Good morning, and welcome to doValue Q1 2023 results conference call. I'm Alberto Goretti, Head of IR at doValue, and I'm here in Rome today with Manuela Franchi, our newly appointed Group CEO, and Davide Soffietti Group Deputy CFO. Together, we will cover the main group and market developments since the beginning of the year, as well as the financial performance for the first quarter. At the end of the presentation, we will be happy to take any questions that you might have. Let me now hand over to Manuela to get started.
Thank you, Alberto. It's a great pleasure and honor for me to present our first Q 2023 results as acting CEO for the doValue group. As you all know, I've been a key member of the management team of doValue since its IPO, and actively contributed to its growth and development over the last few years, both organically and through acquisitions. I also had the privilege of being in constant dialogue with financial analysts and investors, and the regular feedback you have provided to me over the years has been extremely valuable. I've been recently entrusted by the board to take the role of acting CEO on the back of the departure of Andrea Mangoni, and I feel a huge sense of responsibility as well as excitement in taking on this assignment.
I'd like to thank the board for its trust, and I would also like to thank Andrea for his precious mentorship and guidance over the years. I'm very aware of the challenges and opportunities that are in front of us. You can be assured that I will do my best to provide the group with continuity as well as to accelerate the company development, taking into account that all the company is behind us and no other changes have happened. All our CEOs and management team is fully committed to our year-end results. Let's now get started with the presentation. On page three, in Q1, the company has delivered the results which are in line with our budget.
Our performance has been particularly resilient also considering the macro slowdown, as well as some specific external factors that have affected the first three months of the year, in particular in the Hellenic region and Iberia. The current inflationary environment, which led also to substantially higher financing costs for both households and SMEs, has had some impact on our collection performance, as common to other players in the industry. This is also compounded by general slowdown in cost activity in Italy after the acceleration in auctions seen post-COVID in 2021, and in the first part of 2022. In Spain, the quarter was affected not only by the select portfolio boarding, which limits comparability with last year, but also by strike of the courts, which has influenced the recovery activity for two of the three months of the year.
In Cyprus, the election that was held in February had a collateral effect of making foreclosure more difficult, which impacted our NPL activity in the country, particularly, compensating the strong re-activity. All in all, in this context, we delivered EUR 101 million of gross revenue and EUR 30 million of EBITDA. The group has also delivered a growth of 42% in cash flow from operation year-on-year, something we are quite proud of, also considering the seasonality of our business. Net debt has increased in Q1, mainly due to the normal seasonality of our business, as well as higher tax paid in the quarter. Financial leverage remains at the end, in line with the end of the year and much below our target of up to 3x .
Please bear in mind that we have EUR 4 billion of GBV already secured that will be onboarded during 2023 and will further support the revenues for the remainder of the year. Lastly, let me recall you on the excellent performance of the ESG front with the MSCI ESG rating upgrade to AAA in March. Moving now to page four. The key message here is that we have managed to overcome few specific market challenges that have affected the quarter and might wait also on the coming quarters. In general, our geographic diversification has followed us to weather well some country-specific themes, further demonstrating the value of having expanded beyond our domestic market over the years.
In Italy, the market has seen a reduction in auction activity in the last few months, which is reversal of the post-COVID acceleration when courts worked through the pile of cases which had accumulated post-lockdown. Court activity is now normalized. We have reacted in this environment by improving our internal efficiency, having implemented staff at group level in record time and pursuing a high degree of insourcing versus the past. In Greece, the macro environment remains particularly strong, with the country likely to reach investment grade level in the coming quarters. The regulatory uncertainty around the role of servicer in the HAPS scheme negatively weighed on the first two weeks of the year. In addition, elections are going to be held in 2023 in Greece, with the expectation of a material slowdown of court activity.
In this environment, we are executing our planned pipeline of disposal of NPL portfolio on behalf of our client, so all elements which are on our control. In Cyprus, election were held in February, and this had a marginal negative effect on the ability to perform foreclosures. Despite all this, in Greece and Cyprus, our REO business continues to perform very well. In Spain, a strike of the courts affected two months, the second wave has already started. The fact that the majority of t`he NPL flow from commercial banks to re-servicers are related to government ICO loans makes the recovery activity of servicer more complex and harder. In Spain, doValue continues to restructure its business with positive evidence of the turnaround already visible in the month of March and April.
