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

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the doValue First Half 2023 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Daniele Della Seta, Head of M&A and Strategic Finance, Acting Investor Relations. Please go ahead, sir.

Good morning, and welcome to the doValue's First Half 2023 Results Conference Call. I'm Daniele Della Seta, Head of M&A and Strategic Finance and today, then acting of IR. And I'm joined here in Rome today with Manuela Franchi, our Group CEO; and Davide Soffietti, Group Deputy CFO; and Theodore Kalantonis, Chairman of doValue Greece. Together, we will cover the main group and market developments since the beginning of the year as well as the financial performance for the first half. At the end of the presentation, we will be happy to take any questions that you may have. Let me start now, hand over to Manuela to get started.

Thank you, Daniele. It's a great pleasure for me to present our first half 2023 results. Moving to the presentation, on Page 3, we show some of the key developments in the group performance in the first half of the year. First, I would like to highlight the return of doValue to a strong trajectory in the second quarter after a challenging start of the year. Our performance has been satisfactory, both in terms of revenue growth and profitability, driven by very positive performance in Greece and our ongoing restructuring in Spain following the off-boarding of Sareb portfolio. Our Q2 gross revenue increased by 8% year-on-year, excluding Sareb, to EUR 120.8 million. Second, our revenue growth has been coupled with a very [indiscernible] EBITDA ex NRI margin of [ 58.9% ] versus [ 51.7% ] in same year. EBITDA in the quarter has been growing by [ 57.9% ] year-on-year excluding Sareb to EUR 50 million. Please note also that the year-on-year on the 2Q is double-digit profit, even including Sareb in the second -- in 2022. This is a very satisfactory result made possible by strong focus on cost discipline, a seamless execution of a complex reduction plan in Spain and a very healthy top line growth in Greece driven by positive macro environment in the region. Our quarterly EBITDA margin is also reaping the fruits of our strong CapEx made in the past on our IT and transformation plan, which has made our operations more efficient. Third, our GBV has stabilized thanks to higher volumes from our solid block contracts and commercial efforts across all the regions to capture either [indiscernible] base and other [indiscernible] -- and a broad and diversified customer base. Last but not least, even after the payment of a very generous dividend of EUR 48 million and despite the seasonal effect of our business, higher taxes, our net leverage still stands at 2.3x as of July, one of the lowest in the credit [ practicing ] industry and well below our maximum threshold of 3x. This allows us to find the right balance between shareholder remuneration and growth through M&A. As you all know, this has been a very successful acquisition for doValue and has been one of the major driver of growth and profitability in our last 3 years. For this earnings call, I believe it's time to give credit to our people of doValue Greece, thereby representing here Mr. Kalantonis, Chairman of doValue Greece, who will provide you with a focus on the entity and the growth path.

