Quarterly Report • May 14, 2021
Quarterly Report
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doValue CONSOLIDATED INTERIM REPORT AS AT MARCH 31, 2021
Registered Office: Viale dell'Agricoltura, 7 – 37135 Verona Share capital € 41,280,000.00 fully paid-up
Parent Company of the doValue Group Registered in the Company Register of Verona, Tax I.D. no. 00390840239 and VAT registration no. 02659940239 www.doValue.it
| Governing and control bodies | 4 |
|---|---|
| GROUP STRUCTURE | 5 |
| NOTE TO THE CONSOLIDATED INTERIM REPORT | 8 |
| DIRECTOR'S INTERIM REPORT ON GROUP OPERATIONS | 12 |
| FINANCIAL STATEMENTS AS AT MARCH 31, 2021 | 42 |
| CERTIFICATION OF THE FINANCIAL REPORTING OFFICER | 51 |
Chairman GIOVANNI CASTELLANETA
CEO ANDREA MANGONI
Directors FRANCESCO COLASANTI EMANUELA DA RIN GIOVANNI BATTISTA DAGNINO NUNZIO GUGLIELMINO ROBERTA NERI GIUSEPPE RANIERI MARELLA IDI MARIA VILLA
Alternate Auditors SONIA PERON
At the date of approval of this document
(1) Chairman of Supervisory Committee, pursuant to Legislative Decree 231/2001 (2) Member of Supervisory Committee, pursuant to Legislative Decree 231/2001
Chairman NICOLA LORITO (2)
Statutory Auditors FRANCESCO MARIANO BONIFACIO (2) CHIARA MOLON (1)
MAURIZIO DE MAGISTRIS
doValue is one of the main players in Southern Europe providing services to banks and investors for the management of loans and real estate assets (Servicing). Its assets under management amounted to about €161 billion as at the end of March 2021 (gross book value), up by roughly 2% from the end of the previous period (€158 billion).
The structure of the Group as at March 31, 2021, as shown in the following diagram, reflects the organic and external growth and diversification of doValue over 21 years of operations.
The Parent Company doValue S.p.A., a servicing company governed by Article 115 of the T.U.L.P.S. 1 , and its subsidiaries carry out servicing activities for PL, Early Arrears, UTP, NPL and Real Estate assets, and provide ancillary services for business information and Master Servicing, operating in a specific business area or geographical market.
doValue was created from a combination, in 2016, of the two largest Italian servicers: UCCMB, originally part of the UniCredit Group, and Italfondiario, active since 2000 in partnership with leading specialised investors.
In July 2017, the doValue stock debuted on the stock exchange, placed with institutional investors. doValue shares are traded under ISIN code IT0001044996 and ticker symbol DOV [Bloomberg: DOV IM].
Between 2018 and 2019 doValue experienced a phase of major expansion and significant diversification, first with the entry in the Greek market with a mandate contract from four systemic local banks and later in the wider southern European market, with the acquisition of Altamira Asset Management, a servicer active in Spain, Portugal and Cyprus and a leader in the management of real estate assets. In the Italian market, doValue's growth continued with the acquisition of new management contracts from banks and investors, in particular its leading position in servicing of securitisations backed by state guarantee ("GACS").
At the end of 2019, doValue announced the acquisition of FPS, (now doValue Greece), a Greek servicer with managed assets of over €26 billion, which allowed the Group to become a leader also in the promising Greek market. The completion of the FPS acquisition in June 2020 represents a further step forward in the strengthening of doValue's leadership in the servicing market in southern Europe, using an "asset-light" business model that does not require direct investments in asset portfolios and pursuing increasingly greater diversification in the credit value chain.
1 Italian Consolidated Law on Public Security
The Consolidated Interim Report as at March 31, 2021, drawn up using the euro as the reporting currency, was prepared on a voluntary basis in order to provide the additional periodic information to the annual and half-yearly financial reports, and ensures continuity with the past, as Legislative Decree 25/2016 implementing Directive 2013/50/EU eliminated the requirement for periodic financial reporting referred to March 31 and to September 30.
The Consolidated Interim Report as at March 31, 2021 was not prepared according to the international accounting standard applicable for interim financial disclosures (IAS 34 - Interim financial reporting), in view of the fact that the doValue Group applies that standard in the preparation of the half-yearly financial report and not to the quarterly reporting, except in circumstances connected with the preparation of documentation for exceptional transactions.
The Consolidated Interim Report as at March 31, 2021 was prepared on a going concern basis in compliance with the provisions of IAS 1, and on an accrual basis, in accordance with the principles of the relevance and materiality of accounting information and the prevalence of economic substance over legal form and with a view to facilitating consistency with future presentations.
The amounts stated are expressed in thousands of euros unless otherwise specified.
The Consolidated Interim Report as at March 31, 2021 is accompanied by the Certification of the Financial Reporting Officer pursuant to Article 154-bis of Legislative Decree 58/1998.
The Group's structure as at March 31, 2021 includes the companies reported in the table below:
| Owner relationship | |||||||
|---|---|---|---|---|---|---|---|
| Company name | Headquarters and Registered Office |
Country | Type of Relationship (1) |
Held by | Holding % | Voting rights % (2) |
|
| 1. | doValue S.p.A. | Verona | Italy | Holding | |||
| 2. | Italfondiario S.p.A. | Rome | Italy | 1 | doValue S.p.A. | 100% | 100% |
| 3. | doData S.r.l. | Rome | Italy | 1 | doValue S.p.A. | 100% | 100% |
| 4. | doValue Hellas Credit and Loan Servicing S.A. |
Athens | Greece | 1 | doValue S.p.A. | 100% | 100% |
| 5. | Altamira Asset Management S.A. | Madrid | Spain | 1 | doValue S.p.A. | 85% | 85% |
| 6. | Altamira Asset Management Portugal, Unip. Lda. (Portugal) |
Lisbon | Portugal | 1 | Altamira Asset Management S.A. |
100% | 100% |
| 7. | Altamira Asset Management Cyprus Limited |
Nicosia | Cyprus | 1 | Altamira Asset Management S.A. |
100% | 100% |
| 8. | doValue Cyprus Limited | Nicosia | Cyprus | 1 | doValue S.p.A. + Altamira AM S.A. |
94%+6% | 94%+6% |
| 9. | doValue Greece Loans and Credits Claim Management Société Anonyme |
Moschato | Greece | 1 | doValue S.p.A. | 80% | 80% |
| 10. | doValue Greece Real Estate Services single member Société Anonyme |
Moschato | Greece | 1 | doValue S.p.A. | 100% | 100% |
| Notes to the table |
|||||||
| (1) | Type of relationship: |
1 = majority of voting rights at ordinary shareholders' meeting
2 = dominant influence at ordinary shareholders' meeting
3 = agreements with other shareholders
4 = other types of control 5 = centralized management pursuant to Article 39, paragraph 1, of Legislative Decree 136/2015 6 = centralized management pursuant to Article 39, paragraph 2, of Legislative Decree 136/2015
(2) Voting rights available in general meeting. The reported voting rights are considered effective
There were no changes to the scope of consolidation in the first quarter of 2021.
The methods used to consolidate the data of the subsidiaries (line-by-line consolidation) are the same as thse adopted for the 2020 consolidated financial statements of the doValue Group, which readers are invited to consult.
The financial statements of the Parent Company and the other companies used to prepare the Interim Report are those prepared as at March 31, 2021. Where necessary, the financial statements of consolidated companies that may have been prepared on the basis of different accounting policies have been adjusted to ensure their consistency with the Group's accounting policies.
In application of Legislative Decree no. 38 of February 28, 2005, this Consolidated Interim Report as at March 31, 2021, has been prepared in accordance with the accounting standards issued by the International Accounting Standards Board (IASB), including SIC and IFRIC interpretative documents, endorsed by the European Union, as set forth in European Union Regulation no. 1606 of July 19, 2002.
The classification, recognition, measurement and derecognition criteria adopted for assets and liabilities, and the methods for recognising revenues and costs, adopted in this Consolidated Interim Report have not been updated from those adopted in the preparation of the Consolidated financial statements for the year ended December 31, 2020, to which reference should be made for a full disclosure.
Some amendments are applicable for the first time from January 1, 2021, none of which are particularly relevant for the Group. These were made to accounting standards already in force, which were endorsed by the European Commission. A list is reported hereunder:
The summary results and financial indicators are based on accounting data and are used in management reporting to enable management to monitor performance.
They are also consistent with the most commonly used metrics in the relevant sector, ensuring the comparability of the figures presented.
The doValue Group operations are focused on the provision of services to Banks and Investors over the entire life-cycle of loans and real estate assets ("servicing").
doValue is the Southern Europe's leading servicer, with about €161 billion (gross book value) in assets under management and a track record spanning 21 years.
Its business model is independent, aimed at all Banks and Investors in the market, and asset light: it does not require direct investments in loan portfolios.
doValue's services are remunerated under long term contracts based on a fee structure that includes fixed fees based on the volume of assets under management and variable fees linked to the performance of servicing activities, such as collections from NPL receivables or the sale of customers' real estate assets or the number of real estate and business information services provided.
The Group provides services in the following categories:
doValue and Italfondiario, in their capacity as Special Servicers, have received the following ratings: "RSS1-/CSS1-" by Fitch Ratings, and "Strong" by Standard & Poor's, which are the highest ratings assigned to Italian operators in the sector. They have been assigned to doValue and Italfondiario since 2008, before any other operator in this sector in Italy. In 2017, doValue was also assigned a Master Servicer rating of "RMS2/CMS2/ABMS2" by Fitch Ratings, which was also improved by a notch in 2019. In July 2020, doValue received the BB Corporate credit rating, with stable outlook from Standard & Poor's and Fitch.
The tables below show the main economic and financial data of the Group extracted from the related condensed statements, which are subsequently represented in the section of the Group Results as at March 31, 2021.
| Key data of the consolidated income statement | 3/31/2021 | 3/31/2020 RESTATED |
Change € | Change % |
|---|---|---|---|---|
| Gross Revenues | 123,661 | 84,263 | 39,398 | 47% |
| Net Revenues | 108,644 | 73,045 | 35,599 | 49% |
| Operating expenses | (73,388) | (54,830) | (18,558) | 34% |
| EBITDA | 35,256 | 18,215 | 17,041 | 94% |
| EBITDA Margin | 29% | 22% | 7% | 32% |
| Non-recurring items included in EBITDA¹⁾ | (495) | (1,283) | 788 | (61)% |
| EBITDA excluding non-recurring items | 35,751 | 19,498 | 16,253 | 83% |
| EBITDA Margin excluding non-recurring items EBT EBT Margin |
29% 7,190 6% |
23% (3,112) (4%) |
6% 10,302 10% |
25% n.s. n.s. |
| Profit (loss) for the period attributable to the Shareholders of the Parent Company |
3,136 | (3,743) | 6,879 | n.s. |
| Profit (loss) for the period attributable to the Shareholders of the Parent Company excluding non-recurring items |
5,535 | (718) | 6,253 | n.s. |
¹⁾ Non-recurring items in Operating expenses include the costs connected with the merger between doValue Greece and doValue Hellas, those incurred for the Group reorganisation project and costs referred to Covid-19
| Key data of the consolidated balance sheet | 3/31/2021 | 12/31/2020 | Change € | Change % |
|---|---|---|---|---|
| Cash and liquid securities | 166,555 | 132,486 | 34,069 | 26% |
| Intangible assets | 564,246 | 577,460 | (13,214) | (2)% |
| Financial assets | 51,585 | 70,859 | (19,274) | (27)% |
| Trade receivables | 179,263 | 175,155 | 4,108 | 2% |
| Tax assets | 122,530 | 117,909 | 4,621 | 4% |
| Financial liabilities | 627,886 | 626,204 | 1,682 | 0% |
| Trade payables | 51,706 | 51,824 | (118) | (0)% |
| Tax Liabilities | 109,160 | 105,549 | 3,611 | 3% |
| Other liabilities | 57,324 | 65,872 | (8,548) | (13)% |
| Provisions for risks and charges | 58,797 | 55,110 | 3,687 | 7% |
| Group Shareholders' equity | 168,507 | 164,396 | 4,111 | 3% |
The RESTATED income statement data as at March 31, 2020 were restated based on the final results related to the PPA of Altamira Asset Management.
