doValue S.p.A. (DOV) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to doValue Capital Markets Day. Our event today is titled Leading the Evolution of the Credit Servicing Industry. And hopefully, by the end of the presentation, you'll be as excited as we are about the prospects for our company for the next 3 years and beyond. My name is Alberto Goretti, and I'm heading Investor Relations for the group. Together with me here at Rome today, you have Andrea Mangoni, our Chief Executive Officer; Manuela Franchi, our Group CFO and General Manager of Corporate Functions; and George Kalogeropoulos our Group Chief Operating Officer. Also connected from Athens, we have Theodore Kalantonis, heading our activities in the Atlantic region and connected from Madrid, we have Francesc Noguera, heading our activities in Iberia. We have a pretty packed agenda today. We're going to go through the presentation in a couple of hours and then I'll leave 1 full hour for Q&A. So without further ado, let me hand it over to Andrea to get started. Over to you, Andrea.

Thank you, Alberto, and welcome, everyone. So Slide 5. Slide 5 is on our business model, we reiterate our commitment on our consolidate and straightforward business model. Our clients are banks and investors we have their asset under management, and we perform collection for same. Our company is capital light. Our investment in assets are extremely limited just to align our interest with the interest of our clients. The visibility of our revenues and cash flow is extremely high, thanks to our long-term contract and the indemnity fees protect our cash flow in case the assets are sold by client. Our business have a significant barrier to entry because of the scale and because of the high indemnity fees. So all in all, our long-term visibility is extremely, extremely, extremely strong. Moving to Slide 6. We have experienced strong growth since IPO. We doubled our gross book value. We had a threefold increase both in gross revenues and EBITDA. While we improved from 31% to 34% per our EBITDA margin in the last 5 year. Moving to Slide 7. Growth means diversification for doValue. Today, doValue, is a completely different company in comparison to the company we IPOed 5 years ago. At the IPO time, we were in just one country. Today, we have well diversified and balanced presence across Souther Europe where we are the undisputed leader in our industry. At the IPO time, we had just three clients: UniCredit, Fortress and Intesa. Today, we have a wider and balanced client base with more or less 70 7-0 different clients. And when we IPO the company doValue was all about NPL. Today, the situation is completely different. We have, I think, the broadest product offering in Southern Europe with value proposition spending from non-performing loans to performing. Slide 8 is on our successful track record on acquisition and integration. The contribution of the acquisition to the growth of the company was significant. In our historical core business, the sizable steps in terms of acquisition where the acquisition of Altamira couple of years ago, and the acquisition of the current doValue Greece back to June 2020. Today, we are investing in digital platform to [ broaden ] digital capability, both to support our core business and expand our offering to [ early ancient ] market. We will back on this point later on because it's an important point on our new strategy. Moving to Slide 9, we have proven to be a very resilient investment proposition. This slide is on our cash flow generation and operational resilience. From the IPO, we generated more or less EUR 350 million free cash flow and pay down to our shareholder EUR 88 million. We reimbursed debt for EUR 166 million. And the leverage of the company went down from 2.6x during pandemic to the current more or less 2x. So the financial structure of the company is solid, I can say rock solid. And our cash flow generation was driven by [indiscernible] of collection. This performance was extremely strong. at the IPO time, our collection rate was 2.4% versus the current 4. Slide 10 is on the execution of our previous business plan. If we look back to our previous business plan back to November, 2019, I think we missed some financial target basically because of the pandemic. But we have carried out all the operational and business action we committed on -- at the IPO time. Amongst the different action, I said before, I think the most important right now is the diversification in terms of product. We currently have a very complete product offering across the credit value chain. And we can further increase leveraging on our experience in the different countries where we are operating right now. Moving to Page 11. This slide is on the main driver that supports the growth of our industry. I think the three main ones are: First of all, in the short-term at the end of the Moratoria and the upstick in new NPE formation expected from this year onward. In the medium run -- and this is important because this will be both for Stage 3, so no performing exposure and Stage 2, so high-performing exposure. In the medium term, I think the main driver will be the switch in the originator space from the banks to the investor because when the current public intervention in the credit market will come to an end, the -- our client base will switch from the securitisation vehicles to the investors. Because the historical investor will be back to the market, and we can leverage on our strong relationship of some of this -- of those investors such as Fortress or Bain. In the long run, the main driver will be the tight banking regulation and ECB pressure for the bank to delever as soon as possible. On Slide 12 because of the end of the Moratoria and the tight banking regulation, I said before, a substantial formation of new NPEs is expected in the 5 countries where we are. Our view is confirmed by PwC, and it means an NPE formation of around EUR 200 billion from 2020 to 2024. And this is with a conservative default rate, as you can see in the right-hand side of the slide. So the magnitude of the increase could be higher. Next slide is on -- we have on next slide a snapshot of the pipeline we are looking at. Market is very active, market is very active. And we are talking about more or less EUR 17 billion addressable market in the 5 country where we are this year. We put in this slide description of the current pipeline. The project where we are working, we are working on at the moment. And we are extremely positive on our success rate on this pipeline because of our preferential strong relationship with some of these originators. We put a key message on Slide 14. We are the dominant player in Southern Europe with a blended market share in the region of 20%, 25%. And we want to protect our current market share in our core business. But our aim is to expand the business of doValue to all categories of loans, as I said before, including Stage 2, Stage 1, so performing loans. And the market is sizable we are extremely positive on what we can do on it. But this opportunity is not included in our business plan, I mean, in terms of figures, economic and financial results. On Slide 15, we summarized the different phase of our strategic evolution. Now we are in the third phase. And the third phase means leading the evolution of the credit servicing industry through investment in technology and in parallel strengthening strategic and long-term partnership with banks and investor in a broadened reference market. Again, a broader reference market means our expansion across the credit management value chain. So we want to do -- thanks to our investment in technology, better what we are doing and we want to be in the condition to address a new sizable and profitable market. This brings us to Slide 16, where we laid down the 5 strategic pillar of doValue 2024. These pillars are: Grow, Enhance, Transform, Innovate and Care. Let's take them one by one. So the first one is Grow. Our growth will be based on our strong origination capacity. We have had EUR 9 billion mandates per annum in the last couple of year without significant capital deployment, plus EUR 5 billion of new inflow. All in all, EUR 14 billion per annum. This is an important number because our guidance in terms of growth was something around EUR 10 billion per annum. So our origination track record is extremely, extremely strong. Talking about our business plan, we will replicate this inflow per annum, so EUR 14 billion. And I have two comments on it. The first one is, this year will be key because on top of the new EUR 14 billion, we have to onboard more or less EUR 10 billion of mandate are already secured and to be onboarded next year. So for a total of EUR 24 billion. My second comment is on the EUR 14 billion acquisition per annum we put in our business plan. I think this number could be conservative because it's in line with our previous performance. And we do not include in this projection, the impact in the -- of the new formation of the NPE, I said before because of the end of the Moratoria and the impact of the current crisis. So $14 billion it's important number, but I think it could be a little bit conservative. The second pillar is Enhance. In the next three year, we will continue to enhance our product offering through cross-fertilization across the different market and leveraging on the best practice within our different companies. And on the right-hand side of the slide, we described the expansion of the product portfolios by country versus the status quo. And as you can see, the enhancement is tangible. The three pillar on Slide 19 is Transform. One of the strategic project in our business plan is the so-called doTransformation project. The aim of the project is extract more value per AUM unit. And at the same time, lowering the cost per unit and reducing the breakeven point of the company for the benefit of the EBITDA. We are talking about EUR 55 million investment for global and local transformation. The impact of this investment will be extremely positive because we foresee a run rate of EUR 25 million per annum after 2024. This is the backbone of our business plan. This project is paramount. And this is why Manuela and George will drill down on it later on, on this presentation. Moving to Slide 20. Slide 20 is on innovation. For doValue, innovation means doing better what we do already and learn to do more to expand our reference market. We will pursue innovation, both internally and through acquisition. When I say internally, I means the doTransformation project, I said before. The innovation budget will be well to 10% of the doTransformation plan, OpEx and CapEx. About acquisition, we have a solid track record on the matter. In the last couple of year, we build up a partnership with Debitos for doLook platform to enter into the NPE secondary market. We bought QueroQuitar, Brazilian fintech, and BidX1 an Irish proptech company. And we have a significant acquisition plan. Neither the acquisition we did over the last couple of year, not the pipeline are factored in the business plan in terms of positive economic and financial impact. Moving to Slide 5. Slide 5 is on Care. doValue plays a special role in the financial ecosystem because we support the bank to continue lending. And through this way, foster economic growth and employment. As a proof of our commitment to act professionally, responsibly and sensitively, we have the best-in-class ESG rating. We are extremely proud of this result. And we will continue to commit ourselves on it for the benefit to all our stakeholders. Slide 22 is on our sustainability targets. We published our sustainability plan, which contain several quantitative target and we will provide regular update on it to the investors community. Lastly, Slide 23. On Slide 23, we wrap up our financial target to 2024, and we reiterate our guidance for 2021. On our guidance for last year, I think based on our result in December 2021, this guidance could be a little bit considered. But for the time being, we reiterate our guidance. And we put in this slide the indication we want to give to our Board of Director in terms of shareholders' distribution. We want to distribute to our shareholders $0.5 dividend per share for last year. In terms of financial target 2024, we foresee an EBITDA CAGR significantly higher than the revenues CAGR, a 15% CAGR in our net income and substantially conservative deleverage profile dividend -- after dividend payment. So our commitment in terms of dividend policy is pay to our shareholder dividend per share CAGR at least of at least 20%. It means more than EUR 200 million. We can potentially increase even more our dividend payment through additional dividend distribution or share buyback in case of limited M&A. Talking about M&A, last slide is on consolidation opportunity. We think consolidation, it's important because our industry needs scales. And because through consolidation, we can have definitely better pricing environment. We see some consolidation opportunity in Spain because the SAREB process currently underway will reshape the structure of the Spanish market and in Italy, because of the contingent weakness of some of our of our competitor. So we are monitoring this M&A opportunity. But again, hypothetical M&A will not affect the dividend policy we are committed on. Thank you.

