Azimut Holding Spa Ord

Good afternoon. This is the CARS call conference operator. Welcome and thank you for joining the Azimut Hordi 9-month 2024 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. Gabriele Blais, CEO of Azimut. Please go ahead.

Thank you very much and good afternoon to everyone. As usual, we'll go quickly through the presentation that you might have received and then we will be available for Q&A. If we just want to start on slide number four, quick highlights on the results so far this year. We have gathered up until the nine months 12.5 billion. If we update this with yesterday's announcement as of the end of October, inflows have come down to 14.3 billion, so surpassing even the revised guideline we have given in July this year. Adjust net income of $447 million, 28% progression with the same period the year before. And as far as clients are concerned, we are delivering net weighted average performance, so net of fees of 8.25% year to date. or 52 basis points ahead of the industry. In the meantime, during this 2024 that has been very rich in terms of achievements, we want to remind everyone that we did complete the first exit from our GP staking business, cashing in a significant amount of money given the investment that was initially made, so 60 million, and we came out with 165 million gross. The second announcement just a couple of weeks ago with the strategic partnership in Australia with Oaktree that is going to invest 124 million in AZNGA, a business which Admin started back in 2015. and has been valued at an AV of 690 million. In this case, we are not going for an outright sale, but we will retain a strategic stake of 25%. Last but not least, we will also touch this point later on, the reorganization of the Italian FA network, which aims to create a digital bank, and for the very first time since our history will enable us to capture NII in order to consolidate our relationship with clients and collect deposits. Moving to slide number five, this is a quick update on the trend in our assets under management and under custody. As you can see, significant growth throughout the year thanks to significant inflows. as well as a benign market environment, which adds on top a good performance on our asset. If you consider the spike that you see in Q2, this is in the inflow data. This is linked to the acquisition of true independence. Even if we exclude that, one point which is worth mentioning and underlining is how More than 70% of our inflows so far this year have gone into managed inflows. Moving to slide number six, this is the typical breakdown per region of our flows. As you can see, 2.3 billion out of Italy, thanks to our proprietary distribution system, as well as the contribution coming from the partnership with Unicredit. In the EMEA region, Turkey, Monaco, and the UAE, very strong, almost 200 million each. And then moving to the Asia-Pacific region, we have to definitely underline an almost billion euro of flows coming out of Australia, as well as some 230 million coming from the Asia region. As far as the Americas is concerned, 2.3 billion. Here the lion's share is contributed by Brazil with 1.4 billion of flows. As we have mentioned several times throughout the year, flows are coming back. There is a more constructive environment and therefore we are intercepting significant flows. As I mentioned before, $6.1 billion of acquisition from Sanctuary of True Independence, which walk us to the $12.5 billion in the nine months. Moving to slide number seven, total assets. As you can see, we have reached 106.1 billion euros. If you want to update this to last month, it goes up to 108 billion. And in terms of geographical breakdown, not much to say. In terms of weighting, it hasn't changed much. Once again, the three major markets account for more than 70% of our assets. Starting on slide number eight, we will go through quickly the results. We have decided that we'll be commenting the nine-month result, while Alessandro later on will be giving you a bit more color on the quarterly, third-quarter results. So as far as the revenue, we have a progression of 9% or almost $90 million year over year. If we break this down in the composition of the revenues, you can observe how the management fees have gone up by 5% to almost $900 million of that. 12 million comes from Italy as well as 30 million from our foreign operation which we can further break down in 9 million from change of perimeter and 20 million from organic growth with the lion's share here coming from Australia and Turkey respectively. As far as the Italian business, we have seen growth coming from the advisory and individual managed portfolios, as well as the ongoing trend of revenue growth out of the private market initiative, which is partially affecting the lower recurring fees on funds, as well as the fact that we are switching AUM from liquid into illiquid products. As you can observe, 196 basis points of recurring margins. This is something we have commented several times after seeing a downward trend in the last quarters. Second and third quarter of this year, I've seen a stable margin at 196 basis points. If we go back to the insurance fee line, we have seen a positive growth of more than $30 million. The bulk of that is related to performance fees, which is $29 million, while the current component goes up by $4.5 million. year-over-year. Moving to the performance feline, we have a significant increase versus the year before. So far this year, I would say that net of the negative fulcrum, we have a positive contribution coming from Italy that partially offset the negative fulcrum but most importantly performance fees from our foreign operation in excess of 15 million delivers the almost 9 million of net performance fees last but not least in terms of the other revenues you can see a good level at more than 30 million this is explained by the investment banking and FinTech activities for almost half of that amount, and then fees that are client activity driven for the other half. Moving to slide number nine. You can see a breakdown of the costs, which are up by 60 million compared to a year before. If we deep dive again here in terms of distribution costs, they are up by 25 million, of which Italy explains 20 million. And this can be summarized in $5 million related to the progression of the management fees that we commented before. Another $5 million related to the placement of private market funds by third parties as well as some affiliates that are managing some of our funds. And last but not least, $7 million almost by higher variable incentives