Good afternoon, this is the Chorus Call Conference Operator. Welcome, and thank you for joining the doValue First Half 2024 Financial Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the Conference Call, they may signal an operator by pressing Star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Daniele Della Seta, Investor Relations of doValue. Please go ahead, sir.
Good morning, and welcome to doValue First Half 2024 Results Conference Call. I'm Daniele Della Seta, Head of IR at doValue, joining you from Rome, along with Manuela Franchi, our Group CEO, and Davide Soffietti, our Group CFO. In the last six months, there were two major impactful announcements: the unveiling of our industrial plan for 2024, 2026, and the signing of a binding agreement for the acquisition of Gardant.
Those two events are each one part of a unique growth strategy, and today we will emphasize how the company is focusing on the two legs. We will delve into the group and market development since the year began, including an update on the execution of our business plan and the announced M&A transaction. As usual, Davide will focus on our financial performance for the first half. At the conclusion of our presentation, we will be pleased to address any questions you may have. Let me start now, handing over to Manuela to get started.
Thank you, Daniele. It is with great pleasure that I present our first half results. This semester has been nothing short of eventful, occurring during a very unique phase of the economic cycle. Our team and the board have been largely focused on capitalizing on opportunities arising from consolidation and executing our business plan, which will continue to chart the course of our company growth. Let's now get started with the presentation by diving into our first half 2024 business plan highlights on page 4. On the EBITDA side, I'm pleased to report that our EBITDA for the first half of the year has exceeded our internal budget, reaching EUR 67 million, thanks to diversification of revenues and our extreme cost discipline.
As usual, due to seasonality, much of our results for the full year will depend on the second half, and particularly on the timing of closing for certain portfolio sales. On the business side, we are witnessing strong new business momentum in the first half, with EUR 7.5 billion of new business, of which EUR 4.5 billion coming from forward flow or contracts we did not manage before, spanning from stage two to NPL, secured and granular unsecured. This achievement comes in a market characterized by very few NPL disposal and low focus from banks on asset quality. DoValue was able to focus on each area of the market and leverage its leadership position to secure a substantial share of the NPE transactions.
We are confident that we will reach our target of EUR 8 billion annually, contributing to a significant increase in our gross book value and higher collection rate due to the engineering of our GBV. Our quarterly cash flow dynamics have been positive, thanks to effective working capital action, resulting in a net cash flow of EUR 37.6 million in Q2. This contributes to maintaining stable leverage within our financial policy and has been a key focus for our equity story as part of the new business plan. We are proud to have maintained a corporate rating of Double B stable outlook, despite a wave of severe downgrades among our peers. Such rating has been confirmed, also post the announcement of the acquisition of Gardant. This is a statement to the strength of our business model, especially in times of higher interest rates.
The Gardant acquisition is progressing smoothly and on track to close the deal by 2024. Actual timing will depend on the receiving authorities. As told in the past, this strategic acquisition will significantly enhance our business capabilities and market position. We have successfully completed the optimization of our perimeter with the disposal operation in Portugal and the closure of Ad Solum. These steps are aligned with our strategic focus on core profitable areas and operational efficiency. In summary, we are on track to deliver our business plan targets and capitalize on the upcoming Gardant transaction, setting a solid foundation for continued growth and success. Moving now to page five. Let's explore our outlook for NPE production, focusing on trends illustrated in the graph on this slide.
As mentioned in the previous quarterly call, the decline in NPE stocks on balance sheet have been possible only thanks to a functional and efficient distressed debt ecosystem, where servicers like doValue play a crucial role. Over the past 10 years, NPE cumulative net flows have been in negative territory due to substantial disposal and weak NPE generation. However, starting from 2023, this trend has inverted and is accelerating as we, as we move towards 2024. Borrowers are being impacted by restricted financial conditions, and the macroeconomic cycle is pointing towards a possible downturn. Although the figure refers to Europe and the amount of net inflows is still modest, the trend is clear and significant.... Focusing on the value core market on page six, let's analyze the figures for each region.