Our key clients in Spain continue to appreciate our performance. We are certain that we continue to perform ahead of other servicers deployed by them. Moving now to page five. In terms of GBV, clearly the trend year-on-year has been dominated by the off-boarding of the Sareb portfolio and some disposals made by our clients. The collection trajectory at group level is actually positive year-on-year, excluding Sareb, strongly supported by the activity in the Hellenic region as well as productivity improvement deriving from the doTransformation plan. More in details, our GBV stands at EUR 120 billion at the end of March, flat compared with the end of 2022. Collections stood at EUR 1.1 billion in Q1 2023, a growth of 6% excluding Sareb.
The collection trajectory in Italy has mirrored the trajectory in GDP, despite the deterioration in the auction activity and in general much of slowdown which has pushed household and SMEs towards judicial routes as opposed to amicable settlements. In fact, the general increase in financing costs has made the refinancing option less viable in general terms. In the Hellenic region, collection outperformed significantly the trajectory of GDP, despite the regulatory uncertainty that affected Greece in January and the election held in Cyprus, which have limited the foreclosure activity. In Iberia, the loss of Sareb had a meaningful impact on collection, a factor which was compounded by the court strike. Nevertheless, excluding Sareb, our collection has grown by 3% year-on-year, and we continue to be top rated by our clients. This is a result of all the productivity efforts done by the team. Moving now to page six.
I wanted to give you an update on doTransformation. As you recall, the program is key for the group on both revenue and cost. The main objective revolves around, first, the ability to extract more revenue per unit of GBV managed. Second, enhancing productivity to lower cost per GBV managed. Third, updating the operating model to reduce cost base end point. Fourth, strengthening our human capital. I'm very proud of the results achieved by this program, which are in line with the expectations. On the cost side, a lot of work is being done to streamline our operation and IT backbone. On some key workstream, we are very well advanced. For example, our service model has been 95% implemented. We have also completed the rollout of 90% of our application, and infrastructure and security workstream is 70% completed.
This should already provide enough lift to EBITDA margin by reducing OpEx-related operations from 10% to 7% of total already in 2023. Let me remind you that our transformation program is characterized by balance between centralized operation and local one, thus avoiding duplication of costs and full control of our delivery. We have also been extremely careful and reasonable in planning investment for the doTransformation program, reducing the overall planned expenditure and investment by EUR 10 million compared to the original plan. Moving to page seven. The doTransformation program, coupled with the restructuring of our operation in Iberia and an ordinary FTE reduction in Italy, has already produced a 20% reduction in OpEx in the last 15 months, of which 15% was achieved in the last six months.
Clearly, Italy and Iberia are strong components of such reduction, which also mirrors the respective movements in FTEs. For Italy, also partially the release of the FCO provision related to unvested share-based remuneration. The departure of our CEO will continue to give the positive support to our P&L for the first months to come in terms of HR costs. Parted costs and FTE reduction can be expected for the rest of 2023 in all countries due to higher operating efficiencies. Moving to page eight. A key theme is the development of very active secondary market for NPL portfolio in Greece. This is something that was already planned at the inception of the HAPS securitization , and it also functional to achieving our collection targets. In particular, we are taking advantage of this also by trying to preserve as much as we can the servicing mandate post-disposal.
As you know, we have already been very successful in completing Project Virgo and Project Souq, where we preserved the servicing mandate from EOS and Intrum respectively. In 4Q 2022, we also completed Project Frame on behalf of Bain Capital. We are currently in the market with few other trades such as Heliopolis, Thales, and Gemini, which should complete by the end of 2023. In addition, the re-performing market transaction are also gaining traction, and we are preparing various portfolio for such trade. A similar market is expected to develop in Italy and Spain, considering that the bulk of the NPL stock is currently held by investors or securitization vehicles, as opposed to a few years ago when the bulk of the stock was still in bank's balance sheet. Moving now to page nine.
The pipeline has grown by EUR 6 billion in the last three months, currently standing at EUR 58 billion. This is all related to existing NPL portfolio, that not taking into account the very probably increase in NPL production by banks in the coming quarters. It's important to note that the pipeline contains some very large government-sponsored transactions, such as the EUR 12 billion Project GLAM in Italy and the EUR 5 billion Project Ariadne in Greece. Please note that regarding future NPL production, we have already seen a 17% increase year-on-year on the forward flow, which we receive from our banking partners. Believe that this is a signal of increased NPL production already taking place.