as well as higher severance payments due to the year's curve, which is now no longer in our favor as we commented in the year before. If we move, sorry, there is also in the distribution cost line 3 million almost of higher marketing costs in Italy, also related to the new bank project that we have commented in the last quarters. As far as the foreign business, we have a progression in the distribution cost line of 5 million related to a bunch of different countries, but nothing material or exceptional here. Moving to the personal and SG&A line, we have a progression of 30 million where basically Italy stays flat with probably one notable exception related to some successful variable incentive for some successful corporate investment banking activities, And the benefit of that is below the EBIT line, so in the finance income line. So you see the cost in here, but the revenues or the income are booked below the EBIT line. When we move to the foreign operation, there is a progression of $25 million, $5 million explained by the new perimeter, as well as $20 million of organic growth. This leads us to an EBIT of $458 million and an EBIT margin of 43.5%, basically flat versus the year before. Moving on, clearly this year the finance income is playing a very significant contribution. The bulk of that is explained by the capital gain that we recorded on the sale of the Kennedy Lewis stake. whereas the O3 transaction is not yet here. We also have been pleased by some dividends from our GP staking business, as well as our positive net interest income on our cash that today is yielding an average yield of around 3%. Net profit, an adjusted basis, just to better reflect the industrial profitability of the company, is not considering the impact of the IFRS 17, which is $447 million or a 28% progression versus the year before, which gives us a 61 basis point in terms of net profit margin. Moving on to slide number 12, you see the usual snapshot of our performance, a weighted average performance net of the fees. On a four and a half year basis, we are delivering an over performance of more than 90 basis points, whereas year to date, as we have already mentioned, this stands at 8.25% or 50 basis points ahead of the industry benchmark. Slide 13, not much to say, if not that we are continuing the buildup of our presence in the private market space with 6.3 billion. And you can see on the following slide the geographical breakdown, which by now is mainly Italy-driven, following the state of Kennedy-Lewis, and from an asset class perspective, there is a very balanced mix between private debt, private equity infrastructure, and the rest. So let's go to a couple of slides on the transaction in Australia. As you have heard and read, probably we have successfully completed a very interesting transaction. It took us a bit longer than what we expected originally, but there was a lot of interest and we thought it was quite appropriate to assess every single transaction that we were submitted and choose the optimal bidder as far as we were seeing the future development of the business. So some of you may remember that AZNGA is basically consolidating financial practices in Australia. So we now have more than 34 partner firms and in excess of 15 billion Australian dollars of assets under advice. It was founded back in 2014, although the first transaction was performed in 2015. The rationale behind this transaction is clearly to sell a portion of our stake, retain at least a strategic interest of 25%, and participate in the future growth of the underlying industry and, most importantly, of AZNGA. AZNGA will continue to consolidate businesses into what we call super firms in order to be even more present across the country and more meaningful in terms of the advice we provide to our domestic Australian customers. As far as The positioning and the reasoning why we did this transaction is that with Oak Tree, who has been investing in the financial industry in Australia and not just in Australia, we can accelerate a lot more the growth process that we are going through, as well as strengthen the credibility of the business model we have been building for quite some time. This is a very interesting transaction, which we will certainly discuss even more in the future. But it goes without saying that we started some years ago in Brazil to actively manage our foreign investments. And by now, you should have understood that every single country is has an incredible potential, but not just that, it has a hidden value that sometimes is recognized by the market. Moving to slide number 16, the effect of this deconsolidation. Just one thing here, we are expecting potentially to close the transaction by year end if there is the Foreign Investment Review Board approval. This is customary approval that in Australia is demanded by foreign investors. willing to buy a stake in an Australian business. Nothing more than a procedural process, but if it's not completed by year-end, it's going to be done before, I mean, in the early weeks of 2025. Once this happens, we will adjust the assets on closing, 9.6 billion as of the end of September, and we will not adjust retrospectively the net inflows that we have collected in 2024. Going forward, only the pro-rata stake of Antimode in the Australian business will be reflected in the monthly inflow figures. As far as the P&L is concerned, we have given here a snapshot of the contribution and what it means or what it would look like, our P&L net of the line-by-line consolidation of AZNGA as we will only then consolidate the pro-rata stake of our interest of 25% within the finance income line below the operating profit then moving forward to slide 18 we just wanted to before digging into the bank new bank project wants to spend a couple of minutes on remembering ourselves what this company has achieved since it went public back in 2004 It's important because sometimes we forget what this company has achieved and why we are so convinced that in the future we will continue to deliver not just the numbers but the strategic objectives that we communicate to the market. So if we go, and there is no particular order in what we put in this slide, and there is certainly a lot of other things that we have forgotten. But if we start from the top left-hand side, you probably remember how in 2005 the Bank of Italy changed the performance fee methodology and we transferred AUM from Italy to Luxembourg without losing a single client. In 2015, we announced the reorganization of Timone shareholding and we confirmed our long-term commitment. And some commented that