In order to facilitate an understanding of the doValue Group's performance and financial position, a number of alternative performance measures ("Key Performance Indicators" or "KPIs") have been selected by the Group and are summarised in the table below.
doValue – Consolidated interim report as at March 31, 2021
(€/000)
| KPIs | 3/31/2021 | 3/31/2020 RESTATED |
12/31/2020 |
|---|---|---|---|
| Gross Book Value (EoP) - Group¹⁾ | 161,224,964 | 161,142,897 | 157,686,703 |
| Gross Book Value (EoP) - Italy | 78,579,021 | 77,808,637 | 78,435,631 |
| Collections of the period - Italy | 360,657 | 329,785 | 1,386,817 |
| LTM Collections - Italy | 1,417,689 | 1,821,907 | 1,386,817 |
| LTM Collections - Italy - Stock | 1,423,943 | 1,809,140 | 1,349,089 |
| LTM Collections / GBV EoP - Italy - Overall | 1.8% | 2.3% | 1.8% |
| LTM Collections / GBV EoP - Italy - Stock | 1.9% | 2.4% | 1.9% |
| Staff FTE / Total FTE Group | 39% | 35% | 43% |
| LTM Collections / Servicing FTE - Italy | 2.10 | 2.62 | 2.02 |
| EBITDA | 35,256 | 18,215 | 114,347 |
| Non-recurring items (NRIs) included in EBITDA | (495) | (1,283) | (10,928) |
| EBITDA excluding non-recurring items | 35,751 | 19,498 | 125,275 |
| EBITDA Margin | 29% | 22% | 27% |
| EBITDA Margin excluding non-recurring items | 29% | 23% | 30% |
| Profit (loss) for the period attributable to the shareholders of the Parent Company | 3,136 | (3,743) | (21,943) |
| Non-recurring items included in Profit (loss) for the period attributable to the Shareholders of the Parent Company |
(2,399) | (3,025) | (42,750) |
| Profit (loss) for the period attributable to the Shareholders of the Parent Company excluding non-recurring items |
5,535 | (718) | 20,807 |
| Earnings per share (Euro) | 0.04 | (0.05) | (0.28) |
| Earnings per share excluding non-recurring items (Euro) | 0.07 | (0.01) | 0.26 |
| Capex | 2,748 | 6,647 | 19,735 |
| EBITDA - Capex | 32,508 | 11,568 | 94,612 |
| Net Working Capital | 127,557 | 122,271 | 123,331 |
| Net Financial Position | (376,464) | (233,025) | (410,556) |
| Leverage (Net Debt / EBITDA LTM PF) | 2.5x | 1.4x | 2.7x |
¹⁾ In order to enhance the comparability of Gross Book Value (GBV) as of 3/31/2020 the values for doValue Greece have been included at the reference date
Gross Book Value EoP Group/Italy: indicates the book value of the loans under management at the end of the reference period for the entire scope of Group/Italy, gross of any potential write-downs due to expected loan losses.
Collections for period Italy: used to calculate fees for the purpose of determining revenues from the servicing business, they illustrate the ability to extract value from the portfolio under management.
Collections for last 12 months (LTM): collections in the twelve months prior to the reference date. The aggregate is used in interim periods to enable a like-for-like comparison with the annual figure.
Italy Stock Collections for last 12 months (LTM): these are the recoveries for the 12 months prior to the reference date of the managed Stock.
Italy LTM collections/GBV (Gross Book Value) EoP: the ratio between total gross LTM collections and the period-end GBV of the total portfolio under management. This indicator represents another metric to analyse collections for the period and LTM in absolute terms, calculated in relation to the effectiveness rate of collections, i.e. the yield of the portfolio under management in terms of annual collections and, consequently, commission income from management activities.
Italy LTM collections Stock/GBV (Gross Book Value) EoP Stock: the ratio between total gross LTM collections on the Stock portfolio under management at the start of the reference year and the end-period GBV of that portfolio. Compared with the previous indicator LTM collections/GBV, this metric represents the effectiveness rate of recoveries normalised for the entry of new portfolios during the reference year.
Staff FTE/Total FTE: the ratio between the number of employees who perform support activities and the total number of full-time employees of the Group. The indicator illustrates the efficiency of the operating structure and the focus on management activities.
Italy LTM collections/Servicing FTE: the ratio between total LTM collections and the number of employees who perform servicing activities. The indicator provides an indication of the collection efficiency rate, i.e. the yield of each individual employee specialised in servicing activities in terms of annual collections on the portfolio under management.
EBITDA and EBT attributable to Parent Company shareholders: together with other relative profitability indicators, they highlight changes in operating performance and provide useful information regarding the Group's financial performance. These data are calculated at the end of the period.
Non-recurring items: items generated in extraordinary operations such as corporate restructuring, acquisitions or disposals of entities, start-up of new businesses or entry into new markets.
EBITDA excluding non-recurring items: EBITDA attributable to core operations, excluding all items connected with extraordinary operations such as corporate restructuring, acquisitions or disposals of entities, start-up of new businesses or entry into new markets.
EBITDA Margin: obtained by dividing EBITDA by Gross Revenues. EBITDA Margin excluding non-recurrent items: items obtained by dividing Ordinary EBITDA by Gross Revenues.
Earnings per share: calculated as the ratio between net profit for the period and the number of outstanding shares at the end of the period.
Earnings per share excluding non-recurring items: the calculation is the same as that for earnings per share, but the numerator is equal to net profit for the period excluding non-recurring items net of the associated tax effects.
EBITDA - Capex: calculated as EBITDA net of investments in fixed capital (including property, plant and equipment and intangible and financial assets) ("Capex"). Together with other relative profitability indicators, it highlights changes in operating performance and provides an indication on the Group's ability to generate cash.
Net Working Capital: this is represented by receivables for fees invoiced and accruing, net of payables to suppliers for invoices accounted for and falling due in the period.
Net Financial Position: this is calculated as the sum of cash, cash equivalents and highly-liquid securities, net of amounts due to banks for loans and due to customers for the current accounts opened with the Group.
Leverage: this is the ratio between the net financial position and pro-forma EBITDA for the last 12 months to take account of significant transactions from the start of the reference year. It represents an indicator of the Group's debt level.
The table shown below presents the consolidated income statement as at March 31, 2021 with comparative figures as at March 31, 2020 RESTATED. It should be noted that the values as at March 31, 2021 include the contribution relating to doValue Greece, whose closing was completed on June 5, 2020, while the comparative data do not include it.
(€/000)
| Condensed Income Statement | 3/31/2021 | 3/31/2020 RESTATED |
Change € | Change % |
|---|---|---|---|---|
| Servicing Revenues: | 111,043 | 75,377 | 35,666 | 47% |
| o/w: NPE revenues | 92,320 | 60,486 | 31,834 | 53% |
| o/w: REO revenues | 18,723 | 14,891 | 3,832 | 26% |
| Co-investment revenues | 4,077 | 141 | 3,936 | n.s. |
| Ancillary and other revenues | 8,541 | 8,745 | (204) | (2)% |
| Gross revenues | 123,661 | 84,263 | 39,398 | 47% |
| NPEOutsourcing fees | (7,053) | (4,869) | (2,184) | 45% |
| REO Outsourcing fees | (5,149) | (4,152) | (997) | 24% |
| Ancillary Outsourcing fees | (2,815) | (2,197) | (618) | 28% |
| Net revenues | 108,644 | 73,045 | 35,599 | 49% |
| Staff expenses | (52,592) | (38,386) | (14,206) | 37% |
| Administrative expenses | (20,796) | (16,444) | (4,352) | 26% |
| Total "o.w. IT" | (7,443) | (5,463) | (1,980) | 36% |
| Total "o.w. Real Estate" | (1,588) | (1,199) | (389) | 32% |
| Total "o.w. SG&A" | (11,765) | (9,782) | (1,983) | 20% |
| Operating expenses | (73,388) | (54,830) | (18,558) | 34% |
| EBITDA | 35,256 | 18,215 | 17,041 | 94% |
| EBITDA margin | 29% | 22% | 7% | 32% |
| Non-recurring items included in EBITDA¹⁾ | (495) | (1,283) | 788 | (61)% |
| EBITDA excluding non-recurring items | 35,751 | 19,498 | 16,253 | 83% |
| EBITDA margin excluding non-recurring items | 29% | 23% | 6% | 25% |
| Net write-downs on property, plant, equipment and intangibles | (18,922) | (16,410) | (2,512) | 15% |
| Net provisions for risks and charges | (1,976) | (1,856) | (120) | 6% |
| Net write-downs of loans | 163 | 50 | 113 | n.s. |
| EBIT | 14,521 | (1) | 14,522 | n.s. |
| Net income (loss) on financial assets and liabilities measured at fair value | (515) | (246) | (269) | 109% |
| Financial interest and commissions | (6,816) | (2,865) | (3,951) | 138% |
| EBT | 7,190 | (3,112) | 10,302 | n.s. |
| Non-recurring items included in EBT²⁾ | (3,091) | (4,163) | 1,072 | (26)% |
| EBT excluding non-recurring items | 10,281 | 1,051 | 9,230 | n.s. |
| Income tax for the period | (2,803) | (2,185) | (618) | 28% |
| Profit (Loss) for the period | 4,387 | (5,297) | 9,684 | n.s. |
| Profit (loss) for the period attributable to Non-controlling interests | (1,251) | 1,554 | (2,805) | n.s. |
| Profit (Loss) for the period attributable to the Shareholders of the Parent Company |
3,136 | (3,743) | 6,879 | n.s. |
| Non-recurring items included in Profit (loss) for the period | (2,435) | (3,194) | 759 | (24)% |
| O.w. Non-recurring items included in Profit (loss) for the period attributable to Non-controlling interest |
(36) | (169) | 133 | (79)% |
| Profit (loss) for the period attributable to the Shareholders of the Parent Company excluding non-recurring items |
5,535 | (718) | 6,253 | n.s. |
| Profit (loss) for the period attributable to Non-controlling interests excluding | ||||
| non-recurring items | 1,287 0.04 |
- | 1,287 0.09 |
n.s. |
| Earnings per share (in Euro) | (0.05) | n.s. | ||
| Earnings per share excluding non-recurring items (Euro) | 0.07 | (0.01) | 0.08 | n.s. |
¹⁾ Non-recurring items in Operating expenses include the costs connected with the merger between doValue Greece and doValue Hellas, those incurred for the Group reorganisation project and costs referred to Covid-19
²⁾ Non-recurring items included below EBITDA refer mainly to (i) termination incentive plans that have therefore been reclassified from personnel expenses, (ii) fair value delta of the Put-Option and Earn-out and (iii) income taxes
The RESTATED income statement data as at March 31, 2020 were restated based on the final results related to the PPA of Altamira Asset Management.
At the end of March 2021, the Group's Managed Assets (GBV) in the 5 reference markets of Italy, Spain, Portugal, Greece and Cyprus amounted to €161.2 billion, up by 2% compared to the end of 2020 (€157.7 billion), thanks to the new mandates and the flows related to long-term contracts acquired in the first quarter. These data confirm, on the one hand, the effectiveness of the strategic decision taken in previous years through adequate geographic diversification and, on the other, the significant appeal of the Group on the various reference markets.
The following chart shows the geographical distribution of the GBV: in particular for each country the share managed as at March 31, 2021 is highlighted.
Developments in assets under management were characterised by the following changes relating to flows from new customers of roughly €4.4 billion, of which €2.3 billion for onboarding of contracts signed in 2020 and €2.1 billion deriving from contracts signed in 2021 which are part of the target for the year of €7-9 billion:
In addition to the flows listed above, a further €1.0 billion comes from existing customers through flow contracts vis-à-vis the target for the year of €2.0 billion.
A reduction of GBV was recorded during the period due to transfers totalling €0.3 billion.
Assets under management is to be considered in further growth with respect to the picture already described due to new mandates acquired and currently in the on-boarding phase for a total amount of €0.9 billion. They are composed as follows:
The following charts show the composition of the portfolio under management in terms of geographical diversification, type of asset/business and main customers:
Group collections during the period amounted to €1.3 billion, compared to €0.9 billion as at March 31, 2020. The increase is essentially due to the full contribution of the contracts of doValue Greece (not present in the first quarter of 2020). Collections breakdown by geographical area as follows: €0.4 billion in "Italy", €0.6 billion in "Iberia" (Spain and Portugal) and €0.3 billion in "Greece & Cyprus".
