Earnings Call: Q1 2018

May 10, 2018

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Azimut Holdings First Quarter twenty eighteen Results Conference Call. After the presentation, there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Mr. Sergio Albarelli, Managing Director and CEO of Adzimut Holdings. Please go ahead, sir. Good afternoon to everybody, and apologies for the slight delay. We had a longer preliminary meeting of this conference call, but let me speak immediately to our agenda today. We're going to analyze as usual our quarterly results, new idea of our asset management and distribution, some views about financials and at the end summary and outlook. Let's go straight to inflows and assets under management. We have an increase of 9% versus March 2017 in our assets. March year, 50,000,000,000,600,000,000.0. April, we will be above EUR 51,000,000,000, pretty good. Still the same ratio between domestic and international, Italy representing roughly 75% and international representing the balance. As much as net inflows, we are below the EUR 900,000,000 March, very close to EUR 1,000,000,000 April and still validation of our policies since long time ago, strategic investment outside Italy, strong contribution organic contribution for our foreign operations. On financial results, total revenues $182,000,000 below first quarter twenty seventeen. Recurring fees are higher. Unfortunately, variable fees are lower due to market conditions, significantly lower 9,600,000.0 versus $49,500,000 Our net profit as a consequence are $26,400,000 versus 72,900,000.0 one year ago and almost entirely due to the limited variable fees in the quarter. Good numbers and good news, approved dividend per share, euros 2, one cash as you know, and €1 to be paid through existing treasury shares. Basically, we doubled the amount of money that we pay in 2017. Our assets, as I mentioned to you before, going up, still good numbers on international, as I mentioned, 25%. Our performance year to date is roughly flat, although recovering slightly better than the Italian industry. Breakdown of our assets under management more or less in line with the past. Our average performance, still good. Not too much to say here in front of you the usual chart we are presenting you anytime in our presentation. If we move forward and we go for our funds breakdown, we have a slight increase in bonds, more or less flexible staying on the same level as well as balanced. Equity is slightly up 0.6% as much as the underlying assets, 42% in equity and on bonds, we are roughly speaking 36.3%. If we go for a geographical breakdown, you see the usual picture, North America, Europe still stronger as usual, UK and Asia Pacific. But if you go on fixed income, we have most of our assets in hybrid and investment grade with high yield and silvering representing a significant portion of it as well. On the distribution side, we're still growing above the average of the industry, talking roughly speaking about the average for Adriem of 9% versus the average of the industry minus 1.3%. Decelerating as you can see, but still we're positive on it, because we see a significant increase in the quality of the people we hire. Our financial network in Italy has seen 41 additional hires in the first quarter. Average age is younger than the age in the market and as well as the age in our industry. The percentage of the assets invested in managed assets, managed funds, I. E. Unit linked, mutual funds and so on and so on is above the figure we presented you three months ago. It was 78%. It is now 82%. Average portfolio 16%, slightly lower than the previous one. But confirmation of our strategy, 51% of these people are coming from banks. No big changes as much as the geographical allocation of our sales network. To note, point six six agents, 1,000 agents, Italy wide. On the financials, I would like to introduce you Alessandro, our CFO, who will be giving you some highlights about the numbers. Okay. So thank you, Sergio. Let's start from the bottom of the income statement. We have consolidated net profit of €26,000,000 compared to the €73,000,000 of the first quarter twenty seventeen, with a net profit of €30,000,000 compared to EUR 74,000,000 of 2017, therefore, with a variation close to EUR 45,000,000. This is mainly explained, as already mentioned, by the decrease of EUR 40,000,000 on variable fees. But at the same time, it's also, let's say, explained by the recurring fees that increased compared to last year by EUR 8,000,000 and in an increase of the operating cost to about EUR 12,000,000, where we have EUR 6,000,000 on distribution cost, EUR 6,000,000 more, and EUR 6,000,000 more on the administrative cost. I mean both of them linked to the evolution of the group in terms of asset under management, but also on the evolution that we have to abroad. Going through the other hedge elements of the income statement, we can see the interest income increased by almost €3,900,000 This is mainly explained by the introduction of the new accounting standard, the IFRS nine, where the effect of the variation of the fair value of our assets linked to our investment on a paper for sale is directly impacting now the P and L. Therefore, the unrealized impact was it's on equity. Now we have these changes, so we have to keep this I mean to keep this on the P and L. Going to the next slide, we have the net financial position, where we can see that