we were kind of no longer committed or looking forward to remain attached to the growth of this company. And this has not occurred. We have always delivered over performance to our clients in the short, medium, long term. We have always delivered anything between 80 to 100 basis points per annum net of fees to our clients. In 2008, we started our internationalization strategy to simply diversify our business and gain access to growth. And we can see this in the numbers we are producing these days. Then we leverage and deleverage the balance sheet using the cash generation to deleverage the balance sheet. And at any point in time when we were debt free, we were more generous in terms of capital distribution, i.e. dividend policy. We generated more than 15 times of total shareholder returns since the IPO, being the third best stock in the Italian market in terms of total return. We did change the fee structure twice, not something that we were looking for, but we adapted to the new regulatory guidelines. And we didn't put at risk nor destroy the business model, which means that we didn't lose any single client as it was hinted by some. We did deliver and over-deliver every single business plan since the time of the IPO in 2004. Every five years we delivered or over-delivered growth and met any single target and objective we set to ourselves. We did two successful LBOs by Timone's participants. It goes hand in hand with what we think in terms of undervaluation of our business. And we have remained committed for the long run. We didn't do these transactions for the short-term gain as our shares remain locked up in Timone. We did the product innovation, which basically supports our unique integration with the distribution. And more recently, in 2019, we started the democratization and expansion into private market to upgrade our product offering, build better portfolios for our clients, and deliver consistent positive performance to retain our clients and our financial advisor over the long run. And last but not least, We are committed to expand our business in the corporate and investment banking and fintech activities to enlarge our client base and to diversify our revenues and profit and become a one-stop shop for entrepreneurs as well as corporate clients. At the management team, employees, financial advisors worldwide, so not just those in Italy, have always delivered and more. So the new bank project, which we will comment in further detail in the next slide is not different. And we will make it happen one way or another. Slide 19 shows you why we do this. We do this because in Italy there is a significant amount of money trapped in deposits, 1.8 trillion at the system level. And when we drill this down to our competitors, we have a significant gap. We did build this gap very conscious of that because we did not want to have a banking license up until a couple of quarters ago when we decided that we wanted to intercept the net interest income that we could generate. So we went for spin-off transaction or we hinted to what is a separation of the Italian network into two. And from October, the entire network of Azimuts, so not just those that are going into the new bank, have the possibility to raise deposits by an agreement with Illimiti, which is a trusted partner since many years, and with whom we have already opened in just a single month thousands of accounts which are being funded. we have provided therefore a target of seven and a half to ten billion euros in terms of manage in terms of sorry deposits that we will be raising it's not going to be done overnight of course because it's a significant amount of money but as we have mentioned before we have always delivered our targets last but not least we have put in place the right incentive scheme to all our FAs, and we just wanted to remind you that we have been managing and incentivizing an FA network for the last 35 years, so we know how to do things. And this is all done to capture the net interest income. Slide number 20. It's a quick update of the timeline. Nothing dramatically changed vis-à-vis what we have already communicated to you, if not that in Q4 we expect to conclude negotiations in one way or another. In one way or another it means, slide 21, that there are several options that we are discussing internally and with potential partners. There is no particular order in this slide, so you shouldn't be reading the slide left to right or right to left. It's just that we wanted to picture to you the three different options that we are confronted with these days. And if we want to start from the sale to a banking partner option, it's an option in which Adzimuth will retain a shy of 20% participation in the new bank. And we will benefit from clearly initial proceeds as well as the earning streams that the new bank will generate given our shareholding. The banking license will be readily available to capture the full net interest income. And in this case, it's going to be done via the banking license that the bank probably will provide. The second option that we are confronted with is the sale of the stake to a financial partner. In this case, again, we will retain shy of 20%. And this shy of 20% is related to the fact that we will be within the threshold of not being or not falling within the CRD4 regulation as far as admin holding is concerned. So we will not be subject to capital constraints nor Bank of Italy regulation. In this case as well we will benefit from initial proceeds as well as from the earning streams via the stake in the new bank and lastly the license which is going to be acquired will also allow us to capture the net interest income in full. Last but not least there is the option that says that we will do a complete spin-off and then subsequently listing autonomously. And this is not related to the failure of the first two options, but we have a clear idea of what is the objective, the price, and the capability that we have to grow the new bank project for the benefit of our shareholders. So our shareholders in adjunct holding will become shareholders in this option of the new bank and benefit from the expected future growth and net interest income to be generated by the new bank. So to create value for clients, shareholders, financial advisors, and employees, we will also, while also capitalizing on assets that are currently outside of adjunct perimeter, any of these options is currently being assessed with potential counterparties and we will take the final decision by year end. I will leave the floor to Alessandro for the financials. Thank you, Gabriele.