It should be noted that this figure is especially positive when compared to the final quarter of the previous year: in fact, on a like-forlike basis, collections in the first quarter of 2021 came to approximately 90% of the amount recorded between October and December 2020. This result is markedly significant if we also consider that the business is impacted by a clear negative seasonal trend in the first part of the year and that, historically, the fourth quarter is always extremely positive. This trend is further proof of the strength of the assets managed by the Group, despite a difficult context such as the current one.
Following up on the measures already taken in 2020, the doValue Group has continued to monitor and manage the Coronavirus epidemic emergency by adopting the prevention measures in the succession of government Decrees issued over time, and those set forth by the respective health authorities, including therein the extension of modes of remote working. The primary objective of the Group is to take a proactive approach to the various problems identified in order to protect the health of its employees, at the same time guaranteeing full company operations. However, some restrictions contained in the various legal provisions issued from time to time, slowed the activities of important services needed for the performance of loan and real estate asset servicing activities, mainly including the courts and support services for real estate transactions. These measures, together with the regulatory initiatives that extended the effects of loan moratoria in almost all countries in which the Group operates, influenced normal collection activities and the usual business access conditions.
Despite operating in a delicate scenario, both from a macroeconomic and health perspective, the doValue Group recorded gross revenues of €123.7 million in the first quarter of 2021, marking an increase of 47% compared to €84.3 million which was registered in the first quarter of 2020. It should be noted that the period under review includes the full contribution of all the Group's subsidiaries, while the comparative period did not include either the activities of the subsidiary doValue Greece, acquired in June 2020, or the effect of Coronavirus, which only impacted the final part of March 2020. Also this first period of operations shows a positive reversal of the trend: for the third quarter in a row, gross revenues are well above the average of the three previous quarters, demonstrating a healthy level of resilience of the Group's business model, as well as its elasticity in responding to the changeable market conditions influenced by the extraordinary and external variables.
In pro-forma aggregated terms, therefore including the effects of the acquisitions of Altamira Asset Management and doValue Greece from the start of each relevant period, gross revenues in the first quarter of 2020 would have been €117.5 million. Consequently, the current €123.7 million reported above would mark an increase, on a like-for-like basis, of €6.2 million, equating to a rise of 5.2%.
Revenues from Servicing of NPE and REO assets, amounting to €111.0 million (€75.4 million as at March 31, 2020), show an increase of 47%. As already pointed out, the current quarter benefitted from the full contribution of foreign subsidiaries.
The positive trend in NPE base fees (up by about 40% compared with the same period of 2020), despite virtually no change in the average fees on the GBV of assets under management, is related to the greater weight of this revenue component, in absolute and average fees terms, in the markets of southern Europe, where Altamira and doValue Greece operate, as compared with Italy, a factor that can further strengthen the future visibility of the Group's revenues, particularly with the current external environment characterised by greater uncertainty due to the effects of the Coronavirus.
As regards the "Italy" segment, regarding NPLs, it should be noted that collections for the last 12 months as a ratio to end-of-period (EoP) gross book value (GBV), given by the indicator "LTM collections/GBV (EoP)", came to 1.8%, in line with the percentage recorded in 2020 and down compared to final 2.3% recorded in the same period of 2020 due to the temporary negative impact of the Coronavirus on the collection activities. Excluding new management contracts, the indicator "LTM collections stock/GBV stock (EoP)" was 1.9%, registering the same rate as 2020 and a similar decrease to the 2.4% recorded in the first three months of 2020. These results are clearly the consequence of the effects linked to the epidemiological emergency in progress, which did not allow the Group to operate effectively and fully in the period between the second and third quarters.
Co-investment revenues amounted to €4.1 million (€141 thousand in March 2020), related primarily to the Relais securitisation whose mezzanine and junior notes had been acquired in the last few days of 2020 and resold in the first half of February 2021, recording a profit on disposal.
By contrast, the contribution of ancillary and other revenues, in the amount of €8.5 million (€8.7 million in March 2020), was more significant and can be attributed to the following:
These revenues account for approximately 7% of total gross revenues for the period under review, while in the first quarter of the previous year their incidence had been approximately equal to around 10%, thus confirming a stable source of revenues for the Group.
(€/000)
(€/000)
| 3/31/2021 | 3/31/2020 RESTATED | Change € | Change % | |
|---|---|---|---|---|
| NPE revenues | 92,320 | 60,486 | 31,834 | 53% |
| REO revenues | 18,723 | 14,891 | 3,832 | 26% |
| Co-investment revenues | 4,077 | 141 | 3,936 | n.s. |
| Ancillary and other revenues | 8,541 | 8,745 | (204) | (2)% |
| Gross revenues | 123,661 | 84,263 | 39,398 | 47% |
| NPE Outsourcing fees | (7,053) | (4,869) | (2,184) | 45% |
| REO Outsourcing fees | (5,149) | (4,152) | (997) | 24% |
| Ancillary Outsourcing fees | (2,815) | (2,197) | (618) | 28% |
| Net revenues | 108,644 | 73,045 | 35,599 | 49% |
Net revenues rose by around 49% to €108.6 million, compared to €73.0 million in the first quarter of the previous year. All the components of this item posted an increase when compared with the respective items of 2020, due to the expansion in the scope of consolidation. More specifically, the following should be noted:
Operating expenses, amounting to €73.4 million, showed an overall 34% increase compared to the same period of the previous year, when they amounted to €54.8 million. This increase is related entirely to the larger volume of business carried out in the current period, registering a less than proportional increase than the rise in net revenues.
| 3/31/2021 | 3/31/2020 RESTATED | Change € | Change % | |
|---|---|---|---|---|
| Staff expenses | (52,592) | (38,386) | (14,206) | 37% |
| Administrative expenses | (20,796) | (16,444) | (4,352) | 26% |
| o.w. IT | (7,443) | (5,463) | (1,980) | 36% |
| o.w. Real Estate | (1,588) | (1,199) | (389) | 32% |
| o.w. SG&A | (11,765) | (9,782) | (1,983) | 20% |
| Operating expenses | (73,388) | (54,830) | (18,558) | 34% |
| EBITDA | 35,256 | 18,215 | 17,041 | 94% |
| o.w: Non-recurring items included in EBITDA | (495) | (1,283) | 788 | (61)% |
| o.w: EBITDA excluding non-recurring items | 35,751 | 19,498 | 16,253 | 83% |
More specifically, of the €18.6 million increase, €14.2 million is attributable to staff expenses and €4.4 million to administrative expenses. As proof of the effectiveness of the cost-cutting strategy in place, it should be noted that the percentage weight of operating expenses on gross revenues dropped from around 65% in the first quarter of 2020 to 59% in March 2021.
Staff expenses rose by 37% compared to March 2020 and amounted to €52.6 million (€38.4 million in the same period of the previous year). On a like-for-like basis with respect to the first quarter of 2020, this item recorded an increase of roughly 6%, amounting to €40.8 million compared to €38.4 million, therefore showing a similar trend to the increase in gross revenues.
Administrative expenses rose by 26% over the first quarter of 2020, amounting to €20.8 million, compared to €16.4 million in the comparative period. Also in this case, the increase in these costs is less than proportional than the increase in gross revenues.
In addition, in order to address the Covid-19 epidemic, the company implemented an organic plan to further rationalise operating expenses, aimed at generating savings at Group level by capitalising on the synergies between its different areas.
In line with the two previous years, operating costs for the period include a number of non-recurring items (NRIs), which are shown as adjustments to EBITDA to facilitate comparison between periods and the identification of structural profitability for the Group.
These non-recurring items, which were therefore already recorded in the first quarter of 2020 in the amount of €1.3 million, totalled €0.5 million and mainly refer to:
EBITDA excluding non-recurring items accelerated considerably to over 80%, amounting to €35.8 million (€19.5 million in March 2020), with a margin of 29% on revenues, marking significant growth compared to 23% in the comparison period. On a like-for-like basis, the figure recorded in the current year is virtually in line, in terms of absolute value, with that of March 2020, despite taking account of the difficulties of the current macroeconomic framework.
Including non-recurring charges, EBITDA comes to €35.3 million, a growth of more than approximately 90% compared to the same figure recorded in 2020 (€18.2 million). On a like-for-like basis, the figure recorded in the current year is roughly 3% higher, in terms of absolute value, than that of March 2020, despite considering the difficulties of the current macroeconomic framework.
Group EBIT came to €14.5 million, compared to a substantial break-even position in 2020 restated also in the presence of a higher value related to amortisation/depreciation than the one recorded in March 2020, a clear sign of higher overall profit margins. EBT totalled €7.2 million, compared with the partial negative figure of €3.1 million recorded in the same period of the previous year, including the financial expenses connected with the loan taken out for the Altamira acquisition and the interest payable related to the bond loan issued on August 4, 2020, replacing the original bridge-to-bond loan, for the acquisition of doValue Greece.
| (€/000) | ||
|---|---|---|
| --------- | -- | -- |
| 3/31/2021 | 3/31/2020 RESTATED | Change € | Change % | |
|---|---|---|---|---|
| EBITDA | 35,256 | 18,215 | 17,041 | 94% |
| Net write-downs on property, plant, equipment and intangibles | (18,922) | (16,410) | (2,512) | 15% |
| Net provisions for risks and charges | (1,976) | (1,856) | (120) | 6% |
| Net write-downs of loans | 163 | 50 | 113 | n.s. |
| EBIT | 14,521 | (1) | 14,522 | n.s. |
| Net income (loss) on financial assets and liabilities measured at fair value | (515) | (246) | (269) | 109% |
| Net financial interest and commissions | (6,816) | (2,865) | (3,951) | 138% |
| EBT | 7,190 | (3,112) | 10,302 | n.s. |
EBT includes non-recurring expenses in the amount of €3.1 million related to:
Net write-downs on property, plant and equipment and intangibles amounted to €18.9 million, while the "restated" figure for March 2020 amounted to €16.4 million. This item mainly includes the amortisation relating to the Altamira and doValue Greece servicing agreements (for the latter, valued on the basis of the temporary calculation carried out at the time of the Purchase Price Allocation (PPA)), classified as intangible assets in the balance sheet given the unique characteristics of the servicing market, which, in the past, saw the leading operators investing in long-term asset management agreements.
The total balance also includes the amortisation of rights-of-use deriving from the accounting of lease agreements following the application of IFRS 16. The amount that influenced the first quarter of 2021 came to €2.5 million, while the impact in the same period of 2020 amounted to €2.4 million. The remainder of amortisation primarily concerns software licenses connected with technology investments made by the Group during the period aimed at upgrading the IT platform.
Net provisions for risks and charges totalled €2.0 million, essentially in line with the previous period. This is mainly attributable to provisions for early termination incentives in favour to employees primarily granted to employees in Italy who participated in the Company's plan, in line with the targets of the 2020-2022 business plan, partially offset by releases of provisions of previous years deemed to no longer exist.
The Net loss on financial assets and liabilities measured at fair value came to €0.5 million, marking an increase compared to the loss in the previous period of €0.2 million. This deviation is attributable to the negative change in the overall fair value of ABS securities in the portfolio and the accrual of the time value relating to financial liabilities for the earn-out and put-option already cited previously in non-recurring expenses.
Net financial interest and commissions amounted to €6.8 million, an increase compared to €2.9 million in March 2020 and reflect financial expenses tied to the acquisition of the subsidiary Altamira and higher expenses connected with the bond loan related to the acquisition of doValue Greece.
(€/000)
| 3/31/2021 | 3/31/2020 RESTATED | Change € | Change % | |
|---|---|---|---|---|
| EBT | 7,190 | (3,112) | 10,302 | n.s. |
| Income tax for the period | (2,803) | (2,185) | (618) | 28% |
| Profit (Loss) for the period | 4,387 | (5,297) | 9,684 | n.s. |
| Profit (loss) attributable to Non-controlling interests | (1,251) | 1,554 | (2,805) | n.s. |
| Profit (loss) attributable to the shareholders of the Parent company | 3,136 | (3,743) | 6,879 | n.s. |
The tax rate, calculated by excluding non-recurring items and normalising the effects of the deferred tax assets of Altamira SA and of the DTA charge, comes to 23%, compared with the 21% for the same period of 2020. In this regard, the impact of the foreign subsidiaries on the normalised tax rate is evident, given that they enjoy a lower overall fiscal burden than that of the Italian companies.