it's almost in line with last year, the December. We have a variation it's a negative variation of EUR 4,000,000. If we split the variation on cash and cash equivalent, it is around EUR 10,000,000, and we have a total debt that decreases to EUR 6,000,000. The valuation is therefore explained by two, three elements. If we consider the result of the quarter, twenty six million, sorry, And we take out the buyback that we finalized in January of EUR 30,000,000 plus the contribution of EUR 6,000,000 to abroad for the acquisition. We got the variation of EUR 10,000,000 on cash and cash equivalents. I think that's fine. Thank you, Alessandro. Thank you so much. Moving to summary now to look very simply, we don't think this very challenging quarter is putting at any risk our strategy and our ability to go forward with good targets versus our five years plan. Obviously, they had an impact. They had an impact, no need to say. It was mostly on variable fees. Some of our funds were not performing as expected. That said, we are confident that our ability to generate revenues will stay intact throughout 2018. Net inflows anyway to be seen as very robust. The Italian business is more focused than before on quality versus than on quantity. The numbers I mentioned you before about the quality of assays are just giving over to the strategy that our company set out now back eighteen months ago. Additional plans are and we already implemented some strategies in order to hire even more professional agents going forward. If we talk about international expansion, our growth is now mostly organic. The pace of acquisition is still valid, but the numbers we have seen in the first quarter are generated by the existing business, which is pretty good at the operating level profit impact. As you probably remember, we've been spending a significant amount of our time in the last year in restructuring our product offering. Efforts are always into that direction. They have been filed with local authorities in Lux Sembrologe and Italy as well as a structure on the existing range. Additional filing will follow-up in 2018. The aim is to reduce nonperforming funds, both in terms of performance versus the client and performance versus the group, eliminating smaller funds or funds which are not contributing significantly to our margins. The same will go for our insurance business and wrap account business. You remember with the tap new organization for wrap accounts in 2018. The numbers are proving to be good into that direction. We're consolidating our ability to use in the number of wrappers. The same will go for unit links. Everybody is aware of the fact that 10/01/2018, IDD will come into effect. And not just because it's a new directive, but we will take the opportunity in offering our network first and our clients second, the opportunity to have an even more valid range of products in order to offset any potential negative effect coming from markets. The area we're going to focus going forward, once again, growth overseas as well as in Italy. Let me repeat, as well as in Italy because when people are skeptical about our willingness to keep the business in Italy growing as it is growing internationally, that's not the case. Italy is and will stay the main market for the group, a company with strong growth international, where we have seen significant step going forward. No need to say, as already highlighted in some conference call in the past, we want to diversify away from traditionally long only type of products. We are developing our alternative business into private equity, private debt and advisory. Thanks to good people, we have in house hiring of new people and the ability of our portfolio manager to generate new ideas. We are still opportunistic on M and A. We're not making any statement regarding we're to buy this or we're going to buy that. We like to see how the market situations are evolving, which are the opportunities to be presented in front of us either domestic or international. And you probably remember we made some statements about what's going on in Italy and what it could be good for AdriMut going forward in international markets. No need to say, all the efforts we are putting in place for portfolio management and range of products are all in line with the target of providing our clients a superior performance like we have always been able in the last ten years, twenty years, twenty five years. Last point, more efficient operational platform. You remember, we started months ago a project in order to change our operating model, our architecture. Things are progressing well. We expect to be in line with the delivery in 2019, And this will be generating a significant savings on margins and operation setups. Let's point as usual the update on our five years business plan. Not much to say because we are presenting exactly the same trend we were presenting three months ago. The annualized net profit obviously is still in fact is EUR300 million as a target. Nowadays, we're running at EUR106 million. We expect market condition to be not as trend line as it were in 2017 and 2016. But nonetheless, all the activities we're performing on cost control reorganization and focus on quality should be helping us in order to achieve the number. Analyzed net inflows running fine despite slightly lower than one year ago. Dividend policy, I think that just a few days ahead of the ex dividend date, everybody