As we have anticipated by Gabriele, we will focus on the third quarter results. So we can move to slide 23 where we have the first part of the P&L. Starting from the evolution of the total revenues, you can see that there is a positive variation compared to the second quarter of $2 million. And as well, if you consider that the second quarter there was a benefit of $7.6 million on variable fees compared to this quarter that is almost zero, you can appreciate the evolution of the impact coming from the increase in the recurring fees. of $8 million and this amount is explained by a positive growth from the Italian business, let's say 60%, and 40% is coming from the foreign business. We are stable and we are consistent with the previous quarter on the other income, and as well we have a positive increase in the insurance revenue of 1.2 million. Again, a combined effect in this case of an increase in the recurring fees of 0.5 million and 0.7 million from the performance fees. At the level of the operating cost, you see that there is an increase of 5.7 million, mainly of these increases coming from the distribution cost, where we have an increase of 5 million, but as we already anticipated, the impact is mainly driven by the effect of the change, the negative change of the yield curve. Therefore, it is generated at 4 million cost. Therefore, we should underline the fact that it is not linked to an increase of cost of the distribution network, but mainly coming from this non-recurring effect linked to the food. At the level of the personal and the GNA, we are almost flat with a negative variation, so lower cost of just $700 million. But here, again, what has been already mentioned by Gabriele, we have a variable effect that is not reflecting in the total revenue, but below the EBIT in the finance income. And then on the amortization, We have an increase of $1.6 million due to higher costs, but also driven by a prudential approach on provision. So, all in all, we have stabilized the revenue margin, again, as anticipated before. So, quarter on quarter, you see that we are almost in line with the previous quarter. So moving to the following slide, page 24, we have the second part of the P&L. Again, to compare the second quarter probably doesn't make sense as we are impacted by the Kennedy-Lewis transaction. So focusing on the quarter, the 70 million, the almost 70 million that you see in the finance income are mainly driven by positive realized and unrealized gain on our own investments. of around $19 million that can be split 50-50 between the Italian business and the international business. We have positive contribution from the interest, again linked to our liquidity, of $3 million around, and then partially offset by negative fair value option of $5 million and the IFRS 17 for $1.8 million, as also mentioned in the note number four. Then the evolution again in terms of tax or minorities, we are back to a normal evolution and normal, let's say, impact comparing to the previous quarter as, you know, again we were impacting by the Kennedy-Lewis in the second quarter. Moving then to slide 25, we have the net financial position. We have a cash-in-cash equivalent amount of money above 1.1 billion with a net financial position of 661 million compared to the 637 million of June 24. You cannot be afraid, I mean, of the low variation compared to the previous quarter. As you see that there is only 25 million increase. But you should consider the significant amount of tax that we paid, mainly on LuxHub, that is coming from the approval, I would say, of the previous year tax declaration of the Luxembourg business. Therefore, we start to pay as well from this approval amount. from the tax authority, the amount that's already booked on our P&L in the previous quarter and years. Therefore, if you would like to reconcile the $25 million variation starting from $160 million of net profit for tax, we take out $8 million coming from M&A activities, and then the $127 million paid in tax, we should get the 25 million variation compared to the previous quarter. I'm going to leave back to Gabriele for the last part of the presentation.