Starting with Italy, we see an inversion of the NPL trend, with a 1.5% increase in Q1 2024. This change highlights a shift in the market dynamic. The implementation of the NPL secondary market EU directive is expected to increase the liquidity of portfolio traded in secondary markets, which will further influence these trends. In Greece, there has been a substantial 14% growth in NPL stock in Q1, despite a high number of disposals. The NPL ratio of less significant banks remains substantially higher compared to the EU average. Greek banks are benefiting from very high net interest income and margin, which is helping to build solid equity cushions in case they decide to sell portfolio. This is increasing Greek banks' loss absorption capacity, which we think will incentivize them to execute remaining NP transaction now rather than later. Moving to Cyprus.
Since 2023, we have observed early signals of distress in the rate of loans migration across Stage 1, 2, and 3. Despite a slight decline in NPL stock by EUR 0.3 billion from Q4 2022, the NPL ratio remains above the average by 0.6 percentage points. Approximately 30% of NPL in Cyprus are held by less significant institutions, indicating a concentration of risk within smaller financial entities. In Spain, we see a continued deterioration in bank asset quality, with notable increase in NPL in construction and mortgage lending throughout 2023. The lack of developed NPL servicing ecosystem in Spain has led to high and rising levels of bad loans in absolute terms. Additionally, there was a 3.6% increase in NPL stock in Q1, reflecting ongoing challenges in the market.
The inversion of the NPL trend across various European markets underscores the importance of a robust and efficient distressed debt ecosystem. Servicers like doValue play a critical role in managing this shift and ensuring stability within the financial system. As we move forward, the strategic initiatives we have implemented will position us to capitalize on this market dynamics, as we have observed already with new volumes materializing in the first half of 2024. Moving now to page seven. Onto our GBV intake. Let's take a closer look at the data as of June 30, 2024. We have successfully onboarded and committed a total of EUR 7.5 billion in GBV.
This includes EUR 3 billion in new mandates, EUR 1.5 billion in forward flow, and EUR 3 billion in committed contracts, of which EUR 2.7 billion of secondary deals that won't increase the overall GBV stock. All these elements have driven an increase in GBV for the first time after many quarters, demonstrating a positive market trajectory for servicers. Breaking this down by region. In the Hellenic region, we onboarded EUR 1.6 billion within the Hellenic region. We have seen a strong intake of new mandates from both banks and investors, amounting to a total of EUR 1.3 billion in GBV. Secondary mandates have also underpinned this growth, with EUR 240 million in GBV added, in addition to EUR 2.4 billion of committed secondary mandates. In Spain, we secured around EUR 1 billion.
Our market-oriented approach in Spain is yielding significant results, with new business intake in first half 2024, doubling compared to first half 2023. We have seen solid new business generation from both the banks and investors. In Italy, we onboarded EUR 350 million. We secured EUR 300 million NPL mandates from Popolare Bank, and an additional EUR 300 million in stage 2 UTP contributed to the Efesto Fund , which is in committed GBV to be onboarded. These figures highlight the strength and breadth of our operation across different markets. Looking ahead, we have a robust pipeline of potential deals totaling EUR 37 billion over the next 18 months. The value is not very different from the past, because deals as signed have been replaced by new need, new deals. In Spain, almost all potential deals are ongoing as market sales, primarily from Spanish banks.
In Italy, we have a pipeline with EUR 14 billion potentially coming from state-owned and related entities, and EUR 1 billion from funds and investors. Approximately 28% of this GBV consists of portfolio sales and direct primary sales. In the Hellenic region, we anticipated around EUR 5 billion of potential deals in mixed UTP and NPL, with over EUR 6 billion coming from funds or non-bank investors. You might have seen the new deals allocated on Alphabet to three funds, including Bain and Fortress. We are in close conversation with the three funds to secure servicing mandates on this portfolio. Another key pillar of our business plan related to diversification towards non-NPL revenue. Let me give you some updates on how the group is progressing towards expanding its business in servicing a broader scope of asset classes, positioning itself as a credit management company on page eight.