Profit (Loss) for the period attributable to the Shareholders of the Parent Company, excluding non-recurring items, came to €5.5 million, compared to the negative €0.7 million of the previous period. Including non-recurring items, the Profit (Loss) for the period attributable to the Shareholders of the Parent Company was €3.1 million, compared to the negative €3.7 million of the same period of the previous year.
doValue's international expansion in the broader market of Southern Europe, with the acquisition first of Altamira and later of doValue Greece, has led to the revision of the manner in which management assesses and analysesthe business, moving from a segmentation by customers and business lines to a geographical breakdown.
This classification is tied to specific factors of the entities included in each category and to the type of market. As a result, the geographical areas defined are: Italy, Greece and Cyprus and Iberia (Spain and Portugal).
Based on these criteria, the following table shows the revenues and EBITDA (excluding non-recurrent charges) for the period for each of these business segments.
The first quarter of 2021 recorded gross revenues of €123.7 million (€84.3 million in March 2020) and EBITDA, excluding recurring expenses, of €35.8 million (€19.5 million in March 2020). The "Italy" segment contributed 23% to total Group EBITDA, excluding nonrecurring items, while the "Iberia" segment contributed 21% and the "Greece and Cyprus" segment 56%.
The EBITDA Margin, excluding non-recurring items, on the "Italy" segment came to 20%, slightly higher than the 19% recorded on the "Iberia" region, and lower than the "Greece & Cyprus" region, which posted a figure of 46%.
| First Quarter 2021 | ||||
|---|---|---|---|---|
| Condensed Income Statement (excluding non-recurring items) | Italy | Greece & Cyprus | Spain & Portugal | Total |
| Servicing revenues | 31,446 | 42,619 | 36,978 | 111,043 |
| o/w NPE Revenues | 31,446 | 39,162 | 21,712 | 92,320 |
| o/w REO Revenues | - | 3,457 | 15,266 | 18,723 |
| Co-investment revenues | 4,077 | - | - | 4,077 |
| Ancillary and other revenues | 6,054 | 908 | 1,579 | 8,541 |
| Gross Revenues | 41,577 | 43,527 | 38,557 | 123,661 |
| NPE Outsourcing fees | (2,248) | (1,106) | (3,699) | (7,053) |
| REO Outsourcing fees | - | (394) | (4,755) | (5,149) |
| Ancillary Outsourcing fees | (2,347) | - | (468) | (2,815) |
| Net revenues | 36,982 | 42,027 | 29,635 | 108,644 |
| Staff expenses | (20,976) | (16,783) | (14,807) | (52,566) |
| Administrative expenses | (7,687) | (5,262) | (7,378) | (20,327) |
| o/w IT | (3,348) | (1,583) | (2,412) | (7,343) |
| o/w Real Estate | (507) | (716) | (357) | (1,580) |
| o/w SG&A | (3,832) | (2,963) | (4,609) | (11,404) |
| Operating expenses | (28,663) | (22,045) | (22,185) | (72,893) |
| EBITDA excluding non-recurring items | 8,319 | 19,982 | 7,450 | 35,751 |
| EBITDA Margin excluding non-recurring items | 20% | 46% | 19% | 29% |
| Contribution to EBITDA excluding non-recurring items | 23% | 56% | 21% | 100% |
| First Quarter 2021 vs 2020 | ||||
|---|---|---|---|---|
| Condensed Income Statement (excluding non-recurring items) |
Italy | Greece & Cyprus | Spain & Portugal | Total |
| Servicing revenues | ||||
| First Quarter 2021 | 31,446 | 42,619 | 36,978 | 111,043 |
| First Quarter 2020 restated | 32,350 | 8,957 | 34,070 | 75,377 |
| Change | (904) | 33,662 | 2,908 | 35,666 |
| Co-investment revenues, ancillary and other revenues | ||||
| First Quarter 2021 | 10,131 | 908 | 1,579 | 12,618 |
| First Quarter 2020 restated | 5,498 | 77 | 3,311 | 8,886 |
| Change | 4,633 | 831 | (1,732) | 3,732 |
| Outsourcing fees | ||||
| First Quarter 2021 | (4,595) | (1,500) | (8,922) | (15,017) |
| First Quarter 2020 restated | (3,261) | (501) | (7,456) | (11,218) |
| Change | (1,334) | (999) | (1,466) | (3,799) |
| Staff expenses | ||||
| First Quarter 2021 | (20,976) | (16,783) | (14,807) | (52,566) |
| First Quarter 2020 restated | (19,876) | (4,563) | (13,084) | (37,523) |
| Change | (1,100) | (12,220) | (1,723) | (15,043) |
| Administrative expenses | ||||
| First Quarter 2021 | (7,687) | (5,262) | (7,378) | (20,327) |
| First Quarter 2020 restated | (5,223) | (1,942) | (8,858) | (16,023) |
| Change | (2,464) | (3,320) | 1,480 | (4,304) |
| EBITDA excluding non-recurring items | ||||
| First Quarter 2021 | 8,319 | 19,982 | 7,450 | 35,751 |
| First Quarter 2020 restated | 9,487 | 2,028 | 7,983 | 19,498 |
| Change | (1,168) | 17,954 | (533) | 16,253 |
| EBITDA Margin excluding non-recurring items | ||||
| First Quarter 2021 | 20% | 46% | 19% | 29% |
| First Quarter 2020 restated | 25% | 22% | 21% | 23% |
| Change | (5%) | 23% | (2%) | 6% |
The balance sheet figures have been reclassified from a management perspective, which is more in line with the representation of the reclassified income statement and the net financial position of the Group.
At the end of this Interim Report on Group Operations, in accordance with the same presentation approach for the income statement, we have included a reconciliation between the condensed balance sheet reported below and the table reported in the section containing the consolidated financial statements.
| Condensed Balance Sheet | 3/31/2021 | 12/31/2020 | Change € | Change % |
|---|---|---|---|---|
| Cash and liquid securities | 166,555 | 132,486 | 34,069 | 26% |
| Financial assets | 51,585 | 70,859 | (19,274) | (27)% |
| Property, plant and equipment | 33,356 | 36,176 | (2,820) | (8)% |
| Intangible assets | 564,246 | 577,460 | (13,214) | (2)% |
| Tax assets | 122,530 | 117,909 | 4,621 | 4% |
| Trade receivables | 179,263 | 175,155 | 4,108 | 2% |
| Assets held for sale | 30 | 30 | - | n.s. |
| Other assets | 14,532 | 16,485 | (1,953) | (12)% |
| Total Assets | 1,132,097 | 1,126,560 | 5,537 | 0% |
| Financial liabilities: due to banks | 543,019 | 543,042 | (23) | 0% |
| Other financial liabilities | 84,867 | 83,162 | 1,705 | 2% |
| Trade payables | 51,706 | 51,824 | (118) | (0)% |
| Tax Liabilities | 109,160 | 105,549 | 3,611 | 3% |
| Employee Termination Benefits | 16,312 | 16,341 | (29) | (0)% |
| Provisions for risks and charges | 58,797 | 55,110 | 3,687 | 7% |
| Other liabilities | 57,324 | 65,872 | (8,548) | (13)% |
| Total Liabilities | 921,185 | 920,900 | 285 | 0% |
| Share capital | 41,280 | 41,280 | - | n.s. |
| Reserves | 124,194 | 145,162 | (20,968) | (14)% |
| Treasury shares | (103) | (103) | - | n.s. |
| Profit (loss) for the period attributable to the Shareholders of the Parent Company |
3,136 | (21,943) | 25,079 | (114)% |
| Net Equity attributable to the Shareholders of the Parent | ||||
| Company | 168,507 | 164,396 | 4,111 | 3% |
| Total Liabilities and Net Equity attributable to the | ||||
| Shareholders of the Parent Company | 1,089,692 | 1,085,296 | 4,396 | 0% |
| Net Equity attributable to Non-Controlling Interests | 42,405 | 41,264 | 1,141 | 3% |
| Total Liabilities and Net Equity | 1,132,097 | 1,126,560 | 5,537 | 0% |
The item Cash and liquid securities includes €1.7 million relating to assets allocated for a specific business activity deriving from the subsidiary Italfondiario.
Financial assets went from €70.9 million to €51.6 million, marking a decrease of €19.3 million. The item is broken down in the following table.
| (€/000) |
|---|
| --------- |
| Financial assets | 3/31/2021 | 12/31/2020 | Change € | Change % |
|---|---|---|---|---|
| At fair value through profit or loss | 42,217 | 63,644 | (21,427) | (34)% |
| Debt securities | 15,647 | 36,741 | (21,094) | (57)% |
| CIUs | 26,374 | 26,857 | (483) | (2)% |
| Equity instruments | 196 | 46 | 150 | n.s. |
| At amortized cost | 9,368 | 7,215 | 2,153 | 30% |
| L&R with banks other than current accounts and demand deposits | 75 | 75 | - | n.s. |
| L&R with customers | 9,293 | 7,140 | 2,153 | 30% |
| Total | 51,585 | 70,859 | (19,274) | (27)% |
The main component of the decrease in financial assets in the period was debt securities, as a result of the transfer of mezzanine and junior notes related to the Relais securitisation.
As regards financial assets at amortised cost, L&R with customers recorded an increase of €2.2 million, attributable to the subsidiary Italfondiario and deriving from use of part of the financial resources originating from a limited recourse loan, relating to assets allocated for a specific business activity and classified under other financial liabilities.
Property, plant and equipment went from €36.2 million to €33.4 million, marking a reduction of €2.8 million, due to depreciation in the period of €3.4 million and purchases in the quarter amounting to €591 thousand, of which €169 thousand relating to new rights of use in application of IFRS 16 Leases.
Intangible assets went from €577.5 million to €564.2 million, therefore registering a decrease of €13.2 million determined by €15.5 million in amortisation in the period, and €2.3 million by software increases.
The following is a breakdown of intangible assets:
| (€/000) | ||||
|---|---|---|---|---|
| Intangible assets | 3/31/2021 | 12/31/2020 | Change € | Change % |
| Software | 21,301 | 20,259 | 1,042 | 5% |
| Brands | 36,301 | 37,502 | (1,201) | (3)% |
| Assets under development and payments on account | 1,913 | 2,807 | (894) | (32)% |
| Goodwill | 192,993 | 192,992 | 1 | 0% |
| Other intangible assets | 311,738 | 323,900 | (12,162) | (4)% |
| Total | 564,246 | 577,460 | (13,214) | (2)% |
In particular, the more significant amount of intangible assets stems from the latest two acquisitions completed by the Group, relating respectively to Altamira Asset Management and its subsidiaries, carried out at the end of June 2019, and to the business combination of doValue Greece concluded in June 2020, and whose values as at March 31, 2021 derive from the provisional calculation performed at the time of the Purchase Price Allocation (PPA).
In relation to the acquisition of Altamira, intangible assets are composed as follows:
(€/000)
As regards the acquisition of doValue Greece, the fair value measurement of the acquired intangible assets amounts to a total of €255.7 million (€237.7 million as at March 31, 2021 net of the amortisation for the period), attributable to active servicing contracts, in addition to €68.5 million allocated to goodwill.
Tax assets as at March 31, 2021, are broken down as follows:
| Tax assets | 3/31/2021 | 12/31/2020 | Change € | Change % |
|---|---|---|---|---|
| Current tax assets | 6,806 | 6,977 | (171) | (2)% |
| Paid in advance | 6,977 | 8,085 | (1,108) | (14)% |
| Tax credits | 125 | - | 125 | n.s. |
| Tax liabilities | (296) | (1,108) | 812 | (73)% |
| Deferred tax assets | 95,472 | 94,700 | 772 | 1% |
| Write-down on loans | 49,343 | 49,344 | (1) | 0% |
| Tax losses carried forward in the future | 17,306 | 16,821 | 485 | 3% |
| Property, plants and equipment / Intangible assets | 21,256 | 21,369 | (113) | (1)% |
| Other assets / liabilities | 47 | 42 | 5 | 12% |
| Provisions | 7,520 | 7,124 | 396 | 6% |
| Other tax receivables | 20,252 | 16,232 | 4,020 | 25% |
| Total | 122,530 | 117,909 | 4,621 | 4% |
Current and deferred tax assets are essentially in line with the balances at December 31, 2020, while the increase of €4.0 million in other tax receivables relates to the VAT credit.