Thank you, Alessandro. Slide number 27, just a quick summary and outlook and to finish on a positive note. As you can see, we have already achieved 89% of the original 500 million net profit target. As you have probably seen from the press release, we are expecting to end the year anything between 550 million and 600 million, obviously under normal market conditions, and with the higher range being linked to the closing of the sale of the stake in AZNGA in Australia. As far as the net inflow target, we will just leave you to estimate what can be the end of the year number. We just have two months left. The activity, the commercial activity is quite positive across all the countries and consider that at some point we will also consolidate the acquisition of the AMP down in Australia. Thank you very much, and we leave the floor for any Q&A.

Excuse me, this is the Car School Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 until touched on telephone. To remove yourself from the question queue, please press star and 2. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Elena Perini from Intesa San Paolo. Please go ahead.

Hello, everyone, and thank you for taking my questions. I've got actually four. The first one is a request of some clarifications on the FinTech project. Because, first of all, I'm getting a bit confused because I have not understood whether the listing is now an alternative to a financial or a banking partner. Because in the initial presentation, it seemed to be a... an outcome in any case. Now it seems not to be so. The second clarification is about the state that Azimuth will retain. If I remember well, it was thought that slightly below 10% in the original presentation, and now you talk about below 20%. The second question is if you can share with us your views on the BAMI offer on Anima in terms of a potential read-across also for the asset gatherers sector. So if you expect... some other banking players even abroad to be potentially interested not only in the asset management but also in the Italian asset gathering space and the potential consequences for the sector. The third question is about the potential capital gain in Australia, if you can give us some indications. And the fourth question is a request for a clarification on the Fulcrum mechanism, because I'm getting a bit confused here. Considering that your performance here today is positive, but the fulcrum maintains itself as negative. So I would like to understand better the mechanic on the back of this mechanism. Thank you very much.

Thank you very much, Elena.

So just starting from the first one and going then one by one, the FinTech project, the listing or what might be confusing, there is absolutely no change in the plans of ultimately get the vehicle listed. Certainly through the agreement with a banking or a financial partner, The conversation that are ongoing would hint to a potential listing delayed with respect to the first agreement, i.e. the sale to a partner. because they want to probably see the delivery of the plan we have presented, which you might remember points to doubling AUM and net profit over a five-year period. So there is no change in the plan from our perspective. We do consider highly valuable the listing, especially because we will also be involving financial advisors into the shareholding of this new entity, exactly as it has been successful for Azimuth, it will be successful for the new bank. In terms of the stake that Azimuth will retain, Given more in-depth conversation with legal counsel as well as our investment bankers, we are pointed to understand that shy of 20%, would not trigger the involvement of abdomen holding into the CRD4 regulation, so we can go up to that threshold if needed, but it's very much going to depend on the conversation we will be finalizing with any potential partner. As far as The read-across, I wouldn't speculate on commenting Bami's offer nor anything else. I'm just going to stress and underline the importance for banks to build commission revenue line. The fact that investing in the asset management sector enables banks to avoid heavy capital consumption. And that is a potentially high growth business, or if you want to put this in another context, a stream of flows and revenues that are quite credible and visible for the foreseeable future. So anyone interested willing to get involved into the Italian asset management industry should be looking at this with a lot of interest. I just want to finally add the fact that the transaction has been done at a multiple of 9.5% times earnings, Adzimot is currently trading at six to seven times earnings, and I leave it to you guys to assess why and if this is correct. Following question, the capital gain in Australia, in terms of the initial numbers that we are seeing, but there is a complex structure of options with all the firms below that that we will have to take care of, but it's going to be anything between 30, 35 million gross as far as capital gain. The full crew mechanism, I'm not sure I got the question, but just to remind you, the full crew mechanism that was introduced some years ago, it's a mechanism that enables us to compare the performance of each and every fund with some ESMA-compliant benchmark. If there is a positive overperformance, we charge a performance fee. If there is a negative underperformance, we give back a portion of the management fee that is charged. How much? Plus minus 20%. Nothing has changed up until the introduction of the system, and the Fulcrum mechanism delivers positive results across some funds and negative results across other funds in which we have a benchmark that is performing better than our funds.

