Earnings Call: Q4 2024

Mar 3, 2025

Good morning. This is the conference call presenting Generalfinance Full Year 2024 results and 2025-2027 business plan. Let me remind you that all participants are in listen-only mode. The presentation will be followed by a Q&A, and the presentation is available in the Investor Relations section on the www.generalfinance.it site. To be assisted by an operator during the conference call, please press star and zero on your phone keypad. Let me now turn the conference over to Mr. Massimo Gianolli, CEO of Generalfinance. Mr. Gianolli, you have the floor. Thank you very much. Good morning to all of you, and welcome. As you know, if you're not here, you can follow us by downloading the presentation. We start from page five of the presentation, which really is presenting our story. It's the 43rd year of life for Generalfinance, and it really gives you the highlights that we already announced during the previous meetings. We started our business in Spain. It really launched it. We opened offices, and we also announced, just a few days ago, a strategic agreement with the SACE Group. We also started the acquisition process to get to the merger of Workinvoice. On the following page, we try to give you an idea of the pathway we've followed over the years as we've been implementing our business plan on 2022, 2023, and 2024. Our operations were many, so we launched a number of activities. My team is very skilled. We worked on revolving facilities that we have renewed for the next three years. They have increased. They've grown, by the way. We worked on the securitization processes as well. We started securitization in 2022, and that led to the current overall funding, which is about EUR 1 billion. We were followed along this pathway by all the players that have always helped us and supported us. The main thing is that there are new players as well supporting us. They've joined us along the way. In 2022, we presented our first sustainability report, and we strengthened our in-house setup and structure with new colleagues. Following the guidelines of Bank of Italy, we increased our control system. We strengthened and boosted, as I said, internal controls, and we have also increased and strengthened the agreement with SACE. There were many transactions where SACE really covered or hedged our loans. We had Acciaierie d'Italia deal with the Ministry. Generalfinance is a system operator at the service of the weaker Italian companies, the so-called special situations. We have been focusing on them, and over the last 20 years, we've specialized more and more. We also went on and started on the 29th of June 2022, we went the IPO way, and ever since, we've been working hard. We acquired Workinvoice this year. We are starting a digital small business activity. It was the idea of acquiring Workinvoice, and that set a department, an area devoted to small businesses, so to say. We opened our offices in Spain. We're about to open in Rome as well to be closer to ministries and the SACE universe, so to say, and all other state agencies that we constantly cooperate with. We move to page 7, and with some pride, we can say that we have almost hit all the targets that we had in our previous business plan. I was telling you that I rely on a very hardworking and skilled team, and we achieved EUR 3 billion turnover and exceeded that. We hit 98% of our targets as far as net income is concerned. Regardless of turnover, that is very important what you get is we hit 98% of our targets. ROE is 36%, and it's 100% of what we had planned. You see we are very careful and very cautious when it comes to costs, and we met the targets. Page 8, it's very interesting to see the story of this company, and I've always been committed to this company. It's very interesting to see how CAGR has been constant ever since 1991. I joined the company in 1988, so you see the pathway and the experience I have accrued over time. Starting from 2010, we had an interesting effect, meaning we had exponential growth leading us to managing about EUR 14 billion of turnover overall. The interesting thing is that in 2024, CAGR of 31%, you probably remember that we achieved it in one of the most difficult times in the history of humanity between 2020 and 2024, proving that Generalfinance's business model is counter-cyclical, if you wish. It's devoted and addressed to distressed companies who find it difficult to access the lending world. We've never had credit issues or problem, and we've never had problems with our NPE ratio. Our CFO will tell you more about it later on. Page nine, we see the presentation of our core business was developed, our activities that stem from. Bottom left, you see our clients are typically company that I define special situations because they are companies that are either in turnaround or find it hard to access lending, UTP companies, newcos that acquire maybe a business line from a distressed company. At the center of the slide, let me tell you that the central pie at the top of the slide is a breakdown of how our portfolio is actually broken down. 23,000 assigned debtors is broken down between Italy and abroad. The breakdown, as you can see, is also based on score. It's very important to read it. We'll see our terms as DSO, days of sales outstandings, and NPE ratios, because it's counterintuitive somehow. What we do with our customers and clients is we are the outsourcees. You see we manage yellow, black, and green. Red, sorry. In a minute we'll see that we collect receivables in a very fast way, and we allow our clients not to lose money. A weak company, a distressed company, first thing in the morning, a quarter past 8:00 A.M., there was a big fire we're working on. If you have a weak company turning to you, they need you to move fast. They need an outsourcee to manage receivables in an industrial way. As you can see, they need somebody who will collect their receivables, and normally we do with recourse or recourse factoring. We operate counter-cyclically. 75% of the market works without recourse, and we, on the other hand, instead, we have 25% without recourse, depending on the quarter, and the rest is recourse. The sellers, as you can see on the central part of the slide, the bottom side of the slide, sellers, there's a lot more yellow, red, and some green because there are newcos as well. If you break it down on the right-hand side, you see how we've classified by legal status. We have newcos that are yellow because newcos, even though they're highly capitalized, they're still weak. They've only just started their operation. The banking world is not supporting generally newcos. There are international funds. They set up newcos with EUR 30 million-EUR 40 million capital endowment, but there are no credit lines, no credit facilities to be able to manage working capital. You have distressed companies that are companies that have maybe a bankruptcy procedure ongoing. It's 43%. The performing part, high risk, pre-UTP is 54%. If we move on to page 10, it's interesting to see how we've grown also in our collection performance, DSOs, payment conditions. We've always improved our DSO. One and a half years ago, we had a declining growth, and then we started instead, a process of constant growth. We have a DSO that's shorter than the market. If you see on the left-hand side, we got very close to conditions, payment conditions that are very similar to the market conditions. As I said before, I always stop more and dwell more on the right-hand side of the slide, especially the first column is telling us how we manage receivables. 