On the product innovation side, the pipeline has further grown in the last three months, now also incorporating some projects on reperforming loan in Italy as well as pro- brokerage fee model in Greece. All in all, we remain extremely focused on pushing the boundaries of our product offer with the aim of increasing relevance for our clients, broadening our reference market, and sustaining our revenues and EBITDA in the medium to long term. This is key for us as the NPL and UTP markets have now reached a certain level of maturity, and we need to continue pursuing additional growth revenues. To wrap up on ESG, on page 11, there are some details around our recent upgrade by MSCI, which is now rating doValue at AAA since March 2023.
We continue to pursue our sustainability plan, working on ESG objective for 2023, after having successfully completed all our objectives in 2022. Key areas of work has put out the level of engagement of our employees, as well as training for our workforce. We will carry out in 2023 a holistic sustainability assessment of all our suppliers in the three core countries in which we operate. Let me hand over to Davide to cover the financials in more details.
Thank you, Manuela. Good morning to all of you. I am Davide Soffietti, Deputy CFO for the group and CFO for the Italian business. For those that don't know me, I have been with doValue since the beginning of 2016, covering different roles in finance, I was also part of the team that led the IPO of the company in 2017. I have worked in the credit service industry for more than 20 years, also covering the financial valuation and monitoring of NPL portfolio, as well as due diligence process for the acquisition of new portfolios and servicing processes. I have met in person or in video call some of you during our recent roadshows, I'm looking forward to work with all of you on regular basis in the coming quarters. Let's get started.
Moving to page 13, we have here a summary of the financial for the quarter. As already mentioned by Manuela, the quarter was in line with our expectations and partially reflected the normal seasonality of our business, the current macro slowdown in Europe, and some other exogenous factors. GBV has remained stable since the beginning of the year, while it declined by 21% year-on-year, mainly reflecting the off-boarding of Sareb portfolio in the second part of 2022. Our collection performance year-on-year has proven to be more resilient than the corresponding decline in GBV, in particular sustained by strong performance in the Greek and Hellenic region in the quarter. Overall, collections stood at EUR 1.1 billion in the first quarter.
In general, given the growing importance of the secondary transactions, we expect the collection profile to become more lumpy and, in the case of 2023, more concentrated towards the second half of the year. The collection rate stands at 4.1% as of the end of March, in line with the level recorded at the end of 2022. Gross revenues declined by 23% year-on-year to EUR 101 million, a trend in line with decline in GBV, which was in good part due to off-boarding of the Sareb portfolio, as well as due to some weakness in the collection performance on NPL portfolios in Italy. As a reminder, the Spanish activity in the 1st quarter of 2023 was affected also by the court strike, which impacted the whole of the month of February and March.
In general, the operating environment is likely to continue to be affected by these exogenous factors for the rest of the year. That's why we have been extremely proactive in managing our cost base in order to achieve our budget for the quarter. Thanks to that, EBITDA declined in line with gross revenues year-on-year to EUR 30 million, EBITDA margin. For risk and charge, and the non-cash impact of fair value movement drove the net income decline, which for Q1 2023 is a touch above the given. The impact of taxes paid in the quarter mainly drove our net debt much higher compared to the year-end 2020.
Financial leverage is stable at 2.2x and remains in the low part of our target range of 2x-3 x. As a reminder, we have ample liquidity of more than EUR 260 million if you take into account both our cash position as well as the amount of undrawn committed lines. Moving to page 14. Here we present the components of our GBV movement in the first quarter. Overall flows amounted to EUR 900 million with strong inflows from Eurobank in Greece. Overall flows have increased by 70% year-on-year, which we read as a sign of a new wave of default starting on the back of the macro slowdown experienced in 2022, and still ongoing. On top of that, in the quarter, we have onboarded EUR 1.4 billion of new mandates.
