Good morning, ladies and gentlemen, and welcome to doValue Capital Markets Day. Our event today is titled Leading the Evolution of the Credit Servicing Industry, and hopefully by the end of the presentation, you'll be as excited as we are about the prospects for our company for the next three years and beyond. My name is Alberto Goretti, and I'm heading Investor Relations for the group. Together with me here in Rome today you have Andrea Mangoni, our Chief Executive Officer, Manuela Franchi, our Group CFO and General Manager of Corporate Functions, and George Kalogeropoulos, our Group Chief Operating Officer. Also connected from Athens, we have Theodore Kalantonis heading our activities in the Hellenic region, and connected from Madrid, we have Francesc Noguera heading our activities in Iberia. We have a pretty packed agenda today.
We're gonna go through the presentation in a couple of hours and then leave one full hour for Q&A. Without further ado, let me hand it over to Andrea to get started. Over to you, Andrea.
Thank you, Alberto, and welcome everyone. Slide five is on our business model. We reiterate our commitment on our consolidated and straightforward business model. Our clients are banks and investors. We have their asset under management and we perform collection for SAM. Our company is capital light because our investment in asset are extremely limited just to align our interest with the interest of our clients. The visibility of our revenues and cash flow is extremely high thanks to our long-term contract.
The indemnity fees protect our cash flow in case the asset are sold by client. Our business have significant barrier to entry because of the scales and because of the high indemnity fees. All in all, our long-term visibility is extremely strong. Moving to slide six. We have experienced strong growth since IPO. We double our gross book value. We had a threefold increase both in gross revenues and EBITDA, while we improved from 31%-34% our EBITDA margin in the last five year. Moving to slide seven.
Growth means diversification for doValue. Today, doValue is a completely different company in comparison to the company we IPO'd five years ago. At the IPO time, we were in just one country. Today we have a well diversified and balanced presence across Southern Europe where we are the undisputed leader in our industry. At the IPO time, we had just three clients, UniCredit, Fortress, and Intesa. Today we have a wider and balanced client base with more or less 770 different clients. When we IPO'd the company, doValue was all about NPL. Today the situation is completely different.
We have I think the broadest product offering in Southern Europe with value proposition spanning from non-performing loans to performing. Slide eight is on our successful track record on acquisition and integration. The contribution of the acquisition to the growth of the company was significant. In our historical core business, the sizable steps in terms of acquisition were the acquisition of Altamira couple of years ago, and the acquisition of the current doValue Greece back to June 2020. Today, we are investing in digital platform to bring home digital capability, both to support our core business and expand our offering to adjacent market.
We will back on this point later on because it's an important point on our new strategy. Moving to slide 9. We have proven to be a very resilient investment proposition. This slide is on our cash flow generation and operational resilience. From the IPO, we generated more or less EUR 350 million free cash flow and paid down to our shareholder EUR 88 million. We reimbursed debt for EUR 166 million, and the leverage of the company went down from 2.6x during pandemic to the current more or less 2x.
The financial structure of the company is solid, I can say rock solid. Our cash flow generation was driven by our performance in terms of collection. This performance was extremely strong. At the IPO time, our collection rate was 2.4% versus the current 4%. Slide 10 is on the execution of our previous business plan. If we look back to our previous business plan, back to November 2019, I think we missed some financial target, basically, because of the pandemic. We carried out all the operational and business action we committed on at the IPO time.
Among the different actions I said before, I think the most important right now is the diversification in terms of product. We currently have a very complete product offering across the credit value chain. We can further increase it leveraging on our experience in the different countries where we are operating right now. Moving to page 11.
This slide is on the main driver that supports the growth of our industry. I think the three main ones are first of all in the short term the end of the moratoria and the uptick in new NPE formation expected from this year onward. In the medium run, this is important because this will be both for Stage 3 so non-performing exposure and Stage 2 so high performing exposure. In the medium term I think the main driver will be the switch in the originator space from the banks to the investor.
Because when the current public intervention in the credit market will come to an end, our client base will switch from the securitization vehicles to the investors, because the historical investor will be back to the market. We can leverage on our strong relationship of some of these, of those investors such as Fortress or Bain. In the long run, the main driver will be the tight banking regulation and the ECB pressure for the bank to delever as soon as possible.
On slide 12, because of the end of the moratoria and the tight banking regulation, I said before, a substantial formation of new NPs is expected in the five countries where we are. Our view is confirmed by PwC, and it means an NP formation of around EUR 200 billion from 2022 to 2024. This is with a conservative default rate, as you can see in the right-hand side of the slide. The magnitude of the increase could be higher.
Next slide. We have a snapshot of the pipeline we are looking at. Market is very active and we are talking about more or less EUR 17 billion addressable market in the five countries where we are this year. We put in this slide a description of the current pipeline, the projects where we are working on at the moment. We are extremely positive on our success rate on this pipeline because of our particularly strong relationship with some of these originators.