90% of our receivables, 92%, for 150,000 maturities that we've managed last year, they were collected on the due date. This is a huge advantage for our clients, but it also bears witness to how efficient we are for 150,000 maturities. If they're not paid on a natural maturity, it means there's a lot of work. There would be a lot of work. More interesting is 7% of the expired or overdue receivables. You have bank transfers, and normally they are booked a few days after the actual maturity. You don't get your bank transfer on the 31st, but a few days later. If 7% is paid within the next 30 days, so it's a very small residual amount, and it's still collected in the following 30 days. Page 11, as I said before, you see DSO, days of sales outstanding, growing, improving, always still below market data. Page 12, you see the usual slide we disclose where we show you our digital platform. If you remember, the very heart of our platform, the code writing, and the way it was written for the heart of the matter, the code was written in 1996. It's toward the back end. Ever since, the platform was renewed four times, and then redigitalized fully when Stefano Biondini joined us five years ago. You see the response rate. There's 76 of us, and we manage 652,000 transactions. When you talk about traditional platform, it's very important to have a very sound, well tried out platform. Interesting thing is that within our platform, we have all item lines, all maturities from 1991 until today. Imagine the value of these millions of records that are kept within our platform and that constantly provide us with information, with data. Very interesting also on page 13 is the stock performance. I am very, very satisfied with its performance and the results, the performance. Well, we proved the market that we can do our job well, we can deliver on our promises, and we were rewarded by the market with our stock price performance. If we compare ourselves against our peers, we are ranking first, and we also surpass companies that are very performing. It's very interesting to see, compared to the peer average on the right-hand side, how we have performed value-wise, performance-wise. We have generated values for our shareholders. If you move on to page 14, you will see that by leveraging the Capital Law, the CRR, with multiples, we've improved our performance and shareholding structure. We wanted to enable our company to grow constantly and protect our company to ensure its growth. We can see the results thanks to the shareholding structure, that's a very sound structure. On the left-hand side, you see the CEO of the team is part of the shareholders. We're focusing on our business. We're not focusing on anything else. This is very important. If you have to lead a company, that is of paramount importance. Just like soundness and being effective, that's typical of our Board of Directors. I congratulated our Board of Statutory Auditors because as a CEO, I could really see that we had a 3-year time span that was very sound, very reliable, and that really helped us creating value. Let's move on to page 15 now. Let me say that once again, turnover broken down in a greater level of detail. Page 15, you see how EUR 500 million per year are the different pieces of the puzzle that were added to the turnover until 2024. On page 16, it's even more interesting to see how net income has been performing. About EUR 5 million per year starting from 2022-2024. At this time of the year, we've witnessed a very interesting CAGR for our net income with a CAGR, as I said, of 40%, up 40%. Let me hand it over to our CFO, Ugo Colombo, to look at the details of how we performed over the year, and I'll get back to you soon. Thank you very much. Thank you, Massimo. Good morning, everyone. Let me start with some details. We'll start from the top, starting with the P&L. The first thing that comes to your eye is the growth of the top part of the P&L. Both the interest margin and net commissions have been growing by over 30%. In particular, the interest margin has been growing by 38% almost. You may recall in 2023, the interest margin had declined because of the rates that had affected our P&L, impacted it negatively, whilst in 2024, it was impacted positively. Just like net commission has had a greater impact than we've seen so far, then net banking income has been growing by 35%, so it has been much more powerful than the turnover growth. The other point, which you can see in the title, talking about the low volatility in the P&L. If you take a look at net value adjustments, that item has been more or less constant at just over EUR 1 million. There is a low credit risk impact on the P&L, while cost of risk has been steadily declining in the last three years. This has been a great accomplishment in that we've been quite good at managing risks, especially when financial assets have been growing by 30%, if you consider that the cost of risk has become quite steady. As Massimo was saying, costs have been growing as a result of the CapEx we had in the last three years, both for our digital IT platform, but also in terms of the fact that we have increased our headcount. I'm talking about both operations and top management, especially for receivables and operations. In 2024 has been growing as a result of an increase in variable personnel costs because of the good results we got in the 2024 P&L, closing over EUR 21 billion of net results with a CAGR amounting to 30% over three years. Let me also emphasize the loan-to-value, namely the percentage of loans granted relatively per turnover. We went from 79%-75% in three years. The level of protection then has been grown with over EUR 100 million buffer in non-advanced sums, especially if you compare it to nominal loans. Our risk profile has gotten even better as a result of more stringent risk control policies. Another point I would like to emphasize is the ratio between the net banking income and average loans, which more or less show the overall profitability of the portfolio. As you can see, in 2024, it goes once again above 9.1%. That's the net IRR of the portfolio net of funding, considering also the cost components, unlike the previous three years, where the indicator had gone down to a trough of 8.5% in 2023. We're still biased in terms of commissions, but that also depends on the rate dynamics, because this business model is heavily dependent, as Massimo said, on our ability to provide credit management outsourcing services, where the financial component is just one of the many components of our factoring service. In 2024, 75% of the P&L is accounted for by the net commission, while the net interest income only accounts for 25%, so much lower than our banking peers. Something else I would like to emphasize is how straightforward