In particular, the Souq portfolio in Greece, which we now manage on behalf of Intrum, some UTP portfolios in Italy contributed into the first to fund, as well as another mid-sized mandate in Spain. Already mentioned, collections stood at EUR 1.1 billion in the quarter, and the split between collection and write-off remains in line with the average at 56% to 46%. Disposal amounted to EUR 700 million in the quarter, mainly relates to Souq portfolio, which was sold on behalf of Cairo I and Cairo II securitization vehicles. A reminder, we have already won EUR 4 billion of mandate, which have not yet been onboarded. This will positively contribute to revenues in the second part of the year. The part of this relates to two projects in the Hellenic region, Project Sky in Cyprus and Project Frontier II in Greece.
Moving now to page 15. Here is a more detailed breakdown of our gross revenues by region. Gross revenues declined in aggregate by 23% year-on-year to EUR 101 million. As you can see, the bulk of the decline in gross revenues is related to Iberia, where the off-boarding of the Sareb contract, coupled with the negative effect of the court strike , has resulted in a decline of 56% year-on-year. In Italy, gross revenues declined by 20% year-on-year, mainly due to a slowdown in the NPL activity, partially compensated by the growth of our UTP business. Fee-related revenues in Italy declined also by 12% year-on-year, partially reflecting the more lumpy nature of the revenue recognition framework around these activities.
In the Hellenic region, gross revenues declined marginally by 2% year-on-year, as strong growth in the NPL and REO business were more than compensated by a nominal decline in the UTP revenues, which in Q1 2022 were positively impacted by the release of the curing provision, thanks to better-than-expected performance. The activity in services in Q1 2022 was impacted positively by a specific one-off item deriving from a successful long-dated fee negotiation, making the comparison with Q1 2023 more difficult. We continue to optimize and reduce our outsourcing activity, both leveraging on different portfolio mix post-Sareb with lower reactivity, as well as in-sourcing some activities in Italy. Outsourcing fees declined both in absolute terms and as a percentage of gross revenues, positively contributing to sustaining our EBITDA margin. Moving to page 16.
We continue to proactively and effectively manage our cost base, both in terms of personal costs as well as IT and SG&A. OpEx declined by 20% year-on-year to EUR 62 million. The reduction in cost does not yet match the reduction in revenues, meaning that we still have more work to do in the coming quarter. We are confident that also through our doTransformation program and further SP reductions, we will be able to achieve our target cost reduction and EBITDA margin. In terms of HR costs, these declined both in Italy as well in Iberia, particularly as we have continued our restructuring post-Sareb. Personnel costs all increased in the Hellenic region, mainly due to the increase on the back of the onboarding of the Frontier portfolio. Other operating costs declined at different rates across the four regions.
In particular, Iberia, such costs were more than halved in Q1 2023 compared to Q1 2022. In Iberia, the doTransformation program is particularly advanced and was boosted by the renewal of the direct contract. Moving now to page 17, EBITDA declined by 23% year-on-year to EUR 30 billion, as the reduction of service was partially compensated by the reduction in outsourcing costs and operating expenses, further demonstrating our ability to timely manage our cost base. As I mentioned, in terms of EBITDA, we landed in line with our 2023 budget. Overall, we are satisfied with these results, also considering the various exogenous factors which negatively impacted our operational environment in the quarter. The EBITDA decline was most pronounced in Iberia, where the current reduction plan will produce results from the second quarter forward.
We do not exclude a further cost of optimization in Iberia in 2023, as the cost structure still needs to adjust to new reality in terms of GDP in the region. In Italy, the contraction in EBITDA was approximately 13% year-on-year, while in the Hellenic region, the contraction was more modest, at 8%. Moving to page 18, here you have the summary of our regional performance on various key metrics. We are particularly satisfied of our collection performance in the Hellenic r egion at close to EUR 400 million. It's also reflected in the collection rate in the region. All in all, the group collection rate remains stable at 4.1% less the CRS. Our EBITDA at group level continues to be stronger, strongly supported by the performance in the Hellenic region, which made almost 90% of our EBITDA in the quarter.
Moving to page 19, net income was affected in the first quarter by the decline in EBITDA, a marginal increase in customary provision for risk charge, and the non-cash impact of fair value movements, partially compensated by the reduction in taxes and minorities. Non-recurring items were equal to zero, above EBITDA, and stood at approximately EUR 4 million below EBITDA related to the redundancy provisions. Moving to page 20, we are satisfied with the 42 increase in cash flow from operation recorded in Q1 2023. As I mentioned, Manuela, we are very proud of this achievement, considering the customary seasonality of our business, which normally sees a weaker top line in the first quarter against a generally stable cost base throughout the year.