As shown in the pie chart, 53% of our revenue are derived from asset classes other than NPL, demonstrating the strength and diversity of our business model, such as real estate, UTP, and ancillary services. This is what we call the engine to our growth in our business plan, where we achieve notable targets. On UTP, we have now EUR 8 billion in GBV under servicing, with 26% in Italy and 74% in Greece, increasing significantly after Gardant. On early arrears , we are managing EUR 700 million in Spain, in Greece, sorry, particularly with Eurobank, in addition to new contracts in Spain with Sabadell and BBVA. On performing loans, we signed our first stage two mandate with top-tier banks, accounts for EUR 300 million, and we have EUR 200 million in contracts with Spanish banks on granular non-bank secured tickets.
On average, these products enjoy an EBITDA margin of 45%-50%, which is superior to NPL of circa 35%. We are also progressing on the execution of special projects that will diversify further the role of doValue in credit business. As promised in March, during the presentation of our business plan, we have set up a company in Greece called Synthesis, focused on the brokerage of auctions and real estate financing to build the demand for assets and capture new revenue streams. We believe this structure will allow us to best exploit the significant opportunity and margin we see in this business in Greece, benefiting from greater flexibility and control in executing our strategic vision and capturing the full potential of this promising market segment. On advisory services, another new initiative is doAdvisory, a company also set up in the second half of 2024.
It's already operating with 4 mandates and expected to generate third-party revenue of over EUR 1 million in 2024, and be profitable. Associated to this project, we are developing predictive models across all countries, piloting these initiatives to enhance our credit management capabilities. Our strategic diversification beyond NPL into UTP and reo performing loans and ancillary services, along with new business lines like mortgage broking and advisory services, position us strongly for future growth.
This diversified approach not only mitigates risk, but also opens up new opportunities for revenue generation and market expansion. Now, let's spend a slide on the Gardant transaction. On page 9, we outlined the key steps and timeline for the acquisition, along with the necessary regulatory and corporate actions. Our regulatory filings will include submission to several key authorities, such as Bank of Italy, Consob, and the National Central Banks, and the FDI regulators.
Timing of regulatory approval will drive timing of closing and the necessary corporate actions, which will be prepared in parallel in order to optimize timing. We have called an EGM to resolve several important items, including reverse stock split, updates to our bylaws, increasing the number of board of directors members, to include the new shareholders, and approving the reserved capital increase for the purchase of Gardant. A reverse stock split will be executed, where shareholders will receive one new share for every five shares they currently hold. As you know, a part of the transaction will involve a share component for the seller of Gardant. This will be executed through a cashless transaction, zero coupon convertible note of nominal EUR 80 million, which will automatically convert into new issued shares of value corresponding to 20% of the new company at closing.
20 million shares or 4 million after the reverse stock split. The implicit conversion value of doValue shares will be EUR 40, based on actual share count. EUR 20 after reverse stock split. We anticipate the closing of the Gardant acquisition to occur by year-end, subject to successful completion of all preceding steps and regulatory approvals. Following the closing, we will proceed with the EUR 150 million rights issue. This will be unconditionally backed by our anchor shareholders, Fortress, Bain, and at that point, Elliott, for approximately EUR 82.5 million, and supported by a pre-underwriting agreement by banks for the remaining EUR 67.5 million. The final underwriting will be contingent upon the conditions set in the pre-underwriting agreement and customer conditions. Now, let me hand over to Davide to cover the financials in more details.
Thank you, Manuela, and good morning to all of you. So let's dig down with the financial of this quarter. Moving to page 11, we have here a summary of the financial for the first half of the year. As already mentioned by Manuela, the first half was better than our expectation for EBITDA. Gross revenues are down 50.7% versus first half 2023, due to delayed sales in Greece and a challenging market environment. This was counterbalanced by higher ancillary and diversified revenue. New business intake is beginning to pick up, but due to onboarding timing, is not yet impacting our top line. As we already done in the past, we have been proactive in managing our cost base, which has a sizable variable component, even for HR costs. EBITDA at EUR 67 million exceeded management expectations for the first half.