We put a key message on slide 14. We are the dominant player in Southern Europe with a blended market share in the region of 25%. We want to protect our current market share in our core business. Our aim is to expand the business of doValue to all categories of loans, as I said before, including stage two and stage one, so performing loans. The market is sizable. We are extremely positive on what we can do on it. This opportunity is not included in our business plan, I mean, in terms of figures, economic and financial results.
On slide 15, we summarize the different phase of our strategic evolution. Now, we are in the third phase. The third phase means leading the evolution of the credit servicing industry through investment in technology, and in parallel, strengthening strategic and long-term partnership with banks and investor in a broadened reference market. Again, a broadened reference market means our expansion across the credit management value chain. We wanna do, thanks to our investment in technology, better what we are doing. We wanna be in the condition to address a new sizable and profitable market.
This brings us to slide 16, where we lay down the five strategic pillars of doValue 2024. These pillars are grow, enhance, transform, innovate, and care. Let's take them one by one. The first one is grow. Our growth will be based on our strong origination capacity. We have had EUR 9 billion mandates per annum in the last couple of years without significant capital deployment, + EUR 5 billion of new inflow. All in all, EUR 14 billion per annum. This is an important number because our guidance in terms of growth was something around EUR 10 billion per annum. Our origination track record is extremely strong.
Talking about our business plan, we will replicate this inflow per annum, so EUR 14 billion. I have two comments on it. The first one is this year will be key because on top of the new EUR 14 billion, we have to onboard more or less EUR 10 billion of mandates that are already secured and to be onboarded next year. For a total of EUR 24 billion. My second comment is on the EUR 14 billion acquisition per annum we put in our business plan. I think this number could be conservative because it is in line with our previous performance.
We do not include in this projection the impact in the form of the new formation of the NP I said before, because of the end of the moratoria and the impact of the current crisis. 14, it's an important number, but I think it could be a little bit conservative. The second pillar is enhancement. In the next three years we will continue to enhance our product offering through cross-fertilization across the different markets and leveraging on the best practices within our different companies.
On the right-hand side of the slide, we described the expansion of the product portfolios by country versus the status quo. As you can see, the enhancement is tangible. The third pillar on slide 19 is transform. One of the strategic project in our business plan is the so-called doTransformation project. The aim of the project is extract more value per AUM unit, and at the same time, lowering the cost per unit and reducing the break-even point of the company for the benefit of the EBITDA. We are talking about EUR 55 million investment for global and local transformation.
The impact of this investment will be extremely positive because we foresee a run rate of EUR 25 million per annum after 2024. This is the backbone of our business plan. This project is paramount, and this is why Manuela and George will drill down on it later on in this presentation. Moving to slide 20. Slide 20 is on innovation. For doValue, innovation means doing better what we do already and learn to do more to expand our reference market. We will pursue innovation both internally and through acquisition.
When I say internally, I meant the doTransformation project. I said before, the innovation budget will be equal to 10% of the doTransformation plan, OpEx and CapEx. About acquisition, we have a solid track record on the matter. In the last couple of year, we build up a partnership with Debitos for doLook Digital platform to enter into the NP secondary market. We bought Chiroquita, Brazilian Fintech and BidX1 and Irish PropTech company. We have a significant acquisition plan.
Neither the acquisition we did over the last couple of year, not the pipeline are factored in the business plan in terms of positive economic and financial impact. Moving to slide five, slide five is on Cairo. doValue plays a special role in the financial ecosystem because we support the bank to continue lending, and through this way foster economic growth and employment. As a proof of our commitment to act professionally, responsibly and sensitively, we have the best in class ESG rating. We are extremely proud of this result, and we will continue to commit ourself on it for the benefit to all our stakeholders.
Slide 22 is on our sustainability targets. We published our sustainability plan and which contain several quantitative target, and we will provide regular update on it to the investors community. Lastly, slide 23. On slide 23, we wrap up our financial target to 2024. We reiterate our guidance for 2021. On our guidance for last year, I think based on our result in December 2021, this guidance could be a little bit conservative. For the time being, we reiterate our guidance.
We put in this slide the indication we wanna give to our board of directors in terms of shareholders distribution. We wanna distribute to our shareholders EUR 0.5 dividend per share for last year. In terms of financial target to 2024, we foresee an EBITDA CAGR significantly higher than the revenues CAGR, a 15% CAGR in our net income, and a substantially conservative deleverage profile after dividend payment.
Our commitment in terms of dividend policy is to pay to our shareholder a dividend per share CAGR of at least 20%. It means more than EUR 200 million. We can potentially increase even more our dividend payment through additional dividend distribution or share buyback in case of limited M&A. Talking about M&A, last slide is on consolidation opportunity. We think consolidation, it's important because our industry needs scale and because through consolidation we can have definitely better pricing environment.
We see some consolidation opportunity in Spain because the Sareb process currently underway will reshape the structure of the Spanish market. In Italy, because of the contingent weakness of some of our competitor. We are monitoring this M&A opportunity. Again, in a typical M&A, we'll not affect the dividend policy we are committed on. Thank you, Alberto.