The cash flow from operation generated in Q1, 2023, was absorbed by higher taxes, mainly related to the payment schedule adoption degree, and also the interest costs, which are constant over the year. The sum of tax and interest paid amounts to EUR 25 million in Q1 20 23, an amount close to 90% of our EBITDA minus taxes. As mentioned, this is normal in the context of the seasonality of our business across the different quarter of the year. We are particularly satisfied with the effort we have made in managing working capital, which in the quarter has absorbed only EUR 1 million of cash. In addition, the debt and other asset liabilities has normalized to EUR 6 million in the quarter, mainly reflecting these redundancy payments. All in all, the quarter absorbed approximately EUR 3 million of cash.
Moving to page 21, our financial structure remains conservative and sound, with more than EUR 250 million of liquidity split between EUR 120 million of cash and EUR 150 million of undrawn credit lines. Please note we have never drawn our FCS in size, and we are not planning to do so as our operations are fully self-funded and our leverage is low. Our next bond maturity is in 2025, which means we do not have to worry for the time being about the overall increase in interest rates. Our bonds have generally traded better than the sector and of the overall high yield market, a demonstration of the attractiveness of our capital light credit servicing model.
Finally, on this point, our current 2025 bond pays a 5% coupon and secondary trading plus indication from investment banks point towards a possible marginal increase by 200-250 basis points upon a possible refinancing. Therefore, changing only marginally our weighted average cost of debt. Financial leverage stood at 2.2 x at the end of March, broadly stable compared to the end of December, and still at the lower part of our leverage range target of 2x -3x . Our current financial position allow us to pursue M&A, although our strategy puts organic growth as priority. Thanks for your attention. Let me now hand over to Manuela for her final remarks.
Wrapping up our presentation. On page 23, we wanted to provide you with some concrete action we are implementing in order to support our performance in 2023. We are working hard to deliver 2023 in line with our budget, which as mentioned previously, is broadly in line with the current consensus. In a nutshell, we expect on board EUR 4 billion of GBV already secured, and this will support revenue generation for 2023. In addition, we will continue to execute our planned secondary servicing deals to match the APS business plan targets, also with the aim of retaining the servicing mandates. Lastly, we have already initiated some discussion with key investors to renegotiate fees upwards to allocate more fairly the value creation between investor and servicers.
On the cost side, we will continue in sourcing some of the activities traditionally performed by our external network. We will continue our inorganic cost reduction program in Iberia. In addition, the new transformation program will soon start with savings in terms of costs related to operation as it did for IT costs. Lastly, as mentioned, we are continuing to work on cash conversion from a design 2023, as demonstrated by the better working capital dynamics achieved already in Q1. We are currently performing in line with our budget. Despite the market headwinds, we are confident of the delivery of the plan for this year. Thank you very much for your attention. Let's now open the floor to questions.
Thank you, Manuela. As a reminder, please, press star one to register your questions, and we'll take them one by one. I think we can take the first question from Simonetta Chiriotti at Mediobanca.
Thank you, Alberto. Good morning, all. You have mentioned that overall results are in line with the budget. Do you confirm that the budget is to deliver revenues and EBITDA roughly in line with the previous year? Looking at what happened in the first quarter, this means that in the rest of the year, you should deliver some growth on the EBITDA level. Do you think that this is possible considering the level of the assets, especially in Spain?
Remaining on Spain, do you think that the recent acquisition of Haya by Intrum changes the competitive landscape, and do you see room for M&A in that market, or are you interested in M&A in that market in the coming months? Thank you.
Simonetta, I'll cover the first question. Yes, we are confident that we'll be able to meet our budget targets for the year, which are roughly in line with consensus in terms of growth revenues and EBITDA, and in particular in EBITDA, which is probably gonna be in line with what we printed last year. As Manuela mentioned, there are several factors that are supporting this assumption. First of all, the GBV that we already secured will be onboarded. It's all GBV in the Hellenic region, so it could ease the profitability and should be onboarded mid-2023 and will support revenues for the year.