Please remember that the first half of 2023 was positively impacted by the release of a provision for the former CEO's variable compensation, while the first half of 2024 has been characterized by significant wage inflation in Italy for the renewal of the National Banking Contract. Net income as NRI has been positively impacted by lower D&A and provision, which helped to counterbalance the lower EBITDA, while net income reported was positively impacted by EUR 23 million positive component related to the Spanish tax claim against Altamira Holding. Moving to page 12, here we present the components of our HDD movement in the Q1. Total flows amounted to EUR 1.5 billion, on track to meet our guidance of EUR 2 billion for the full year. On top of that, in the semester, we have onboarded EUR 3 billion of new mandates. Collections stood to about EUR 2.1 billion.
As you can appreciate, disposal came to EUR 1.6 billion. We also have committed mandate for around EUR 300 million, excluding EUR 2.67 billion of additional secondary transactions, which, although contributing to revenue generation, will not increase the size of GBV. New GBV is offset by corresponding disposal in that case. Moving now to page 13. Here is a more detailed breakdown for our gross revenues by region. Gross revenues were overall down to EUR 214 million versus EUR 226 million, 2023. I remind you that we are not considering revenues from Portugal for both the first half 2023 and first half 2024, as we have closed the sale of that business unit. In Italy, gross revenues were slightly lower by 2.5% year-on-year, mainly due to lower UTP collection, impacted positively in the first half of 2023 by a sizable disposal.
This was partially compensated by very positive performance of ancillary, plus 9%. In Hellenic region, gross revenues declined by 2.5% year-on-year, dragged down by lower revenues in Greece, impacted by delays in disposal, partially compensated by higher revenues in Cyprus. As usual, growth in Rio and other diversified revenues helped to underpin the revenues. In Spain, the lower revenues are mainly related to lower stock of real GBV and challenging real estate market. Moving to page 14, we continue to proactively and effectively manage our cost base, both in terms of personal costs as well as IT and SG&A. Operating expenses, excluding MRI, have remained broadly stable year-on-year at EUR 125 million.
The stability in costs came despite a significant one-off effect, which reduced the HR costs in the first half of 2023, stemming from provision released for the former CEO variable compensation in 2023, EUR 6.9 million, and despite wage inflation in Italy, +50%, after the renewal of the contract. Overall, we have maintained strong cost discipline across the group, particularly in Spain, where we achieved a minus 16.4% reduction in operating costs, preserving profitability despite declining revenues. HR costs were stable at 2023, despite unfavorable comparison to the one-off positive effect in 2023. This was achieved also thanks to the completion of 172 FTEs incentivized exits, resulting in a running saving of EUR 8.8 million.
In summary, in summary, we are confident that our ongoing transformation program and cost discipline will allow us to maintain solid and resilient margins. Moving now to page 15, EBITDA as analyzed for the group was EUR 67.4 million, higher than our expectation. This is down 17.5% versus the previous year, and mainly driven by lower revenues and unfavorable cost compared in 2023. As revenues from disposal will lightly pick up in the second half, we are confident we will restore normal profitability and catch up with our guidance. The EBITDA margin for the Hellenic region was notably impacted by lower disposal, half the level of 2023. Despite this, we have managed to partially offset this effect with savings in operation costs.
We expect the EBITDA margin in Greece to lightly restore to around 60%, with an increased focus on disposal in the coming quarters. In Italy, despite the ongoing wage inflation and other economic challenges, we saw resilient performance, thanks to substantial savings on HR costs and to ancillary revenues growth. For Spain, the result was close to breakeven, despite a drop of EUR 6 million in revenues versus the previous year. This was driven also by postponement to the second half of 2024 in variable fee recognition, and then the performance ratio partially offset by Santander NPL. Moving to page 16, we show how our EBITDA is translated into a positive report of the net income of EUR 16.5 million, or EUR 69 million net income NRI.