Thank you, Manuela, for your kind words. In general, the Greek economy has stood more resilient than European peers to the energy price of 15% and considerably higher than the Eurozone average of 3.5%. This year, the economy continued to overperform in Q1 at a yearly rate of 2.1% and is expected to remain around 2%, both in 2023 and 2024, despite a [ stuck inflationary ] external balance. Unemployment, currently at about 10%, remains in steady decline. Core inflation has fallen to 4.8%, while headline inflation dropped last month to 1.8% year-on-year. Public finances are also on a positive trajectory. A primary surplus of 1.1% of GDP is expected for 2023 and, on average, at 2.3% of GDP for the 2024-2026 period. Along with strong nominal growth, it comes also a rapid de-escalation of net debt-to-GDP ratio at slightly over 160% in 2023, down from 195% as recently as in 2021. On the other hand, the current account deficit, although improving, remains quite high at circa 7%. Finally, the political uncertainty came to an end with the landslide victory of center-right, pro-business New Democracy party. And following these results, it is widely expected that this will retain investment grade most likely within the year. This newly gained policy visibility, along with the availability of easy structured funds make the goal of sustained overperformance relative to [indiscernible] realistic. On the back of the above, and in an improving economic environment and a very constructive real estate market, Greece is performing better than other markets on NPL collections. The level of state support of businesses and households during and after the pandemic exceeded all expectations. More than EUR 65 billion were disbursed in loans and outright state subsidies since 2020. Plus, resilient income and increased personal and business deposits helped sustain the rate of collections despite the extreme economic disruption, and this is expected to continue. The primary loan sale market is expected to remain strong until the end of 2024, despite the recent mega cleanup of the 4 systemic Greek banks NPL book. The current level of NP ratio of 4 major banks varies between 5% and 10% and is expected to further decrease to well below 5% in the next 2 years. A new HAPS scheme is also expected to be launched in the next few months by the Greek state to facilitate these efforts. In total, around EUR 5 billion of new HAPS transactions are expected to happen by the end of 2024, while the EUR 5 billion Ariadne portfolio from the Greek liquidator, PQH, is also expected to be relaunched in [ Tansi ] by the end of this year. Meanwhile, the secondary loan market has developed significantly, with doValue Greece playing a major role. Total transactions in 2022 were circa EUR 5 billion, with a similar amount forecast for 2023. Pre-performing loan transactions have yet to gain steam, but Greek banks need to support their credit expansion and the market could reach a total of EUR 10 billion to EUR 15 billion of re-performing loans returning to the Greek banks in the next 3 to 4 years. Finally, Greek real estate, including REO activity is hot and constantly increasing, with prices up by 15% year-on-year. Buying interest comes mainly from foreigners and [ individual business ] with most transactions taking place in [indiscernible]. The auction market is operating quite normally and the successful auction ratio is expected to further improve. As loan portfolio management progresses, increased scenario pools support more our fee income. Within this positive environment, to have successfully integrated doValue Greece into the doValue group, while transforming a captive servicing unit of a Greek bank in the #1 player in the NPL Greek market and a reference for investors looking for opportunities in this. In conclusion, I strongly believe that the outlook for Greece as well as for doValue Greece will remain positive for the next periods. Thank you.