Thank you very much, Andrea. Very interesting overview of what we've achieved since IPO and what we are set to achieve in the next three years. The next part of the presentation will drill down on the three different regions we have in our portfolio, Italy, the Hellenic region, and Iberia. Over to you, Andrea, to kick start on what we've done since IPO on the Italian business and what we are set to achieve to 2024.
Okay. Thank you, Alberto. A quick presentation on our situation and perspective on the Italian market. Since IPO, we have been focused on preserving our AUM around EUR 80 billion. Our main aim was offset the impact of the aggressive deleveraging process of UniCredit. I think the impact of this deleveraging process has been compensated by shifting GBV towards new clients. The best example is the securitization market, because in the last couple of years, we won 75% of the GACS awarded.
This is important because it's another demonstration of our strong origination capabilities. Secondly, because we did it without any capital deployment. At the same time, we enhanced our product offering, and we entered into the UTP and early arrears market. I will drill down on it later on in this presentation. In terms of financial results, we protect our EBITDA in a couple of ways. The first one is we protect our premium fee.
This is a key driver in our results, because despite the quite aggressive competition, we stay at premium in terms of fees for the benefit of our EBITDA. The second point is the increase in the efficiency of the company. Our cost reduction plan mitigated the impact of the competition on our EBITDA. Just to give you an example, we reduced our FTEs by more or less 18% in the last couple of years. Slide number 27 is on the servicer market in Italy.
We are the leader of the market by far after several years and despite increase in competition we experienced it in 2019, 2020. As I said before, in this competitive environment, we protect our premium fee, both base and variable. Our current outlook is stable. Slide 29 is on the expected uptick in formation of new NPL in Italy. Moratoria expired after almost two years. We see a material increase in the NPL formation, EUR 90 billion from 2022 to 2024.
This growth I think it's a little bit conservative because as I said before, the default rate is extremely prudent, something in between 1% and 2%. We are active in all segments of the credit value chain. Here we have a clear example of diversification and cross-fertilization between countries, because we are starting with the first pilot with an important bank from January this year on early arrears. So we can enter this new business leveraging our experience in doValue Greece.
Another example of diversification on page 30, and the example is the successful case of Efesto. Efesto, it's UTP fund. The aim of the fund is restructuring corporates with turnaround potential. We have currently 12 banks participating to the Efesto fund. The assets under management are EUR 700 million and we are targeting for this year at least EUR 1 billion assets under management. The profitability of this new product is extremely interesting because we are talking about an EBITDA margin higher than 60%.
In terms of strategy, we said strong origination capacity and product diversification. The third pillar in our strategy in Italy is cost reduction and operational optimization. Here we have some details on the cost containment actions performed so far in Italy. These actions have yielded savings of EUR 8 million per year from 2019 to 2021. In terms of projections, we see additional savings of EUR 4 million per year.
To wrap up our quick deep dive on the Italian business, we expect results mainly driven by our strong origination capacity lending the assets under management of EUR 81 billion in 2024. The improvement in our efficiency and productivity will foster the EBITDA growth. We foresee an EBITDA 2024 in the region of EUR 40 million-EUR 45 million. With this, I will hand over to Alberto.
Thank you very much, Andrea. Extremely interesting insight on our Italian business. Let's now move on to the Hellenic region with Theodore Kalantonis, who should be connected from Athens. As you know, the Hellenic region was boosted through the acquisition of FPS back in 2020, and it's a very important pillar of our plan to 2024. Theodore, over to you.
Thank you, Alberto. Good morning from Athens. Starting from page 34, the Hellenic region is the crucial component of doValue's three-year business plan in terms of GDP, EBITDA, and cash flow generation. We have big ambitions for this region, and we already possess a number of unique features which will best position our company in order to capture new business opportunities in the years to come. To start with, doValue is the only truly independent credit and REO servicer in the Hellenic region. In terms of size, we are the biggest servicer in both Greece and Cyprus, number one in Greece, number one in Cyprus. Moreover, we have developed a strong expertise in the Greek HAPS securitization market, also borrowing skills and expertise from the very successful GACS track record of doValue in Italy.
We have already shown our ability to grow our book in the region by winning crucial mandates such as Frontier, Icon, and Mexico. Looking forward, we are very well positioned to gain the most out of a very attractive pipeline of primary and secondary transactions which lay ahead of us. Specifically, we are actively looking at concrete transactions totaling more than EUR 13 billion of gross book value, EUR 9 billion in Greece and EUR 4 billion in Cyprus. The Hellenic region is also where doValue displays the most complete and developed product offering, and this for sure will allow us to remain competitive in the next three years. In particular, we are very strong in all segments, from the NPLs to UTP and early arrears. In addition, our REO capabilities are well advanced, particularly in Cyprus.