By contrast, the breakdown of tax liabilities is reported below, which reported an increase compared to the 2020 balances, substancially due to current taxes related to the positive taxable income of the quarter:
(€/000)
| Tax liabilities | 3/31/2021 | 12/31/2020 | Change € | Change % |
|---|---|---|---|---|
| Taxes for the period | 10,757 | 6,538 | 4,219 | 65% |
| Deferred tax liabilities | 76,136 | 77,466 | (1,330) | (2)% |
| Other tax payables | 22,267 | 21,545 | 722 | 3% |
| Total | 109,160 | 105,549 | 3,611 | 3% |
As at March 31, 2021, financial liabilities - due to banks amounted to €543 million, essentially stable with respect to the balances as at December 31, 2020 and include payables for the acquisition of Altamira in 2019 and doValue Greece in 2020. In particular, for the first acquisition, a Facility Loan was entered into, whose amortised cost at the end of March 2021 amounted to €286.9 million, while for the acquisition of doValue Greece, a guaranteed senior bond was subscribed, whose residual debt measured at amortised cost at the end of March 2021 came to €256.1 million.
Other financial liabilities at the end of the first quarter of 2021 are detailed below:
(€/000)
| Other financial liabilities | 3/31/2021 | 12/31/2020 | Change € | Change % |
|---|---|---|---|---|
| Lease liabilities | 26,414 | 28,793 | (2,379) | (8)% |
| Earn-out | 30,066 | 29,894 | 172 | 1% |
| Put option on non-controlling interests | 23,770 | 24,011 | (241) | (1)% |
| Hedging derivatives | 360 | 454 | (94) | (21)% |
| Other financial liabilities | 4,257 | 10 | 4,247 | n.s. |
| Total | 84,867 | 83,162 | 1,705 | 2% |
Lease liabilities include the discounted value of future lease payments, in accordance with the provisions of IFRS 16.
The liability for the "Earn-out" refers (i) to the Altamira operation in the amount of €17.5 million, which represents a portion of the acquisition price and (ii) to the acquisition of doValue Greece for €12.6 million that is related to the achievement of some EBITDA targets within a ten-year time frame and the first payments of which will not be due before 2024.
The liability for "put option on non-controlling interests" regards the option for the purchase of residual non-controlling interests in Altamira, expiring in June 2021.
The other financial liabilities include, in this first quarter of 2021, the amount of €4.3 million for a limited recourse loan relating to the above-mentioned assets allocated for a specific business activity.
Provisions for risks and charges recorded an increase of €3.7 million compared to the balances at the end of 2020, due to the combined effect of the uses and releases pertaining to in-court and out-of-court disputes settled in the quarter for €0.9 million and new provisions for variable compensation for employees of €4.6 million, which take account of the updates to the new Remuneration Policy for 2021 approved by the Shareholders' Meeting occurred on April 29, 2021.
(€/000)
| Provisions for risks and charges | 3/31/2021 | 12/31/2020 | Change € | Change % |
|---|---|---|---|---|
| Legal disputes | 42,095 | 42,836 | (741) | (2)% |
| Staff expenses | 10,703 | 6,112 | 4,591 | 75% |
| Other | 5,999 | 6,162 | (163) | (3)% |
| Total | 58,797 | 55,110 | 3,687 | 7% |
Other liabilities went from €65.9 million to €57.3 million, marking a decrease of €8.5 million in the quarter, due mainly to the release for the portion relating to the first quarter of 2021 of the deferred income registered at the end of 2020 for €31 million, in application of IFRS 15 and relating to the accounting of the early payment of fixed servicing fees pertaining to 2021.
Shareholders' equity attributable to shareholders of the Parent Company amounted to €168.5 million and includes the amount of dividends to be distributed, amounting to €20.8 million, approved by the Shareholders' Meeting occurred on April 29, 2021.
(€/000)
| Net Working Capital | 3/31/2021 | 3/31/2020 | 12/31/2020 |
|---|---|---|---|
| Trade receivables | 179,263 | 161,523 | 175,155 |
| Trade payables | (51,706) | (39,252) | (51,824) |
| Total | 127,557 | 122,271 | 123,331 |
Net working capital for the period amounts to €127.6 million, compared to €123.3 million in December 2020, marking a trend essentially in line with the previous year. This is proof of the special attention paid by the Group to these items and the resulting cash flows. These positive aspects are also the result of the strategic choice of geographic diversification of the business that has allowed the Group to take advantage of improved cash flows from foreign areas.
| (€/000) | ||||
|---|---|---|---|---|
| Net Financial Position | 3/31/2021 | 3/31/2020 | 12/31/2020 | |
| A | Cash | 166,555 | 134,279 | 132,486 |
| B | Liquidity (A) | 166,555 | 134,279 | 132,486 |
| C | Current bank debts | (82,404) | 134,279 | (80,998) |
| D | Bonds issued - current | (2,208) | (82,108) | (5,374) |
| E | Net current financial position (B )+(C)+(D) | 81,943 | 186,450 | 46,114 |
| F | Non-current bank debts | (204,485) | 52,171 | (203,198) |
| G | Bonds issued - non current | (253,922) | (285,196) | (253,472) |
| H | Net financial position (E)+(F)+(G) | (376,464) | (233,025) | (410,556) |
The net financial position at the end of March 2021 amounted to €376.5 million compared to €410.6 million at the end of 2020 (and €233.0 million in March 2020).
When compared with the same period of the previous year, this item was impacted by the acquisition of Eurobank-FPS (now doValue Greece), which was financed by a guaranteed senior bond of €265.0 million.
A clear improvement is evident with respect to the closing value at December 31, 2020, amounting to €34.1 million partly influenced by the sale of ABS securities attributable to the Relais securitisation completed in February, and partly by the healthy operating cash flows.
Cash and cash equivalents recorded €166.6 million, up compared to €132.5 million at the end of 2020, thus allowing the necessary elasticity that the Group needs to develop its operating plans. In addition to this, as at March 31, 2021, the Group had €80 million of fully available committed credit lines to support total liquidity. This item includes €1.7 million relating to assets allocated for a specific business activity.
The current net financial position remained positive at €81.9 million (€46.1 million at the end of 2020), reflecting a balanced overall capital structure.
| (€/000) | |||
|---|---|---|---|
| Cash flow | 3/31/2021 | 3/31/2020 RESTATED | 12/31/2020 |
| EBITDA | 35,256 | 18,215 | 114,347 |
| Capex | (2,748) | (6,647) | (19,735) |
| EBITDA-Capex | 32,508 | 11,568 | 94,612 |
| as % of EBITDA | 92% | 64% | 83% |
| Adjustment for accrual on share-based incentive system payments | 974 | 489 | 3,098 |
| Changes in NWC (Net Working Capital) | (4,226) | 1,732 | 15,645 |
| Changes in other assets/liabilities | (10,470) | (9,990) | 6,555 |
| Operating Cash Flow | 18,786 | 3,800 | 119,910 |
| Tax paid (IRES/IRAP) | - | - | (15,324) |
| Financial charges | (6,439) | (2,593) | (17,807) |
| Free Cash Flow | 12,347 | 1,207 | 86,779 |
| (Investments)/divestments in financial assets | 21,745 | 2,234 | (24,938) |
| Equity (investments)/divestments | - | - | (234,057) |
| Dividend paid | - | - | (1,875) |
| Net Cash Flow of the period | 34,092 | 3,440 | (174,091) |
| Net financial Position - Beginning of period | (410,556) | (236,465) | (236,465) |
| Net financial Position - End of period | (376,464) | (233,025) | (410,556) |
| Change in Net Financial Position | 34,092 | 3,440 | (174,091) |
The Operating cash flow for the period amounted to €18.8 million (€3.8 million in March 2020) and represents the positive result of the strategy involving the geographical diversification of the business and the recovery phase in progress in the first quarter of 2021. The figure under review was positively impacted by the healthy profit margins recorded in the period, with Ebitda at €35.3 million and investments contained to roughly €2.7 million (equal to roughly 2% of gross revenues).
Financial charges paid amounted to €6.4 million (€2.6 million in March 2020) and were affected by the higher average indebtedness recorded as a result of the lines activated to support the Group's international growth process.
Therefore, the above trends determined a Free Cash Flow for the period of €12.3 million compared to €1.2 million in the first three months of 2020.
February saw the disinvestment of the mezzanine and junior notes of a securitisation relating to NPEs for €1.6 billion (the "Relais Project").
During the period under review, no equity investments or dividends paid were registered, in line with the resolutions of the Shareholders' Meeting of April 29.
The Net cash flow for the period was therefore a positive €34.1 million, a net improvement compared to the €3.4 million recorded in March 2020.
During the quarter, the main transactions on the managed portfolio saw the acceptance and / or signature of approximately €4.4 billion of new mandates. Note should be taken of the onboarding of the Icon portfolio in Greece.
The doValue's sales initiatives translated to a significant volume of new credit servicing agreements. The most representative servicing mandates include:
In addition, note should be taken of roughly €1.0 billion of new flows of loans granted under management by existing customers on multi-year contracts signed in Spain, Italy, Greece and Cyprus.
As already recorded under "Significant events after the end of the year" in the Directors' Report on Operations of the Group as at December 31, 2020, as part of a tax inspection still ongoing conducted by the Spanish Tax Authorities on Altamira Asset Management Holding ("AAMH"), legal entity used by the previous shareholders of AAM and not part of doValue Group, Altamira Asset Management ("AAM") for fiscal years 2014 and 2015, on the month of March 2021 AAM has been informed by Spanish officials of a different approach by the Spanish Tax Authorities in the calculation of the tax base compared to the one followed by the company at the time based on the existing legislation, mainly regarding the fiscal deductibility of expenses and financial charges incurred by AAM and AAMH following the acquisition of AAM by AAMH from Banco Santander.
As part of the aforementioned tax assessment procedure, some risk profiles came to light in the estimate of the previous tax liabilities of AAM.
In May 2021, the Spanish Tax Authorities, expressed their willingness to reach an agreement to fully settle pending tax disputes (also relating to the years 2016-2017-2018 for which said financial charges were deducted and that, in the event of agreement, shall be settled through the submission of a supplementary tax return) with no application of penalties and interest, whose impact in economic-financial terms, was quantified at a total of roughly €34 million. AAM considered it to be in its interest to reach an agreement with the Authorities under these terms, and adjusted the provision allocated in respect of said tax audit, registering an impact of €29.2 million on the 2020 income statement, in application of IFRIC 23 "Uncertainty over income tax treatments", and IAS 8 "Accounting standards, changes to accounting estimates and errors". For further details, please refer to the Directors' Report on the Group as at December 31, 2020, in the section on "Significant events after the end of the period".
The respective Boards of Directors approved the plan for the merger by incorporation of doValue Hellas Credit and Loan Servicing Société Anonyme in doValue Greece Loans and Credits Claim Management Société Anonyme. The plan was submitted to the Central Bank of Greece for authorisation and will be recorded in the register of companies once the shareholders' meeting approvals have been received. This transaction will enable doValue to rationalise its presence in Greece under a single brand and to achieve cost synergies related to the elimination of some corporate and onboarding costs of the portfolio under management of doValue Hellas on the systems of doValue Greece.
On February 18, Fitch Rating confirmed the long-term rating (IDR) of BB with a stable outlook and the short-term rating at B. The rating of the guaranteed senior bond was confirmed at BB.
In April 2021, the Spanish Tax Authorities formalised the proposed agreement with Altamira Asset Management Holding ("AAMH"), a vehicle attributable to the previous shareholders of the Altamira Group and not falling under the doValue Group, and the subsidiary Altamira Asset Management ("AAM"), accurately quantifying the sums due at an amount essentially in line with the estimates drawn up previously, confirming the specific provision allocated to be more than sufficient. At the end of April, the two companies signed said proposed agreement, which now remains subject to receipt of the opinion of the Oficina Tecnica.
Note should be taken of the fact that the tax charges recorded on the basis of said agreement derive from the structure originally put in place in 2013 and 2014 for the acquisition of AAM by the previous shareholders (Apollo, CCPIB and Adia) and that, at the moment of the acquisition of AAM by AAMH, doValue covered the risk of contingent liabilities, including tax-related, by obtaining declarations and guarantees from the seller and supplementing them with specific insurance cover. doValue already activated at the same time as notification of the tax proceedings, the insurance policy taken out at the time of acquisition and the additional contractual safeguards against the entire amount relating to the above-mentioned tax audit. On the basis of the in-depth analyses carried out, also through specific legal consultancy, the full recoverability of these financial outlays would seem possible.