Thank you very much, Theodore, and congratulations to all your team. Moving on to Slide 5. I would like to provide some color on the turnaround we are seeing on our Spanish business following the negative impact of the Sareb off-boarding. The final economic condition of the Sareb contract renewal would have been highly dilutive for our margin. And as such, we decided to not pursue this opportunity farther as to the last round. As a result, we have been rightsizing our operation in Spain over the last 12 months in order to adjust the cost base to lower GBV and preserve our margins. The results are now visible. And after a number of negative quarters, the EBITDA in Spain in the second quarter of 2023 has returned to a positive EUR 3.7 million result, delivered in the [ counter cost ] stable revenue despite 57% lower GBV. Starting from the leaner and public-focused organization, doValue will actively pursue new market opportunities, focusing on winning new clients instead of relying on the [ bought ] SLA contracts, while at the same time shifting our business mix from REO to NPL, following the latest market trends in the French market. On this, let me remind you that Spanish banks are significantly derisking of their REO and still holding EUR 75 billion of NPE, almost in line with the amount of an Italian banking system. Of significant importance, it is the success rate we are dealing with them with minor once a large offset price for Spanish bank and Sabadell. Moving to Page 6. Let's have a look at the performance of our Italian operations. Similarly to what we have done in Spain, we have been actively tailoring our business to the challenging model context by focusing on improving our collection rates and policy loan costs. This has enabled us to maintain a stable collection revenue in the first half despite a 5.7% reduction in GBV. We are also managing our business with a greater emphasis on NPL, UTP, ancillary services and REO, which provide higher margin and which now accounts for 53% of our gross revenue vis-à-vis 22% in the first half of 2022. The combination of a higher-margin business mix and a significant cost discipline, in particular, OpEx reduction, lower NPL outsourcing and efficiency delivered by our ongoing digitalization and AI investments enabled us to grow our EBITDA margin in Italy by almost 3 percentage points to 27%. In terms of market dynamics in Italy, we are seeing a destock in Italy broadly stable over the last 5 years, although the mix between the banks and funds has shifted significantly towards the latter. This will stimulate a growing secondary market that we at doValue are ready to capture and we are already capturing, thanks to the success of our doLook platform for several investors and banks, which has delivered accumulated GBV of EUR 3.1 billion in the period '21-'23. And in the first half of '23, we executed satisfactory transactions for an amount of EUR 750 million GBV, double the amount of deals 2022. It's important to stress that we think this secondary transaction has allowed us to manage and retain the servicing mandate of 90% of the GBV. Moving now to our general and macroeconomic trends. We are witnessing in our major countries on Slide 7, a reduction in NPA on banks’ balance sheets, not as much driven by the fact that banks are no longer generating NPE, but rather than being able to compress and this led to significant recourse to an efficient and [ factional ] ecosystem to dispose and manage NPLs. In fact, as shown by costing data on the disposal in banks’ balance sheets, it's clear that given the challenging macro context of the last 2 years and the actions by the Spanish and Greek banks, will now hold more in fees than at the beginning of 2021. And this is in the context of a sluggish growth of new loans. Please note also that in addition to the NPE held by the banking system, there is now a significant amount of NPE and by state for preventive that could or will come to the market. For example, just situate in Greece would increase the potential market by approximately 50%. In the lower part of the slide, we show some macro indicators captured between 2021 and '23 that are signaling an increasing economic pressure in Italy, Greece and Spain mainly due to inflation, higher interest rates, which is impacting also savings rates. Looking at the PMI index developed by S&P Global where [indiscernible] indicated economic expansion and scored below 50 to an economic contraction, both Italy and Spain have been material -- have seen a material shift from a positive trajectory in 2021 to negative in '23. Recent data for Italian GDP in the second half of 2023 marked a contraction of 0.2%. Increased PMI index has proven more resilient and remains above 50%, mainly thanks to the real estate market, but also a growing pressure on HH's financial condition. In this context, we believe that the banking system will be tackling any [indiscernible] fee more proactively not subject to the risk, but also to improve ROE and profitability, thus reducing the [ latter risk, NPE ] permission and disposal. So we will be seeing much more NPE production, as we have seen already in the second Q. Moving now to page 8. We have a pipeline of potential new business of approximately EUR 19 billion over the next 12 to 18 months, which contains some very large government-sponsored transactions, such as EUR 12 billion for the GLAM in Italy and EUR 6 billion REO business and [indiscernible] the SLBO in [indiscernible]. Let me comment on GLAM. From recent interaction with [ MAX ], the projects will continue to be assessed notwithstanding the management changes in AMCO. It's important to note that doValue is developing a more resilient stream of revenues by refocusing its commercial efforts in securing a larger number of mandates with a lower average size rather than relying on a few large mandates from a limited number of clients. On Page 9, we have outlined our transformation journey in terms of digitalization, technological innovations and new capabilities driven by AI that will boost the productivity of our resources while achieving a significant reduction in costs. The investments we have carried out over the last 3 years are now ready to deliver the benefits in terms of customer journeys and [ product ] quality; transforming raw data into knowledge to support decision-making and strategic planning; streamlining processes and consolidating the system to improve support operations. The new capabilities we have developed will enable our teams to reduce by 55%, 40% the time required to go look up key information on customer data while reducing servicing costs by 8% to 11% and increasing the annual recovery rate per asset manager by 4%. We remain highly committed to our ESG strategy, which as you can see on Slide 10, has been designing concrete positive targets for 2023 as part of the group's sustainability plan for which we have to live by. Our efforts have been recognized by a number of primary ESG rating providers, which have all improved the rating assigned to the group. Moody's Analytics upgraded its score from Limited to Robust a few weeks ago. MSCI ESG Research upgraded its rating from AA to AAA in March 2023. And Sustainalytics upgraded the group to Low Risk and an ESG rating of 19.1. With that, I will now hand over the call to Davide for a closer look to our financials.