should be happy about receiving €2 in dividend. I'm not taking too much of your time now. I will be more than happy to take any question arising from the conference. So you can open up the microphone. Excuse me. Is the Chorus Call conference operator. We will now begin the question and answer session. The first question is from Hubert Lam of Bank of America. Please go ahead. Hi, good afternoon. I've got three questions. Firstly, on flows. If you look at the net managed inflows over the last couple of months, they've been negative. Just wondering how do you explain that? Is it due to markets, MiFID, the lack of hiring or just a slower domestic market? Maybe just give some color as to why there have been outflows over the last couple of months. Second question is on G and A costs. G and A costs picked up a bit in the last in Q1 versus the last quarter. Just wondering if there's any one off in that quarter or should we expect this to be the new run rate going forward? Third question is on hiring. Seems like you picked up the hiring in Q1, which led to higher commission expense. Has the recruitment environment changed that led to the increased hiring? Or I'm just wondering how why it picked up this quarter? And should we expect this to be, again, the new run rate going forward? Thank you. Thank you, Hubert. Very simply, on net flows, probably remember, we already declared that we've been hit by a couple of institutional clients in the last few weeks. On the other hand side, there were some numbers coming from a reduction of our proprietary funds investment from proprietary Abzimut into our own funds in order to allow capital to be deployed to other opportunities. On G and A, very simply, I'll give you an example. A significant portion of the increase is made by all the personnel that was onboarded in the last few months in international operation in Italian as well. And I give you a flavor. I visited our Dubai office after one year. It was a very tiny operation of two people. Now we're talking about compliance manager, internal auditing. We're talking about operation, one portfolio manager, three salespeople, the country manager, the legal counsel. If you go for expansion in new planet seriously, obviously, the first cost you're going to incur are the costs generated by personnel. And I expect this trend to be obviously well managed. We're not going to allocate people randomly, but where the opportunities will be arising. But nonetheless, no surprise, if you remember, when we talk about product range, I. E, restructuring what we are offering to our clients, we do not just talking about investment vehicles. We're also talking about potentially hiring portfolio manager or analyst, making sure our operations are up and running well and at the same time restructuring and making sure they will be more profitable. So in essence, obviously, some impact coming from investments, but not as a surprise because this is the trend line we started now one year ago about the change in our architecture and revising our operating model and the hiring of people. So no surprise on that side. If we stick to hiring and we're talking specifically about FAs, it is true. 49 sorry. 41 in a quarter may look surprising because last year was less exciting as much as a number. But you probably remember that I always mentioned the fact that the hiring numbers are on the swing mode. You may happen to have a quarter very significant for people that we started contacting even one year ago, and suddenly the hiring materialized. And you might have a quarter which is totally flat because discussion and agreement are not materializing. What I can stress once again as a major factor is the quality of these people is going higher. We have a campaign, which is called Banking Revolution in order to hire potential strong bankers from existing banks all around the country. The numbers are good. We are on the process of hiring people already within this 41. We have strong people coming from banks. And we might expect to see a bit more exciting numbers going forward. But again, please don't see hiring as a pure trend line, but it's a a swing process. It may be very up one month. It's basically going down to zero, even potentially negative when people are leaving another month. The next question is from Alberto Villa of Intermonte. Please go ahead. Hi, good afternoon. I have a few questions from my side. The first one is again on inflows. If you can provide us with an idea what's the organic delivery in terms of inflows of the Italian operations excluding the, let's say, effect of institutional mandates and the contribution coming from abroad. I was just wondering if you are expecting your focus on quality, I understand, and not on quantity if the organic growth is still positive or you expect some kind of flattish or negative trends in term of net inflows contribution from the Italian operations? I also noticed that you add 41 new advisers, but the number of financial advisers increased by only 18. So you had 23 people leaving. Is that something related to normal churn of the network? You're expecting any increase on that side? Any comment on that could be helpful. The second question is on the you mentioned during the presentation that you are transforming or eliminating some of the non performing funds and also looking at the unit linked products. I was wondering if when you launch a new fund, you do it with the same