BOARD OF DIRECTORS MEETING: APPROVAL OF DRAFT FINANCIAL STATEMENTS FOR 2018, CALL OF ORDINARY SHAREHOLDERS MEETING AND OTHER RESOLUTIONS

 

 Rome, 12 March 2019 – Confirming the preliminary results disclosed on February 11, 2019, the Board of Directors of doBank S.p.A. (the “Company” or “doBank”) today approved the draft financial statements, which will be submitted to the approval of the Shareholders’ Meeting, and the consolidated financial statements at December 31, 2018.

Consolidated financial highlights as at December 31, 2018 compared with December 31, 2017.

 Gross revenues: €233.5 million, +9% on €213.5 million;

  • Net revenues: €209.6 million, +8% on €193.4 million;
  • EBITDA excluding non-recurring items[1] amounted to €84.0 million (+20% compared with €70.1 million in 2017); EBITDA amounted to €81.3 million, +16% compared with €70.1 million;
  • EBITDA margin excluding non-recurring items amounted to 36%, up 3 points compared with 33% in 2017; the EBITDA margin amounted to 35% (33% in 2017);
  • Net profit excluding non-recurring items amounted to €52.6 million, +17% compared with €45.0 million; net profit amounted to €50.9 million, +13% compared with €45.0 million;
  • Net financial position: a positive (cash) €67.9 million, after dividend payments of €30.9 million (a positive €38.6 million at December 31, 2017);
  • CET1: 26.1% compared with 26.4% at December 31, 2017 (CET1 of CRR Group at 19.4% compared with 29.8% at December 31, 2017);

Portfolio under management

  • Gross book value of assets under management (GBV) amounted to €82.2 billion (€76.7 billion at the end of 2017);
  • Collections amounted to €1,961 million, +7% compared with €1,836 million at December 31, 2017.

The Board of Directors has resolved to propose to the Shareholders’ Meeting the distribution of dividends related to the fiscal year 2018 for € 36,836,956 corresponding to 70% of consolidated net income excluding non-recurring items (70% payout). Dividend per each ordinary share as at December 31, 2018, including treasury shares equal to 1.9% of share capital, is equal to €0.460, before taxes.

In 2018, doBank had gross revenues of €233.5 million, up 9% compared with the previous year (€213.5 million) thanks to the expansion of all the main revenue components.

More specifically servicing revenues, the focus of the Group’s operations and representing 88% of consolidated revenues, amounted to €205.5 million, compared with €194.7 million (+6%) the previous year. The growth mainly reflects the increase in performance fees, connected with developments in collections and assets under management, as well as portfolio transfer indemnities. The average level of base fees and performance fees was stable in 2018 compared with the previous year, reflecting the criteria adopted in selecting new contracts, which gave preference to those with the greatest fee-generation potential.

Revenues from co-investment and revenues from ancillary products and minor activities totalled €28.0 million, an increase of 49% compared with 2017, equal to 12% of total revenues. The expansion reflected income from the ABSs issued in the Romeo SPV and Mercuzio Securitisation securitisations, the growth in revenue from data remediation, business information, due diligence and master servicing activities and the reimbursement of expenses incurred by the doBank Hellas branch in Greece, which amounted to €3.2 million.

Fee and commission expense amounted to €23.9 million (€20.1 million in 2017), with the rise reflecting the expansion of collections and ancillary services. Net revenues amounted to €209.6 million at December 31, 2018, up 8% on 2017 (€193.4 million).

Operating expenses amounted to €128.3 million, up 4% compared with €123.3 million in 2017, despite the increase of 9% in revenues and the launch of new initiatives in Greece and Italy, underscoring the Group’s operating leverage. The rise in staff expenses (from €83.4 million at December 31, 2017 to €94.0 million in 2018) is attributable to the strengthening of top management and the introduction of the new incentive mechanism introduced following the listing. This increase was attenuated by a decline in IT costs, due to lower running costs and the absence of the projects under way in 2017, as well as gains from cost efficiencies in overheads.

EBITDA before non-recurring items at end of 2018 amounted to €84.0 million, up about €13.9 million (+20%) compared with 2017 (€70.1 million). As a percentage of revenues, EBITDA before non-recurring items improved by 3 percentage points, going from 33% in 2017 to 36% in 2018. Including the non-recurring costs recognised in the year, which were equal to €2.7 million and included the start-up costs incurred to begin operations in Greece, those associated with the development of the UTP business in Italy and part of the costs connected with the Altamira acquisition, EBITDA would have amounted to €81.3 million, up 16% compared with 2017 (and an EBITDA margin of 35%).