Okay, thank you. Thank you very much.

The next question is from Alberto Villa from Intramonte. Please go ahead.

Good afternoon. I have three questions. The first one is on the net inflows progression, which was pretty impressive in the last few months. And you are now exceeding the new guidance that is the double of what you were expecting at the beginning of the year. I was wondering if you can give us more color on what is driving this significant performance and how sustainable is this strong trend you have reported in the last few months, maybe if you can provide some color on what is really underlying this very strong increase in net inflows and what should we expect to be, let's say, an outlook for the future, just to understand what is the potential also going forward, maybe also with some indications by jurisdictions on what is happening. The second one is on the... You mentioned the 8.5 average performance of the Luxembourg funds. It's difficult from the outside to... to calculate nowadays the performance, I think there are also factors like Forex and so on, because if I take the inflows and the evolution of the assets, it comes to a much lower increase due to the, let's say, performance, but maybe there are some moving parts related to Forex and so on. If you can maybe give us some more indications about the movement of the assets for as long as you can answer now on that would be helpful and maybe the negative impact of foreign currencies and so on. and maybe also some indication on what is the amount of the Luxembourg funds that were reporting this positive performance. And the third and final one is on the FinTech. You now are also considering a spin-off and listing. This obviously is a different way to get to the goal of having this new company established. But it also... requires to probably capitalize the company given that this is a bank and there is no cash in from the disposal of a stake to a financial or banking partner. I was wondering if you can give us an idea what is the funding need of the new fintech bank and in this case how we should look at the fact that Azimuth is not making cash-in but should eventually fund the company before the spin-off. Thank you.

Thank you, Alberto. So as far as the first question on net inflows is concerned, yes, we are benefiting from significant flows across countries. Maybe let me start saying that probably the fact that we are delivering a net weighted average performance to clients, although we will get to the specifics later, of in excess of 8% signals the fact that it's a spectacular year in terms of performance for clients. Clients' activity is now robust. They are seeing these results and anything with commercial activities, there is always a delay in the benefit or negative aspect that one should expect from such a situation. I have to say that we came out last week of our international convention which was organized and hosted in Turkey and The trend across countries is quite solid across the board for macroeconomic reasons, for attractiveness of the brand in each and every country, which translates into the possibility to hire bankers and financial advisors. We are also very keen in trying to make available our product solutions at the more global level, which would therefore give and provide an added benefit to our financial advisors and clients wherever they are based. So it's very difficult to have the crystal ball and indicate what could be the future flow environment, but unless there is significant market turbulence or some unexpected events that may impose a slowdown on the commercial activity, the next couple of quarters could still benefit from this environment, although maybe not at exactly the same pace. So I wouldn't suggest you to get a comfortable with a billion plus every single month because it's clearly something very complicated to deliver. As far as the weighted average performance is concerned, you're right. It's kind of becoming more and more complicated to provide you with just one single number that summarizes the complexity and the scope and the diversification that we have achieved so far. But clearly, this number that we have provided to you is a number that indicates the weighted average performance of a potential client, especially looking at the Italian geography, given the allocation across funds that we typically have. So 240,000 customers, 95% plus of them are in positive territory year to date. More than two-thirds of our products are in positive territory year to date. This number does not come by luck, but by a very good and extensive global asset management team that has delivered an exceptional result for the year. While not being fully exposed to the equity component as we used to be, So we have been quite on the conservative side, but the bond component has performed extremely well this year. So we have to congratulate our fixed income team across the board for a spectacular result. So in essence, the weighted average performance is still a good representation of what we are delivering in Italy, but does not or cannot summarize the entire performance delivered to our clients globally. Lastly, the FinTech question. Maybe let me just start from this. We did not want to provide indications of what is our preferred option. We did not want to speculate or to be asked how we should or you should position yourself in terms of this transformational deal that we are trying to make. It's a complex transaction, but uh we are not excluding any possible option so the spin-off and listing has always been one option among many that we have always considered is something that would mean that we will yes go alone at least in the first part and see how to gain the best and the optimal setup for Azimut shareholders. It is not an option that would mean that we did not find a partner nor a private equity or a banking partner. but it means that the conditions that we set at the beginning of this transaction, including the price, the guarantee for the 20 years, the mechanics on how to execute the transaction, the potential upside that we see are not there. And if they are not there, this is the most single and biggest problem transaction that this company is doing at the moment, and we cannot afford to ruin what we are working on for quite some time, nor get the most out of it.