Starting from a lower EBITDA, the net income was positively impacted by lower provisions and the lower D&A, in addition to the positive one-off effect of the Spanish tax claim for EUR 23 million. Moving to page 17, let's have a look on the cash flow dynamic. In the first half, we recorded a solid EUR 19.6 million cash flow from operation, with a significant cash generated in the Q2. Improved cash conversion was driven mainly by normalization of other asset liability dynamics in line with our business plan, stable CapEx, and low net working absorption. When looking at the pace of other asset liabilities dynamics, you may notice the cash outs for IFRS 16 were mostly anticipated in the first half, EUR 10 million versus EUR 6 million expected for the full year.
The redundancies cash outs are lower than expected, and the release of provisions with no monetary effect of EUR 3.1 million. Moving to page 18, we discuss our net debt and leverage position, which reflects our commitment to a conservative financial strategy. Our leverage has remained stable at 2.9x. Significant cash inflows related to arbitration with Altamira's management has offset some of the large outflow tied to earnout payments and refinancing activities. The cash position of the company increased to EUR 110 million, which together with the undrawn RCF, gives the company a liquidity buffer of around EUR 200 million. Looking ahead, the refinancing of current maturities will be addressed in the context of the upcoming M&A transactions, ensuring that our financial maneuvers align with our strategic growth and acquisition plans.
Including previous line, the group will have total RCF lines in the region of EUR 125 million after the M&A transaction. Moving to page 19, here you have summary of our regional performance on very key metrics. All in all, the group collection rate decreased temporarily to 4.2% versus 4.4% of last year. This is expected to improve as we move towards the end of 2024, when we'll account higher disposal in Greece, and we're onboarding in Spain. Our EBITDA at group level continues to be strongly supported by performance in the Iberian position. Turning our attention now to our guidance for 2024 and impact, impact of the Gardant transaction. Let's take a detailed look at where we stand on page 21.
As we navigate in a very challenging environment, we continue to close a landmark transaction that will also involve raising capital in the market. It is crucial for us to keep you constantly updated on our guidance and impact of the transaction as we move into the second half of the year in the market. It is crucial for us to keep you constantly updated on our guidance and impact of the transaction as we move into the second half of the year in a very fluid matter. As you know, seasonality patterns for our business are skewed towards the Q4, so the first half is not always a reliable proxy for the full year. However, we have already identified some trends that have helped us fine-tune our guidance for 2024.
On gross revenues for the first half of 2024, our gross revenues reached EUR 214 million. This is a bit lower than expected, due to delays in closing certain disposal transaction in Greece, and the lower collection rate caused by challenging environment for collection, but offset by strong non-interest revenue contribution versus expectations. In this context, we are revising our guidance for the full year revenues to EUR 460 million-EUR 480 million, from EUR 480 million-EUR 490 million. On our gross book value at the end of the first half 2024, stands at approximately EUR 18 billion. We are confident that at the end of the year, as collection and disposal will intensify, the GBP will be underpinned by solid partner new business intake, which is now exceeding expectations.
This is why we are maintaining our target of EUR 116 billion for the year, but confident to do better. On EBITDA, despite softer revenues, thanks to effective expense management, our EBITDA, excluding non-recurring items for the first half, is EUR 67 million, which is higher than our expectation for the first half. However, much of the outlook for the full year will depend on the second half and the timing of assets and disposals. Given the delayed order intake in the first half, we only deviate slightly from previous communication, leading to a range of EUR 155-165 million EBITDA. Our financial leverage is currently 2.9 times EBITDA. Cash generation continues to be solid, with cash conversion in line with expectation.