In April, MSCI ESG Rating improved the rating assigned to the doValue Group, bringing it from the previous rating of BBB to A. The A rating is a recognition of the growing attention paid by the Group to ESG issues.
The Ordinary Shareholders' Meeting of doValue S.p.A. was held on April 29, 2021 and approved all items on the agenda, including:
On May 13, 2021 doValue subscribed an investment agreement for participating in a capital increase in the Brazilian fintech company Quero Quitar S.A. for about €1.5 million. In respect of this investment, doValue will acquire a stake of around 10% in Quero Quitar, with which it will collaborate in the future to develop innovative recovery models and collection technology in the unsecured nonperforming loans segment in Europe.
With registered office in San Paolo, Quero Quitar is one of the most promising fintech start-ups operating in the field of digital collection. With approximately 15 million debtors registered and more than 20 customers including leading Brazilian financial institutions, the platform developed by Quero Quitar allows debtors to manage the process of renegotiating their debts amicably, thanks to a fully digital, scalable and efficient process. In particular, the company does not use call centres or require human intervention, but attracts debtors to the platform through digital marketing tools (social network, internet advertising, e-mail, sms, etc.), allowing the debtor to intervene proactively with respect to the renegotiation offers proposed by Quero Quitar based on the mandate of its customers.
The investment falls under the M&A strategy of diversification in sectors with high growth profiles and different but complementary business models with respect to doValue's core business.
The current economic situation related to the effects of the Coronavirus, which are not expected to translate to structural changes in the dynamics of the industry, requires a cautious approach to the short-term performance.
Despite the operational continuity of doValue operations in all its markets and the trend of gradual improvement of the market conditions, the Group is carefully monitoring the reduced activity of the legal system and public services in general, together with decisions on bank moratoriums and developments in the real estate sector, which can impact the time needed to manage positions and collections. However, it notes a gradual improvement in conditions, which are moving towards a stabilisation and normalisation phase.
Despite a context of limited visibility, the positive trend in collections recorded in the first quarter of 2021 represents a confirmation of the growth trend, already recorded in the second quarter of 2020, and signals the discontinuity of the traditional seasonality of Group collections, concentrated on the final quarter of the year and provides a tangible sign of recovery.
The significant geographical, product and customer diversification and the flexibility of costs, in particular outsourcing costs and the employee incentive plan represent additional factors for the mitigation of the negative impacts of the Coronavirus pandemic, in view of a potential full recovery in 2021.
Finally, it is believed that the doValue business model is able to respond to the various phases of the economic cycle with the expansion of assets under management or collections, respectively, during the contraction or expansion of the cycle itself, consistent with the Group's mission to support Banks, Investors, companies and individuals in all phases of credit management, fostering the sustainable development of the financial system.
In consideration of the activities it performs and the results achieved, the financial position of the doValue Group is appropriately scaled to meet its needs.
The financial policy pursued is aimed at fostering the stability of the Group, which in view of its operations does not currently or prospectively intend to engage in speculative investment activity.
With regard to the main risks and uncertainties, the current financial markets' situation and the consequences of any economic and financial effects deriving from the spread of the Coronavirus still involve elements of uncertainty, even in the presence of more stable macroeconomic conditions than during 2020.
In order to express an opinion on the going concern assumption on the basis of which this Consolidated Interim Report as at March 31, 2021 was prepared, the risks and uncertainties to which the Group is exposed were carefully assessed:
From the analyses carried out and on the basis of the assumptions reported above, no uncertainties have emerged in relation to events or circumstances which, considered individually or as a whole, could give rise to doubts regarding the company's ability to continue as a going concern.
The international health emergency declared in January 2020 by the World Health Organisation (WHO) as a consequence of the spread of Coronavirus, and still in progress, has caused a significant slowdown in activity, in some cases the interruption of economic and commercial activity in multiple sectors.
Market turbulence persists, which amplifies the level of uncertainty of the estimates of possible developments in terms of the economic impact of the spread of the Coronavirus around the world, Europe and Italy. Short-term macroeconomic forecasts will therefore be subject to changes that are currently not precisely quantifiable, even if there is greater stability compared to 2020 in the reference market.
Starting from the end of February of last year, the doValue Group promptly activated the Business Continuity & Crisis Management Committee in crisis session in order to make decisions resulting from the development of the situation. The main measures taken over time and still in force were aimed at supporting its employees and collaborators, both in Italy and abroad, in the management of the Covid-19 emergency, first and foremost protecting their health and well-being, while allowing them to maintain contact with the organisation.
In particular, also in the first few months of 2021, the Group guaranteed:
In light of the above, in compliance with the guidelines issued by Consob on February 16, 2021 (Consob warning notice no. 1/21 - Object: Covid-19 - Economy support measures - Warning notice on the disclosure to be provided) and ESMA guidelines, the main financial information needed to understand the effects of the pandemic on the Company's business is provided below.
With reference to the intangible assets in the financial statements, it should first be noted that the opening balance of the intangible assets, which represent the value of multi-annual servicing contracts and goodwill connected to the acquisition of Altamira, were restated with respect to the closing balances as at March 31, 2020, following changes to the PPA measurement, pursuant to IFRS 3, rendered final as at June 30, 2020, after 12 months from its entry into the scope of consolidation.
In respect of the acquisition of Eurobank-FPS (now doValue Greece), concluded on June 5, 2020, steps were taken to carry out a provisional Purchase Price Allocation (PPA) as at December 31, 2020, based on which intangible assets relating to the Special and Master Servicing contracts were identified, for the management of portfolios of impaired exposures and consequent goodwill. The related values initially recognised in the financial statements were determined on the basis of the valuation of the estimate of the fair value of the net assets of doValue Greece, which takes into account the useful information for valuation purposes available at the acquisition date and entry into consolidation. The process of collecting and analysing useful information for valuation purposes is still in progress and is not yet completed; this process is to be completed within one year from the date of acquisition of the subsidiary.
Albeit taking into account the difficulty inherent in the formulation of even short or medium-term forecasts in this ongoing climate of great uncertainty and considering that both Altamira and doValue Greece hold medium/long-term management contracts for existing loans (stock) and future positions (new flows) with leading banks and major investment funds, the Group carried out an impairment test on the values of the intangible assets and on the goodwill as at December 31, 2020, as indicated by the international accounting standard IAS 36 "Impairment of assets" in accordance with the instructions issued by ESMA on October 28, 2020 in the Public Statement "European common enforcement priorities for 2020 IFRS annual financial reports". This test highlighted a consistently positive difference between the value in use of active servicing contracts and the associated carrying value less amortisation for the period, as well as the absence of impairment with respect to the recoverable value of goodwill allocated to the CGUs.
For more information regarding said impairment test, please refer to the Directors' Report on the Group as at December 31, 2020. With reference to the residual values of the intangible fixed assets as at March 31, 2021, with amortisation for the period deducted accordingly, no evidence of impairment emerged.
In particular, it should be noted that the trend in economic results for the period, albeit more than in line with the budget expectations, confirms the adequacy of the prospective flows used for the performance of the impairment test as at December 31, 2020 and that the verification of the internal and external trigger events for each individual servicing contract and for goodwill, was negative for
each asset tested. These valuation elements, based on the Group's policy in force, confirmed that a new impairment test as at March 31, 2021 was not necessary.
The current financial markets' situation and the consequences of any economic and financial effects deriving from the spread of the Coronavirus inevitably involve elements of uncertainty, even in the presence of stable macroeconomic conditions.
However, in light of the information available to date, considering the organisational measures implemented to guarantee business continuity, the multiple cost containment initiatives put in place, and taking account of the type of business conducted by the Group, which is structurally flexible in the different phases of the economic cycle, it is believed that there is currently no risk of having to adjust the carrying amounts of the assets and liabilities reported in this Consolidated Interim Report.
The direct effects of the Covid-19 pandemic and the containment measures implemented by European governments caused operating difficulties for the sector in which the Group operates, which were also confirmed in first sector of 2021, and which involve the persistence of limited visibility of the short-term performance. However, despite the overall climate of uncertainty, positive signs have been recorded in the form of a recovery, albeit slow, in the judicial activities of the courts, which have registered growing volumes of transactions and an increase in out-of-court settlements, proof of the increasing liquidity available in the reference market. The trend in collections in the quarter, in fact, is in line with the scenarios envisaged by the Group and is similar to that of the last quarter of the previous year, despite the presence of a seasonality which tends to see collections squeezed into the first part of the year. In the first quarter of 2021, the Group recorded the following results (with respect to the same period of 2020):
It should also be noted that, from the start of the pandemic, non-recurring expenses relating to Covid-19 were incurred for an approximate amount of €0.9 million, including:
As regards Managed Assets (GBV), despite the current context, in the first quarter of 2021, the Group has entered new servicing contracts with investors for a GBV equal to €4.4 billion, in addition to the flows from long-term management contracts for €1.0 billion, proof of the strength of the current market pipeline of servicing in southern Europe.
As of the date of this Consolidated Interim Report as at March 31, 2021, in consideration of the persistence of the market turbulence linked to the Covid-19 pandemic, which prevents the estimation of possible developments in its economic impact with any accuracy, it would be premature to conduct a review of the overall business plan.
However, in order to assess the sustainability of the assets under management as at December 31, 2020, while taking into account the difficulty inherent in making forecasts, even in the short or medium term, in this climate of uncertainty, the Company has prepared, in the first few months of the year, a hypothesis of the future impact of the Covid-19 on the plan targets which have been updated taking into account the decline in revenue flows from the portfolios under management in 2020, assuming a gradual and progressive recovery in operations in the second half of the year and estimating a return to normal conditions starting in 2021 until the return to a cash flow situation equal to the pre-Covid period in the following years, together with the cost containment measures set out in the budget.
These assumptions are consistent with the doValue business model, which is able to adapt to the contraction or expansion phases of the economic cycle, reacting with the expansion of assets under management or collections.
To be noted is how the EBITDA and the shares performance, in terms of costs, have allowed the Group to protect and increase cash flows, with cash on hand amounting to around €166.6 million and unused credit lines equal to €90.5 million at end of the first quarter of 2021, of which €80 million in committed credit lines. Consequently, as at March 31, 2021, the doValue Group recorded a financial lever (ratio between net financial indebtedness of the Group and consolidated EBITDA) in the amount of €2.5x whose value does not exceed the parameters envisaged by the financial covenants.
As at March 31, 2021, 25.05% of the shares of the Parent Company doValue were owned by its largest shareholder, Avio S.a r.l, the reference shareholder, a company incorporated in Luxembourg, affiliated to the Fortress Group, which in turn was acquired by Softbank Group Corporation in December 2017. A further 1.74% of doValue shares are held by other investors similarly connected with Softbank Group Corporation, which thereby holds an overall stake of 26.79%.
As at March 31, 2021, the residual 72.40% of the shares was placed on the market and the remaining 0.81% is represented by 651,542 treasury shares, measured at cost, for a total of €103 thousand held by the Parent Company.
The reference shareholder does not exercise any management or coordination powers over doValue pursuant to Article 2497 et seq. of the Civil Code, as it does not issue directives to doValue and, more generally, does not interfere in the management of the Group. Accordingly, the strategic and management policies of the doValue Group and all of its activities in general are the product of the independent self-determination of the corporate bodies and do not involve external management by Avio.
The Parent Company doValue exercises its management and coordination powers over its direct subsidiaries as provided for in the legislation referred to above.
As at March 31, 2021, doValue held 651,542 treasury shares, equal to 0.81% of the total share capital. Their carrying amount is €103 thousand and they are presented in the financial statements as a direct reduction of shareholders' equity under "Treasury shares". The item "Other reserves" includes the associated equity reserve in the same amount.
The ordinary shareholders' meeting of April 29, 2021 revoked the authorisation to purchase and sell treasury shares conferred by said meeting to doValue's Board of Directors by means of resolution of May 26, 2020. At the same time, a new authorisation to purchase treasury shares in one or more transactions was conferred, according to the same terms and conditions pursuant to the previous shareholders' meeting resolution, i.e. up to 8,000,000 ordinary shares of doValue S.p.A., equal to 10% of the total, for a period of 18 months from the shareholders' meeting approval.
During the period the Group continued to invest in a number of technological innovation projects, which are expected to bring a competitive advantage in the future.