In terms of financial results, the contribution of the Hellenic region to the doValue Group is very accretive. The EBITDA margin of the region is above the group average, and this is mainly due to a concentrated market and the fact that the Hellenic servicer market is still at an early stage of development compared to more mature markets such as Italy and Spain. All in all, we expect that the marginality premium is likely to continue going forward, also supported by our front-loaded transformation plan. In particular, a significant push will be made in the next quarters in order to improve the productivity of our personnel in both Greece and Cyprus and bring it in line with the group average. Let's now shed some more light on the region.
Moving on to page 35, on the left, you can clearly see the dominant position of doValue in the region with EUR 38 billion GBV under management and a market share of almost 30%, followed by Cepal and Inroom. You can also see the high level of market concentration with the top four servicers controlling 80% of the market. It is also important to note that the National Bank of Greece, the only major bank that has not sold its credit servicing operations, has recently awarded to doValue the servicing contract of Frontier, a EUR 6 billion GBV securitization transaction, the first HAPS transaction to be executed by NBG. On the right, you can see the current status of fee structure in Greece, as well as its outlook going forward.
Currently, the blended average of base fee is around 15 basis points, while the respective blended average of collection fee is around 10% of gross recoveries. The outlook of both fees looks stable, mainly due to the high concentration and the less mature phase of the market, as previously mentioned. Let's move now to page 36. On the left part of the page, you can see a bottom-up estimate of the new NPE formation in the Hellenic region based on a number of external sources. Let me walk you through this. At the end of September 2021, the NPE ratio of the major Greek banks was 15%, well below the historical record of 47% back in 2016, but still quite far from the final target to go down to less than 5% in the next two to three years. Same for Cyprus.
In terms of absolute numbers, this implies that currently there is an excess of over EUR 10 billion NPEs sitting on the balance sheet of the banks in the region, with the latter trying to eliminate them by selling portfolios outright or by securitizing them. On top of this EUR 10 billion-EUR 12 billion of excess NPEs, PricewaterhouseCoopers, as Andrea mentioned before, estimates that another EUR 14 billion of new NPEs may be created in the region. In total, the bottom-up estimate of new NPE formation in the Hellenic region amounts to around EUR 24 billion in the next few years. As you can see on the right part of the page, the above bottom-up estimate is roughly consistent with our top-down assessment based on various default rate scenarios.
On page 37, you can see that in the Hellenic region, doValue has a very complete product offering spanning from NPLs to REOs, to UTPs and other areas. All these product lines have significantly contributed to our revenues in the last 12 months, and we have plans to continue doing so in the next three years. In particular, we intend to maintain our leadership position in the NPL segment and in the HAPS securitizations, while at the same time increase our productivity and improve collections per unit of GBV. In addition, we see opportunities to consolidate smaller servicing platforms in this segment, which is an attractive proposition in terms of capital allocation for the doValue Group. In terms of REOs, we are planning to leverage on the recent acquisition of a minority stake in Bitexen in order to enhance our activity in Cyprus, where Bitexen is already very active.
In addition, we would like to continue to grow our UTP and early arrears offering, thus capitalizing on our strong historical track record, particularly in Greece. Lastly, in terms of other services, we certainly see an opportunity to do more in the region, and we have already started to actively deploy our due diligence and underwriting capabilities for a number of investors, including Fortress and Bain. Moving now to page 38. In the Hellenic region, we are proactively embarking into a transformation journey in order to improve our operational efficiency, reduce costs, and protect our margins. Greece was the first country to get into this journey since the last quarter of 2020, and the first deliverables are to be live as we speak. Cyprus will follow suit by the second quarter of this year.
Main deliverables will include end-to-end simplification and lean of the processes, set up of digital capabilities, especially for our secured credits and enhancement of the RM service model for secured exposures. In terms of economic benefit, we are very confident that the above transformation initiatives will yield significant savings by 2024. Specifically, we expect to achieve over EUR 12 million annual cost savings by 2024, which is around 20% lower of the 2022 cost base. Let's move to page 39. Concluding my presentation on the Hellenic region, I would like to focus on four key takeaways. First, the servicer market is expected to remain vibrant in the region, also boosted by a positive macroeconomic environment. We remain very confident that we will continue increasing our loan and REO book during the next period.
Second, in terms of fees, the current fee structure is favorable and above the group average, while the outlook looks stable. Third, we have already initiated a holistic transformation plan expected to deliver significant savings in our cost base and thus help us not only to maintain, but further improve our margins. In particular, gross revenues per FTE are expected to increase by 6% from 135K today to almost 220K in 2024. Last point. Currently, the Hellenic region contributes to the group EUR 100 million gross revenues and an EBITDA of EUR 80 million, implying a margin of 46%. Our strong commitment to the group is that in 2024, we will deliver EUR 260 million gross revenues, EUR 150 million EBITDA, and a margin over 50%.
Thank you very much for your attention. Alberto.