our balance sheet is. At the top you see then the breakdown between assets and liabilities. You see that total assets is almost EUR 100 million and consists of financial assets. Receivables, we acquire EUR 615 million on page 19, as well as liquidity, which is kept in primary banking institutions, EUR 122 million. As you can see, the balance sheet is quite straightforward, easy to read, and easy to understand for both shareholders and stakeholders. As for liabilities, at the end of the financial year, there was EUR 80 million total, about EUR 630 million. Later we'll see the total. At the end of 2024, we did confirm our robust capital ratios are flat year-over-year, but as we saw then, assets have been powerfully growing, so the RWA has been then offset by our income in 2024. Despite this, we still have some higher capital buffers than required by the directive. In terms of primary capital, the CET1 ratio, the capital buffer is over eight percentage points, so our CET1 ratio is almost three times than the minimum, which is 4.5% for non-banking 106 intermediaries. In terms of the capital ratio, then our capital position is quite robust with six percentage points buffer higher than the capital requirements. In the last three years, we have been steadily fine-tuning and optimizing our capital, saving on the RWA, especially as a result of what we've done on collateral guarantees, and especially for such guarantees that were then granted for some special positions. As a result, we managed to reduce the ratio between RWA and assets by 15%. On page 20, you see our funding position at the end of 2024. Take a look at the bottom part. The total available funding is almost EUR 1 billion. That's a substantial amount, especially if you look at the right-hand side in green, the bar, which is the counterbalancing capacity, so what was not used plus available liquidity, which is worth almost EUR 400 million. As we'll soon see, that allows us to fund the growth in the next three years with the existing credit lines. Something else I would like to emphasize is decline in the funding spread, that used to be 210 basis points in 2023. As a result of a different funding mix and also the steady optimization number of available instruments, we managed to cut it down to 170 basis points in 2024, thereby optimizing even more our net interest income. I was earlier talking about the risk provisions. As you can see, from 2022 to 2024, despite the multiple crises impacting the macroeconomic environment, we were able to then curb and reduce the cost of risk as a ratio between net adjusted value and then loans disbursed by five basis points. The NPE ratio has gone up by 60 basis points compared to 2022, and as we have been saying in other analyst calls, then the regulation has changed in terms of the new default definition, which as you may recall, had the minimum impact on GF numbers. As you can see on the right side, if you compare it to the average market, 5.5% of the NPE ratio and at the market value. UTP and the other than past due, then you can see we come up quite brilliant if you see Generalfinance on the right-hand side. Let me wrap up this part by showing you a breakdown of the different types of protections we have for the net risk. I was talking earlier about the insurance. If you'd add the acquired SACE insurances, plus the Allianz Trade, the EUR 60 million insurance for policies protecting factoring exposure, we have got about EUR 130 million insurance from insurance companies. EUR 100 million is that 75% percentage of advance. If you multiply it by the nominal value of receivables, that can be used for recourse factoring actions, so as to protect for any potential defaults. We've got about EUR 100 million of personal insurances that are used in our lines of funding. The net risk is worth less than half of the total of exposure, which amounts to over EUR 600 million. Let me now come into the future. For months on end, we have been working on how to best design the new Business Plan, how to make it achievable and feasible, whilst being conservative and cautious because of the many things I'm about to outline you. Top left, I'd like to draw your attention, which then refers to the first slide. Over the next three years, we think that Generalfinance will have a EUR 14 billion cumulative turnover, which is the same of the 42 years we saw at the beginning. There's something that actually caught me, impressed me. We'd like to generate EUR 83 million cumulative net income and distribute EUR 42 million shareholder remuneration. Another interesting forecast number is starting from to date, over the next 36 months, will be then granting EUR 42 million, including last year's income. As a shareholder, this is quite relevant, important, but it also matches our guidance before the IPO, and that will further confirm the growth sustainability that is the hallmark of this company, as well as its ability to then continue with the shareholder remuneration. Our ROE at 32%, total capital ratio, 13% with the issue of a small Tier 2 in 2027. 2027 income, 33 million. As you can see, we'll keep on focusing on costs with a 34% cost income. Our business plan is quite straightforward. Italy will keep on growing, and then we have always been specialized in this sector, and we'll continue to do that. And our operations in Italy will only focus on our core business, and they will be doing that also going forward. So our growth starts and originates from Italy. We'll keep looking after core business. Our growth was exported to Spain, where we started already, and the initial results are quite positive. The Spanish market is there. There is not a similar peer and not something like us, and there was an immediate response coming from Spanish companies. It was a winning choice. Now I can tell you something more about what I told you last year in fall, because now we've got the resolutions, and we are soon about to start operations in Spain. We started from the design and preparation stage to the time when we start actually disbursing loans. In addition to that, you may recall two years ago, we also then initiated the Swiss project, which is a clone of the Spanish project. We opened up an office in Madrid, and we are planning to open up an office in Zurich by summer or fall this year. This year, finally, the digital invoice discount platform will be then rolled out, and especially the Workinvoice, which will be specialized in the SMBs. The CFO Office has been steadily focusing on diversification whilst making our funding platform more and more powerful. Strategic partnerships are very important, and many more will ensue over the next few months. These are not just partnerships to pay lip service, and you may have seen it from what the CFO showed you. He was talking about EUR 131 million such insurances. That is what I call both a strategic and a product partnership. Such a project will start this year. If we move to page 25, we see some very interesting items. We've kept disbursing 50% of our work in a smart working mode. We are constantly assessing or evaluating our team to check performance, find possible issues. On average, we've had 25 hours of training per