In compliance with the provisions of the "Rules for Transactions with Related Parties" referred to in Consob Resolution no. 17221 of March 12, 2010, as amended, any transaction with related parties and connected persons shall be approved in accordance with the procedure approved by the Board of Directors, whose most recent update was approved at the meeting held on February 13, 2020. This document is available to the public in the "Governance" section of the company website www.dovalue.it.
With regard to paragraph 8 of Article 5 - "Public information on transactions with related parties" of the Consob Regulations containing provisions relating to transactions with related parties (adopted by Consob with Resolution No 17221 of March 12, 2010 and subsequently amended with Resolution No 17389 of June 23, 2010), please note that:
A) on the basis of the Policy concerning transactions with related parties adopted by the Board of Directors of doValue S.p.A. on February 13, 2020, in the first quarter of 2021, no transactions of greater importance were carried out;
B) in the first quarter of 2021, no transactions with related parties were carried out, as defined pursuant to Article 2427, paragraph 22-bis of the Italian Civil Code, at conditions different from normal market conditions which have significantly influenced the balance sheet and financial position of the Group;
C) in the first quarter of 2021, there have been no changes or developments to individual transactions with related parties already described in the last financial report that have had a significant effect on the Group's balance sheet or results in the reference period.
We inform you that doValue S.p.A. has adopted the simplified rules provided for in Articles 70, paragraph 8, and 71, paragraph 1-bis, of the Consob Issuers Regulation no. 11971/1999, as subsequently amended, and has therefore exercised the option to derogate from compliance with the obligations to publish the information documents provided for in Articles 70, paragraph 6, and 71, paragraph 1, of that Regulation on the occasion of significant mergers, spin-offs, capital increases through the contribution of assets in kind, acquisitions and sales.
In application of Consob Communication no. DEM/6064293 dated July 28, 2006, Shareholders' equity and the Parent Company's result are reconciled below with the related consolidated amounts.
| (€/000) | |
|---|---|
| 3/31/2021 | 12/31/2020 | |||
|---|---|---|---|---|
| Shareholders' Equity |
Profit (loss) of the period |
Shareholders' Equity |
Profit (loss) of the year |
|
| doValue's S.p.A. separate financial statements | 231,681 | (1,913) | 222,805 | 7,831 |
| Cancellation of the carrying value of consolidated equity investments: |
||||
| - difference arising from the investments' carrying values and the relative subsidiaries' Equity |
(66,609) | - | (36,765) | - |
| - Results of the subsidiaries, net of minority interest | - | 4,163 | - | (12,570) |
| Cancellation of dividends | - | - | - | (20,429) |
| Other consolidation adjustments | 299 | 886 | 299 | 3,225 |
| doValue Group consolidated financial statements | 165,371 | 3,136 | 186,339 | (21,943) |
Rome, May 13, 2021 The Board of Directors
| (€/000) | 3/31/2021 | 3/31/2020 RESTATED |
|---|---|---|
| NPE revenues | 92,320 | 60,486 |
| o.w. Revenue from contracts with customers | 91,524 | 60,227 |
| o.w. Other revenues | 796 | 259 |
| REO revenues | 18,723 | 14,891 |
| o.w. Revenue from contracts with customers | 15,997 | 12,463 |
| o.w. Other revenues | 2,726 | 2,428 |
| Co-investment revenues | 4,077 | 141 |
| o.w. Financial (expense)/income | 4,077 | 141 |
| Ancillary and other revenues | 8,541 | 8,745 |
| o.w. Financial (expense)/income | 3 | 3 |
| o.w. Revenue from contracts with customers | 1,782 | 1,939 |
| o.w. Other revenues | 6,814 | 6,835 |
| o.w. Costs for services rendered | (54) | (61) |
| o.w. Other operating (expense)/income | (4) | 29 |
| Gross revenues | 123,661 | 84,263 |
| NPE Outsourcing fees | (7,053) | (4,869) |
| o.w. Costs for services rendered | (7,052) | (4,869) |
| o.w. Administrative expenses | (1) | - |
| REO Outsourcing fees | (5,149) | (4,152) |
| o.w. Costs for services rendered | (5,149) | (4,152) |
| Ancillary Outsourcing fees | (2,815) | (2,197) |
| o.w. Costs for services rendered | (469) | (1,118) |
| o.w. Administrative expenses | (2,346) | (1,079) |
| Net revenues | 108,644 | 73,045 |
| Staff expenses | (52,592) | (38,386) |
| o.w. Personnel expenses | (52,595) | (38,386) |
| o.w. Other revenues | 3 | - |
| Administrative expenses | (20,796) | (16,444) |
| o.w. Personnel expenses | (1,123) | (1,469) |
| o.w. Personnel expenses - o.w. SG&A | (1,123) | (1,469) |
| o.w. Administrative expenses | (19,834) | (15,171) |
| o.w. Administrative expenses - o.w. IT | (7,443) | (5,463) |
| o.w. Administrative expenses - o.w: Real Estate | (1,586) | (1,199) |
| o.w. Administrative expenses - o.w. SG&A | (10,805) | (8,509) |
| o.w. Other operating (expense) | (7) | - |
| o.w. Other operating (expense)/income - o.w. Real Estate | (2) | - |
| o.w. Other operating (expense)/income - o.w. SG&A | (5) | - |
| o.w. Other revenues | 169 | 207 |
| o.w. Other revenues - o.w. SG&A | 169 | 207 |
| o.w. Costs for services rendered | (1) | (11) |
| o.w. Costs for services rendered - o.w. SG&A | (1) | (11) |
| Total "o.w. IT" | (7,443) | (5,463) |
| Total "o.w. Real Estate" | (1,588) | (1,199) |
| Total "o.w. SG&A" | (11,765) | (9,782) |
| Operating expenses | (73,388) | (54,830) |
| EBITDA | 35,256 | 18,215 |
| EBITDA margin | 29% | 22% |
| Non-recurring items included in EBITDA | (495) | (1,283) |
| EBITDA excluding non-recurring items | 35,751 | 19,498 |
| EBITDA Margin excluding non-recurring items | 29% | 23% |
| Net write-downs on property, plant, equipment and intangibles | (18,922) | (16,410) |
| o.w. Depreciation, amortisation and impairment | (18,922) | (16,410) |
| Net Provisions for risks and charges | (1,976) | (1,856) |
| o.w. Personnel expenses | (2,411) | (2,634) |
| o.w. Provisions for risks and charges | 435 | 844 |
| o.w. Other operating (expense)/income | - | (47) |
| o.w. Depreciation, amortisation and impairment | - | (19) |
| Net Write-downs of loans | 163 | 50 |
| o.w. Financial (expense)/income | 30 | - |
| o.w. Depreciation, amortisation and impairment | 43 | 2 |
| o.w. Other revenues | 90 | 48 |
| EBIT | 14,521 | (1) |
|---|---|---|
| Net income (loss) on financial assets and liabilities measured at fair value | (515) | (246) |
| o.w. Financial (expense)/income | (515) | (246) |
| Financial interest and commissions | (6,816) | (2,865) |
| o.w. Financial (expense)/income | (6,736) | (2,810) |
| o.w. Costs for services rendered | (80) | (55) |
| EBT | 7,190 | (3,112) |
| Non-recurring items included in EBT | (3,091) | (4,163) |
| EBT excluding non-recurring items | 10,281 | 1,051 |
| Income tax for the period | (2,803) | (2,185) |
| o.w. Administrative expenses | (430) | (454) |
| o.w. Income tax expense | (2,373) | (1,731) |
| Profit (Loss) for the period | 4,387 | (5,297) |
| Profit (loss) for the period attributable to Non-controlling interests | (1,251) | 1,554 |
| Profit (Loss) for the period attributable to the Shareholders of the Parent | ||
| Company | 3,136 | (3,743) |
| Non-recurring items included in Profit (loss) for the period | (2,435) | (3,194) |
| O.w. Non-recurring items included in Profit (loss) for the period attributable to Non controlling interest |
(36) | (169) |
| Profit (loss) for the period attributable to the Shareholders of the Parent Company | ||
| excluding non-recurring items | 5,535 | (718) |
| Profit (loss) for the period attributable to Non-controlling interests excluding non | ||
| recurring items | 1,287 | (1,385) |
| Earnings per share (in Euro) | 0.04 | (0.05) |
| Earnings per share excluding non-recurring items (Euro) | 0.07 | (0.01) |
| Cash and liquid securities 166,555 132,486 Cash and cash equivalents 166,555 132,486 Financial assets 51,585 70,859 Non-current financial assets 45,963 64,961 Current financial assets 5,622 5,898 Property, plant and equipment 33,356 36,176 Property, plant and equipment 33,301 36,121 Inventories 55 55 Intangible assets 564,246 577,460 Intangible assets 564,246 577,460 Tax assets 122,530 117,909 Deferred tax assets 95,474 94,702 Other current assets 1,420 1,333 Tax assets 25,636 21,874 Trade receivables 179,263 175,155 Trade receivables 179,263 175,155 Assets held for sale 30 30 Assets held for sale 30 30 Other assets 14,532 16,485 Other current assets 12,878 14,840 Other non-current assets 1,654 1,645 Total Assets 1,132,097 1,126,560 Financial liabilities: due to banks 543,019 543,042 Loans and other financing non-current 458,407 456,670 Loans and other financing current 84,612 86,372 Other financial liabilities 84,867 83,162 Loans and other financing non-current 4,258 6 Loans and other financing current - 4 Other non-current financial liabilities 29,479 31,380 Other current financial liabilities 51,130 51,772 Trade payables 51,706 51,824 Trade payables 51,706 51,824 Tax Liabilities 109,160 105,549 Tax payables 33,025 28,083 Deferred tax liabilities 76,135 77,466 Employee Termination Benefits 16,312 16,341 Employee benefits 16,312 16,341 Provision for risks and charges 58,797 55,110 Provisions for risks and charges 58,797 55,110 Other liabilities 57,324 65,872 Other current liabilities 57,324 65,872 Total Liabilities 921,185 920,900 Share capital 41,280 41,280 Share capital 41,280 41,280 Reserves 124,194 145,162 Valuation reserve (144) (215) Other reserves 124,338 145,377 Treasury shares (103) (103) Treasury shares (103) (103) Profit (loss) for the period attributable to the Shareholders of the Parent Company 3,136 (21,943) Profit (loss) for the period attributable to the Shareholders of the Parent Company 3,136 (21,943) Net Equity attributable to the Shareholders of the Parent Company 168,507 164,396 Total Liabilities and Net Equity attributable to the Shareholders of the Parent Company 1,089,692 1,085,296 Net Equity attributable to Non-Controlling Interests 42,405 41,264 Net Equity attributable to Non-controlling interests 42,405 41,264 |
3/31/2021 | 12/31/2020 | |
|---|---|---|---|
| Total Liabilities and Net Equity | 1,132,097 | 1,126,560 |
| 3/31/2021 | 12/31/2020 | |
|---|---|---|
| Non-current assets | ||
| Intangible assets | 564,246 | 577,460 |
| Property, plant and equipment | 33,301 | 36,121 |
| Non-current financial assets | 45,963 | 64,961 |
| Deferred tax assets | 95,474 | 94,702 |
| Other non-current assets | 1,654 | 1,646 |
| Total non-current assets | 740,638 | 774,890 |
| Current assets | ||
| Inventories | 55 | 55 |
| Current financial assets Trade receivables |
5,622 179,263 |
5,898 175,155 |
| Tax assets | 25,636 | 21,874 |
| Other current assets | 14,298 | 16,172 |
| Cash and cash equivalents | 166,555 | 132,486 |
| Total current assets | 391,429 | 351,640 |
| Assets held for sale | 30 | 30 |
| Total assets | 1,132,097 | 1,126,560 |
| Shareholders' Equity | ||
| Share capital | 41,280 | 41,280 |
| Valuation reserve | (144) | (215) |
| Other reserves | 124,338 | 145,377 |
| Treasury shares | (103) | (103) |
| Profit (loss) for the period attributable to the Shareholders of the Parent Company | 3,136 | (21,943) |
| Net Equity attributable to the Shareholders of the Parent Company | 168,507 | 164,396 |
| Net Equity attributable to Non-controlling interests | 42,405 | 41,264 |
| Total Net Equity | 210,912 | 205,660 |
| Non-current liabilities | ||
| Loans and other financing | 462,665 | 456,676 |
| Other non-current financial liabilities | 29,479 | 31,380 |
| Employee benefits | 16,312 | 16,341 |
| Provisions for risks and charges | 58,797 | 55,110 |
| Deferred tax liabilities | 76,135 | 77,466 |
| Total non-current liabilities | 643,388 | 636,973 |
| Current liabilities | ||
| Loans and other financing | 84,612 | 86,376 |
| Other current financial liabilities | 51,130 | 51,772 |
| Trade payables | 51,706 | 51,824 |
| Tax payables | 33,025 | 28,083 |
| Other current liabilities | 57,324 | 65,872 |
| Total current liabilities | 277,797 | 283,927 |
| Total liabilities | 921,185 | 920,900 |
| Total Net Equity and liabilities | 1,132,097 | 1,126,560 |
(€/000)
| 3/31/2021 | 3/31/2020 RESTATED | |
|---|---|---|
| Revenue from contracts with customers | 109,302 | 74,629 |
| Other revenues | 10,598 | 9,777 |
| Total revenue | 119,900 | 84,406 |
| Costs for services rendered | (12,806) | (10,266) |
| Personnel expenses | (56,128) | (42,489) |
| Administrative expenses | (22,611) | (16,704) |
| Other operating (expense)/income | (10) | (18) |
| Depreciation, amortisation and impairment | (18,879) | (16,427) |
| Provisions for risks and charges | 435 | 844 |
| Total costs | (109,999) | (85,060) |
| Operating income | 9,901 | (654) |
| Financial (Expense)/Income | (3,141) | (2,912) |
| Profit (Loss) before tax | 6,760 | (3,566) |
| Income tax expense | (2,373) | (1,731) |
| Net profit (loss) from continuing operations | 4,387 | (5,297) |
| Profit (Loss) for the period | 4,387 | (5,297) |
| o.w. Profit (loss) for the period attributable to the Shareholders of the Parent Company | 3,136 | (3,743) |
| o.w. Profit (loss) for the period attributable to Non-controlling interests | 1,251 | (1,554) |
| basic | 0.04 | (0.05) |
| diluted | 0.04 | (0.05) |
The RESTATED income statement data as at March 31, 2020 were restated based on the final results related to the PPA of Altamira Asset Management.