Thank you very much, Theodore. I think this presentation really reinforces the strategic rationale of our acquisition of FPS back in 2020, which allowed us to enter the Greek market, but also the importance of the acquisition of Altamira one year earlier, which allowed us to enter in size the market in Cyprus. Now let me hand it over to Francesc to go through our business in Spain and Portugal. Francesc, over to you.
Thank you. Thank you, Alberto. Morning, everyone, from here in Madrid. If you move to page 41, Alberto, please. Now, when it comes to Iberia, our present profile to some extent is very similar to the one that Italy had before the IPO. In terms of customers, apart from the usual suspects, Santander, Sareb, we have started already this diversification journey. We are acquiring new customers, mainly investors, third parties. We are quite positive that with this new wave of NPEs after the post-COVID crisis, we may be able to acquire even more customers. In terms of GBV, we have managed to maintain the GBV above EUR 40 billion by offsetting collections and REO sales with inflows and new portfolios.
One key issue here in terms of GBV is gonna be the Sareb outcome, but I'm gonna drill down on that afterwards in the presentation. When it comes to products, we are enhancing our capabilities in terms of NPLs. You know that Altamira is very strong when it comes to REOs, but in NPLs we see opportunity and upside, so we are betting on that, and also on deploying legal services to new customers. Finally, when it comes to financial results, well, you know this expiration of the Sareb contract means the expiration of one of the two large contracts with an upfront fee that were paid some years ago by Altamira, and the substitution with conventional servicing contracts with tighter margins.
Therefore, it's very important to engage in transformation of the operating model so that we manage to be more productive and to make our assets more profitable. If you turn to the following page, please. Now, when it comes to the market, the servicing market in Iberia, it's quite fragmented. There are many players, many of them strong. Still, we are the leader in the market, and as you can see here on the left side, only three of us, Dubagiu, Hipoges and Copernicus are pure servicers. Also marked by the star, you can see that many of the present servicers in the market are working one way or another with Sareb.
Last year, we managed to acquire close to EUR 2 billion new portfolios, so that we are still growing, and we want to grow even more in the coming years. In terms of the environment, if you go to the right side, banks and investors both are growing too reluctant to pay base fees. They favor. They feel more comfortable on collection fees or performance fees because they feel they are more aligned or they manage to align services on their interests.
When it comes to base fee, the market trend is a decrease, and the outlook is that it will continue this way while collection of performance fees are increasing and our outlook is that it will be the same situation in the coming years. If you move to the next one, please. In terms of NPL formation, post-COVID, we don't see a huge wave of new business, but there's an uptick for sure. Out of those EUR 90 billion over the next three years, we think that the dominant profile will stem from SMEs that have been quite affected by this crisis.
It's something that I will discuss afterwards, but we are deploying a model to manage SMEs, particularly when it comes to NPLs, to take advantage of the market that is coming after the COVID crisis. If you move to the next one, please, Alberto. In terms of revenue streams in Iberia, again, NPLs, we feel that we can foster our product offering. We are basically managing NPLs in general, but we want to have this particular model for SMEs. We are deploying that, working on that with our Italian colleagues that have more expertise on that. Also, we see a growing appetite by banks in Spain and Portugal for securitization of portfolios, and we're also deploying capabilities to be a player on this sort of product.
Our transformation plan is addressing an increase in collections by FTE over the next three years. In terms of REOs, we are the market leader. We are the strongest player in Iberia. Still, with the transformation, we will do a fine-tune of the model to even increase productivity. We are leveraging on this new digital channel, BidX1, that the group has invested in equity. As mentioned, Andrea mentioned before, we see a great future in also opening our channels to this digital channel. In terms of real estate development, this is a business line which was mixed with our core business, servicing business.
It was developed within Altamira, and we think that there is a very interesting market opportunity for a player in Spain in this business line. We decided to spin it off from the company. We created a new co that was this month in January called Absolum, and it will have its own strategic plan and identity capabilities to make it grow over the years. In terms of UTP and arrears, well, this is quite a nonexistent market nowadays in Iberia. Banks have historically been reluctant to outsource these type of loans to servicers.
Given the market trends and the regulatory trends that Andrea mentioned before, we think there will be an opportunity here, and we are working also in a value proposition to be deployed in the coming years, along with our Italian and Greek colleagues that are more expert in these products. Legal services, well, this is a very strong practice in Altamira, and we think we can outsource these services to new customers, and we are working on that as well. If you move to next page. Now, Sareb, well, this is the flavor of the month, or you could say the flavor of the year. We are presently four servicers working with large contracts with Sareb, the ones on the left side.
Altamira, we manage around EUR 24 billion assets. When the contract expires in June this year, we will be managing around EUR 22 billion, more or less. You know that this is a contract that we got in 2015 by paying an upfront fee of EUR 174 million. When it comes to the scenarios, our base case in this business plan is that we get awarded a contract by Sareb. Having said that, it's more about GBVs than margin. Why is that? Because there is a large competition to get a new contract. Six contenders were invited to the RFP. The market consensus is that the final fees will be significantly lower than the present ones.