As Davide mentioned, the seasonality effect that we usually have has been exacerbated this year by the timing of the disposals that we're planning to do in Greece, meaning that the year will be a bit more backloaded this year compared to previous years. We are keeping a very strong target of preserving also the servicing mandate for the future, which will support also performance in 2024 and onward. On the cost side, as mentioned by Manuela, there's, you know, insourcing activity and also some insourcing that we are doing on the REO side in Spain. As said, you know, we carry on focusing on personnel costs both in Iberia and in Italy.
On top of that, there's the de Transformation Program which is progressing very well and which should start to yield tangible results from mid-2023 onwards.
On your second question, Simonetta, we don't believe that the transaction announced yesterday is changing the competitive landscape in the sense that it's a consolidation of the Intrum platform. Vis-a-vis external clients, we have again, in terms of new contracts, a significant market share in terms of potential additions. Because the team has been focusing on improving the performance on the existing portfolio, and this is obviously the first signal they recognize. The products we are exporting to Spain are unprecedented and are not happening for the other competitors. Vis-a-vis investor clients, we see a positive trajectory, and vis-a-vis bank clients, as we have demonstrated in the last six months, we have done already pilots with the and, you know, launch projects.
We went beyond the pilot phase with two of the other major banks which are also working with our competitor, but are exceeding our competitor. In terms of M&A, yes, we are interested as we were before in potential M&A in the region to add volumes to our structure, which can load more volumes as we said.
Thank you. Another question, if I may. Basically, the trajectory is to reach an EBITDA in line with last year, first quarter, you have since the first quarter. What about the second quarter? Do you think that, like, a catch-up in profitability will be already visible in the second quarter or everything is postponed to the second part of the year?
The only thing that we can say around the second quarter is around the normal seasonality of our business. You know, our cost structure in terms of HR, but also taxes, interest rates, is pretty much stable across the year. Our revenues are very strong in Q2 and in Q4 normally. Certainly, you know, if you look at the past, it used to be stronger than Q1.
Also considering this year the effect of the sales, which are more backend loaded. Probably this effect of a stronger Q4, vis-a-vis the others, is more, is stronger this year than in the past. All in all, you know, the normal seasonality applies.
Yeah. Thank you.
Take the next questions from Eleni Ismailou at AXIA Ventures.
Hello, everyone, and congratulations for the set of results. I just have a couple of questions. Firstly, could you please specify the asset class of the performing loans you see in Greece, and also what counterparties do you see in secondary deals? Is it like banks or firms? Thank you.
I think we missed your first question, but on the second one, the counterparties are investors. The three trades that we did in Greece were coming out of two hub securitization and one portfolio. The two hub securitization portfolios went to Intrum and EOS. EOS is a specialized financial investor, then Intrum, you know, who they are. The third one went to APS.
Maybe to address this type of, better, you know, this type of trades in the Greek market. This is not only common to us, it's common to all the services in the market. You know, there have been a lot of ups in the last three years, the investor in this portfolio has been programming already in the business plan presented to the rating agency and to the government some sales during this period. We are carrying out this transaction as well as others. The benefit of these sales is both booking a sales fee for the transaction as well as maintaining the services that please to the same fee level.
Maybe, Eleni, if you can repeat the first question, that would be helpful.
Yeah. The first question was, whether you could specify the asset class of the performing loans you see in Greece.
Yeah. In Greece it's mostly obviously the category of the UTP and earlier years loan, where we, I mean, we are able to propose restructuring solution and new financing back these loans to the performing status. As such, they can be sold both in portfolio and securitization format to banks or investors which are different from the original from the originator. This type of transaction has been happening usually in Anglo-Saxon world in the past, and the team is trying to replicate in Greece first. We are having a similar project in Italy for this portfolio, which are in the high part of the non-performing status, in the sense that they are almost performing and especially on the mortgage re-residential books.
Okay, thank you very much.
Okay, I think we can take the next set of questions from Andrea Lisi at Equita.
Hi, thank you for taking my question. The first one is on Greece. I see that the collection was quite strong here, above last year level, but the revenues were lower, especially the servicing revenues. Just to understand here the dynamic, the correlation between collection, the servicing revenues, if there is some pressure on fees or if there is a mix that has affected there, and what we can expect for the rest of the year. The second is on Spain. You said that you're interested in M&A, but apart from M&A, what can you do to become more profitable in Spain again? Because with this size in terms of GBV, it seems that it's hard to be profitable.