However, a lower EBITDA denominator could possibly lead to a net leverage between 2.8x and 3x the EBITDA. About the new mandate, the future flows, we have secured EUR 4.5 billion in new mandate and future flows in the first half of 2024, and we are on track to achieve our annual target of approximately EUR 8 billion, with significant transaction in the pipeline. Please note that the new mandate target excludes secondary transactions. The guidance has been updated on a standalone basis. The impact of the Gardant acquisition on our P&L will depend on the closing date, which we expect in the last quarter of 2024. We anticipate it to be negligible, as it will cover only 1-2 months. The impact on the balance sheet will be fully recognized at the closing, and it will include the amount of debt related for the acquisition, cash to be related to the rights issue, and the cash position accumulated by Gardant in 2024. The vendor will retain this cash thanks to a customary locked box
Overall, we forecast an operating cash flow of approximately EUR 130 million in 2026, which will translate in the free cash flow to serve dividend and principal repayment of around EUR 90 million-EUR 95 million, assuming interest expenses of EUR 35 million-EUR 40 million. Here, we try to explain cash flow generation in more detail, as requested by you. More importantly, our leverage will be between 1.3x and 1.5x pre-M&A before dividend, which provides a comfortable level. This leverage allows to us to create space for shareholder remuneration, size growth opportunities, and maintain a cushion withstand market volatility. We are confident that the acquisition will not only contribute to our financials, increasing our 2026 targets and cash flow generation, but also add an important strategic layer to accelerate the execution of within our industrial plans. Thank you, all. We now take your questions.
Thank you. This is the doValue conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one. At this time, the first question is from Davide Giuliano of Equita. Please go ahead.
Yes, good morning. Thank you for taking my question. I have three. The first one on cash generation: can you remind us what you expect for second half regarding other assets and liability item? In particular, just to double check, is there anything to consider beyond the redundancies and the IFRS leases? And on the net working capital, on the, I see that it's linked to portfolio sales pending onboarding. Can you elaborate a bit more on the negative impact in the first half of the year?
The second one, on Spain, we saw large inflows in the first half of the year. When will we start to see the benefits of these inflows? What can we expect in second half in terms of operating performance? And, the third one, what margins, what margins in relation to gross book value can we expect for the new UTP contribution from the DFS to fund? And on the Alphabet Portfolio, if you can, can you give us a little bit more color on that? Thank you.
Thank you, Davide. I will take the first question. On cash generation, we are in line with our expectation. Also, we are doing it to be better in the first half, and what we have already tried doing the Capital Markets Day. On the other half that I did, we expect that we'll have mainly what you have seen in the first half. Redundancy, as you see in the first half was EUR 8.4 million. That are little below our target. In our business plan, we have EUR 23 million-EUR 30 million. We expect to have a lower amount of this amount, redundancy because of the Gardant transaction will probably reduce the exit to EUR 20 million, roughly. On IFRS 16, we confirm our guidance that we explained during the presentation.
Today, we are already at EUR 10 million outflow, that is 65% of the full year amount. We expect to pay at the end of the year EUR 16 million to EUR 17 million of IFRS 16. In terms of net working capital, we think would be, could be in the range of -EUR 5 million to 0. These impacts depend on the secondary phase increase. As you asked question, when we run a portfolio sales, we are entitled to register the revenue as soon as the investor sign the contract, but we can collect the invoice we issue when the portfolio has been onboarded by the new client. So we need to wait the onboarding, and then we have to wait the waterfall of the securitization paper. This is why usually the invoices of the secondary phase is not collected after three months, as happened for the other revenues, but we collect usually ... by in six months rather than nine months, depending on the onboarding time. But this is just a shift in the collection, but the under control.
In terms of the payment flows, I think this is the result also of the strategic decision last year to buy Team4, which is specialized services on digital collection for small tickets. This company allows with their CRM to capture a lot of the small ticket and secure flow that we have secured with the new contracts with Sabadell and BBVA. So in the second part, clearly with the trend in the market in terms of increasing NPL production, you have seen the statistics which we have shown in the first part of the presentation. We expect this flow to go up, and we are signing similar agreements with other banks.
So, in terms of operating performance, clearly, the system and the people are already set up, so the increasing volume will not determine an additional cost, but will all flow through the PNL in a positive manner. In terms of the contribution to the UTP activity in Italy, we are very proud to have moved, you know, in the higher part of the loans type. So more on the performing space, which have also much higher recovery rates. So, banks are starting to discuss active management of earlier years and stage two loans. We have developed there also new system and new technologies.