employee. We only had two claims from customers. We do not have claims normally, because that means you were wrong in how you processed your business from the very onset. Everything depends on experience. We have 42 years of experience, and that really comes in handy when it comes to deciding what you have to do or not to do. These are interesting data. These are interesting figures that tell you about the value of our business model. It's a very transparent business model, a very clear one, and not easy to attack by customers. We disbursed to local communities, we supported canteens, we supported those who are in need, and we disbursed EUR 600,000 to support local associations and projects. Personally, I am directly involved, and colleagues are also involved to support social initiatives. Those initiatives there are also devoted to protect our local geographies, to protect art and culture, but also to support those who are in need locally. We have a very interesting item in our operations. EUR 3 billion turnover also ensured wages to more than 50,000 people we actually support financially. The social aspect of our operations is of national importance. If we move on to page 26, we see a very interesting comparison between the factoring market, mainstream market, which is about EUR 300 million worth of turnover, the Italian market. You see instead, Generalfinance market, which is potentially EUR 40 billion of potential turnover, and we only account for 7.something% when it comes to our growth. Our growth in the Italian market is definitely a viable one and feasible one, and it's very interesting to combine all this data with the data you find at the bottom of the slide on the left. You see that companies, distressed companies, weak companies, there are thousands of them every year. From here to 2026, there are about 10,000 companies or enterprises that are at insolvency risk, and there were already 9,700 in 2025. The catchment area we draw from, and you'll see more in detail on page 27, is indeed an interesting one. Page 27, you see in bold, sorry, you see all the interesting information we want to highlight. We have countries where there is a potential increase of insolvency, Spain, Switzerland. In Spain, you see it's marked again, it's in bold, even more than in Italy. It's more likely, we're more likely to see a crisis. Ever since we got there, opened our offices there, we could see that firsthand. Page 28 It's interesting to see on the left, you see a breakdown of the Spanish market. From a regulatory viewpoint, it's a very simple market, and that indeed is favorable for us. It's not costly because our opening model, it's branches with one or two or three employees at the most in Regus facilities, real estate facilities, so very flexible. Micro setups that can be flexibly adapted on demand, and therefore opening costs for branches, it's very low. That's why we are seeing how we can actually duplicate this model, because it's a low-cost and low-risk model. This is paramount because we go abroad to open up just a few offices. We want to use our network, leverage our network, which is the one we have in Italy, and which is also available in other European countries where we want to have a stepwise development and growth of our operations there. Spanish market is slightly smaller than that of mainstream factoring, EUR 270 million worth of turnover. It's also interesting to see that the trend for distressed companies or insolvency risk is about 5,000 companies per year. There is a market there, and it's quite a big one. As we put in the notes, in the Spanish market, there's no player acting as specifically as Generalfinance is. On page 29, you see the same breakdown, but applied to Switzerland. It's very interesting to notice the number of companies. Indeed, we're talking about much smaller companies than in Spain because in the German and French cantons where the industry is most developed, you see there are about 7,700 companies at risk between 2025 and 2027. There, too, in Switzerland, we could actually ascertain with the local partners that there's room for us to grow because Switzerland is single banks, so to say. In Switzerland, loans to SMEs, it's mainly Lombard transactions. They do not get much access to banks. There are weak SMEs. We've seen quite a few of them, and they are natural outlets, so to say. On page 30, we disclose a small breakdown of Workinvoice history. This is a starting point. I mean, Workinvoice is a starting point, and the figures, the data we put in our business plan, imply a growing contribution provided by Workinvoice from 2025-2027. This year, they are up and running for the first time. They will work under our umbrella, and therefore they will develop the model that I have in mind, and that's the model I worked for the first 20 years of my life, so to say. On page 31, it's very interesting to see how within our group, the average age is 42 years. We invest in young people. We constantly invest in young people. It's very important because, on average, we want to have a low age, average age for our headcount. There's a good balance between males and females. At the bottom of the slide, you can see we are getting ready to achieve and exceed 100 people to get to about 130 people employed by the end of the business plan, 2027. We have a chapter devoted to human resources, to human capital. We've just hired, as of this morning, Maria Virginia Piccirilli, who has a strong track record and background in managing human resources. This new hiring in this new area, which reports directly to me, to the CEO, is of paramount importance if the company wants to grow and expand internationally, also when you have M&As and mergers by incorporation. We'll get to the fourth floor of the Generalfinance tower in Via Giorgio Stephenson. They'll be on the fourth floor, and they have to become a division of Generalfinance and not just an island detached from all the rest. Mrs. Piccirilli, and I would like to welcome her on behalf of all of us, she will be playing a fundamental role in our expansion process and project. We have our fintech and digital lending division that will be led by Matteo Tarroni, who is the founder of Workinvoice. On page 32, you see the main components. The turnover will get to EUR 5.3 billion in 2027. Net income in 2027 will be EUR 32.5 million. ROE will be 32%, and cost-income 34% by 2027. Again, we have two very important elements. I talked about being conservative and cautious before. Of course, we introduced a lot of novelties. We are expanding abroad. We are integrating Workinvoice, and so we wanted to introduce a much more meaningful NPE ratio and a doubled cost of risk, because we want to be conservative. The operations as we are leading them, they're part of our core business, so that is in our experience and our ability to do business. When you export a model, it takes some time for it to actually settle and start being fully operational. We might even make mistakes in implementing those new projects. To be conservative because of the way we are setting to operate and the way we are expanding, we really want to be cautious. This is not a target, of course. It's a non-target, but