The impact in EBITDA is really marginal in our business plan, while the impact in GBVs is substantial because we could grow from EUR 22 billion to EUR 26 billion, so EUR 4 billion additional GBVs. What I mentioned in terms of EBITDA, it would be marginal. The alternative case that we don't get awarded the contract, again, in terms of EBITDA, it would be marginal, and we would have to reorganize our businesses so that we align resources to the new verticals that we are creating. If you turn to this following page, please. In terms of transformation, this is paramount for Altamira. The reasons are, the
This new paradigm in the market of conventional servicing contracts instead of upfront fee contracts, so that means tight margins. Then, in the case of Altamira specifically, a more granular portfolio and an aged portfolio as well. We need to transform the company. It's something that we are already engaged in doing so, not only in Spain but also in Portugal, both countries. We launched transformation plans in both last year, and these plans are addressing processes, data, organization, technology. In the end, we are switching from manual-based processes to very technology-based processes. The goal in the end is to raise productivity, both in NPLs and in REO going forward. If you move to the next one, please, Alberto.
Now, to wrap up on Iberia, the headline here for sure is the expiration of Sareb contract in June. Having said that, if we get awarded a new contract, as I mentioned before, really the impact in EBITDA is marginal. We enter this new paradigm, and we need to adjust the company to a new reality. The decline in EBITDA will be significant in 2022 because of this reason of the Sareb contract. We expect to grow in a very fast pace in the following years, so that in 2024 we manage to stabilize the EBITDA around EUR 40 million, and a margin over 21%.
That would be to some extent a better quality EBITDA, in the sense that it will be based on a more diversified business, more customers and more products, and also a business that doesn't rely on on upfront contracts anymore, but on conventional contracts. Just to mention here that this 21%, this 21% EBITDA, we also calculate the sale contracts will run 26 to five for online and the one in Italy. That's all. Thank you. Thank you, Alberto, and I go back to you.
Thank you very much, Francesc. Let's now deep dive on the transformation plan, which both Manuela and George are leading at doValue. Manuela, over to you.
Thank you, Alberto. To introduce the transformation plan, it's important to go through the transformation that the industry has gone through in the last five to six years. As you know, most servicers were created out of spin-off from banks, so with very rich contracts due to the fees paid upfront. The banks have had the leverage during the last period, selling their portfolio to investors or through securitization, which have market fees with lower margin and more diversified client base. Our organization has adapted and anticipated these clients' needs and adapted the cost structure in certain countries. This is going to happen, as we heard from Francesc, also in other countries. We are changing with an agile, responsive organization to these changes.
On top of it, we have grown through acquisition, so the complexity we have achieved with our presence in five countries with a very wide product offer today, much more than it was at the time of IPO, will add to such complexity. We want to make this situation an opportunity for us, not a challenge. We are able to do so with our transformation plan. The transformation is focused on satisfying clients' needs, so clients are the first focus. We have adopted a global model to do so, which will use our people, our new managers, our capabilities, and our culture to make sure there is a significant change in the way we operate and in the way we deliver our results. Let's focus now on what has been done.
This journey has started already at the time of the acquisition of Altamira. We have created the basis for the future deployment. First, we created a unified governance model with three regions, corporate structure concentrated at group level with functional reporting at local level. There is a significant coordination between the activities at group with the activities at local level and the opposite from local to group. We have created a virtuous circle of spreading of know and best practices, which will be helpful to create the pyramid on the right side. Grow revenue with more collection by GBV managed, more services on the GBV managed, and enhance the product offering. Second part is optimize cost and CapEx. Innovation will allow us to reduce the break-even point and enhance our scalable structure.
Last, this will allow us to maintain our leadership position in the industry and increase returns to deliver superior profitability for our stakeholders. Let's analyze one by one all these pillars. First of all, grow revenue. This will happen through different actions. Enhance products and client breadth. We today have a strong business development team at group level with group product experts which have been driving the expansion of the product offer through the different countries. As I told you two years ago, we were going to deploy real estate in all the regions, and today this is a reality. We have a platform, we have revenue in all the countries from REO activity. Our product experts are working with the local teams, which are close to the customers.
We need to understand the client's need. We need to be able to anticipate their needs and therefore change our organization, our products, and our systems to satisfy their needs. Clients are of paramount importance. Happy clients provide higher remuneration. They find more business on a regular basis. This is important to protect our fees and our GBV. Obviously, we monitor that with the client satisfaction service and with improvement products, programs. Second, we need to offer, and we are doing it, more clients, more products to our clients. The last step of this journey has been done in all the countries and will be done even more in Spain with the deployment of early warning and UTP services. This will enable to achieve higher revenue per GBV, growing from 38 to 40 basis points from 2021 to 2024.