The question about Italy is about the personal costs that dropped significantly year-on-year. Just to understand a bit better what happened and if it is something that is sustainable. Last one, the level of CapEx you have to spend for the rest of the year, given that in the first quarter they were really low. Thank you.
Hello, Andrea. I will take the first question. The collection in Q1 2023 was supported by the Souq fees , excluding Souq recollection, were +5%. As I already mentioned, the revenues in Q1 2022 in the region and in Greece, we had a one-off item related to the curing fees that, excluding that items is the collection, the revenues are more in line with Q1 2022. These expenses, as I mentioned, also in Cyprus we had the same situation where the first Q of 2022, we had the one-off items related to the negotiation we had with one of our key clients that was very successful, and then we had a benefit in first Q 2022. Excluding that item, the free revenues will be in line with the past.
Just to clarify this last point, basically we had booked in first Q 2022 also the better fees that are negotiated for 2021. Because the renegotiated renegotiation ended the beginning of 2022, but it was on the year before. On the second question on profitability scene, obviously, when we think that we are going to be profitable, and this year, this is without M&A, because our strategy is without M&A. Take into account that the exit cost of the personnel which we experienced last year and will complete by first Q, will have during this year all the running effect. The fact that almost 200 people have exited the cost base will have a full effect, obviously full next year, but a significant one already this year. This is the first factor.
Second factor, the Spanish team has been successful in exploring, you know, and developing all the new systems, which obviously are a more efficient one, but also are able to deliver not only lower cost, running costs, but also at higher productivity. In fact, you have seen that already in the first Q, the collection rate at Sareb has increased. Last obviously there is an effort on the general cost to go down, and on the outsourcing cost, most of them were driven by the Sareb contract. By exiting it, there is much more efficiency and less legacy related to, you know, the network, which is something the team is working on. The profitability of Spain is not driven by M&A, but could be enhanced by M&A.
On the personnel cost in Italy, there are sustainable elements to continue it forward. In the first Q, one element waited, which is the release of the provisions for the stock component of the CEO package, but is package as you know also from comments to the remuneration policy was considered expensive. Therefore, you know, in the new scenario will be more at market terms. This will create a running saving that we will bring with us going forward. On top of that, we will continue to have savings obviously related to the exit program, as we are doing efficiencies on the personnel as we continue.
On the CapEx side, we had communicated in the plan last at the end with the results of 2022. It was EUR 27 million CapEx for 2023. This is in line with our expectations. You have seen less in Q1 2023 because take into account that the deployment of staff was a major event which has changed the way of reporting of all the functions in the group. The team has been really focusing on that deployment. The first two results were already on top for all the countries. That's why, you know, we load the investment in the first Q to focus the team, IT team, transformation team on this specific effort. We confirm our budget for 2023.
One last follow-up if I may, is about free cash flow generation. If I'm not wrong, you stated that 2022 would have been a year of kind of stabilization while strong acceleration in 2023. Do you confirm it or there is something new there? Thank you.
Yes, we can confirm. We can see also in the first quarter was very positive. It was all absorbed by the tax paid related to the previous year and the interest rates that are quite constant quarter by quarter. Also considering Q1, we can confirm that 2023 will be very positive from a cash flow generation. We are also working to improve work on the working capital dynamics.
Thank you.
Okay, I see no further question in the queue. Thank you everyone, and have a good day. Hello, sorry, I think some question has just appeared. Maybe there are some follow-up questions. Let's take the first one from Tim Pedroni at Schroders.
Hi there, Alberto, Manuela. Hello, hi. Thanks for the for the release and your time. Can you just ask quickly an update on the forward flow agreements with Santander, UniCredit? I remember they were due to expire in the next couple of years. Just see if you can update us there. Secondly, just a very broad question about whether you guys are considering valuing how to apply generative AI kind of infrastructure in your business, because I suppose you can gain a lot of efficiency by, you know, in the future years rolling out that kind of technology. Just understanding if it's something you are considering and whether it might be incremental into your efficiency plan, which you're clearly already delivering now. Thank you.
Thanks. Thanks, Tim. On the forward flow, these are going to finish in more than two years. It's almost three years. Therefore, obviously this discussion keep progressing, but at a slow pace in the sense that there is no pressure from both parties to do it now because it will be an extension and no cost of these contracts. We think given the performance we are having with both our key clients, which is very strong, both in Spain and in Italy. Obviously in Italy on the NPL side, we don't compete with anybody, but they have their internal benchmarks. On the Spanish side, we compete with other two services. This give us confidence that we will lengthen our contracts.