Usually they tend to have recoveries in the order of 80%-90%, with the peaks also just below 100%. So this will enhance recoveries, but also the profitability on these, as we have mentioned on one of the pages, is more in the order of 45%-50%. Last on the Alphabet, the allocation of the portfolio is now completed on all the three tranches of the book. Two of them have been allocated to Bain and Fortress, which represents 70% of the book. As you know, Fortress and Bain in the Hellenic region only work, or mostly work with us. So we are confident that to finalize the agreements with them by the Q3.
Also, we are discussing with the investor who has acquired the last portfolio also potentially for that mandate. In the market, there are other portfolio also related to, also includes, a sale, disposal and securitization of a portfolio. We are well positioned there, given that in the first half of the year, we already onboarded EUR 500 million from that, from Attica Bank. So all in all, we are positive on the intake of new business, in the second half, related to this area, too.
Thank you. Very clear.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. The next question is a follow-up from Davide Giuliano of Equita. Please go ahead.
Yeah, thank you. I take the opportunity to ask another question on Italy. In particular, Q1 was up year-on-year in terms of gross revenues, while second Q was slightly down. I think it's related to lower collection. In this regard, the second Q was very strong last year. What do you see in terms of business momentum, and is Gardant performance in line with your expectation? Thank you.
In Italy, the nature of our book is mostly today driven by close portfolios, so stock agreements. Therefore, you know, the dynamic on the stock you know follows the vintage of it. So you can improve and grow the collection as you add new portfolio. But this is also the driver of why we have focused a lot on the diversification angle, and we pushed significantly the other revenue streams. In Italy, we have a pretty diversified revenue product going from real estate services, legal services, admin services for securitization vehicles, data services, as well as the office we are now producing for the Stage 2 loans.
Before Gardant transaction, we see these two elements to grow to move in you know in a direction which will balance each other. With Gardant, obviously, we are going to add two flow agreements with banks. One which includes a very profitable you know UTP business. As we said, the UTP business of Gardant is very similar to ours in terms of margin which will drive also the rejuvenation of the book. On top of the fact that we are rejuvenating it with the addition of earlier years and potentially Stage 2 loans, on which we are very focused. Thank you.
The next question is from Simonetta Chiriotti of Mediobanca. Please go ahead.
Thank you. Good morning, all. So my question is, if you, on the general competitive environment in Italy, with we have seen finally the finalization of the acquisition of of Prelios. There has been news flow on on Intrum in the last weeks, and so on. So if you could give us an idea of how is the competitive environment evolving in Italy, and more in general terms, in the market where you operate? Thank you.
The market is consolidating, and this is a positive factor for services. Because as we have seen in markets with very high concentration, like Greece, clearly you create economies of scale by adding volumes, and there is much more pricing power on the side of services. So we see positively the dynamic of a consolidation, both obviously for our transaction, and also potentially if Prelios was going to combine with Cerved. We haven't seen. We have gained market share in Italy in the last six months as well as in Greece. In Spain, the market remains more fragmented.
We are not seeing big shifts in terms of ownership of services because many of the services are owned by private equity, which also own the portfolio they're managing, so they see the entire cycle through the combination of the two. This could happen more in the last part of the year or next year. That's why we are focused there on increasing our exposure to banks by diversifying not only with Santander, which is already a traditional historical client for us, but also going towards the main local big banks, like Sabadell, BBVA, and Caixa.
The next question is from Fabrizio Bernardi of Intermonte. Please go ahead.
Buongiorno, Manuela. Thank you for the presentation. We have been having a few presentation by the banks, more or less 15 in a couple of days, so it was a busy season. The messages we got from the banks is that the asset quality is not deteriorating, so far. So maybe in the next couple of months may be worse, or worsening, let's say. So, my question is that what is your view on consolidation of the sector? I mean, apart from Gardant, which is now something, let's say, almost done. I was wondering whether you can give us your view about the consolidation of the sector.