Thank you very much Andrea. Very interesting overview of what we've achieved since IPO and what we are set to achieve in the next 3 years. So the next part of the presentation will drill down on the 3 different regions. We have in our portfolio, Italy, the Atlantic region and Iberia. So over to you, Andrea, to kick start on what we've done since IPO on the Italian business, and what we are set to achieve to 2024.

Okay. Thank you. Thank you, Alberto. So a quick presentation on our situation and perspective on the Italian market. Since IPO, we have been focused on preserving our AUM around EUR 80 billion. So our main aim was offset the impact of the aggressive deleveraging process of the UniCredit. I think the impact of this deleveraging process has been compensated by shifting GBV towards new clients. And the best example is the securitisation market because in the last couple of years, we won 75% of the GACS awarded. This is important because it's another demonstration of our strong origination capabilities. And secondly, because we did it without any capital deployment. At the same, we announce our product offering and we entered into the UTP and Early Arrears market, and I will drill down on it later on, on this presentation. And in terms of financial results, we protect our EBITDA in a couple of ways. The first one is we protect our premium fee. This is a key driver in our results because despite the quite aggressive competition. We stay at premium in terms of fees for the benefit of our EBITDA. And the second point is the increase in the efficiency of the company. Our cost reduction plan mitigated the impact of the competition on our EBITDA. And just to give you an example, we reduced our FTEs by more or less 20 - 18% in the last couple of years. Slide number 27 is on the servicer market in Italy. We are the leader of the market by far after several years and despite the increase in competition we experienced in 2019, and in 2020. As I said before, in this competition environment we protect our premium fee both base and variable. So our current outlook is stable. Slide 29 is on the expected upstick in formation of new NPE in Italy Moratoria expired after almost 2 years, so we see a material increase in the NPE formation, EUR 90 billion from 2020 to 2024. And this growth, I think it's a little bit conservative because, as I said before, the default rate is extremely prudent, something in between 1% and 2%. We are active in all segment of the credit value chain. Here, we have a clear example of diversification and the cross fertilization between country because we are starting with the first pilot with an important bank from January this year on Early Arrears. So we can enter this new business leveraging our experience in doValue Greece. Another example of diversification on Page 30, and the example is the successful case of Efesto, Efesto is a UTP fund. The aim of the fund is restructuring corporate with turnaround potential. We have currently 12 banks participating to the Efesto fund. The asset-under-management are EUR 700 million and we are targeting for this year at least EUR 1 billion asset-under-management. The profitability of this new product is extremely interesting because we are talking about an EBITDA margin higher than 60%. So in terms of strategy, we said strong origination capacity and product diversification. The third pillar in our strategy in Italy is cost reduction and operation and optimization. Here, we have some details on the cost containment action performed so far in Italy, this section have yield savings for EUR 8 million per year from 2019 to 2021. And in terms of projection, we see additional savings of EUR 4 million per year. So to wrap up, our quick deep dive on the Italian business. We expect results mainly driven by our strong origination capacity, lending the asset-under-management of EUR 81 billion in 2024. The improvement in our efficiency and productivity will foster the EBITDA growth. So we foresee an EBITDA 2024 EBITDA in the region of EUR 40 million, EUR 45 million. So with this, I will hand over to Alberto.

Thank you very much, Andrea. Extremely interesting insight on our Italian business. Let's now move on to the Atlantic region with Theodore Kalantonis, who should be connected from Athens. As you know, the Hellenic region was boosted through the acquisition of FPS back in 2020, and it's a very important pillar of our plan to 2024. So Theodore, over to you.

Thank you, Alberto. Good morning from Athens. Starting from Page 34, the Hellenic region is the crucial component of doValue's 3-year business plan in terms of GDP, EBITDA and cash flow generation. We have big ambitions for this region, and we already possess a number of unique features, which will best position our company in order to capture new business opportunities in the years to come. To start with, doValue is the only truly independent credit and [indiscernible] service in the Hellenic region. In terms of size, we are the biggest service in both Greece and Cyprus, #1 in Greece, #1 in Cyprus. Moreover, we have developed a strong expertise in the Greek HAPS securitisation market, also borrowing skills and expertise from the very successful GACS track record of doValue in Italy. We have already shown our ability to grow our book in the region by winning crucial mandates, such as Frontier, Icon in Mexico. Looking forward, we're very well positioned to gain the most out of a very attractive pipeline of primary and secondary transactions, which is ahead of us. Specifically, we are actively looking at concrete transactions totaling more than EUR 13 billion of gross book value, EUR 9 billion in Greece and EUR 4 billion in Cyprus. The Hellenic region is also where doValue displays the most complete and developed product offering. And this, for sure, will allow us to remain competitive in the next 3 years. In particular, we are very strong in all segments from the NPLs to UTP and to Early Arrears. In addition, our REO capabilities are well advanced, particularly in Cyprus. In terms of financial results, the contribution of the Hellenic to the doValue Group is very accretive. The EBITDA margin of the region is above the group average, and this is mainly due to a concentrated market and the fact that the Hellenic services market is still at an early stage of development compared to more mature markets such as Italy and Spain. All in all, we expect that the marginality premium is likely to continue going forward, also supported by our front-loaded transformation plan. In particular, a significant push will be made in the next quarters in order to improve the productivity of our personnel in both Greece and Cyprus and being in line with the group [indiscernible]. Let's now shed some more light on the region. Moving on to Page 35. On the left, you can clearly see the dominant position of doValue in the region with EUR 38 billion GBV under management and a market share of almost 30%, followed by CEPAL and Intrum. You can also see the high level of market concentration with the top 4 services controlling 80% of the market. It is also important to note that the National Bank of Greece, is the only major bank that has not sold its credit service operations, has recently awarded to doValue the servicing contract of Frontier, a EUR 6 billion GBV securitisation transaction, the first HAPS transaction to be executed by GBV. On the right, you can see the current status of fee structure in Greece as well as its outlook going forward. Currently, the blended average of bases around 15 bps, while the respective blended average of collection fee is around 10% of gross recoveries. The outlook of both fees look stable, mainly due to the high consideration and the less mature phase of the market, as previously mentioned. Let's move now to Page 36. On the left part of the page, you can see a bottom-up estimate of the new NPE formation in the Hellenic region, based on a number of external sources. Let me drive you through this. At the end of September 2021, the NPE ratio of the major Greek banks was 15%, well below the historical record of 47% back in 2016, but still quite far from the final target to go down to less than 5% in the next 2, 3 years. Same for Cyprus. In terms of absolute numbers, this implies that currently, there is an excess of over EUR 10 billion of NPEs sitting on the balance sheet of the banks in the region with the latter trying to eliminate them by selling portfolios outright or by securitizing that. On top of this EUR 10 million to EUR 12 billion of excess NPEs, Pricewaterhouse, as Andrea mentioned before, estimates that another EUR 14 billion of new NPEs may be created in the region. So in total, the bottom-up estimate of new NPE formation in the Hellenic Region amounts to around EUR 24 billion in the next few years. As you can see, on the right part of the page, the above bottom-up estimate is roughly consistent with our top-down assessment based on various default rate scenarios. On Page 37, you can see that in the Hellenic Region, doValue has a very complete product offering, spanning from NPLs to REOs to UTPs and Early Arrears. All these product lines have significantly contributed to the revenues in the last 12 months, and we have plans to continue doing so in the next 3 years. In particular, we intend to maintain our leadership position in the NPL segment and in the [ HAPS ] securitizations while at the same time, increase our productivity and improve collections per unit of GBV. In addition, we see opportunities to consolidate smaller servicing platforms in this segment, which is an attractive proposition in terms of capital allocation for the doValue Group. In terms of arrears, we are planning to leverage on the recent acquisition of a minority stake in BidX1 in order to enhance our activity in Cyprus, where BidX1 is already very active. In addition, we would like to continue to grow our UTP and Early Arrears offering, thus capitalizing on our strong historical track record, particularly in Greece. Lastly, in terms of other services, we certainly see an opportunity to do more in the region and where we have already started to actively deploy our due diligence and underwriting capabilities for a number of investors, including Fortress Bank. Moving now to Page 38. In the Hellenic Region, we are proactively embarking into a transformation journey in order to improve our operational efficiency, reduce costs, and protect our margins. Greece was the first country to get into this journey since the last quarter of 2020, and the first deliverables are to be live as we speak. Cyprus will follow suit by the second quarter of this year. Main deliverables will include end-to-end simplification and leaning of the processes, setup of digital capabilities, especially for unsecured credit and enhancement of the RM service model for secured exposures. In terms of economic benefit, we're very confident that the above transformation initiatives will yield significant savings by 2024. Specifically, we expect to achieve over EUR 12 million of annual cost savings by 2024, which is around 20% lower of the 2022 cost base. Let's move to Page 39. Concluding my presentation on the Hellenic Region, I would like to focus on 4 key takeaways. First, the services market is expected to remain vibrant in the region, also boosted by a positive macroeconomic environment. We remain very confident that we will continue increasing our loan doValue book during the next period. Second, in terms of fees, the currency structure is favorable and above the group average, while the outlook looks stable. Third, we have already initiated a holistic transformation plan, expected to deliver significant savings in our cost base and thus set us not only to maintain, but further improve our margins. In particular, gross revenue per FTE are expected to increase by [indiscernible] from [ 135k ] today to almost [ 220k ] in 2024. Last point. Currently, the Hellenic Region contributes to the group EUR 100 million gross revenues and an EBITDA of EUR 80 million, implying a margin of 46%. Our strong commitment to the group is that in 2024, we will deliver EUR 260 million gross revenue, EUR 150 million of EBITDA and the margin over 50%. Thank you very much for your attention. Alberto?