Thank you, Manuela, and good morning to all of you. So let's get started. Moving to Page 12, we have here a summary of key financials for the second quarter and the first half of the year. As already mentioned by Manuela, the quarter was in line with our expectation and shows midterm momentum quarter-on-quarter. We are showing a valuation both improving and excluding Sareb and in a way as a very large portfolio and we think that comparison with 2022, excluding Sareb, is very helpful to show how the business is performing [indiscernible]. Let me tell you it is performing well. We have always stated that new Sareb contract stabilities would have been low. That is why our top line has been negatively affected by [ the dividend ]. Our EBITDA is growing double digits quarter-on-quarter, even including Sareb. Let's move to Page 13 to decide on the gross book value dynamics. Our GBV has remained substantially favorable since end of 2022 and end of the third quarter, despite the soft performance of collection activities and the increase in disposal mainly linked to the Pillar portfolio. This has been possible as overflows from our partner banks will be complete versus the same quarter in 2022 and even versus 2021. This is the sign of the rating economic environment, which is escalating in a pickup of NPE formation. Our business development as are visible in the new mandate for EUR 2.5 billion GBV in a very competitive environment for NPL pricing, meeting [indiscernible] of the past. With this, we note that in the first half of 2023, the company has won over 10 new mandates, even if of multi, marking a plus 39% GBV of new mandates versus the first half of 2022, excluding Frontier, a Greek [indiscernible] of EUR 6 billion GBV. In general, given the growing importance of the secondary transaction, we expect the collection profile to be done more lumpy and, in the case of 2023, more concentrated towards the second half of the year. The collection rate stands at 4.4% right of the June, improved from the 4.1% recorded in the first quarter. Moving to Slide 14. Gross revenue in the first half 2023 declined by 16% year-on-year to EUR 230 million and by 8.7% in second quarter 2023, recording a significantly less negative trend than the decline in GBV, which was in large part due to the off-boarding of the Sareb exposure. Excluding Sareb, the comparison between the first half 2022 and the first half 2023 is almost flat, marking a significant catch-up in the second quarter. Italy in the first half '22 was boosted by higher disposal fee for about EUR 60 million. Without the disposal, the gross revenues for the region will be mostly unchanged. The Hellenic region is performing well, thanks to strong collection and growing REO business, while gross revenues in Spain, excluding Sareb, are unchanged, thanks to growing weakness and a strong growth from Santander. Moving to Slide 15, we show the results of our cost discipline measure, in-sourcing strategy and restructuring process in Spain. We continue to optimize and reduce our outsourcing activity, leveraging on distant portfolio mix of Sareb off-boarding as well as including the [indiscernible], thanks to efficiency gained in the implementation of doTransformation program. OpEx in [indiscernible] declined more than [indiscernible] and as a percentage of gross revenues, positively continuing to sustain our EBITDA margin. We have been extremely proactive in managing our cost base and this has allowed us to achieve a growing EBITDA even with the [ PC ] revenues for the off-boarding of Sareb. We are confident that also thanks to our doTransformation program and further headcount optimization, we will be able to achieve our target for EBITDA margins. HR costs declined both in Italy as well in Iberia, mainly driven by our restructuring program, post Sareb [ off-boarding ]. HR costs increased in the