Last, we will work even further on our collection. Through data, through more accurate recovery curves, advanced analytics, and stronger capabilities, we will improve client experience and deliver more collection per GBV managed. Here we have a challenging but very much doable result of growing collection by GBV from 4% to 6%. We have done it in the last three years, growing it from 2% to 4%, and we already recovered all the COVID impact. As you have seen, we were at peak at 4.2%. We will close this year at 4%, and we will do more from that. Let's now focus on the cost side. Many of you know already our cost structure.
A significant portion is represented by people cost, and the remainder by IT costs for around 5% of revenue, and general costs or real estate costs for the rest. Our aim is to improve EBITDA margin by 500 basis points by reducing obviously the contribution of all these costs to the revenue. The big enabler is our group structure, which is instrumental to achieve margin uplift through better use of our population, better management of procurement, and overall IT and infrastructure and operation strategy and reduction of office footprint. Going to people strategy, we expect a flat head count in the next three years. This doesn't mean that our population will not change. We expect around 25% rotation of our population to focus on productivity.
Headcount will and therefore HR cost will reduce as a contribution to total cost and will represent less than 35% of revenue by 2024 compared to 40% today. This will be achieved through three main levers. Tools, efficiency, and alignment. What we mean by tools, we will increase standardization of processes. We will reduce complexity. IT will help us to do so. We've increased GBV per FTE by 4% between 2021 and 2024. Higher efficiency. This will happen by redesigning the routine of our asset managers. Simpler task enabled by technology. We have mentioned in the past the big project we have in Italy to merge our NPL platform. This project is now concluded.
We have a superior platform, one platform, where our asset manager will be able to help to work on, in a simple way, focusing on their core activities. All in all, this will happen and is happening in all the countries, with an uplift in revenue by FTE by almost 20%. This is possible only through alignment of interest through the population. First of all, us as key managers and also our top managers who more recently joined, Theodore Kalantonis and Francesc Noguera, we are strongly incentivized in terms of long-term value creation. More than 65% of our remuneration is variable. Almost 50% of our variable remuneration is stock.
All our population has long-term objective and has also very strong short-term objective aligned to the long term. Asset managers are remunerated every quarter on collection, on EBITDA, and on revenue growth. This is very important to deliver the growth we are planning in the next three years. I leave now to George, who is our Chief Operating Officer of the group, to deepen down into all the other initiative at cost and CapEx level.
Thank you, Manuela. You know, talking about OpEx and savings after your group CFO is a challenge on its own. What a subject, you know. Almost all of our competitors and the great majority of the financial services declare that they have a transformation program in place. Yes, we do have a transformation program in place. Allow me to present to you why our transformation program is a different one. We are already in the process to consolidate our backbone. This covers IT, operations, procurement, and data management. This, allow me to say, is a holistic approach. Why we are consolidating? We are consolidating because we want to maximize the synergies across the group.
We want to optimize our cost base and to achieve a better focus and reduce the implementation risk of our global roadmap. A very diversification factor of our transformation program is that it serves not only the needs of the group, but the needs of the countries as well. We have already created three regional hubs, one in Madrid, managing Iberia region, another one in Athens, managing the Hellenic region, and our group hub in Rome. The number of back office will be reduced. The location of our back office operations will be reduced by 40%. We expect to concentrate activities in three main countries, activities from loan management up to invoicing and property management. We have already established the so-called OneDoValue IT.
We are moving from five separate IT organizations to one group IT with five local pods. IT services like infra, security, and management of common applications will be centralized. Such an IT strategy will give us the opportunity to materially reduce by 60% the number of our data centers from 18 in 2021 to eight by 2023. Moving on to the next slide, please. This is all about our back office transformation. Our first step is to become linear with reduced complexity, having the local transformation programs as the main vehicle.
A series of initiatives have been already rolled out in most of our countries, and it is the operational excellence, a key success factor, actually, not only for the cost side, but to support our front line and our revenue streams. The next step will be to create and establish our first back office hubs by the end of the year. This involves all the standardized and optimized services at a regional level. We are planning to install common applications like core banking, ERP, document management, workflow platforms, et cetera, to support such activities. The last activity is about finding the right balance between outsourcing and in-house. Our strategy is to first optimize, then consolidate to make outsourcing an attractive option for us.
All in all, we foresee to progressively reach an annual saving of 15% of our total Group operating cost base by 2024. Now moving to the next slide, please. Yes, you know, IT is the real focus here for the next three years. We do consider IT as an enabler rather than a cost center. The main key drivers of our IT strategy is to significantly reduce complexity, reaching a level of 50%, and increase the number of common platform by 40% across the countries. As I mentioned before, we are going to centralize the infrastructure and the security services while we have already decided on a security upgrade program. Data platforms.
Data is the main asset of our group, and we have performed significant investment so far to upgrade our data platforms in Greece and Italy in particular, while we expect to implement an enterprise data platform by the end of 2022. Innovation. It was mentioned already by Andrea. It is changing. It's about changing the way we are doing things, but offering new service capabilities to our business. We have already established our innovation center and our innovation forum, and we have already assigned a dedicated budget just for innovation. Last but not least is about our people embracing our program. It is our OneDoValue IT strategy that will support this activity and also help us leverage the best skills across the group and indirectly increase our capacity.