Thank you very much, Theodore. I think this presentation really reinforces the strategic rationale of our acquisition of FBS back in 2020, which allowed us to enter the Greek market, but also the importance of the acquisition of Altamira one year earlier, which allowed us to enter in size the market in Cyprus. Now let me hand it over to Francesc to go through our business in Spain and Portugal. Francesc, over to you.

Thank you. Thank you, Alberto. Good morning, everyone, from here in Madrid. If you move to Page 41, Alberto, please. Now when it comes to Iberia, our present profile, in some extent, is very similar to the one that Italy had before the IPO. In terms of customers, apart from the usual suspects, Santander and SAREB, we have started already this diversification journey. So we are acquiring new customers, mainly investors, third parties. And we are quite positive that with this new wave of [ MBs ] after the post-COVID crisis, we may be able to acquire even more and more customers. In terms of GBV, we have managed to maintain the GBV above EUR 40 billion by offsetting collections and real sales with inflows and new portfolios. And one key issue here in terms of GBV is going to be the SAREB outcome, but I'm going to drill down on that afterwards in the presentation. When it comes to products, we are enhancing our capabilities in terms of NPLs. You know that Altamira is very strong when it comes to reuse, but in NPLs, we see opportunity and upside. So we are betting on that and also on deploying legal services to new customers. And finally, when it comes to financial results, well, you know this expiration of the SAREB contracts means the expression of 1 of the 2 large contracts with an upfront fee that were paid some years ago by Altamira and the substitution with conventional servicing contracts with tight margins. Therefore, it's very important to engage in transformation. Transformation of the operating model so that we may be more productive and to make our assets more profitable. If you turn to the following page, please. Now when it comes to the market, the servicing market in Iberia, it's quite fragmented. There are many players. Many of them are strong. Still, we are the leader in the market and as you can see here in the -- on the left side, only 3 of us, doValue, Hipoges, and Copernicus, are pure services and also marked by the star. You can see that many of the present services in the market are working one way or another with SAREB. Last year, we managed to acquire close to 2 billion new portfolios so that we are still growing, and we want to grow even more in the coming years. In terms of fee environment, if you go to the right side, banks and investors, both are growing to -- reluctant to pay base fees. They favor -- they feel more comfortable on collection fees or performance fees because they feel they are more aligned or they managed to align servicers on their interest. So when it comes to base fee, the market trend is a decrease. And the outlook is that it will continue this way, while collection of performance fees are increasing and our outlook is that it will be the same in the same situation in the coming years. So if you move to the next one, please. In terms of NPE formation post-COVID, we don't see a huge wave of new business, but there's an uptick for sure. And out of those EUR 90 billion over the next 3 years, we think that the dominant profile will stem from SMEs that have been quite affected by this crisis. So it's something that I will discuss afterwards, but we are deploying a model to manage SMEs, particularly when it comes to NPLs to take advantage of the market that is coming after the COVID crisis. If you move to the next one, please, Alberto. So in terms of revenue streams in Iberia, again, NPLs, we feel that we can foster our product offering. We are basically managing NPLs in general, but we want to have this particular model for SMEs. We are deploying that, working on that with our Italian colleagues that have more expertise on that. Also, we see a growing appetite by banks in Spain and Portugal for securitization of portfolios, and we're also deploying capabilities to be a player on this sort of product. And also, our transformation plan is addressing an increase in collections by FTE over the next 3 years. In terms of REOs, we are the market leader. We have a stronger the strongest player in Iberia, but still, with the transformation, we will do a fine-tune of the model to even increase productivity. And also, we are leveraging on this new digital channel, BidX1, that the group has invested in equity, as Andrea mentioned before, we see a great future in also opening our channels to this digital channel. In terms of real estate development, this is a business line, which was mixed with our core business. Servicing business was developed with Altamira, and we think that there is a very interesting market opportunity for a player in Spain in these business lines. So we decided to spin it off from the company. We created a new comer that was this month in January called Adsolum, and it will have its own strategic plan and identify capabilities to make it grow over the years. In terms of UTP and earlier arrears, well, this is quite a nonexisting market nowadays in Iberia. Banks have historically been reluctant to outsource this type of loans to servicers. But given the market trends and the regular trends that Andrea mentioned before, we think there will be an opportunity here, and we are working also in value proposition to be deployed in the coming years along with our Italian and Greek colleagues that are more expert in these products. And legal services well, this is a very strong practice in Altamira, and we think we can outsource these services to new customers, and we are working on that as well. So if you move to next page. Now SAREB, well, this is the flavor of the month or you could say, the flavor of the year. We are presently 4 servicers working with large contracts with SAREB, the ones on the left side. Altamira, we manage around EUR 24 billion assets when the contract expires. That will take place in June this year. We will be managing around EUR 22 billion more or less. And you know that this is a contract that we got in 2015 by paying an upfront fee of EUR 174 million. When it comes to the scenarios, our base case in this business plan is that we get awarded a contract by SAREB. Having said that, it's more about GBVs than margin. Why is that? Because there is a large competition to get a new contract. 6 contenders were invited to the [ RFP ]. And the market consensus is that the final fees will be significantly lower than the present one. So the impact in EBITDA is really marginal in our business plan, while the impact in GBVs is substantial because we could grow from EUR 22 billion to EUR 26 billion. So EUR 4 billion additional GBVs, but still what I mentioned in terms of EBITDA, it would be marginal. And the alternative case is that we don't get awarded a contract, again, in terms of EBITDA, it will be marginal, and we would have to regularize our businesses so that we aligned resources to the new verticals that we are creating. If you turn to the following page, please. In terms of transformation, well, this is paramount for Altamira and the reasons are -- well, this new paradigm in the market of conventional servicing contracts instead of upfront fee contracts. So that means tight margins. And then in the case of Altamira, specifically, a more granular portfolio and each portfolio as well. So we need to transform the company. It's something that we are also very engaged in doing so, not only in Spain, but also in Portugal, both countries. We launched transformation plans in both last year, and these plans are addressing processes, data, organization, technology. So in the end, we are switching from manual base processes to very technology-based processes. The goal in the end is to raise productivity, both in NPLs and in REO going forward. So if you move to the next one, please, Alberto. Now to wrap up on Iberia, the headline here for sure is the expiration of certain contracts in June. Having said that, if we get awarded a new contract, as I mentioned before, really the impact in EBITDA is marginal. So we enter this new paradigm, and we need to adjust the company to a new reality. The decline in EBITDA will be significant in 2022 because of this reason of the SAREB contract, and we expect to grow at a very fast pace in the following year so that in 2024, we managed to stabilize the EBITDA around EUR 40 million and a margin of 21%. That would be, to some extent, a better quality EBITDA in the sense that it will be based on a more diversified business, more customers and more products and also a business that doesn't rely on upfront contracts anymore, but on conventional contracts. And just to mention here that this 21% EBITDA will [ indiscernible] the SAREB contract [indiscernible] . So that's all. Thank you. Thank you, Alberto, and I go back to you.