Hellenic region, mainly due to the increased [indiscernible] on the back of the onboarding of the Frontier portfolio. Other operating costs declined at a different rate across the 3 regions. In Iberia, the doTransformation program is particularly advanced and was boosted by the nonrenewal of the Sareb contract, that in order to achieve our target. As you can see on Slide 16, we have reported an EBITDA of EUR 80 million in the first half, down 4.6% year-on-year with a margin of 35%, 4 percentage points higher than in the first half of 2022. The performance quarter-on-quarter has been extremely strong with a plus 12% year-over-year, even including Sareb and an EBITDA margin of 39%. Please note that this year reported EBITDA and EBITDA ex-NRI are almost identical, if not for 50 [indiscernible] effects. On Page 17, we show the performance across our regions. Adding to what has been already said by Manuela and me commenting on the financials, it is to be noted an improvement collection rate in the Hellenic region and Spain and a slightly lower collection rate in Italy, 0.1 percentage points, leads to an improvement in the group collection rate by 0.2 percentage points. Commenting on net income ex NRI showed on Slide 18, here, a dynamic similar to the one on the service for EBITDA. Broad momentum on the second quarter with a plus 27% of net income ex NRI and negative performance in the first half 2023 versus 2022, which is still affected by a weak first quarter, which are now behind us. Let me remind you that net income including NRI is affected by higher provision for redundancies. On the redundancies, it is useful to stress that we have a very short payback period for redundancies which are [indiscernible] and which are relating a lower cost base. On the arbitration with [ Apollo ], account prescribed to account only the negative items of the arbitration decision, but not the positive item of EUR 29 million due to the payment of an [ identity ] for the tax paid in [indiscernible]. As assumed as this will be cash, it will create a substantial increase in reported net income and the cash, of course. Moving to Slide 19. In term of financial position, we generated a strong cash flow from operations in first half 2023 of EUR 23.34 million which marks a considerable change from the cash absorption of EUR 6 million observed in the first half 2022. We are particularly satisfied with the effort we have made in managing working capital, which in the first half generated approximately EUR 6.8 million of cash. Dividend payment of EUR 48 million and [indiscernible] tax payments scheduled in Greece has led to a slight increase of our leverage from 2.2x to 2.4x. Please also note that most of our collection fees in Italy for the quarter are paid in July. Interest payments scheduled [indiscernible], the lower end of our financial policy range and one of the lowest in the sector, which allow us to find an [indiscernible] balance between shareholder remuneration and growth opportunities via M&A and the [ dilution ] of CapEx. Moving to Page 20. Our financial structure remains solid with more than EUR 240 million [indiscernible] in between, EUR 120 million of cash and EUR 120 million of paper lines as of the end of July. In terms of liability management, our next bond maturity is in 2025. Our bonds have been invested on the secondary market that our [indiscernible] on a year [ fixed ] basis, a demonstration of our sturdiness of our capital-light servicing model also for [ best ] investors. Please also note that we have decreased our gross debt by repurchasing and [indiscernible] approximately EUR 5 million of nominal bonds in the open market, allowing us to reduce the financial charge and looking at more profit for the difference between the average purchase price and the nominal value. I will lead the floor to Manuela for her closing remarks.