it's a buffer. It's a meaningful buffer we wanted to introduce. I'll hand it over to Ugo again, and then we'll talk again to wrap up a few more details on the figures going forward, starting from slide 34, where you see a summary of the macroeconomic scenario we've assumed for our business plan, data coming from International Monetary Fund. According to us, both in Italy, which is our main market, we have a 0.7%-0.8% for the next three years. That's the real GDP, how the real GDP grows, and also the markets we're going to enter in the next 2-3 years, Spain and Switzerland. It's still a favorable backdrop for a counter-cyclical operation as a business, as Generalfinance is. Inflation rate historically will still be low versus the average of the last 10 years, especially Italy and Spain, will be in excess of 2%. That also puts pressure on the profitability when it comes to manufacturing industries and commercial industries, which make up the largest part of our clients. Also over the last 10 years, the Euribor rate has been quite high. According to the last ECB estimates, rates will be above two percentage points for companies that have EBITDA margins around two, three percentage points that are our reference targets. There will be a further financial pressure on those companies, thus generating opportunities to be able to support those companies. Companies who, against this backdrop, will still find it difficult to be fully operational for the next three years. The top part of our P&L, we have projected somewhere margin, the profitability is more or less constant. NII, at the bottom of the table from here to 2027, we see a net interest margin of 200 basis points, which is basically in line with the average data between 2022 and 2024. Again, we want to be conservative, because there could be a possible erosion, especially on the corporate side when it comes to average pricing. Because depending on the medium size of the customers we are interacting with, this is growing. There could be erosion on the pricing side. We want to be conservative and factor that in. As far as commissions are concerned, in excess of 75% of our P&L is made up by that, and we are assuming a flat net commission income on turnover. We add up all the different commissions that we collect versus our turnover, 120 basis points worth of active commissions payables. And then we have funding costs, and we have costs to have an insurance guarantee on our turnover. So as Massimo was saying before, to be cautious, and we want to grow in new markets as well. So we have assumed an increase in NPE ratio up to in excess of two percentage points, and still that will still much lower than the market data, 5.5% on average. This is the asset fact average for the market. And a cost of risk, which against a conservative backdrop could increase, and it's already embedded in our estimate around 10 basis points versus five in 2024, and the average is around 6.7 euro cents over the last three years. We have factored in also and assumed in our estimate, a further increase in our business work invoice, 16 new NP, sorry, head count into 25. Expanding abroad, strengthening our core areas, business, credit, underwriting. About EUR 5 million cumulative increase in the next three years. We have assumed a very strong investment plan, both on the D&A part and in the yearly income statement, other admin expenses leading to an average, well, a CAGR growth of 19% between 2024 and 2027, which is in line with the historical average over the last five years, which was around 17 percentage points for total admin costs. As I was saying before, investment plan, which is confirmed and further strengthened for the next three years. On page 39, you see the two pie charts, total CapEx, about EUR 7 million and EUR 7.5 million in the next three years. You see the breakdown on the screen, and the idea and the objective is to increase the tangible assets. Our proprietary IT platform, together with a number of projects to really evolve the platform, services, products, electronic underwriting systems, you name it. We have about 75% of our investments for the year, they will be devoted, more than EUR 6 million devoted to our digital platform. The residual part will be on tangible assets, meaning the Milan offices, et cetera. Last two tables. The first one is the walk of the total capital ratio. You see a bridge, seeing the effects for the next three years, and more than EUR 80 million cumulative over the next three years. A strengthening of dividends of about 4.6 basis points, percentage points, sorry. We will have a very small favorable increase from the implementation of Basel IV rules, especially when it comes to calculating operating risk and the weighing of risk of counterparties rated by external agencies. A replacement of Tier 2 capital, it's 5.5 percentage point. There's outstanding from 2024, and the effect will be about, as I said, 50 basis points. We have the growth of our core business, RWA, which offsets the previous effect, therefore leading to a sustainable growth profitability in excess of 30 percentage points. With the resources available and the capital generated, we have double-digit increase without eroding our capital ratio, which is still around 13 points, with five points of buffer, which is equal for a total of 8%. Our improvement in RWA density, 72% versus 70%, as we had in the previous slides that were referring to 2024. Basically, the breakdown RWA remains more or less unchanged. There won't be any significant increases. As for funding, in line with the growth of our asset stocks, we will be then enhancing the existing funding lines, which will lead to over EUR 1 billion financial debt. As you can see here on the slide, the main instruments will be a securitization plan, or then just like the RCF that was recently renewed at the end of 2024 for further three years, whereby in the next three years then the senior line will be exploited to the full based on the existing amounts. We also assume a further incremental drawing of factoring lines for about EUR 100 million to integrate. Those EUR 400 million there are the existing counterbalancing capacity. So even if we could not then increase our funding base over the next three years, so with the existing funding base, we have 100% coverage of the requirement for the next three years. So which goes to show the flexibility and the strength of our funding ability. As Massimo said, it's a work in progress by definition, so we'll keep on probing and looking for alternative options to make the liability structure even more stable. Finally, let me talk about the funding spread, which is supposed to go down further as a result of the funding mix. We've got the securitization with only 120 basis points on the spread compared to the current average, 170. As a result also then optimization actions that were rolled out late in 2024, which will come to fruition over the next three years. As you can see, an increase in efficiency both in terms of size, diversification, and overall funding cost. The spread is confined to about 140 basis points. Let me go to page 45. CEO, we discussed this at the beginning of our call. As you can