Okay, thanks. Gabriele, if I can just a brief follow-up on your answers. One is on the weighted average performance, I guess this is not including the private market products, just to understand if you have any comments.

It does not include the private market.

Okay.

It's just on using funds.

Okay. Yeah. Any comment on how these products are performing would be helpful. And secondly, on the fintech, if I may. If you can share with us an indication of what is the capital that this company would require in the case you go alone.

In terms of the weighted average performance, as I was saying to you before, more than two-thirds of our products are in positive territory. So it's a widespread performance across many funds, and this is thanks to the benefit of the investment that has been done over the years in terms of product innovation as well as teams, i.e. professionals that have joined the group in Italy, in Luxembourg, in Ireland, across the globe. On the capital, on the FinTech, I think it's not exactly wise to comment on a specific number, but we do know how much we would have to require the FinTech bank, and it's something that goes hand-in-hand with the level of deposits that we will be raising as things go by.

Okay, thanks.

The next question is from Luigi Debellis from Equita. Please go ahead.

Hi, good afternoon. I have four questions. The first one is on the FinTech project and the recent agreement on current account. Can you quantify the amount of deposits you collected in October and the level expected by year-end? The second question on the cost, so can you provide us a guidance for distribution costs and SG&A for Q4? The third question on the recruitment, so what is the update on Azimuth's recruitment activity, chart rate, and competition observed in the market, and what are you targeting in terms of onboarding financial advisors this year and for the first half of 2025? The last question on the Australia, so what is the expected contribution within finance income line expected in 2025 as the very first roughly indication? Thank you.

Thank you Luigi.

So on the deposit, it's not that we're not willing to provide you with numbers, but the minute you start something new, And it's not new, the fact that we have to raise deposits. The procedure is new. The partner has a ramp-up phase in terms of making the system work in the right way and so on and so forth. So it's not just the fact that our advisors need to go and convince clients to raise deposits, but there are a lot of other aspects that have to be taken into account, which leads us to say that thousands of accounts have been opened. Some of those accounts have been already funded with amounts that are between significant to less than significant. And then clearly the expectation is that to reach the $7.5 to $10 billion, it's going to be something done like running a marathon, but at a faster pace. So it will not take us ages, which means decades, it will take us years. which means that as we go along and there is more clarity on the new bank project, then the ramp-up phase will be even more consolidated, and therefore the amount of flows coming out of the deposits over the coming years will lead us to reach $7.5 to $10 billion. I do want to remind you that it's not just the financial advisors of the new bank that are collecting or will be collecting deposits, but It's the entire Azimut network, so the 1,845 colleagues that are out there meeting clients, their trusted clients, and trying to get the deposit into our system. The distribution and SG&A cost, I think Q4, as always, given also the year that we are going to potentially end if nothing dramatically different on the negative side happens in Q4. will be a very strong year, so I would say you should expect an uptick in Q4 in terms of distribution costs because simply the recurring margin is expected to go up, and therefore there is a linear relationship between distribution costs and recurring fees. On the flip side, and this impacts both the SG&A line as well as the distribution cost line, the variable remuneration packages will typically kick in in Q4, which will potentially drive upwards the absolute number figure. I'm obviously talking about the absolute number figure versus Q3. So it's going to be most likely some kind of trend that you have already observed in positive years in the past. In terms of recruitment activity, as you are aware, we have a target of 120 to 150 people as gross figure from several years now. Clearly, the fact that we have been engaged ourselves as well as the management team of the network with the new bank project and the internal reorganization we're probably left behind a bit the recruitment activity, which in any case is coming back. We're still an attractive place for advisors that want to join and want to participate in a growth company. So I do expect, and we all are working towards going back to the usual running rate that I mentioned before. Australia, the contribution in the finance income, I would say it's extremely early and not wise to talk about it just because we are about to close the transaction with O3. There is a business plan that we have shown to them and clearly the impact of their support not just financial, but at various levels, will lead us to a potential acceleration in the growth rate, so we might be able to be even more clear in the coming quarters. But I wouldn't speculate right now.

Thank you very much.

My pleasure.

Management, there are no more questions registered at this time.

So thank you very much for your kind attention and questions. Myself and my colleagues remain available for any follow-up. Have a very pleasant afternoon. Bye-bye.