Wrapping up our presentation on Page 22, we think the company is now in the right position to capture future growth with a lean structure in all the countries. 2Q results are a tangible proof that all the action announced has mostly executed in the past year are leading to strong results in different areas: lower cost in Italy; return to profitability in Spain; new contracts and strong performance in Greece. Starting from this solid base, we are convinced that doValue will be best positioned whilst the banking sector and the FPI industry in meeting the challenges of a very delicate and uncertain macro environment and play an important role in the upcoming consolidation phase of a mature and yet dynamic NPL ecosystem. We leave now space for your questions.

Excuse me, this is the Chorus Call conference operator. We will now begin the question-and-answer session. [Operator Instructions]

So I will state for the questioner, with the first question from Simonetta Chiriotti from Mediobanca, the floor is yours, Simonetta.

The first question is on the outlook for the second part of the year after this positive quarter. If I look at the consensus, EBITDA is at EUR 193 million, which implies the second quarter -- well, actually the second half, sorry, roughly in line with last year, slightly below, only slightly below. Do you think that this scenario is sustainable? And another question is on the cash flow evolution. So the absorption from other assets and liability remained quite strong in the second quarter. Can you give us more color on this item?

Thank you, Simonetta. On the outlook, I would like to refer first to our past performance. I think in 2021 and '22, we have achieved the results which were above market expectation. We have mentioned during our first Q results all the action and the activities we were doing to deliver our expectation for the year and for the second Q which I think for the second Q has been satisfied. So moving to the consensus and also our biggest guidance, we feel comfortable with what we have been pursuing to [ use further ], also, on the back of what we have delivered so far. On the cash flow evolution, we tried to be very clear on one page about the composition of all the items. If you look to Page 19, you can see that in the changes, there is a portion which related to actual parts, which do not shift necessarily from one year to the other, but are for reported purposes aggregated in decline. First, redundancies, obviously, were very big in 2022 and '23 and these will go down, but they represented at Sareb EUR 9 million. Second, for Frontier transaction, you remember that we had bid an up-front price and there was a remaining portion of the price to be paid in the first half of the year, partially from us and partially from the investor, which was delivered. Obviously, this is a one-off. It was included in the initial consideration, as you might remember. The third bullet is around IFRS 16 leases. This is -- will always come through every year because we have a rent paid for our offices, so basically, most of it, which represents for the first half EUR 6 million. And then the MVO and payments and termination benefits of around EUR 5 million. So I think all these elements represent to you a significant portion of the other assets and liability change. Regarding working capital, obviously, you have the effects of the Eurobank structure payments. As you remember, although it has decreased over time, the base fee of Eurobank is still paid in advance every year. So for the revenue of 2023, the base fee of '23 is paid in the end of '22, and this was the same for the previous year. But the absolute amount has gone down as part of the contract. So taking out this element, the net working capital is explained by -- in this quarter. So the pure working capital, i.e., receivable and payables is actually positive.

Okay. We should now move with the second question from Eleni Ismailou of Axia Ventures.

Congratulations for the set of results. Could you give us an update around the secondary transactions in the Hellenic region? You mentioned that the secondary transaction stands at EUR 2.5 billion. And we would like some color on how many of these refer to Greece. And what's the pipeline ahead for Hellenic region we should anticipate?

Eleni thanks for your question, it's a great to have Theodore here who can give you a stronger -- the clear message on Greece. And then I can comment on the composition of the secondary sales as part of our new business.

Okay. First of all, in terms of the overall dynamic of this market, structurally in Greece, out of the [ EUR 100 billion ] more or less of the NPE stock, [ EUR 60 billion ] has been securitized under the HAPS scheme and as part of the management of the business plans of these transactions, the Greek services with doValue being the first one, have started somehow to accelerate the cash collection through the disposal of smaller pieces of these, let's say, legacy negative utilizations. So within this strategy, we've seen a lot of activities. As I said in my commentary, I mean, up to now, as I said, around EUR 5 billion has been impacted in -- up to now, and we expect that this will continue. Another thing that it's, I would say, is coming to Greece, as I said, is the re-performing loan business, but we will talk about it more in the coming, I think, quarters.

Given the composition of the new mandates and the flow, I would like to point out attention to Page 13. Here, you can see that the forward flow has grown a significant amount versus last year, but also quarter-on-quarter. In the new mandate, the total secondary transaction are around EUR 750 million, of which around EUR 550 million coming from Madrid and the remainder from Italy. For Italy, it's an extraordinary achievement and it's not typical of this market where a secondary transaction are usually moved to another, services are not paid for. In this case, we have 2 double effect. We are achieved [ sales key ] and also we have retained the contract. And we have moved this contract under a new structure with a new investor which is particularly proactive in new products, in fact, it's [indiscernible] an RPL transaction. We initiated a new business line on a portfolio of EUR 150 million which is part of the sales process, on which we are going to bring back to the forming with new financing from the investors at certain part of [indiscernible]. Plus we have selected the out of [ DAC ] scheme as a selected group of loans of around between EUR 500 million and EUR 1 billion while reconfirming that GBV can be activated, although they were NPL and this is [ greater ] of around between EUR 500 million and EUR 1 billion where reconfirming that GBV can be activated, although they were NPL and this will create one, a new product line and second, will be much more profitable product in partnership with a new investor client. This is the fundamental because as you have noticed, not only we are stabilizing GBV, we will -- we are at 120 with the figures onboarding, which will be finalized by between -- in the first 15 days of September, but we are diversifying our revenue with now more than 50% of revenue not related to the traditional NPL business.

Next question is from Luigi Tramontana of Banco Akros.

Two questions on my side. Again, on the guidance for this year, given that you have not reiterated that you expect probably stable EBITDA of almost EUR 200 million and minimum increase in the dividend of 20%. So I would like to know if there is anything new on this front. And the second one is more forward looking on your cost base given that you have been very effective in restructuring your activities, especially in Spain. I would like to know your thoughts on the scalability of your platform going on. If you are going to onboard new business, new portfolios? If you think that your cost base will remain broadly stable? Or if we have to expect some impact from inflation?