Thank you very much, Francesc. Let's now deep dive on the transformation plan, which both Manuela and George are leading doValue. So Manuela, over to you.

Thank you, Alberto. To introduce the transformation plan, it's important to do -- to go through the transformation that the industry has gone through in the last 5 to 6 years. As you know, most servicers were created out of spin-off from banks. So with very rich contracts due to the fees paid upfront. The banks have delevered during the last period, selling the portfolio to investors through securitization, which have market fees with lower margin and more diversified client base. So our organization has adapted and anticipated these clients' needs and adapted the cost structure in certain countries. This is going to happen as we here from Francesc, so in other countries. So we are changing with an agile responsive organization to these changes. On top of it, we have grown through acquisition. So the complexity we have achieved with our presence in 5 countries with a very wide product offer, today much more than it was at the time of IPO, will add to such complexity. We want to make the situation an opportunity for us, not a challenge, and we are able to do so with our transformation plan. The transformation is focused on satisfying clients' needs. So clients are the first focus. We have adopted a global model to do so, which will use our people, our new managers, our capabilities, and our culture, to make sure there is a significant change in the way we operate and in the way we deliver our results. Let's focus now on what has been done. This journey has started already at the time of the acquisition of Altamira. We have created the basis for the future deployment. First, we created a unified governance model with 3 regions. Corporate structure concentrated at group level with functional reporting at a local level. So there is a significant coordination between the activities at group with the activities at local level, and the opposite from local to group. We have created a virtuous circle of spreading now best practices, which will be helpful to create the pyramid on the right side. Grow revenue with more collection by GBV managed, more services on the GBV managed and announced the product offering. Second part is optimize cost and CapEx, innovation will allow us to reduce the breakeven point and announce our scalable structure. Last, this will allow us to maintain our leadership position in the industry and increase returns to deliver superior profitability for our stakeholders. Let's analyze one by one all these pillars. First of all, grow revenue. This will happen through different actions. Enhanced products and client breadth. We today have a strong business development team at group level with group product experts, which are the one which have been driving the expansion of the product offer to the different countries. As we had told you 2 years ago, we were going to deploy real estate in all the regions and today, this is a reality. We have a platform, we have revenue in all the countries from REO activity. Our product experts are working with the local teams, which are close to the customers. We need to understand the clients' need. We need to be able to anticipate their needs and therefore, change our organization, our products and our systems to satisfy their needs. Clients are of paramount importance. Happy clients provide higher remuneration. They find more business on a regular basis. This is important to protect our fees and our GBV. Obviously, we monitor that with the client satisfaction service and with improvement products programs. Second, we need to offer, and we are doing it, more client -- more products to our clients. The last step of this journey has been done in all the countries and will be done even more in Spain with the deployment of earlier years and UTP services. This will enable to achieve higher revenue per GBV, growing from 38 to 40 basis points from '21 to '24. Last, we will work even further on our collection through data. Through more accurate recovery curves, advanced analytics, and stronger capabilities, we will improve client experience, and deliver more collection per GBV managed. Here, we have a challenging but very much doable result of growing collection by GBV from 4% to 6%. We have done it in the last 3 years, growing from 2% to 4%, and we already recovered all the COVID impact. As you have seen, we were at peak at 4.2%. We will close this year at 4%, and we will do more from that. Let's now focus on the cost side. Many of you know already our cost structure. A significant portion is represented by people cost and a reminder by IT costs for around 5% of revenue and general costs or real estate costs for the rest. Our aim is to improve EBITDA margin by 500 basis points by reducing, obviously, the contribution of all these costs to the revenue. The big enabler is our group structure, which is instrumental to achieve margin uplift through better use of our population, better management of procurement, and overall IT and infrastructure, and operation strategy, and reduction of office footprint. Going to people's strategy. We expect a flat headcount in the next 3 years. This doesn't mean that our population will not change. We expect around 25% rotation of our population to focus on productivity. So population will enter for HR cost, we reduced as a contribution to total cost. And we represent less than [ 35% ] of revenue by 2024 compared to 40% today. This will be achieved to 3 main levers: tools, efficiency, and alignment. Tools. What we mean by tools, we will increase standardization of processes. We will reduce complexity. IT will help us to do so with increased GBV/FTE by 4% between 2021 and 2024. Higher efficiency. This will happen by redesigning the routine of our asset managers, simpler task enabled by technology. We have mentioned in the past, the big projects we had in Italy to merge our NPL platform. This project is now concluded. We have a superior platform, one platform, where asset manager will be able to help -- to work in a simple way, focusing on their core activities. All in all, this will happen and is happening in all the countries with an uplift in revenue by FTE by almost 20%. Last, this is possible only through alignment of interest through the all population. First of all, as a key managers, and also our top managers who more recently joined, Theodore and Francesc, we are strongly incentivized in terms of long-term value creation. More than 65% of our remuneration is variable. Almost 50% of our variable remuneration is stock. All our population has long-term objective, and has also a very strong short-term objective aligned to the long term. Asset managers are remunerated every quarter on collection on EBITDA and revenue growth. This is very important to deliver the growth we are planning in the next 3 years. I leave now to George, who is our Chief Operating Officer of the group, to deepened down into the -- all the other initiative at cost and CapEx level.