The profit/loss of equity investments at December 31, 2018 amounted to €0.9 million, reflecting the gain on the disposal of the 45% stake in BCC Gestione Crediti S.p.A., a member of the Iccrea Banking Group.

Net profit excluding non-recurring items amounted to €52.6 million in 2018, up 17% compared with the €45.0 million posted at December 31, 2017. Net profit for 2018 amounted to €50.9 million, an increase of 13% compared with the previous year.

Net working capital amounted to €77.4 million, an improvement on the €78.3 million registered at December 31, 2017 despite the higher revenues. The positive developments in working capital, in line with expectations, are linked to the shift of the portfolio towards the Investor customer segment, which has a more favourable working capital cycle.

The positive net financial position (cash) amounted to €67.9 million at December 31, 2018, a substantial improvement on the €38.6 million posted at the end of 2017, and was characterised by the absence of bank debt. The net financial position includes the distribution of dividends of €30.9 million and the investment in units of the Italian Recovery Fund (formerly Atlante II) of €13 million. Free cash flow generation in 2018 amounted to €65.6 million.

Deferred tax assets amounted to €81.4 million at December 31, 2018, slightly down compared with the end of 2017 (€94.0 million), mainly reflecting the reversal of assets on prior-year tax losses.

The CET1 ratio was 26.1%, compared with 26.4% at December 31, 2017 (the CET1 ratio for the CRR Group was 19.4%, compared with 29.8% at December 31, 2017).

Portfolio under management

Assets under management (GBV) at December 31, 2018 amounted to €82.2 billion, an increase on €76.7 billion at the end of 2017, primarily reflecting the entry of €13.2 billion in GBV from new servicing contracts. During 2018, the portfolio transferred by REV, the Berenice portfolio, the portfolio of loans originated by the MPS Group, by Banca Agricola Popolare di Ragusa and that associated with the “Milano” project, together with minor portfolios, were gradually onboarded. These contracts were accompanied by about €1.2 billion (GBV) in loans from existing customers as well ordinary developments in collections, cancellations and transfers of portfolios. If we also include the €1.8 billion contract signed with Greece’s four systemic banks, for which active management began in 2019 following completion of the onboarding and business planning stages, the €2 billion contract granted by the Iccrea Banking Group and the “Riviera” portfolio, assets under management at the end of December would amount to €86.4 billion.

At December 31, 2018, collections on loans under management amounted to €1,961 million, an increase of 7% compared with €1,836 million in 2017, in line with developments in the GBV of assets under management, which gradually increased over the course of the year.

The collection rate at the end of 2018 (the ratio of collections in the last 12 months to end-period GBV), excluding new management contracts, was 2.5% (2.4% at December 31, 2017). Including new servicing contracts, the indicator would be 2.4%, unchanged on the 2.4% registered at the end of 2017. The developments in collections in 2018 confirm the forecasts in the 2018-2020 Business Plan, including the target of raising the collection rate to more than 2.6% in 2020.

FINANCIAL RESULTS OF doBank S.p.A. SEPARATE FINANCIAL STATEMENTS

The Board of Directors has also approved the financial statements for the fiscal year 2018 of the group parent company doBank S.p.A., which reported net revenues equal to € 147,7 million (€135,1 million in 2017), EBITDA equal to € 52,5 million (€53,0 million in 2017) and Net Income, after taxes, equal to € 43,4 million (€33,9 million in 2017).

 

DIVIDEND PROPOSAL

The Board of Directors has resolved to propose to the Shareholders’ Meeting the distribution of dividends related to the fiscal year 2018 for €36,836,956, corresponding to 70% of consolidated net income excluding non-recurring items (70% payout). Dividend per each ordinary share as at December 31, 2018, including treasury shares corresponding to 1.9% of share capital, is equal to €0.460, before taxes. No dividend will be distributed in relation to treasury shares held by doBank as of the dividend record date. The dividend, pending approval by the Shareholder’s Meeting, will be payable as of May 29, 2019 (with coupon detachment on May 27 and record date on May 28).

 

SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD

 There were no significant events following the close of the period.

 

OUTLOOK FOR OPERATIONS

Performance in 2018 confirms the objectives of the 2018-2020 Business Plan, presented in June 2018, which is focused on strengthening doBank’s leadership in the European credit servicing market.