structure in terms of performance fees and management fees of the previous one? Or are you already implementing any new methodology for especially for performance fees? And on the unit linked, if you are worried at all about what has been discussed in the recent weeks in Italy about the ruling of the Casazione of the Supreme Court about eventually considering these products not eligible for some tax benefit for the client. So if you expect this could eventually impact your inflows on that specific product. And the last question is on the fact that one of your competitor, Banco Mediobanum, announced that they receive an investigation and a request of taxes because of their international operations. Do you think this is a risk for the entire industry and also for your operations in Luxembourg? Or this should be something that you rule out? Thank you very much. Thank you, Alberto. Let me go straight to your first question regarding net inflows. We might expect to have a run rate of roughly EUR 2,500,000,000.0 on an annual basis. So this is what we're working on. Once in, once out, to some extent, may make a difference, but that's what we're talking about, 2.5% on an annual basis. Normal hiring, you're totally right, 41 new entrants. The net is 18 because 23 left. That's normal. I mean, it's it's a normal turnover in an entity like us where some people not really good set aside when some people may take the decision to go somewhere else. But the balance is positive and even more important than the balance being positive, these people are bringing in already assets 82% invested in managed funds. So as you remember, this is a strategy we set up long time ago. Our sales proposition and our commercial department has been very good in implementing it, this will be the trend going forward as well. It's seasonal in the sense that it's swinging, but it's not really something which is creating us any problem of keeping anybody of us awake at night. As much as new funds, no, the answer is very simply no. We're not going to change our methodology. So any new fund will be launched exactly with the same structure, the same management fees type of model, the same performance fee model. We're not taking any initiative going into different direction because it will be very difficult to understood by our clients to see some new funds with new methodology and existing one with old methodologies. Unit links, can I quote Shakespeare? Too much ado for nothing. I mean, there has been a plethora of discussion about potentially the impact of what the Casazione and Milano, took as a decision. Obviously, we are investigating into it and trying to figure out if there could be a portion of our business at risk, but I think it's really preliminary to say nothing at all or a portion of it. As much as the investigation, the fiscal investigation, and and you mentioned one of our competitors, well, me stress one point. We've alluded to it a long time ago, long time ago. No need to say tax authorities may run the business the way they like. Obviously, I'm not expecting either yes or no to be showing up at that door. But it's a matter of fact, we already been through this and we gave to the tax authorities all the answers they were looking for. Okay. Just a clarification on the €2,500,000,000 of net inflows you are expecting, is that skewed towards international operations also for the future? Or are expecting a balanced fifty-fifty or anything? No, no. I was just referring to the Italian business. Okay. 2.5 is the Italian business. So we can expect then to add on the international business. Any figure on that? Well, if you take this as a target run rate, it's acceptable to see this as what has been the behavior in the past and on top is very much in line with our target date five years plan. Obviously, then you need to add whatever is going to be the impact coming from acquisition on a local basis for FA's and you should be incorporating as well what is the potential business generated in the foreign operations. On foreign operation, I'd like to stress once again, the numbers are absolutely positive because we see what we like, I. E, organic, but this doesn't mean there will be no acquisition at all. This is in the DNA of Atimode. So 2.5 plus whatever it could be coming from either the acquisitions or foreign operations, obviously, pending market conditions. All right. Thank you. The next question is from Gianluca Ferrari of Mediobanca. Please go ahead. Yes, hi, good afternoon. I have four questions. The first one is on the €978,000,000 total inflows at the April, if you can break it down between Italy and foreign business. Second is the contribution of the foreign business to the EUR26.4 million net profit. So if the foreign activities contributed positively or are still at breakeven. The third is on the payout to the distribution. I understood that recruitment could be a bit volatile during the next few quarters, but the 53.3% payout I'm calculating for Q1 is pretty higher compared to the 50.7% of full year 2017. What should be a kind of guidance for full year 2018 if you can give us this kind of indication? Last question is if you can give us the performance fees cashed in April. Thank you. Thank you. First question, $978,000,000 on revenues. Roughly, we're talking about EUR 700,000,000 coming from foreign operations. So that's a big number, a very big one. On EUR 26,400,000.0 net profit, you know that