Thank you, Manuela. Talking about OpEx and savings after your group CFO is a challenge on its own. And what a subject. Almost all of our competitors and the great majority of the financial services declare that they have a transformation program in place, and yes, we do have a transformation program in place. So allow me to present to you why our transformation program is a different one. We are already in the process to consolidate our backbone. This covers IT, operations, procurement, and data management, but -- so -- and this -- allow me to say, it is a holistic approach. But why we are consolidating. We are consolidating because we want to maximize the synergies across the group. We want to optimize our cost base, and to achieve a better focus, and reduce the implementation risk of our global roadmap. A very diversification factor of our transformation program is that it serves not only the needs of the group, but the needs of the countries as well. We have already created 3 regional hubs, one in Madrid, managing Iberia region; another one in Athens, managing the Hellenic Region; and our group hub in Rome. The number of back office will be reduced at the location of our back-office operations will be reduced by 40%, and we expect to concentrate activities in 3 main countries: activities from loan management, [ after invoicing ], and property management. We have already established the so-called on One doValue IT. We are moving from 5 separate IT organization to One group IT with 5 local ports. IT services like infra, securities, and management of common applications will be centralized. Such an IT strategy will give us the opportunity to materially reduce by 60% the number of our data centers from 18% in 2021 to 8% by 2023. So moving on to the next slide, please. This is all about our back office transformation. Our first step is to become leaner with reduced complexity, having the local transformation programs as the main vehicle. A series of initiatives have been already rolled out in many -- in most of our countries. And it is the operational excellence, a key success factor, actually, not only for the cost side, but to support our front line and our revenue streams. The next step will be to create, establish our first back-office hubs by the end of the year. This involves all the standardized and optimized services at the regional level. We are planning to install common applications like core banking, ERP, document management, workflow platforms, et cetera, to support such activities. The last activity is about finding the right balance between outsourcing and in-house. Our strategy is to first optimize then consolidate to make outsourcing an attractive option for us. All in all, we foresee to progressively reach an annual saving of 15% of our total group operational cost base by 2024. Now moving to the next slide, please. And yes, IT is the real focus here for the next 3 years. We do consider IT as an enabler rather than a cost center. The main key drivers of our IT strategy is to significantly reduce complexity, reaching a level of 50% and increased the number of common platform by 40% across the countries. As I mentioned before, we are going to centralize the infrastructure and the security services while we have already decided on the security upgrade program. Data platforms, data is the main asset of our group, and we have performed significantly -- significant investment so far to upgrade our data platforms in Greece and Italy in particular, while we expect to establish, implement an enterprise data platform by the end of 2022. Innovation, it was mentioned already by Andrea. It is changing. It's about changing the way we are doing things, but offering new service capabilities to our business. We have already established our innovation center and our innovation forum and have already assigned a dedicated budget just for innovation. Last but not least, it's about our people embracing our program. It is our One doValue IT strategy that will support this activity and also help us leverage the best skills across the group and directly increase our capacity. We have set a series of ambitious targets and KPIs that we strictly monitor throughout the organization. Just to name a few, we're going to reduce the number of our application inventory from 224 applications to 124. We're going to reduce the IT spending as a percentage of revenue of 12% in 2021 to 8% in 2024, which is below the competitors' benchmark. We're going to increase our IT spending innovation as a percentage of CapEx from 2% in 2021 to 10% in 2024, which is above the benchmark of our competitors. And all in all, we are going to have a CapEx of EUR 42 million in 2022 on top of the EUR 30 million we spent in 2021, and we expect this situation to be normalized in 2023, declining to close to 3% of the gross revenues. The reality is that we are facing a stable IT cost, despite the heavy investments in the upgrades that are taking place while the revenues are growing. Moving on to the next slide. It is true that we are already realizing the benefits of technology. We are having our doValue Greece subsidiary leading the way and our digital journey is not a dream, it's a reality. Here, you can find 7 initiatives that have already rolled out in our production since Q4 2021. The first one is about advanced messaging system that supports massive campaigns, but personalized services as well. We are already supporting digital signature internally and externally, mainly for the contract signing process. We do receive requests already from our website, orchestrated by RPAs. We are following a 100% virtual eKYC process. We accept the payments powered by Mastercard. We have already initialized our virtual RM meetings focusing on [ SB, RM ] and corporate clients. While we have upgraded our IVR system to support automated authentication that will help us increase our capacity of the customer service function. It is our One doValue IT strategy that will help us transfer all these significant capabilities to all of our countries according to their business plan needs. More self-service capabilities have been planned for 2022 and 2023 across the organization, across the group. Now moving on to the next page, which is the last cost saving component. It's about procurement. Our procurement has both qualitative and quantitative targets. The first one is about creating a global partner ecosystem with a local reach. Having the right balance between local and global players, it's of paramount important for the implementation of our IT strategy. While we have to achieve a saving of 3% to 5% out of a portfolio of EUR 100 million by 2024. Our procurement department is already working on this direction with tangible results already like our office footprint. It has been reduced by 60 offices in 2018 to 39 offices in 2021, and we foresee to go even further down to 30 offices by 2024. This is a total saving of EUR 1.5 million. Let's move to the next one, please. This is a high-level road map of our transformation journey. I think it was evident enough that our transformation journey is not in a piece of paper, it's already here and active. We already delivered significant accomplishments from the integration of Altamira and FPS up to 100% outsourcing of our Italian back-office operation and the initialization of our digital journey. But 2022 is the year that makes a difference to our transformation program that leads to a better doValue by 2024. This is a more productive, more efficient, and more profitable group than today. Thank you very much. Alberto, this is with you.

Thank you very much, George. So just to summarize, we went through the strategic vision for doValue 2024 with Andrea; then the description of the market structure in each of the 3 regions in which we operate; the challenges and the opportunities we have in other countries; the transformation plan, which is clearly a key component of our business plan. And now Manuela will go through how all these aspects translate into numbers. Over to you, Manuela.