The second point is actually, thank you for this question. This is something we are very proud of. The doTransformation program is not just reducing application and reducing the landscape in terms of complexity and reducing costs, but it's very much innovation. We give an example in the results of 2022 about text mining, which is only one case where we track data from, you know, files of different nature, and we use them automatically to better collect and to predict. The forward-looking predictive analytics is something we are extremely focused on at the moment. Because usually this industry tends to predict using curves based on the past experience, and less so on, you know, simulation of specific events of the future.
This is something we are working and we are actually doing some proof of concept already in both in Italy and in Spain. On the second side, we think that obviously our data are a source of strength and wealth that we should use in a different way. In that sense, and in a more powerful way, not only for the internal activity, as we said, to improve collection, but also as a product for clients. Here the effort has been to standardize, homogenize, and use in a systematic way the data.
This is driving the projects around the data platform in Italy, the local data warehouse, and the enterprise data warehouse, which is the group one, where all the group, the local data will be aggregated and used for this purpose.
Just to thank you quick, quickly. Can I just ask you follow up on the outsourcing costs? Just generally, is it fair to assume that the more you move from NPLs towards earlier years in UTP, the share of outsourcing costs can be reduced, because basically outsourcing costs are more linked to court, sort of activities and exercises? Or it's not really the case, it's just, it doesn't matter the underlying assets you're working on in terms of allocating outsourcing costs, versus?
Ye-
You're agreeing to insource. Thank you.
If we didn't have extra capacity, which we create through the investment in IT and the operating efficiencies, I would agree with you in the sense that obviously the UTP products are less use less outsourcing and are more done internally also because there is more complex work to be done by the asset manager on the restructuring side. Nonetheless, we are reducing our outsourcing costs on the traditional business, both NPL and REO, because we can use internal capacity of asset managers, which we free up unless they exit to do the activities that are done outside.
Don't think about outsourcing as only, you know, lowest activity, but also bringing another type of professional, like, similar to, you know, internal asset manager, but with some specialization, which we use outside, which when, you know, the internal ones are free, we can bring inside.
Understood. Thank you very much.
Thank you, Tim. We can take a question from Filippo Prini at Kepler.
Good morning. Just one question. next to the confirmation of budget on EBITDA for this year, are you confirming also the growth of the per share of 20% for this year? Thank you.
I think that that is part of our business plan, target. It was one of the, you know, very clear pillars of the business plan. As you know, we paid EUR 0.60 related to 2021. We paid EUR 0.60 related to 2022. You know, there's no reason to doubt that we're gonna pay EUR 0.72 for 2023.
This is further underpinned by the fact that, you know, we are working a lot with the cashflow, conversion side in order to improve cash generation at the end of the year. Thank you. I think there's a follow-up question from Simonetta Chiriotti with Mediobanca.
Yes. Thank you, Alberto. A couple of follow-up questions. First, related to your last answer, don't you think that the buyback could make more sense with the stock at this level with respect to growing dividends? The second question is on the two large contracts that could be awarded in the coming months, so GLAM and Ariadne. Could you give us an update of where we stand and when these will be awarded to market players? Thank you.
On the first point, it's obviously a level we will consider because we strongly believe that the current share price is undervalued. This was presented on also of our business plan consideration. On the second two, we have two different stories for the different projects. On the GLAM side, this is a project which has been approved by you, has been discussed with the banks. A portfolio has been identified, which is quite sizable. Now I think the government is waiting to finalize the approvals. I think it's also very much linked to the confirmation of the current CEO of AMCO, which was sponsoring this project and was really the driver behind this project.
You know, the renewal of the board, as for all many of the state-owned companies is around this time, this month or the next month. On Ariadne, we think, you know, the process will start after the election, because obviously it's a portfolio state-owned somehow through PQH, which is a vehicle created by the government for the old bank of state in Greece. Once the political situation is stabilized, they will kick start.
You know that on Ariadne we have done a lot of work last year with its final bids, so the process will probably be faster this year, although they will probably be splitting the portfolios at least into parts to make it more interesting for more investors.