we are not disclosing this figure yet, So you should be waiting for a few more quarters before providing this information from us. On payout distribution, no, I think, I'm not really on your side. I mean, I don't see this as an increase in cost of acquisition at all because, again, this is a sort of swinging type of activity. You cannot assume that just this quarter maybe a guidance for 2018. This strategy that we call banking revolution, I. Hiring bankers with good potential and so on and so on, lower age, significant portfolio is not necessarily giving to an increase in cost of acquisition. It's a case by case. If you try to sorry, if someone could try to dictate a strategy by I do want to spend this maximum amount of money for hiring people, I think this someone should be on the wrong side of the business because here, and you know it, this is a people business, you should be looking this a case by case situation. You may happen to be facing a very strong potential candidate, young, 35, 40 years old, 50,000,000 portfolio, and you expect to pay some percentages. And you're then sitting in front of a very established type of consulenta financiaro in the region of €50,000,000 it's a totally different type of numbers. So the average and especially the average in a quarter, it is very difficult to be seen like a proxy throughout the year. And then your question regarding the performance fee cashed in April, we're talking about roughly $2,500,000 Okay. Thank you very much. Pleasure. The next question is from Jonathan Richard of KBW. Please go ahead. Yes. A couple of questions from me. Firstly, on the EUR16 million average portfolio size of the new 41 Promontory. Can you give us an idea of how much of that has already come in the door and what the shape of that curve will look like over the next months, if it has not all come in? Secondly, on the 23 people who have left Azimuth, can you give us an indication of what the average portfolio size was for those levers? And then finally, on the $2,500,000,000 managed assets inflow target for the Italian business, can you give us an idea of what you're internally splitting between managed assets and assets under custody? Thank you. Thank you for your question. First of all, we're talking regarding the EUR 60,000,000 average portfolio to be already cashed in the region of roughly 20%. So you will see the balance going forward in quarter two and quarter three. The same goes for the levers. The average portfolio was much lower, and this is a confirmation of our strategy. We're talking about an average portfolio of in the region EUR 10,000,000. So concentrating on more profitable FAEs and let the less performing FAEs go to potentially a new career somewhere else. Out of the $2,500,000,000 well, this is a very difficult exercise because according to market condition, you may happen to have potentially raising assets and funds rather than unit links. In some cases, it may be securities. It's really difficult to give you a proxy right now. So we will apologize if I don't give you any breakdown of it. Great. Maybe just one more follow-up question on the cost side. Will your new fund transformationconsolidation lead to lower SG and A costs going forward? And if so, how could you give us a quantum for how much we might expect to see SG and A costs come down as you guys move through that exercise? Thank you. It's a good question, and I totally understand it. The answer is very simple. On the one hand side, there will be some cost just wiping out because these are some fixed costs that in a fund, you might have legal cost to some operating cost based on middle and back office. On the one hand side, the cost on the other hand side, the management fees. Some of our funds will be merged into performing as much as management fees type of funds. The overall effect has to be estimated. Obviously, we have some ideas in our mind, maximum and minimum. It's all about the persistency, sorry, of our clients into the merged funds. You will understand we're not providing any information about this because in order to be totally understood, we should be providing you right now the full list of funds that will be merged into other funds. So you would be able to make any calculation. But obviously, this is a competitive information we are not providing to the market right now. Okay, great. Thank you. Pleasure. The next question is from Elena Perini of Bancajimi. Please go ahead. Hello. Good afternoon. I have some questions. The first one is on your interest income. I couldn't understand couldn't hear all your presentation on the P and L from the CFO. So I would like to understand whether there was some one off impact on interest income. Then talking about the run rate of $2,500,000,000 of net inflows in Italy, If I understood well, it is not a level that you confident to achieve in the current year. It is more a medium term target. Then on the savings that you expect starting from 2019 from the new operating platform, can you provide us with some quantitative guidance on this? Then regarding the new asset management platform, regarding the asset managers, the fund managers that were exiting your group, can you provide us with some update on this side? And then if you can elaborate a bit more on the key point of opportunistic M and A that you gave in your outlook for the future. Thank you very much. My pleasure. Me go question number two, then I will be passing