Let's -- all these slides are important for you to understand how we have under control all the levers we have just described to you. And now they develop into the financial targets we indicated at the beginning and which we will summarize at the end. First, a dynamic of gross book value. We don't expect to grow GBV by a significant amount. Why? We plan to win, and to be on the market, and to secure new contracts in a relevant manner. As mentioned by Andrea, we are assuming EUR 13 billion every year on top of that EUR 10 billion, which we already won. This is for each of 2020 to '23, '24. But we are increasing collection. This means that we are going to reduce our GBV every year. So all in all, slightly increasing GBV for this effect. Why we think we can increase collection? We are rotating our GBV. Almost 25% of the GBV will change in the next 3 years, and we have assumed new contracts for EUR 14 billion each year in the last 2 years. So more has changed already, and you will see it in the numbers this year. All in all, new GBV means the fresher vintages, especially those who come from flow agreements. Most of our new additions come from Spain, from the Santander contracts, almost EUR 3 billion every year, which means very young vintages. Better vintages obviously have a higher collection. For this reason, we are assuming a write-off to less than 1x collection because we expect to collect more and therefore, the remainder, which is written-off amount is lower. SAREB is assumed in this projection, but as Francesc said, it's a GBV model rather than a profitability model. Because in the flip side, if we were not to be awarded SAREB, we would reorganize the structure in order to deliver same revenue and mostly same EBITDA profile. On the regional mix, obviously, you have as a growing GBV in Hellenic Region, and in Italy and a stable GBV in Iberia ex-SAREB effect. Moving now to the following page. We expect a growth of revenue by 3% to 4% per annum. So it means the revenues will increase by 1.2x by 2024. This is with a mid-single-digit contribution of Hellenic Region, and the low single-digit contribution of the other 2 regions. Fees are expected to be stable apart from the contractual arrangements, so the changes already embedded in the Eurobank contract and the change in the SAREB fees. We are assuming limited disposals or almost no disposal on the Eurobank book as it has been announced by Eurobank itself. But even if this was -- assumption was going to change, we have already managed the disposal through Mexico and the disposal of the [indiscernible], so during this contract had very strong fees. So we are not afraid of this potential change. Outsourcing costs are expected to remain at around 12% of revenue with indemnities to be in line with historical amounts in 2022 and reduced in the next 2 years. Moving now to the cost structure. We expect to grow EBITDA margin by 500 basis points. So all in all, EBITDA will grow by 6% to 7% per annum. The contribution to -- the cost side is different over time. On HR side, we will decrease the contribution to 35%, while the other cost items will slightly decrease as a percentage of revenue. However, the other cost line items are instrumental to make the lower contribution of the HR cost. We are using technology to reduce the contribution -- the growth in EBITDA in terms of contribution of HR costs. So because we invest in IT, we will not increase HR cost. Real estate will be declining because of lower location and this effect is not much on the cost side, but rather on the liability side because of the IFRS-16. And we will continue to focus, as we have done in the last 3 years. On SG&A by reducing all cost items and streamlining even more cost group functions. It's important to understand that the drive in collection, which is driving also the improvement in EBITDA margin, it's due to -- mostly to the existing book and to the renewal of the existing -- of a better penetration of the existing book on top of the younger vintages brought by the new contracts. This is particularly important for Spain compared to the other regions. In fact, in Spain, we are working on the current GBV by growing how much we actively manage of that book. That's why the new addition are not significant what we expect in the Hellenic Region. We are talking about EUR 1 billion to EUR 2 billion per annum. Different dynamics in Iberia and Italy, where the NPE offload by banks is expected to be higher. The margin in the different region will have a different dynamic, but it's important to say that while for 2022, we mentioned that we expect a stable EBITDA vis-a-vis 2021 indications, this doesn't mean that we are not growing in 2022. This is a very important point. 2022 as a decline in EBITDA due to SAREB by EUR 20 million. So of the circa EUR 200 million of EBITDA, we back -- the organic basis is EUR 180 million. So we are effectively growing by 10% from EUR 180 million back to the guidance we have given for 2021. So a significant step up due to the new contracts coming on board this year, and to the new business that we will win this year and to the cost initiative we have initiated and will foster more growth this year. All in all, the pickup in the next 2 years will be driven in all regions by the components we just mentioned. In the following page, you have a directional trend in all the markets where we show a stable GBV, growing revenue, and a much stronger growth in EBITDA. Let's now focus on the net income dynamic. All in all, we have almost 2x growth of net income -- ordinary net income, and the higher than EBITDA growth is driven by 3 -- 2 elements primarily. D&A, we are reducing significantly the contribution of D&A of the existing contract. But please don't forget that we are adding Frontier, which was paid, and therefore, we have an additional amortization for that. And we are adding CapEx in 2021 for around EUR 30 million, and 2022 for around EUR 40 million, which obviously amortized over the next years. So declining D&A trajectory, but more declining on the contract side less, so obviously, on the new CapEx, which created a total. On the risk provision, we expect obviously this to be driven primarily by the exit scheme. So we will continue to rejuvenate the workforce with voluntary exit scheme. On the interest cost, this is quite easy to project given that we have 2 bonds outstanding with very clear cost and the difference is driven by IFRS-16 adjustments and amortized cost of financing. Last, we expect a blended effective tax rate of around 25%. We have done minorities, which contributes between EUR 12 million and EUR 17 million over the plan per annum with stable partners being Eurobank in Greece and Santander in Spain. Let's now focus on cash flow. We have talked about our transformation plan, which has already done significant progresses in 2021. Obviously, we will go into the details at the year-end results with EUR 30 million investments, primarily driven by the plan in Italy of the merger of the platforms, and the plan in Greece of the change in the operating performance because we want to be, in 2023, 2024, a leaner organization also in Greece. We will go down to industry standards, which are usually between 3% and 5% of revenue. We will be on the lower end due to the transformation journey done already in 2023. In terms of free cash flow generation, we expect to produce more than EUR 300 million. This is pre-dividends and pre-M&A with an acceleration, obviously, in 2023 and '24, just because in 2022, we have a higher CapEx spend. All in all, we want to protect our shareholders from the dynamic of the net income, so to secure constant growth in dividends because we expect the cash flow to drive deleveraging and therefore, to go beyond the D&A dynamic, which impacts the net income. In terms of financial structure, we have even strengthened our sources of liquidity by growing our RCF lines by around EUR 40 million. We mentioned that this is a pre-M&A and pre-dividends. Our M&A strategy is 2-legged: one in-market consolidation. Why? Allow us, even if it's -- we are not active or in the case we are active, to protect fees and to grow fees in a consolidating environment. We reduced the number of competitor. It will help us to expand the product offer in the easiest way and achieve revenue and cost synergies in a more efficient manner .In this market, we have obviously already experienced the Altamira and Eurobank transaction that have been completed in terms of integration, but the market offers more as Andrea has mentioned. On the right-hand side, it's important to focus on what is next in terms of technology. We want to decrease even further correlation with credit, NPL and GBV cycle. Move to a less labor-intensive model to be more a technology model, less HR-intensive with the products and offer, which is complementary to current offer to expand our reference market. We have done some steps in this direction, but we will do more. Like we did in 2018 and then in '19, we have told you which are the areas where we wanted to grow, which were the markets where we wanted to grow. We didn't include them in our financial targets, but we did what we had planned and what we had promised to you. And we will do so also in this next phase. Just a snapshot again on our targets. So growing GBV, but pro forma for the contracts won, it's quite stable GBV, growing collection rate from 4% to 6%. EBITDA revenue CAGR by 3% to 4%, EBITDA CAGR from -- of 6% to 7%. Growth in net income per annum by at least 15% and financial leverage in the medium term around 2x, at peak around 3x and use of free cash flow generation to remunerate shareholders and to make acquisitions. All in all, we are delivering -- we expect to deliver to our shareholders, only through dividends and EPS accretion, more than 30% of our current market cap. This is clearly summarized in the last page of the presence of this presentation, where you can see the dynamic of all these components to make appealing for our current stakeholders and future stakeholders to invest in the value. I leave the final remarks to Andrea.

Okay. Thank you. Thank you, Manuela. So we tried to get across the sense of our recent journey and what lies ahead of us. Our 2021-2024 business plan is ambitious, but it's not out of reach. I really believe we can do better leveraging on our strategy on the [indiscernible] market. And as Manuela said, before the impact of the strategy, it's not included in our financial target, so you can consider it as a solid, credible option value. I believe we have all the ingredients to succeed, both in terms of growth and in terms of delivering our at least 20% CAGR dividend per share we are committing on. But the main ingredient is the management, the top management team of the company. Both the manager, you are familiar with. So Manuela, my right hand, she sits on the left, but -- and the new component, so Alberto, Georgios, Theodore and Francesc, first class manager now really to answer your question. Thank you for your time.

Thank you very much, Andrea. It's 12:00 sharp. So it's quite remarkable. We managed to stick to our plan. Hopefully, it's a good sign. So as customary, we now open for questions. [Operator Instructions]. And then I'll take them and redirect them to the relevant people here in the room or connected remotely. So I think I see the first questions come from Borja Ramirez at Citi. Good to hear from you, Borja. Go ahead.

Yes. Thank you, Alberto, and good morning, and thank you very much for the very detailed presentation. It's very useful. I have 2 quick questions, if I may. The first one is related to the future inflows of any new contracts. I would like to check if you expect this to be more skewed towards banks or maybe investors. In relation to this, also, it would be good appreciated if you could kindly provide any details on any potential opportunity from NPLs related to the government guaranteed loans where some banks are mentioning there could be an increase in NPLs related to loans. And then my second question, just to check if I understood correctly, you expect to prioritize capital return over M&A based on your -- on the target, as you mentioned of the dividend growth. Is it correct to assume that you would first pay dividends and/or share buybacks, increasing leverage to 2x net debt to EBITDA by 2024? And then any potential opportunity that may arise would be on top, and leverage could go up to 3x in the highest scenario? Would this be a correct assumption?

So maybe just to start from the last question. So your understanding is correct. So we will fine-tune our dividend policy to remain at around the 2x level. I think if you calculate the dividend per share at 20% CAGR, you might end up slightly below 2x by 2024, which means that we might actually increase the dividend. And we could also do share buybacks as a complement to the dividend. And clearly, the 3x leverage is only something that we will touch through M&A. It's not something we will go towards with the dividend policy we have in mind. And then maybe on the inflows, Andrea, maybe you can take this one.

Okay. In terms of breakdown of the inflow in our plan, more or less 20% will come from banks and 80% from investors. The investors market includes the securitization project. And this is an important stuff because, as we said before, we are currently dominating the securitization market, both in Italy and in Greece. So we are quite positive on it. On the public guarantee scheme in Italy, our plan do not include the impact of this in terms of NPE generation when the public guarantee will expire. We are working hard on it. This is why I said before, I think our strategy on the [indiscernible] market will be important in terms of value creation because I presume the switch of the current loan from stage 3 to stage 2 when the guarantee will expire, will produce a significant increase in the high-risk component of the performing loans.

Thank you, Andrea. And anything else, Borja?

Thank you. That was very clear.

Okay. Thank you very much. Good to hear from you. The next question comes from Nicholas Binda, Intermonte. So Nicholas, please go ahead.

I have 3 questions. The first one is related to SAREB. So the base case scenario embeds the renewal of the contract. I was wondering, looking at the alternative scenario, how much could be the one-off cost in order to carry out the restructuring process. And always in -- regarding Spain, what are your assumptions for the tax claim in Spain? The second one is related to the unlikely-to-pay segment. I was wondering if you could provide us some colors about the remuneration in this segment, so base fee and variable fee. And the last one regarding the potential buyback program. Do you have in mind the target price or multiple target to look at in order to decide if carry out buyback rather than cash distribution?