see, as a result of Friday, today's sprints, our stock price is at EUR 15. At EUR 12.95, we had already got an 80%, and 84% if you consider dividends too. That's quite relevant. I do not look at the stock price that much. I tend to focus on my business plan and to make the numbers, but I think that the impact is quite visible. As you can see, we had EUR 47 million in profits in the last three years, and that fuels us with further strength to be able to continue along these lines. A total of EUR 25.7 of dividends are paid out, and that's quite important too. The market cap is about to double in value if you compare it to the inception date. Page 46. Some final numbers here. For the next three years, we'd like to generate EUR 83 million of cumulative net income. EUR 42 million will be distributed as shareholder remuneration. Our dividend performance, our dividend yield, will get even better, up to 32%. Let me just wrap up. First, I'll allow people who are connected remotely to ask their questions. Our scenario is quite clear. Our activity is based first on Italian special situations and then also on Spanish and Swiss special situations. We'll be integrating the new Workinvoice and digital platform. We'll be diversifying also our funding sources. Finally, another tenet we have is that based on all the information we've given you, this is a feasible and sustainable and achievable business plan because the market is there. I'd like now to invite people then to ask their questions. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. To remove yourself from the question queue, please press star and 2. Please pick up the receiver when asking a question. Anyone who has a question may now press star followed by 1 at this time. At the time, there are no questions in the queue. Well, I'll give the floor to those who are in attendance here in the room with us. Thank you for your presentation. Irene Rossetto, Banca Akros. A couple of questions. The first one is about the risk areas in your plan, and then you also considered a buffer so you could outperform, you could do better than your plan. Also, given the backdrop, maybe there could be a different backdrop from what you assumed. In addition to Spain, are there other countries you are monitoring, or are these two countries the ones you're going to focus on for the time being? Well, risk areas in our plan, we can't see any, because we have 42 years of experience, and also we have been remodulating our plan. The CAGR is much lower than the CAGR we achieved in the previous four years, and therefore, that is of fundamental importance, the way we were cautious about it. We think, well, the conservative elements we've applied is, on the one hand, growth stems from a lower overall growth and from the integration of three new activities, Workinvoice business, the integration of the Spanish business, and the Swiss business. From that perspective, when it comes to our first line, as we've already said, we are using conservative criteria in our assumptions, meaning that our revenues will stay. Will retain their strength or stay flat. EUR 14 billion, of course, you have to reach that level, and you have to be conservative in your approach. The countries we are focusing on today are the ones you listed. I cannot deny that maybe we could be interested in other countries as well. 2025 for us is a year where we are really unfolding synergies, we are consolidating our operations, and before we focus on other transactions outside of Italy, we find it of paramount importance to really implement everything that can be implemented. That is to say, we have to have Spain fully up and running, Switzerland fully up and running. We have to make sure all parameters are going to be fully implemented, because one thing is announcing, and another thing completely different altogether is actually really enforcing that. So the DSOs are different from Spain and Switzerland. We will do a few transactions. We want our model to be fully up and running. We want to make sure we're not making mistakes, or if we make any, we want to be sure to know exactly what they are and how to mend them. And there are, of course, the figures were shared with you, and we were very conservative also in defining growth, especially for Spain, because Spain has a potential, and I can tell you some qualitative and quantitative data in that respect. Starting from the opening data, until today, we have about 10 companies on the table. So that means we're going to be very careful. But we could end up with a turnover of hundreds of millions of euro. But we don't want to lose money, so we want to be cautious in our approach. Also vis-à-vis this company, it's a conservative approach and then we'll see what happens. We'll see whether in the coming months, short DSOs and maybe by the summer we'll start and look at the situation, and maybe decide whether or not to put our foot on the accelerator pedal. Christopher Seidenfaden, Mediobanca. In the plan you have from 2025-2027, you give EUR 5.3 billion turnover. Of this, what would be Spain and Switzerland contribution? Do you have a conservative scenario, a boosting scenario? Could you elaborate on that? If you go to page 42, we skip this page, which is very information intensive, if you wish. There you'll find the breakdown of our turnover, EUR 5.3 billion overall, of which EUR 3.3 billion are the core business, factoring core business from Italy, special situation and core business. We have about EUR 417 million invoice trading and discounting. That would be contributed by the Workinvoice platform, and also includes a lot of retail customers that would then be rechanneled to digital factoring. For the two target countries, about EUR 350 million for Spain and EUR 220 in Switzerland. Those are the projections. There's nothing high-sounding or booming. I'm very well aware that it's not easy to start a business abroad. I'm sure you've found some openings in the markets, but are these EUR 350 million in Spain, is it a conservative scenario you are depicting there? Very cautious, yes, indeed. It's there, but we want to deliver on results first, so that's why we want to be conservative. We want to start with the right foot, so to say. We want to make sure things are working. This morning, as I said, we had a first meeting, so we have another company that also has offices in Madrid and has a stake in Spanish companies. The scenarios we have on the table tell us that the figures seem to be very cautious. First of all, before we can say that they are cons, we have to really sign the contract, disburse money, collect it, and then at that point, you draw your conclusions. Little by little, we can attack the market, address the markets. From October until now, last October, we are really starting the preparatory phase, the preliminary stages. We're not a big bank. Preliminary stages have to be performed very carefully, especially in a country you do not know very well. It could be notifications, with or without notifications. The MOU, it's like the Memorandum of Understanding we have with clients. We sign with clients before we start working with them. We've embarked on this journey. We don't want it