it to Alessandro, our CFO. 2.5, I didn't say we are not either optimistic or pessimistic. I thought this is a trend you might expect considering what Aptivot has been able to achieve in the last few years. So 2,500,000,000.0 has to be seen where we're moving forward. Obviously, pending market condition and looking at what acquisition both of financial agents and international operations are. But 2.5 is the number for Italy. So the total, obviously, will be totally different. On the savings, we are not disclosing what are supposed to be the savings and where they are coming from because the new architecture of the system will be explained going forward 2018, the 2019 in order to give some disclosure about what has been already some impact. But to give you exactly the numbers of how many dollars we're going to save for single trade, how many dollars we're to save for printing, reporting and so on and so on, it's really not just early and preliminary, but it's not really appropriate because this is an impact that should be valued when the volumes in the business will be at the level we are expecting. On the fourth question, which is the one regarding the operation set up by some of our colleagues, understand that the operation is going to be finalized in the next few weeks. Things are up and running progressively. There are strong cooperation between the two entities. We set up a working group in order to facilitate the start of the operation in order to make sure that any delegation will be up and running smoothly and professionally. That's the update I can give you on that side. And I'm very happy to provide you this because I see what my working group is doing, and this is very professional. As much as the interest income, I think the most appropriate, as I mentioned you before, is Alessandro, so I'm switching this to you. Yes. So as I was referring during the presentation, due to the change in the accounting standard and the introduction of the IFRS nine, we are not allowed anymore to keep the valuation of the fair value of our investment, let me say liquidity investment in fund, not anymore on equity, but on P and L. So even if it's an unrealized impact, we cannot anymore keep it on equity. Therefore, you can see that we have this change and this impact this quarter due to this valuation to approach. Thank you, Alessandro. Is it enough? Well, there was another question on the opportunistic M and A, if you can elaborate a bit more on this. Well, I think please, apologies. I'm not going to play with words. But opportunistic means that if something is popping up on our table or in front of us, it could be good for us to have a look. So we are not, for example, strategically forecasting we're to buy this because of debt and so on. We look at our markets where we are. And if opportunistic will be in front of if opportunities will be in front of us, we're going to be judging them. I give you an example again with Dubai. We came across this opportunity one year ago. We thought it was great. It was fitting in pretty well in our strategic considering of region. And after one year, from an opportunistic vision, it came out to be a strategic decision to set up the offices the way I mentioned you before. Okay. Thank you very much. And then if I can come back on the financial results, so on the interest income. So going forward, we are going to see a more volatile trend in this P and L line. Well, the answer would be yes, it depends. Okay. Thank you very much. Thank you. The next question is from Philippe Carreault of BigDebt. Please go ahead. Yes. Good afternoon, sir. I was looking at your P and L and the development of your recent asset under management. And I think you touched upon the departure of your former manager last year. It seems that it's having an impact, which is slightly higher than we were expecting. In fact, if I add this kind of coincidental departure of 23 FAs this year that you replaced with 40 new FAs And the fact that your commission expense, if I add the minorities as well, are growing by three points in the first quarter versus the average of last year. Is it that the entire organization is under pressure from those departure? And just could you just comment and kind of maybe give us some more thinking about that? Maybe I'm completely wrong, but it's what I derived from just looking at the figures here. Not at all. I mean, I totally understand where you're coming from. You're to figure out considering the tenure of our former portfolio managers and the long dated relationship with us, what it could have been the impact on us. Let me tell you the following. If you look at the numbers, not just in the last quarter, but you see this with an historical perspective, I. E, since it was made the announcement and the agreement was made public and so on and so on, the company made profits, the assets were going up. We raised sorry. We increased the number of IFAs and so on and so on. As of today, what I can tell you is the relationship is working fine. We have no negative input coming from our, let's say, sales network or clients about this because they know that the agreement is valid, up and running and will last for a while because it's all our intention to make sure that the agreement will stay in place. We're talking about colleagues. We're talking about people who are still shareholders of the company so they have a vested interest in making sure that the