I will take this question, Nicholas. So on the SAREB, not a renewal case. The one-off cost we estimated is around EUR 10 million. But on the other side, we will not have to face the cost of the new operating model that SAREB would impose us. As we have said in the past, moving to SAREB new model means also a -- new contract, means also a new operating model, which has around EUR 5 million to EUR 6 million of cost. So the net difference is pretty much EUR 4 million in the 2 scenarios in terms of a one-off effect. For the tax claim, we are proceeding as we had communicated to you in terms of actions to the insurance as we have already recovered a portion of it, and we expect by this year to have outcome from the judges. In the meanwhile, to be conservative, we have not included recovery. So it will be an upside to our net income because as you know, that would be an extraordinary element given that it has been fully expensed last year. Maybe to go back to the previous question was posed by Borja also on the leverage. Obviously, with the dividend distribution we have mentioned and the free cash flow we have mentioned, we will be able to go below the 2x from a financial standpoint, and we will use that capacity eventually to return more. So going to the last point on share buyback. It's -- we haven't defined a share price of reference. We would like to see also the dynamic this year, taking into account eventually a trade-off from [ higher ] distribution because that's also an option through dividends and the share buyback. So we will obviously make a proposal by the time the [ GM ] will approve the dividend for the 2021 results. In terms of UTP remuneration, I think we should probably go back to a slide which was in the Italian section, which speaks about the Efesto Fund. There, we have mentioned the profitability of our UTP book, which is accretive. So we have a revenue model with around 100 basis point base fee, so 1%. So as you can appreciate, it's much higher than what you see to a couple of pages before in terms of base fee on the NPL side. Collection fees here, they're not collection, they are restructuring fees, which are not very different from the -- in terms of amount, a percentage of restructuring compared to the NPL. So obviously, from these 2 dynamics, you can see why the EBITDA margin is substantially higher than the one of the NPL business.

All right. So I see Andrea Lisi from Equita, next in line. Andrea, over to you.

Thank you for the presentation, really clear. I have several questions, I hope you can answer to all of them, maybe we can split in 2 groups. The first one is if you can provide some examples of additional services you can provide -- you're interested in providing maybe developing it internally or through an acquisition. Second one is on EUR 13 billion, EUR 14 billion indication of new inflows per year if it is reasonable to continue to assume a forward flow -- impact from forward flow in the region of EUR 5 billion. Or if it is expected to be a bit above considering the end of moratoria and so on. And if you can provide us an indication in this EUR 13 billion, EUR 14 billion, which will be the weight of the secondary market in both especially Italy and Spain I imagine. Another question is on the slide where you provided the EBITDA of the last 12 months starting from September ending September 2021 in Italy, Spain and Greece. Obviously, the last quarter -- the first quarter last year was more impacted by the COVID than the last quarter this year. So if you can provide us some indication about the real figures for 2021 in Italy, Spain and Greece in terms of EBITDA. And related to this point in Italy, we see an EBITDA margin that ends in the region of 25% in 2024. That is a level which is quite below the pre-COVID levels, which was target which was achievable in -- also for you to come back to the pre-COVID levels. So if you can tell us what has changed or what are your assumptions there? And very last one, sorry for the number of questions, is on Italy and Spain. We see a significant drop in the EBITDA margin, obviously in Spain also because of SAREB. Why should not we see the same thing also in Greece? Especially in Greece, we are observing -- on the one hand, a good growth in terms of revenues for gross book value, a 15% increase. Just wanted to understand which are the most challenging assumption you have assumed there and also which are the contingencies you've taken if some things go different from what you expected?

I can take this question, Andrea. In terms of additional services, taking into account that we have deployed the operating model and the operating system and the team working on the real estate services in Greece and in Italy much broader than what we used to do in these countries, all in all, in Italy, you can recall that we used to do only valuations and auction facilitation. We have deployed the technology that allows us to manage assets so when the assets are reprocessed, which is a trend we are seeing has started. Was supposed to start earlier, but due to COVID and to the blockage of the auction has delayed, but now it's reality after the end of that limitation. Assets are being repossessed, will be sold. So there is a process of commercialization and management of assets, which is important. Second, Early Arrears means managing a smaller ticket with a continuous flow from the bank to the service and then back to the bank because the main aim is to bring them back to performing, which is something we didn't -- we were not used to both in Italy and in Spain. Obviously, Greece has specific contracts with Eurobank and they have done it historically. This is a new trend for Italian banks for sure. Andrea mentioned the pilot project which we are starting with the major Italian bank, and there will be more because these banks were not focused on this asset class before. They were just receiving the Early Arrears not doing anything about them and waiting that if they naturally go back to performing or they go down to nonperforming status. Now because the amount of NPE production could be significant, following Moratoria, they are actively doing strategies to do that. And we want to be ready to service all of these both in the Italian market where it's a reality and from next year also in Spain. Securitization. Securitization is our probably stronger tool -- strongest tool in Italy and has been in the last 2 years. GACS our securitization, HAPS our securitization. It's something which has not been a reality in the Spanish market and in Portugal. And we -- it is going to become a product there very soon. Legal services. Francesc has mentioned, this is done just as support to the NPL strategy so far. But we have the capabilities in house -- and we have the ability to do it as a job. We do it already in Italy. It's a revenue line and that will be a revenue line and not just a support to NPL in Spain from next year. Andrea, I leave to you for -- but these are just examples. The other one is on the data side, where we have data quality enabled by technology in Italy and we will do so the same for the other countries. I leave it to Andrea to address the topics on Greece and Spain.

Yes. You are right in terms of projection. Greece is extremely important, both in absolute and in relative terms, I mean the Atlantic region. The reason why the situation of the Atlantic region is completely difference in comparison to the Italian and Spanish one is, first of all, because the market dynamics are completely different. In Greece, we are currently experiencing an extremely high and higher growth of the market in comparison to Italy and Spain that for NPL are right now mature market. But in parallel, the competition is significantly lower. We have three, I mean, important player in the Greek market. Meanwhile, the Italian and Spanish market are still extremely fragmented. So all in all, in Greece, you have higher growth and lower competition for the benefit of the fees first. The second reason why is on top of the first class, really first-class performance of doValue Greece because the result of the company last year were impressive. The different is in Greece, we have today in the same situation where we were in Italy and Spain a few years ago. So just to be simple. We are -- we and our competitors are deploying capital to enter into a long-term contract. So the feel of this long-term contract are set to remunerate the capital deployment, I said before. So in terms of EBITDA margin, the result is the situation, it's apparently definitely better than the situation that we have in Italy and Spain.

On the fee side, there is an evidence which is different from the others. You can see it in the Greek section. Now here, it's not only Greece but also Cyprus, while in the past you used to see Cyprus from before under Altamira. So you need to take that into account as well. And Cyprus has a higher profitability. The main point is the investor fees in Greece has -- have actually been increasing. So it's quite the opposite than the effect of the competition, bringing fees down in the market. This is an evidence because here, we are projecting what has happened in the last 2 years. So we have experienced better contracts because there are little services, and they want to work with us. And the results achieved on the book managed are over the business plan. All in all, going back also to your question, Andrea, regarding the EBITDA margin of Italy, the main reconciliation from the pre-COVID levels is that one in the pre-COVID, we were already assuming the obviously, inclusion of the other countries. So the improvement to the target was driven also by the other country. And then we saw a shift, a very strong acceleration of the sale of portfolio of UniCredit, which obviously had a higher margin business to fees at a market level. And this is why probably the target was around just below 30% margin and we are 25%. And the remaining gap is explained by the group function. We concentrate all the people which work for group even if they are located in other parts of the organization under the Italian cap. You had other 2 questions. One was on the inflows. The historical inflows were -- targets were, on average, EUR 8 billion of new contracts and EUR 2 billion of new inflows. Now we are talking about EUR 13 billion, which is EUR 4 billion to 5 billion of inflows and still around EUR 8 billion of new contracts. So we are not increasing the forward flow beyond these levels. So this could be one of the contingency you have been describing or you have been asking for. The other one is definitely on the fee side, because of the experience we have put ourselves assuming new business on the lower end of all the contracts won in the countries where we are assuming new business. So in all the new countries, we are assuming the lowest pricing, we have achieved across new clients. In terms of EBITDA margin for this year, we confirm obviously our guidance, which is driving an EBITDA margin around 33%, 34% for this year, as I said, based on guidance. We prefer to announce the final year-end results on the 17 of February.

Thank you, Andrea, and thank you, Manuela. I think the next set of questions will come from Andreas Markou at Berenberg. Andreas, over to you.

Thanks very much for presentation and taking my questions. Most of them are actually a follow-up of some of the already asked questions. The first one is on the margins in Italy. As the previous analyst mentioned, your expectations seem a bit, let's say, undemanding versus historic and also versus Q3, where margins were actually 26%. So you explained, obviously, the reasons with the group costs and the UniCredit portfolio sales. But despite that, I mean, given that the product mix is changing in Italy. I mean, you mentioned, for example, UTPs having margins higher than 60%. And then all the kind of other ancillary businesses, Early Arrears, et cetera, should also be beneficial to margins. So are you not basically baking in a bigger share of revenues from these high-margin businesses, offsetting the impact you mentioned earlier? So that's the first one.