to be an unexpected and very risky journey. We want to be scientific in our approach and not to have steps that are too long for us. For Switzerland, it's a nice figure as well, EUR 227.6 million. There you will only start business in end of summer, early autumn. Could you elaborate on how you think or what makes you think you can really deliver those results if you haven't started your business yet? For Switzerland, as we did when we started in Spain, we started with studies and with an open table with PwC, and we start our working tables a year before. We work with players and consultants that do specific special situation. Alvarez & Marsal in Switzerland, they have files as it happened in Switzerland. We've already started all the channels. We've already got in touch with all the stakeholders. Although we don't have yet any transaction on the table, I don't want to oversimplify, but our model is very simple and do EUR 200 million could be one client with EUR 50 million worth of facilities. With our figures and our average performance, even if we had just a few clients with EUR 20 million on average, that would still lead you over a three-year time span to get to a very limited, a very low number of clients. Our model, Generalfinance's model, is not focusing on mass market. We don't want to look for hundreds of customers. We've identified our headcount or the people we want to interact with. We've hired our people already, as we've done in Spain. First, we identified a manager, and then we started the business. As a consequence, the objectives were already discussed with the experts of the market, and so we gave them targets that are absolutely within their reach. Without those targets, those targets do not embed the strength we have, the boost we can give through our company at international level as well. I won't ask any more questions. Somebody else may. Good morning. Davide Rimini, Intesa Sanpaolo. Thank you for your interesting presentation. I've got a couple of questions. First, with reference to the future figures you're forecasting, you seem to be quite conservative, both in terms of the evolution of the turnover and also in terms of the cost of risk or cost of credit. I was wondering whether you could add some color about the existing plans in terms of the headcount, the size of human resources, because there seems to have been quite a marked increase in the headcount also than compared to the last three years. I was wondering whether you are being conservative in sharing these figures, too, or not. The second question, could you please then mention in passing some laws or regulations which could impact the operations over the next three years? Finally, just some clarification I need. You clinch a strategic partnership with SACE, and you also referred to another agreement with them, a broader framework agreement, not just in terms of the SACE insurances, but something more. Could you please expand on that a little bit? Ugo will address the part, the question about regulations, while I'll take the other two questions. Turnover, the cost of risk, speak for themselves. We are being conservative there, you're right, because if you're considering the size of our company, it behooved us. If you go to page 31, where we talk about the headcount on the day of the merger, we have 16 people coming from Workinvoice, and according to the Workinvoice plan, that should go up to 25 resources. So net Workinvoice people, net of 3 people in Madrid, so Spain, and 2 in Rome. You see that the total is quite in line with our growth plan. This is still based on the same parameters. It's just about arithmetic. That's the human resources we need for our operations, because please remember that the overall increase in the number of clients is quite small. We try to focus on few highly specialized transactions where we've got dedicated resources, and that's also secret of our international success, because we do not need to have many people working with us. We'll soon start with Compañía Naval in Spain, and that's exactly what we were looking for. That's the ideal size that we're looking for in order to then unfold our business model as well as possible, which does not apply to an SMB. Perhaps after one to three years, after we acquired some experience, we may export the digital lending fintech platform, but that calls for higher CapEx and more experience. That's why when going abroad, we start with our core business, and then we try to go for big size tickets, if we can. Before turning the microphone over to Ugo, just your final question about SACE. Well, that agreement concerns everything related to insurances, guarantees, then insurance or risk coverage. It's mainly a business agreement. Together with SACE, we designed a model whereby we work side by side in the field of high-risk organizations, which are not yet at risk of bankruptcy, or what you call special situations, while on the other hand, we help them out with distressed companies. There was a breakdown in these distressed companies because SACE can support us in terms of size too, while we provide our assistance. As for Acciaierie d'Italia, we are committed for hundreds and hundreds of millions of EUR. United, we stand. United can be stronger. We have been working on other national crisis, such as Piombino, near Elba Island. Please remember, once the acquisition of Ilva, Acciaierie d'Italia is completed as a result of this strategic partnership joint venture, we'll be able to be strong enough. Because we're large enough, we can also split both the funding and the risk. Thus, we can then leverage the factoring ability coming from both SACE and Generalfinance. These two facets, the fact that SACE is specialized in performing companies while Generalfinance is specialized in distressed and special situation companies. If you combine that with SACE BT insurance coverage, plus also SACE insurance coverages of a strategic character, which would have covered part of our funding. Some of them have actually then covered a lot of the Acciaierie d'Italia transaction, because without the SACE coverage, Generalfinance would never be able to then step into that transaction. We're talking about EUR 170 million, thanks to our partnership with SACE. As a result of all of these things, I may state the services that we can provide our customer base, companies, the ministry. The Minister Urso is directly involved in all small or big crises with MCC and all the other stakeholders. We actually come to the table as a structured organization with many options to provide. We have daily dialogues also with law firms. As a result of this, we come out quite strong, and we've got a very strong toolkit. Perhaps Ugo can address a question about laws and regulations. Well, I suppose four or five things may impact our factoring activity in the next three to five years. Once again, there is a new definition of default, and this is important. Because we are talking about how to best construe the new regulations, and the Bank of Italy has been mainly focusing on the public administration sector. Where we won't be involved over the next three years, apart from some minor transactions, some tax credits, which