agreement will be up and running for a while. I don't see this neither as an excuse for people to leave, and I'm both talking about financial agents and internal colleagues. And I don't see this as well as a negative impact on either performance fees or variable fees. This is just talking about market conditions. It is not because some of our funds will be managed normal internally, but externally that we have seen a decrease in performance fee, not at all. So I'm very positive about the relationship, and I don't see this as a negative threat to us. Obviously and correct me if I'm wrong, Philippe, it's the first time you connect with us. So we will be more than happy to have additional conversation with you in order to provide you more color about the history of the company and to give you a strong picture of what we're doing and what we expect to do going forward. Thank you. Pleasure. The next question is from Philippe Botrini of Kepler. Please go ahead. Yes. Good afternoon. Two questions from my side. The first one is you if can give us an update on acquisition of basically the deal on Sofia CJR that was announced some months ago and maybe we don't see yet the consolidation of the assets. And the second point is that if you expect to approach some deadline to buyback minority stakes of operation abroad in the next quarter or next year or so, we would expect a reduction of the line of minority interest. Thank you. Thank you, Filippo. Very simply, we expect to see the conclusion of this very long story about Sofia by the May. Please don't see any negative comment in my words. It's just as a matter of fact, it was a long process because making acquisition of a portion of an existing SGR is not as simple as some people could think. But nonetheless, the process is gonna go very finely to its termination. It's been very good for us as an acquisition. We're hiring not just sorry. We are getting not just assets, but we're getting in also stronger portfolio managers and financial agents. So all in, despite being very long, an excellent acquisition. As much as the the minorities, well, we already had something in the last few weeks, I. E, Dubai as an example or Chile. And going forward, might be something that happened on the Sicily short term. Okay. Thank you. Pleasure. The next question is from Matteo Gilotti of Equita. Please go ahead. Good afternoon. A couple of questions. Shall we say that the acceleration of hiring of advisers that we have seen in the first quarter will accelerate a little bit also the distribution cost in the next quarters or it's too simplistic? And the second question is regarding the funds that you have your own funds that you have in your balance sheet as an investment of liquidity. Can you quantify just to, let's say, help a little bit model the interest income or the swings? Thank you. Hi, Matteo. Straightforward answer to your first question, no. No acceleration in hiring. That doesn't mean at all any acceleration in cost of acquisition, not at all. And again, please, let's make sure we've been very clear about this. Hiring financial agents, hiring strong private bankers, it is not really like working in a post office where every day you do exactly the same and you have a recurring exercise. It's in and out, in and out type of exercise. It will take potentially a while to see the similar number going deployed in quarter two or quarter three. It could down to zero. It could be 60, whatever. But please don't see this as a as a proxy. We like to hire good people, and this is what we're stressing in the last eighteen months. The numbers are on our side because if you look at the numbers of the last year, 78% portfolios invested in managed funds, average portfolio 20,000,000, average age significantly below EUR 50s and so on and so on. So we are not at all highlighting that there will be an acceleration because we're very opportunistic in this case as well. And we are not highlighting at all there will be an acceleration in cost. It will be really a very careful exercise because we know that we like to be careful in making sure that the costs are under control. On the your second question regarding the cash invested into our funds and so on. Well, I think that any good company should be investing in its own proprietary products, and we have a good portfolio of our funds. Obviously, it's a long term portfolio. It is managed by our portfolio management team. It's not just a single portfolio manager exercise. And we use it as a cushion whenever we need some liquidity to grow for either opportunistic or special acquisition. That's very simple. Thank you. Pleasure. Mr. Albarelli, there are no more questions registered at this time. Back to you for any closing remarks you may have. Thank you so much, Willy. First of all, let me thank you, everybody, for participating to our conference call. And let me thank, on a special situation cases all the participants who gave us their questions in order to make everybody aware of our numbers and the quality behind them despite the numbers being lower than the first quarter twenty seventeen. Obviously, as I mentioned before to Philippe, if you have additional question on how the numbers have been produced, feel free to contact Vittorio. And he will be arranging the proof of people in the organization to provide more color about the number itself. Thank you very much, and let me wish you a wonderful evening. Thank you. Bye.