Thanks, Luigi, for your question. On guidance, both on EBITDA and dividend, nothing has changed vis-à-vis the past. So we are working on our delivery. Clearly more we progress, and we know that the second half of the year is a little bit a big lift from the first half. This was true in '21, '22 and this year as well. But the second Q was particularly important to close this bridge. The dividend, obviously, we're not here to give a specific proposal to the Board. It's early on. But in terms of indication vis-à-vis the past, we are not changing anything. In terms of restructuring in Spain, the effort on the reduction of cost will see a decrease in the next quarters because in the next quarters, we are going to see all the big impact of the exits that we have done in 2022 and in 2023 first half. So despite the inflation effect, the decrease will continue steadily. You mentioned an important point in terms of new construction. This is fundamental. Despite the restructuring efforts of last year and this year, the team has done a great effort to -- on the commercial side to gain new contracts, has done a very successful pilot project with Sabadell on the SME front, which has been transforming the contractor. So we have moved from one major bank to 2. We are doing [ a set ] also with Caixa and we hope to give positive news by the end of the year for a new contract. So eventually, we move to 3 major banks in Spain. And on top, we have other news, so 2 small Caixa locally. On the flip side, we continue our efforts on the investor side because as you have seen, the production of NPLs in Spain is sustained, also both on the flow and also on the flow contracts with Altamira -- sorry, with Santander and also on the sales side. Obviously, these are small transaction, but we have added 3 investors this year. In terms of resources for the new businesses, clearly, they will require new resources. But net-net, the HR costs will be going down as mentioned. So the new ambition will be less than the decline. Digitally, of course, Cerberus was a demanding client on the standpoint of both resources and systems. They wanted dedicated resources so with limited ability to do it efficiently across portfolios and also dedicated systems, which now we have taken off and transformed. On the flip side, clearly, we had legacy personnel, which was prompted to us originally which now we have been able to restructure and to the positive business new personnel from the market at more competitive cost.

[indiscernible]

The first ones are on Italy. Just to understand the busy dynamic of revenues and EBITDA in the quarter. We see that recoveries in second quarter 2023 versus 2022 are broadly stable, slightly up, but servicing revenues are down by 20% if I'm not wrong. And so to understand if there is some seasonality, if there is some effect here that I was not taking into account, also maybe you said compared -- in case of comparison was tough with second quarter '22 really, really stronger. And so what do you expect going on, on the servicing revenues or in [ tendering ] gross revenues in Italy going on? Then also in Italy, if we look at cost, there is an increase in cost between the first quarter and the second quarter. So to understand which could be considered a normalized level of costs here or if you can provide us a guidance on cost in Italy for the year. The second question is on the collection rate, which improved in the half, in the quarter. And so just to understand how do you think you -- what do you think is the level of collection rate that you think is sustainable, especially in Italy, Greece and Iberia, considering that the region where it grew the most. And in particular, if you can repeat maybe to which has increased the contribution to the collection of the transaction made in the secondary market where you have [indiscernible] the disposal of NPE and then you have taken back the mandates from a new own investor? And if you can provide us an update here on the level of fees in comparison with the fees that were received from previous investors. And the last question is on the restructuring cost, if -- especially regarding personnel, if to -- is it anything to assume that most of them are already expensed? Or if there is something else in the second part of the year?

[ Andre ], it's Davide. On Italy, as we already commented and in our speech last year, we had around EUR 6 million of indemnities that was in -- increasing the lines versus the collection. I did explain that that is the main debt, but if you know, part is related to the lower performance in terms of volumes because in Italy, we were affected by the environment related to the high interest rate and high inflation. As we say, they are working to increase the rates from the ancillary values, to counterbalance the reduction in terms of our collection and we are also switching that. There's this product like the UTP where we will have a higher margin. So this is very important. And at the same time, we are working, as you said, on the cost side. The first quarter, the reduction cost was higher as we had explained in the past and also because we have a positive effect after the exit of this [ year ], but this impact are also positive the full year because, as you know, the salary packages this year was important and also we think the new one would be lower, so it will have a positive impact on the cost side. And at the same time, on the cost side, we are also in Italy doing efficiency, reducing the number of [indiscernible] who were incentive scheme voluntary exiting scheme people that will reduce our cost base. And the last is very important for -- is the outsourcing cost. As we commented, the associated costs are [ remitting ] because we are internalizing some activities that we used to do external. This is also thanks to all the investments we have done with a good automation program that we [indiscernible] used to do external with the internal people without increasing the internal cost. So this is from the Italian side. In terms of collection rate, as you can see in Italy, we are quite stable. So there, we are continuing to perform well versus the [ GBVI ] margin.

