so we had some events that this year we added. And this already equates to something like EUR 24 million less in terms of calendar impact on -- in the comparison with 2018.
And if we take out, I mean, the calendar impact, I would say that we are basically in line in this quarter with the result of 2018. So this demonstrates that the Exhibition business and the Congress business did very well, and we are in line with the recovery now of the performances of the [indiscernible].
[Operator Instructions] The next question is from Andrea Bonfa, Banca Akros.
So my question is related to the CPHI, in particular, if there is any chance that this, let's say, event is becoming, lets say, a stable asset of your portfolio. I mean if you are working on that, if that is feasible enough.
And the second one is regarding to the fact that you been awarded this major Cardio Conference, Cardio Congress in 2027 based on [indiscernible] KPIs for Milan, let's say, a scenario which is increasing in favorable to your business in the sense that Milan is becoming a very attractive city, and you -- if you can elaborate on the fact that you can, let's say, in similar congress and similar events in the future. And finally is the detail on your tax rate, which was very low in the first half of the year, and if you can elaborate on that?
So about the first question on CPHI, we are working. Let's say we are working on this opportunity and is still work in progress. So I cannot disclose more at this stage. But clearly, we are trying to pursue this opportunity. So I cannot have anything more. About the congresses and the cardiology one, clearly, this is the result of the how Milan and our Fiera Milano Congress is doing well. Let's say, it's clear that after the Expo, Milan has attracted a lot of visibility, and this is helping us in attracting also these kind of international events.
Milan has also all the opportunities and structure to make it possible to watch these huge events with this huge number of attendance and this is already part of our plan. I mean, it was already -- let's say, this congress was not part expressively part of our plan, but our strategy, our 4 congresses is based on this, is one of the pillar of our congress strategy now to increase the presence of these international huge associated events.
[indiscernible].
For sure, this will be another example, and so this will be attractive as well. So once it will be known that Fiera Milano Congress is hosting this kind, is such an important event, other organizer will probably put the rise on our venue and consider also the possibility to come in Milan.
And the Olympic Games as well will probably boost this visibility and this attractiveness. About the tax rate, in this moment, the tax rate is quite low in the first semester because we expect because of the seasonality impact that was mentioning before, the net result at year-end to be clearly a little bit lower compared to the one that we are scoring now. So because of the seasonality, because of a second half of the year in which we will miss some huge events that we had last year, for instance, our, let's say, before taxes result will be probably lower than the one that we scored in H1. That's the reason why our tax rate in the first semester, which is based on the final year results, it's a little bit lower than last year.
[Operator Instructions] The next question is a follow-up from Simonetta Chiriotti, Mediobanca.
Another question on the new business line of events. If you would elaborate a bit more on this. So -- and in particular, is it correct to expect a good contribution of this in the third quarter, so in the second part of the year? And the second question is on M&A, if it is possible to have an update on this front?
Okay. So on the entertainment business on the concept, our revenues basically in this part of the initial growth of this sector are not very huge. They are coming from the rental of the spaces basically and partially from the catering and restoration services where we get commission basically on the sales.
In the second half, we will have just one remaining event for the Fiera Milano Live [indiscernible]. So we don't expect a massive increase compared to what we scored so far, at least from the summer event. Clearly, this is a new division. So we are working every day to build what will be the strategy and the further development of this division in the future when we will also use the new asset, the new pavilion 13 and 15 will be basically combined. So it will be -- probably we will rename it. I mean -- because we will not make any more sense to call them 13, 14 pavilion because they will be clearly one on pavilion, that covered pavilion of 34,000 square meters.
So this is a new line of business, even new compared to the one that we are working now, the summer one, which is an open an outside -- an outside business at this moment. So we will work both on the outside possibility and the new pavilion, new covered pavilion. So for sure in the future, it will -- the revenues will grow as we already highlighted in our strategic plan.
So [indiscernible] we also tend towards international concerts with over 160,000 people. So it's very well received from the audience, and this also was due to our position in Fiera Milano in first experience in providing concerts. So we are satisfied from the first result.
And about M&A, I can only confirm that we are working on multiple tables in this moment, at least when we speak about possible M&A in the services sector. And we hope to have positive news for the second half of the year. I mean, I cannot add anything further, but I can confirm that we are working on multiple possibilities and each of this possibility can be potentially close. So they are not alternative to each one.
[Operator Instructions] I'll turn the conference back to you for any closing remarks.
Thank you very much to everybody. Have a nice holiday. And should you have any other questions, we are here available for your questions. Thank you.
Ladies and gentlemen, thank you for joining. The conference is over. You may disconnect your telephones.