(€/000)
| 3/31/2021 | 3/31/2020 RESTATED | |
|---|---|---|
| Profit (Loss) for the period | 4,387 | (5,297) |
| Other comprehensive income after tax not recyclable to profit or loss | ||
| Defined benefit plans | 2 | (1) |
| Other comprehensive income after tax recyclable to profit or loss | ||
| Cash flow hedges | 72 | (31) |
| Total other comprehensive income after tax | 74 | (32) |
| Comprehensive income | 4,461 | (5,329) |
| o.w. Comprehensive income attributable to Shareholders of the Parent Company | 3,210 | (3,775) |
| o.w. Comprehensive income attributable to Non-controlling interests | 1,251 | (1,554) |
The figures from the statement of comprehensive income RESTATED as at March 31, 2020 were restated based on the final results related to the PPA of Altamira Asset Management.
| Allocation of profit from | Changes during the year | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance as at 12/31 previous |
Changes in opening balance |
Balance as at 1/1 |
previous year | Changes | Equity transactions | Comprehensive | Net equity attributable to Shareholders of the Parent Company at the period |
Net equity attributable to Non-controlling interest at the period |
Total Net Equity at the period |
||||
| Reserves | Dividends and other payouts |
in reserves |
Issue of new shares |
Stock options |
Changes in equity investments |
income at the period |
|||||||
| Share capital | 41,280 | - | 41,280 | - | - | - | - | - | - | - | 41,280 | 26,933 | 68,213 |
| Valuation reserves | (215) | - | (215) | - | - | - | - | - | - | 74 | (141) | (21) | (162) |
| Other reserves | |||||||||||||
| - Reserves from profit |
61,082 | - | 61,082 | 7,832 | - | - | - | - | - | - | 68,914 | 2,853 | 71,767 |
| and/or - Other withholding tax |
84,295 | - | 84,295 | (30,531) | - | 1,338 | - | 974 | - | - | 56,076 | 11,451 | 67,527 |
| Treasury shares | (103) | - | (103) | - | - | - | - | - | - | - | (103) | - | (103) |
| Net profit (loss) for the period |
(21,943) | - | (21,943) | 22,699 | - | (1,411) | - | - | - | 3,136 | 2,481 | 1,190 | 3,671 |
| Net equity attributable to Shareholders of the Parent Company |
164,396 | - | 164,396 | - | - | (73) | - | 974 | - | 3,210 | 168,507 | 210,913 | |
| Net equity attributable to Non-controlling interests |
41,264 | - | 41,264 | - | - | (117) | - | - | 7 | 1,251 | 42,405 | 42,405 | |
| Total Net Equity | 205,660 | - | 205,660 | - | - | (190) | - | 974 | 7 | 4,461 | 168,507 | 42,405 | 210,912 |
| Allocation of profit from | Changes during the year | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance as at 12/31 previous |
Changes in opening balance |
Balance as at 1/1 |
previous year | Equity transactions | Comprehensive | Net equity attributable to Shareholders of the Parent Company at the period |
Net equity attributable to Non-controlling interest at the period |
Total Net Equity at the period |
|||||
| Reserves | Dividends and other payouts |
in reserves |
Issue of new shares |
Stock options |
Changes in equity investments |
income at the period |
|||||||
| Share capital | 41,280 | - | 41,280 | - | - | - | - | - | - | - | 41,280 | 26,933 | 68,213 |
| Valuation reserves | (13) | - | (13) | - | - | (54) | - | - | - | (148) | (215) | (21) | (236) |
| Other reserves | |||||||||||||
| - Reserves from profit and/or |
18,606 | - | 18,606 | 38,793 | - | 3 | - | 3,680 | - | - | 61,082 | - | 61,082 |
| - Other withholding tax |
127,292 | - | 127,292 | (190) | - | (42,143) | - | (664) | - | - | 84,295 | 11,676 | 95,971 |
| Treasury shares | (184) | - | (184) | - | - | - | - | 81 | - | - | (103) | - | (103) |
| Net profit (loss) for the period |
38,318 | - | 38,318 | (38,603) | - | 285 | - | - | - | (21,943) | (21,943) | 2,676 | (19,267) |
| Net equity attributable to Shareholders of the Parent Company |
225,299 | - | 225,299 | - | - | (41,909) | - | 3,097 | - | (22,091) | 164,396 | 205,660 | |
| Net equity attributable to Non-controlling interests |
- | - | - | - | - | 10,785 | - | - | 31,680 | (1,201) | 41,264 | 41,264 | |
| Total Net Equity | 225,299 | - | 225,299 | - | - | (31,124) | - | 3,097 | 31,680 | (23,292) | 164,396 | 41,264 | 205,660 |
| Allocation of profit from | Changes during the year | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance as at 12/31 previous |
Changes in opening balance |
Balance as at 1/1 |
previous year | Changes | Equity transactions | Comprehensive | Net equity attributable to Shareholders of the Parent Company at the period |
Net equity attributable to Non-controlling interest at the period |
Total Net Equity at the period |
||||
| Reserves | Dividends and other payouts |
in reserves |
Issue of new shares |
Stock options |
Changes in equity investments |
income at the period |
|||||||
| Share capital | 41,280 | - | 41,280 | - | - | - | - | - | - | - | 41,280 | - | 41,280 |
| Valuation reserves | (13) | - | (13) | - | - | - | - | - | - | (31) | (44) | - | (44) |
| Other reserves | |||||||||||||
| - Reserves from profit and/or |
18,606 | - | 18,606 | 38,507 | - | - | - | - | - | - | 57,113 | - | 57,113 |
| - Other withholding tax |
127,292 | - | 127,292 | (189) | - | 2,202 | - | 489 | - | - | 129,794 | - | 129,794 |
| Treasury shares | (184) | - | (184) | - | - | - | - | - | - | - | (184) | - | (184) |
| Net profit (loss) for the period |
38,318 | - | 38,318 | (38,318) | - | - | - | - | - | (2,975) | (2,975) | - | (2,975) |
| Net equity attributable to Shareholders of the Parent Company |
225,299 | - | 225,299 | - | - | 2,202 | - | 489 | - | (3,006) | 224,984 | - | 224,984 |
| Net equity attributable to Non-controlling interests |
- | - | - | - | - | 3,550 | - | - | (2,222) | (1,328) | - | - | - |
| Total Net Equity | 225,299 | - | 225,299 | - | - | 5,752 | - | 489 | (2,222) | (4,334) | 224,984 | - | 224,984 |
| 3/31/2021 | 3/31/2020 RESTATED |
|
|---|---|---|
| Operating activities | ||
| Profit (loss) for the period before tax | 6,760 | (3,566) |
| Adjustments to reconcile the profit (loss) before tax with the net financial flows: | 27,403 | 18,455 |
| Capital gains/losses on financial assets/liabilities held for trading and on financial assets/liabilities | ||
| measured at fair through profit or loss (+/-) | 215 | - |
| Depreciation, amortisation and impairment | 18,879 | 16,427 |
| Change in net provisions for risks and charges | 4,451 | (1,523) |
| Financial (Expense)/Income | 2,884 | 3,062 |
| Costs for share-based payments | 974 | 489 |
| Change in working capital | (4,226) | 7,732 |
| Change in trade receivables | (4,107) | 15,449 |
| Change in trade payables | (119) | (7,717) |
| Change in financial assets and liabilities | 27,465 | 2,288 |
| Other assets mandatorily measured at fair value | 25,289 | 165 |
| Financial assets measured at amortised cost | (2,074) | 2,123 |
| Financial liabilities measured at amortised cost | 4,250 | - |
| Other changes: | (18,061) | (10,003) |
| Interests payed | (6,514) | - |
| Other changes in other assets/other liabilities | (11,547) | (10,003) |
| Cash flows generated by operations | 39,341 | 14,906 |
| Investing activities | ||
| Purchases of property, plant and equipment | (423) | (4,798) |
| Purchases of intangible assets | (2,325) | (1,849) |
| Net cash flows used in investing activities | (2,748) | (6,647) |
| Funding activities | ||
| Payment of principal portion of lease liabilities | (2,524) | (2,142) |
| Net cash flows used in funding activities | (2,524) | (2,142) |
| Net liquidity in the period | 34,069 | 6,117 |
| Reconciliation | ||
| Cash and cash equivalents | 132,486 | 128,162 |
| Net liquidity in the period | 34,069 | 6,117 |
| Cash and cash equivalents at the end of the period | 166,555 | 134,279 |
| The RESTATED cash flow statement data as at March 31, 2020 were restated based on the final results related to the PPA | ||
| of Altamira Asset Management. |
| 3/31/2020 | RESTATEMENT ADJs |
3/31/2020 RESTATED |
|
|---|---|---|---|
| Revenue from contracts with customers | 74,629 | - | 74,629 |
| Other revenue | 9,777 | - | 9,777 |
| Total revenue | 84,406 | - | 84,406 |
| Costs for services rendered | (10,266) | - | (10,266) |
| Personnel expenses | (42,489) | - | (42,489) |
| Administrative expenses | (16,704) | - | (16,704) |
| Other operating (expense)/income | (18) | - | (18) |
| Depreciation, amortisation and impairment | (15,011) | (1,416) | (16,427) |
| Provisions for risks and charges | 844 | - | 844 |
| Total costs | (83,644) | (1,416) | (85,060) |
| Operating income | 762 | (1,416) | (654) |
| Financial (Expense)/Income | (3,051) | 139 | (2,912) |
| Profit (Loss) before tax | (2,289) | (1,277) | (3,566) |
| Income tax expense | (2,013) | 282 | (1,731) |
| Net profit (loss) from continuing operations | (4,302) | (995) | (5,297) |
| Profit (Loss) for the period | (4,302) | (995) | (5,297) |
| o.w. Profit (loss) for the period attributable to the Shareholders of the Parent | |||
| Company | (2,975) | (768) | (3,743) |
| o.w. Profit (loss) for the period attributable to Non-controlling interests | (1,327) | (227) | (1,554) |
Pursuant to Article 154 bis, paragraph 2, of the "Consolidated Law on Finance", Mrs Elena Gottardo, in her capacity as the Financial Reporting Officer with preparing the financial reports of doValue S.p.A, certifies that the accounting information contained in the 'Consolidated Interim Report as at March 31,2021', is consistent with the data in the supporting documents and the Group's books of accounts and other accounting records.
Rome, May 13, 2021
Elena Gottardo
Financial Reporting Officer
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