It seems to me that the sector is now, let's say, not empty, but a little bit, little bit short in terms of inflows about NPLs, whatever they are. So stage two, part two, UTP, whatever it is. And so the collectors are trying to manage this problem, merging in order to create efficiency about OpEx, about G&A, and so on. So I was wondering which is your view from literally in a qualitative way. I'm not asking you whether you may have other targets apart from Gardant or not. But if you think that we have already seen Intrum maybe moving in this way, I know that they are fairly different versus doValue. But I was asking you. I, I'm asking you if you think that, consolidation in this part of, let's say, diversified financials, can move on forward in a more aggressive way?
Thank you, Fabrizio. The reality is that, it's, I mean, what the bank said, I can see the point of view, no? I mean, they have much stronger balance sheet than in the past. The reality now we want to give figures that we have already absorbed, in the sense that you can see from the order intake, we are more than halfway to our target for the year, and we are confident we will pass this target this year.
So, even in a market which has less flows, but which we had already included in our business plan, reducing, you know, the intake assumption for the year, we will do better than that, because the new inflows are little by little going up. Now, to your question about consolidation, I agree that, you know, in a market where there are not massive volumes as in the past, it makes sense to exploit the synergies of scale, which derives from a combination of platforms. The Italian market is strongly moving in that direction.
If you remember, the traditional chart of price, which tracks the sector, which was showing as, you know, main players, a few years ago, doValue, Intrum, Prelios, Gardant, AMCO, Ifis, illimity, and the Fire Group, probably in this order, if I remember correctly. Now it's seeing the combination of doValue and Gardant. Sorry, I missed Cerved. of Prelios and Cerved. Ifis is reducing their activities, illimity has exited, as you've seen in the reporting. They tried to consolidate all their NPL portfolio, and they report almost zero exposure. AMCO has focused on the internal business from the last reporting. They are, you know, downsizing the book, trying to accelerate collection.
So you're left with, eventually with the, three main, players, which, will be, as, Prelios, and, Intrum. And potentially we will see Intrum, how, it will move, in the overall, scheme of things. Clearly, the, operating leverage is a key factor, in these combinations, together with, the diversification, of revenues. I think we are all, working, and we have progressed, I would say, faster than others, in the amount of non-NPL revenues, in the Italian market, and, in active management of the cost base, even pre every transaction, as this is the way you can face, you know, lower, flow markets. But the market is, repositioning at our biggest flows.
So we are very glad to have repositioned the cost base with higher operating leverage, so that when flows pick up, and you know, in this market, this is happening already also on the Unicredit portfolio, as well as we observe on the Gardant forward flow agreement with the two major banks. This will create an upside in the margin, which is more relevant than in the past.
Okay, thank you, Manuela. One last question, if I can, do top up. When we can assume the Gardant deal, so the capital increase for Elliott, and the rights issue to be finalized, when, when, which is the date? I know that there is a slide, but I would like you to comment on the timing, because-
Yeah.
The point is that you are in a limbo that is not very good from a financial standpoint, because investors are clearly questioning about what is going to happen. So we need to know when the finish line is coming.
Yeah. Fabrizio, we are working actively to get this approval as soon as possible. You might appreciate that we have several of them from, antitrust, Golden Power, all the local,
Yeah, yeah
... central banks. Our plan is to have these approvals by mid October, and launch the capital increase soon after. As you have seen, we already convened the EGM to have all these things happening, you know, in a very short timeframe, soon after we get the approvals. So this EGM is convened, I think, for eleven of September. So the all administrative activity and the submission and interaction with the authorities is undergoing, as well as obviously with Consob for the filing of the prospectus.
Okay. Thank you very much, Manuela.
You're welcome.
Manuela Franchi, gentlemen, there are no more questions registered at this time.
One last note. We appreciate a lot your attention in this part of the year. I know we come for... with our results a little bit later than others, and we wish you very good holidays and a good break over the summer.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.