Andreas, we -- okay. We -- I do like -- I give the financial answer, and Andrea, obviously, the more strategic and holistic one. We want to be reasonably conservative in our expectation because we really want to deliver on our plan. And this is the main message we want to give it to you. So we have assumed accretive new products. We have -- we will do on the cost side, better than we have indicated. We have assumed like as you saw, additional initiatives, but the historical one have been super achieved. You might recall, we spoke about 7%, 10% reduction in FTEs. We did a reduction of 250 people out of workforce of 1,200, which means more productivity because people out, but also people in with, obviously, more specific experience and background on the new things we are doing. So we would rather achieve better results, but promise what we are strongly comfortable with.

I think Manuela was clear enough from my side. Andreas I prefer to have a discussion on this point on February 17 because as Manuela has said, probably on this point, we were a little bit conservative.

Okay. My next question is on the kind of REO and UTP businesses. So I remember a couple of years ago, mentioning a lot about the UTP market, how it's going to bring a lot of new GBV, both profitability, et cetera, et cetera. And it's actually moved a bit slower than what the market and I think what yourselves have been expecting. So what is your conviction today on the UTP market and also the REO businesses going forward given that maybe learning from the historical lessons of maybe the market moving a bit slower than what we expected.

On the UTP, you're right. In terms of size, I mean, assets under management, our growth was slightly lower than our expectation. But the problem we have with UTP is we do not want to dilute our current profitability. So this is why in terms of dynamic of IUM. We are more conservative in terms of expectation. Again, our current profitability is extremely high [indiscernible] and we do not want a diluted. It's a matter of run the trade-off between sites and profitability. On the REO, now -- we were late, but now we are substantially in line with our previous expectations.

On this, Andreas, consider COVID was very ...

Yes, this is because the impact of the pandemic on the auctions, so on the development of the REO business in Italy was a dramatic. We had more or less 6 months of courts shut down, et cetera, et cetera. So during this period, the real estate market was completely stopped. And in the second part of the year, the market itself was still slightly recovering. So considering this negative impact of the pandemic, we are, I think, in line both in business and as Manuela has said before, in operational terms.

Okay. That's clear. And maybe the next question is on Spain. I mean, this has proven to be a bit of a difficult region for you. Not maybe managing costs as quickly as we expected again when you bought Altamira. Given now that today, we're probably in a much more difficult situation with the uncertainty of SAREB and then whatever direction the contract goes, you still need to do a lot of work to actually get the EBITDA in absolute terms back to what it is today. So can you maybe just give us a bit of more detail on your conviction and your execution plans and how you're monitoring execution? And maybe a bit of some insight on the kind of UTP Early Arrears platform that you're intending to build in Spain.

Okay, before leaving the floor to Francesc to answer your question, Andrea, I want to give you my view on the recent past what happened, what happened after the acquisition of Altamira. Frankly speaking, I think we did couple of mistakes. The first one is, as you mentioned, we were not aggressive enough on the cost side. This is why the situation is completely different in comparison to Italy, for example. And the second mistake with it was on the NPL side. As Francesc pointed out, the company is the undisputed leader in Spain in the real estate market. And as you can see, this year -- last year, sorry. The results on this business are impressive. Our problem was on the NPL side because historically, the approach of Altamira was more or less keep the low hanging fruit on the NPL for the benefit of the short-term result, but deteriorating at the same time, the medium-term performance. Now we have a new management in place. This management is completely changing the rules of the game, both in general and in particular, on NPL. We are working hard on it, and we really believe the contribution of the NPL business to the result of Altamira would be important and not in the medium run because we have a real crash program in place. And I think in the second half of the year, you will see some material result coming from the program itself. And -- but on this important point, I want to leave the floor to Francesc to complete the answer.

Well, I think you summarized most of the issues and the answer, Andrea. But just to complement what you have said, one thing which is very important is that most of the growth in EBITDA in the next years comes from what we manage presently, especially NPLs. This transformation of the model addresses the fact that we need to extract more value from the NPL base that we have from customers. So we will gain in revenues, we will gain in EBITDA. There will be more collections per FTE. Overall, more productivity in that perimeter of assets, which is very important. On top of that, something that we explained throughout the presentation, we are developing new capabilities, especially the SME model for NPLs, which we already manage NPLs of SMEs in Altamira, but we see a large opportunity in having a very particular model on that [ addressable ] for the Spanish market. On top of that as well, we are also betting a lot on investors. We have recruited new managers in Altamira new team, very skilled and very expert in this segment of customers, and we are now focusing on growing with them as well. And finally, another very important driver is the real estate development business line with the spin-off that I mentioned before. It's something that we already do for blue chip customers, Banco Santander, SAREB and so on. Bain as well, and we think that we can grow a lot on there in the next years.

Okay. That's clear. And maybe a final question from my end. So we've seen Fortress increasing their share. And also some of your peers, you're receiving tender offers and kind of going private. Any comment potentially from you guys? How would a potential tender offer be viewed by yourself?

So we have no information -- no information at all and no comments to do on the tender of -- no information on our side, zero. On Fortress, I think Fortress increase stake of the company because Fortress strongly believe on our perspective in terms of value creation. But this is -- I can't answer for Fortress. But I think the idea of Fortress, it's not take the company private, because, again, it's a matter of value creation. The top management of the company and Fortress are fully aligned on what the independence of the company, it's important in terms of value creation. We see that during our presentation a differentiated customer base versus the IPO time. So the perception of the market of doValue as an independent company is key to support our growth perspective, more or less all our post-IPO, external growth was no Fortress-driven. So I really believe, and we are in line with Fortress, Fortress will support the growth of the company, what we are doing together in Greece is extremely important. I'm talking about Frontier project, the Neptune project and I think there is much to come, but I really do not believe the current priority of Fortress is take this company private.

Good to have you on this call. I see no more questions on the queue. Maybe Andrea Lisi from Equita just appeared.

Yes. Sorry, a follow-up. If you can provide us an indication on cost. Which is the proportion between fixed and variable costs now? And which level is reasonable to expect at the end of the plan? And the last one is if you can provide a bit more detail on the free cash flow generation we should expect for 2022. We see -- is it reasonable to expect a higher CapEx? Wondering to understand a bit better on the dynamic of net working capital [indiscernible].

Andrea, on the cost side, we should look to Page 63. You can see here that the key components of the cost where you find the variable cost is mostly on the HR side and some on the IT side. We are talking today about 15% of the share cost being variable and only about 10% of the IT cost being variable. So all in all, probably of the total operating cost, taking aside the outsourcing fees because the outsourcing fees are completely variable, we don't have a base fee there, we are talking between 16% to 17%. In the future, because we are going to have a rotation of the population and the new population has a higher component of variable than the current one. The 15% I mentioned would probably be more around 20%, 22%. While on the other cost item, I think it will continue to be the same. So all in all, the variable net of the outsourcing will grow from 16%, 17% to 22% to 23%. In terms of free cash flow generation, I think the -- on the EBITDA, we have given an indication, so similar to the guidance of 2021 on the interest is very clear and also on the tax side. On the CapEx, we have given a specific figure. On the working capital side, we have referenced on Page 68, where we expect some opposite trend vis-a-vis the past because of the reversal of the fee in Greece in the sense that there was a big upfront fee, especially in the first 2 years paid by Eurobank due to the negotiation we had during the COVID times, that indicated a higher base fee to offset potential decline in collection. Actually, we were lucky because our Greek team was able to deliver same collection as the expected pre-COVID, notwithstanding that we benefit from it. And that's why we include the reference that the fee trajectory of Eurobank contract by contract is declining because it had this significant big element in the first 2 years. But all in all, I think working capital negative effect is around EUR 10 million in 2022 expected. Obviously, this is a planning assumption. We will try to do better and have less impact, but this is our base assumption.

All right. So I see the question queue is clear. unless there's any late question, I think we can wrap it up. I hope you enjoyed these 3 hours we spent together. We tried to give you a lot of information to really give you a sense of where we are heading to. And I wanted to thank all the team here in Rome and connected remotely for spending the time to -- together with you analysts and investors. So thank you very much and speak soon. Goodbye.