is not then affected by the new definition of default. That's why that is good for us. There won't be any impact on us in terms of the new definition of default. This has come out during the audits in 2023 and 2024. You may know the EU is thinking about reviewing the payment directive, even setting a payment cap 30 days without difference in the business-to-business transactions. Even though this directive may have a relevant, a significant impact, it's still at At the beginning, first a number of institutions need to be consulted. There is already a caveat, because should the counterparts find an agreement, the 30 days deadline may be extended to 60 days, which is not that different from what I showed you earlier in the Generalfinance slides. In this respect too, even if a new directive were to be introduced, provided that's feasible, especially in Southern European countries with all the financial impact on SMBs, even if that directive or that amendment were to be introduced, I think it would be easily managed. We talked about Basel IV, which usually impacts our financial intermediaries. As I said, we have a constructive impact of 15 or 16 basis points. Talking about the regulatory environment, there are two further regulations. One is the so-called DORA. I won't get too technical, but that provides for new requirements for the resilience of all the banking institutions, intermediaries, in the case of cyber attacks. This is one of the drivers underlying our EUR 7 million CapEx. I'm talking about cybersecurity because we need to comply with the new DORA directive, which is much more stringent than current requirements. We should not forget the corporate social responsibility for financial intermediaries. I think that in our case, it won't have a major impact. This directive, by the way, is being amended and reviewed so as to make disclosure requirements not as stringent as it was originally designed. By and large, we do not expect any major impact resulting from new regulations. We have a question from a remote listener. The next question come from Luca Carrello, Milano Finanza. Good morning to all of you. Thank you very much. Talking about strategic partnerships, you've talked about your agreement with SACE, which is very important for the contribution you can give to Italian companies, but you've mentioned it in the past as well. Are there other strategic partnerships or alliances that are underway, so to say? Could you elaborate on that, please? The answer is yes, both with Italian and foreign counterparties. These entities we are interacting with, I didn't say before that with SACE, we are also considering further developing activities where SACE already has a franchise or where we have a franchise and SACE doesn't. It's an agreement to provide, for instance, services through us. SACE is providing services to us in Spain, for instance. We are looking at more than one strategic partnership with entities that could be banks for de-risking activities. It could be funds that are buying UTPs or other entities that act as Italian servicers abroad or even other entities that put together all of these abilities that I've just mentioned. With these entities, we want to have strategic partnerships, as we did in the past with Premafin, for instance, to provide services, additional add-on services that enable these clients or partners to improve their collection abilities to be ready for UTP or pre-UTP. Sometime, companies who do not have access to loans, sometimes they end up entering the UTP universe, or maybe they are in a condition to have to manage on behalf of a bank, the collection activities with companies that are kept alive. If you give them vitamins, probably you will have better results in the end. I cannot name them yet because the agreements are all so far are subject to NDAs. As soon as we really finalize the partnerships, we will disclose it. This is the area where we are moving, both in Italy and abroad. Thank you very much. Any questions from those who are calling from the conference call or in the room here? Congratulations. More than a question, because I looked at you before the IPO, you really confirmed and really delivered on what you had promised. We understand the effort you put in to really achieve those results. Thank you very much, and congratulations. Thank you very much. Beforehand, I mentioned my team and the people who work with us, and we have a special attention on each and every one of our coworkers, because they all really have a strong sense of belonging. All stakeholders are also to be mentioned, all the entities we have a trust relationship, all the shareholders, our Board of Statutory Auditors, our stakeholders. We're like a Swiss watch, working perfectly, and we don't want to spoil it or have sand get into it. We're being very careful not to jam that watch, that clock. We want to be conservative. Especially for me, we've been building brick after brick. People who are close to me know exactly how important that is. We show our face, and we are more interested in really showing a good face rather than just focusing on the money. We think the plan is within our reach. 2025 had a good start, very good start. We are complying, we are in line with our plans. Now we have to focus, because we will meet you again in three years' time, and of course, we hope you will be able to thank us then, too. I'm very pleased. Thank you. We are Intesa Sanpaolo. The industry is undergoing a consolidation process, banks and specialty finance. Is this an opportunity or a threat for you? Indeed an opportunity. Opportunity. When there's confusion in the market, well, that enables us, for all the reasons I explained before, we stay focused. We stay focused on the business. It's a luxury. It's really not always have I been able to just focus on business. Sometimes I have to focus on something else. On other complex processes or within the Board of Directors, I had people having arguments or people not really thinking of the goods of our company. Now we are in an ideal situation, so we have to stay focused, and we are lucky enough to just be able to really focus on the business and really deliver on the figures we have disclosed. Versus possible peers who are trying to address the market or try and copy our model, we are really well ahead of them, and we want to really keep up with our speed. The speed we can have, it's thanks to our corporate soundness, thanks to our shareholders, we're very sound. I said congratulations to my Board of Directors starting from our Chairman, Professor Dall'Occhio, and he's been releasing interviews, and he is a person whom we treasure having in the company. It's really being able to rely on soundness, have sound Board members. We will further strengthen the company and the Board as well. It's a working team, and it works across the board. This is really what makes the difference. From this very situation, I just think we have to keep on working in the best possible way. If there are no further questions, I'll have you know that next door, we've got the Business Club Duomo 18. If you'd like, it would be a pleasure for us to have you and drink something together. Thank you.