Moving now to the collection rate for the full group. We are in the positive trajectory that we had highlighted in our business plan. Clearly, 2023 being affected by the macro environment has an impact -- has had an impact, but we have tried to achieve the same [ attractive benefit ] of revenue by diversifying even farther the revenue base. In terms of the Hellenic region, it probably was impacted less in the sense that the macro due to the specific legacy event has an impact, which is minimal compared to the strong trajectory from where the [ rig count ] is coming from. So the 6.8 you see here, probably for the full year, that will be definitely above the 7 mark. On the Iberia region, if you take out Sareb, you have seen the growth, and this has been a clear objective of the local management to increase the productivity of the current workforce. So despite the lower number of people, even on a like-for-like perimeter, they will continue to be more profitable on -- in terms of collection rates, both on the Santander portfolio and on the portfolio of the investors with dedicated team and the strengthening of the portfolio team. Portfolio team, just to explain to you, this is a specific team to our analytics -- who do analytics around how to abstract value from a portfolio as supporting asset managers. The positive news is around fees. Usually, the fees were translated in the sales transaction are either the same or better. In fact, in Italy, we have sold the portfolio being through a new investors, which maintain with the portfolio, and we have better feed from the new investor because investors realized that especially in a challenging market in terms of macro, it's very important to incentivize the asset manager and the [indiscernible] to do better. So on the fee side, we must say that we are positively surprised. On the Hellenic front, the contribution of secondary to the total revenue is around probably 5% to 6% of the first half figures for the region. On the restructuring cost, in Spain, the process related to Sareb has completed as we have done it in June. We have done an additional analysis of efficiencies in the month of July that we would like to pursue in the second half of the year. We also had planned already an initiative in Greece. So there will be some more in the second half, but less than in the first half.

We have the question from Filippo Prini of Kepler.

I've got a couple of questions on gross value. The EUR 3.6 billion of new mandates not yet on board, should we expect them to be boarded by end of the year or later stages? And still on the evolution of gross new value, in the first half, mainly in the second quarter, there's been basically the loss coming from the in-stores or often prices of contracts for different reasons, more [indiscernible] and so on. Should we expect something similar in also in H2? Just to have an idea if at the end of this year, the gross value could be above the EUR 117 million that you report in regions bar these new mandates not yet boarded?

Thank you, Filippo, for your question. The EUR 2.6 billion have a name. And there are 2 key contracts, 1 in [ Fabros ], which will be onboarded on the 18th of September and 1 in [ Visa ], which will be onboarded at the end of the year. These are already the one on the signed and everything else. So it's all a question of IT and submitting files. In terms of guidance, for the GBV, we had -- in the business plan, we were flat. We were -- we hope to do better, but we also have the flat trajectory. Although I must say that the commercial efforts in the -- is very -- really, is very high. And we also have continuous positive news that we have that in the second Q. We are less doing the press releases from the new announcement because they're more numerous and smaller in size, so it's a question of opportunity, also for you to not receive too many emails. That's why we have concentrated them in this report. But as you mentioned, the commercial [ letter ] it was on 1 contract of EUR 2 billion rather than 10 contracts for EUR 2.6 billion. It's much wider an impact. But notwithstanding that, the team is very proud with -- on growing partners.

Thank you all for attending our earnings call. That was all for today. Thank you.

Have a great summer.

Ladies and gentlemen, thank you for joining the conference. It's now over. You may disconnect your telephones. Thank you.