More specifically, Group revenues are expected to grow by an average of 8% to 9% per year between 2017 and 2020 (CAGR), while Group EBITDA is forecast to rise by at least 15% per year on average over the same period, with earnings per share expanding faster than EBITDA and a dividend payout ratio of at least 65% of consolidated net profit.

In view of the importance of the agreement for the acquisition of Altamira Asset Management (press release of December 31, 2018), the Group plans to update its Business Plan targets following the closing of the acquisition, which is expected by May 2019.

 

OTHER RESOLUTIONS OF THE BOARD OF DIRECTORS

During today’s meeting, the Board of Directors has also:

  1. resolved to call the Ordinary Shareholders’ Meeting, on 17 April 2019, in single call, for the approval of the individual and consolidated Financial Statements at 31 December 2018 (and the expected Reports); the allocation of the profit for the year and distribution of the dividend; the annual report on remuneration and incentive policies, with financial instrument plans and Severance policy; the integration of the fees to the auditing company for the years ended December 31, 2019 to December 31, 2024..

The notice of call will be published within the terms of the law on the Company’s website at www.dobank.com, in the section “Governance – Shareholders’ Meeting https://www.dobank.com/it/governance/ shareholders’ meeting at the “eMarket Storage” storage mechanism, managed by Spafid Connect SpA and available on the website www.emarketstorage.com as well as an excerpt in the newspaper MF / Milano Finanza.

The documentation and Reports relating to the aforementioned Ordinary Shareholders’ Meeting will be made available to the public in the manner and within the terms of the law.

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  1. ascertained the verification of the requisites of a corporate representative and, having acquired the opinion of the Appointments Committee, has ascertained:
  • possession of the requisites provided for by the current legislation of the Director Marella Idi Maria Villa, appointed by the Shareholders’ Meeting on March 5, 2019 and previously co-opted on January 25, 2019. In particular, the Board of Directors has ascertained:
  • the existence of the integrity and professionalism requisites required by current legislation and in accordance with the approved document called “Guidance on the Qualitative and Quantitative Composition of the Board of Directors deemed to be Optimal”;
  • that the independence requirements set forth in art. 148, 3rd paragraph, of Legislative Decree 58/1998 (TUF), by art. 3 of the Corporate Governance Code for listed companies and by the Articles of Association are not met;
  • the overall adequacy of its composition and the compliance of this composition with the regulations, including regulations, in force.

The curriculum vitae of the Director Marella Idi Maria Villa is available on the Company’s website at www.doBank.com, in the section “Governance / Board of Directors”.

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  1. resolved, subject to the favorable opinion of the Statutory Auditors, to appoint Elena Gottardo as Financial Reporting Officer in charge of preparing corporate accounting documents pursuant to the art. 154-bis of the Consolidated Finance Act, a position previously held by Mauro Goatin, called, with effect from 13 March 2019, to fill the new position of Chief Operations Officer, reporting directly to the Chief Executive Officer.

The curriculum vitae of Elena Gottardo, which on the basis of the information available to the company does not hold doBank shares, is available at the registered office of the Company .

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Finally, the Board of Directors has approved:

  • the “Dichiarazione Non Finanziaria” pursuant to Legislative Decree 254/2016 at 31 December 2018, which discloses non-financial indicators;
  • the Corporate Governance Report pursuant to art. 123-bis of Legislative Decree 24 February 1998, n. 58.

[1] Excluding non-recurring items connected with the launch of our new businesses, notably our operations in Greece and in the UTP segment, and part of the costs associated with the acquisition of Altamira Asset Management

doBank S.p.A.
doBank, listed on the Electronic Stock Market (Mercato Telematico Azionario) organised and operated by Borsa Italiana S.p.A. since July 2017, is a leader in Italy in the business of managing primarily non-performing loans. With more than 18 years of experience in the sector, the Group is a long-standing partner of leading financial institutions and national and international investors. It had a portfolio of assets under management of €77 billion (in terms of gross book value) at December 31, 2017. Managing all phases of the loan lifecycle with an advanced operational approach and the highest servicer ratings in Europe, in 2017 the Group had gross revenues of about €213.0 million, with an EBITDA margin of 33% and strong cash generation.

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Simona Raffaelli – Emilia Pezzini
dobank@imagebuilding.it
Tel. +39.02.89011300

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