We have set a series of ambitious targets and KPIs that we strictly monitor throughout the organization. Just to name a few, we are going to reduce the number of our application inventory from 224 applications to 124. We are going to reduce the IT spending as a percentage of revenue of 12% in 2021 to 8% in 2024, which is below the competitors' benchmark. We are going to increase our IT spending innovation as a percentage of CapEx from 2% in 2021 to 10% in 2024, which is above the benchmark of our competitors.
All in all, we're going to to have a CapEx of EUR 42 million in 2022 on top of the EUR 30 million we spent in 2021, and we expect this situation to be normalized in 2023, declining to close to 3% of the gross revenues. The reality is that we're facing a stable IT cost despite the heavy investments and the upgrades that are taking place while the revenues are growing. Moving on to the next slide. It is true that we are already realizing the benefits of technology. We're having our doValue Greece subsidiary leading the way, and our digital journey is not a dream. It's a reality. Here you can find seven initiatives that have already rolled out in our production since Q4 2021.
The first one is about advanced messaging system that supports massive campaigns, but personalized services as well. We are already supporting digital signature internally and externally, mainly for the contract signing process. We do receive a request already from our website, orchestrated by RPAs. We are following 100% virtual eKYC process. We accept the payments powered by Mastercard. We have already initiated our virtual RM meetings focusing on SB, RM, and corporate clients. While we have upgraded our IVR system to support automatic authentication that will help us increase our capacity of the customer service function. It is our OneDoValue IT strategy that will help us transfer all these significant capabilities to all of our countries, according to their business plan needs. More self-service capabilities have been planned for 2022 and 2023 across the organization, across the group.
Now moving on to the next page, which is the last cost-saving component, it's about procurement. Our procurement has both qualitative and quantitative targets. The first one is about creating a global partner ecosystem with a local reach. Having the right balance between local and global players, it's of paramount importance for the implementation of our IT strategy. While we have to achieve a saving of 3%-5% out of a portfolio of EUR 100 million by 2024. Our procurement department is already working on these directions with tangible results already. Like our office footprint, it has been reduced by 60 offices in 2018 to 39 offices in 2021, and we foresee to go even further down to 30 offices by 2024. This is a total saving of EUR 1.5 million.
Let's move to the next one, please. This is a high-level roadmap of our transformation journey. I think it was evident enough that our transformation journey is not in a piece of paper. It's already here and active. We already deliver significant accomplishments from the integration of Altamira and FPS, up to 100% outsourcing of our Italian back office operation and the initialization of our digital journey. 2022 is the year that makes a difference to our transformation program that leads to a better doValue by 2024. This is a more productive, more efficient, and more profitable group than today. Thank you very much. Alberto, this is with you.
Thank you very much, George. Just to summarize, we went through the strategic vision for doValue 2024 with Andrea, then the description of the market structure in each of the three regions in which we operate, the challenges and the opportunities we have in all the countries, the transformation plan, which is clearly a key component of our business plan. Now, Manuela will go through how all these aspects translate into numbers. Over to you, Manuela.
Let's all these slides are important for you to understand how we have under control all the levers that we have just described to you. Now they develop into the financial targets we indicated at the beginning and which we will summarize at the end. First, a dynamic of gross book value. We don't expect to grow GBV by significant amount. Why? We plan to win and to be on the market and to secure new contracts in a relevant manner. As mentioned by Andrea, we are assuming EUR 13 billion every year on top of that EUR 10 billion which we already won. This is for each of 2022, 2023, 2024. We are increasing collection. This means that we are going to reduce our GBV every year.
All in all, a slightly increasing GBV for this effect. Why we think we can increase collection? We are rotating our GBV. Almost 25% of the GBV will change in the next three years, and we have assumed new contracts for EUR 14 billion each year in the last two years. More has changed already, and you will see it in the numbers this year. All in all, new GBV means fresher vintages, especially those who come from flow agreements. Most of our new addition come from Spain, from the Santander contracts, almost EUR 3 billion every year, which means very young vintages. Better vintages obviously have a higher collection.
For this reason, we are assuming write-off to less than one times collection because we expect to collect more and therefore the remainder, which is write-off written-off amount, is lower. As Sareb is assumed in this projection, but as Francesc said, it's a GBV model rather than a profitability model. Because in the flip side, if we were not to be awarded Sareb, we would reorganize the structure in order to deliver same revenue and mostly same EBITDA profile. On the regional mix, obviously you have a growing GBV in the Hellenic region and in Italy and a stable GBV in Iberia ex Sareb effect. Moving now to the following page, we expect a growth of revenue by 3%-4% per annum.
It means the revenues will increase by 1.2x by 2024. This is with a mid-single digit contribution of the Hellenic region and the low single digit contribution of the other two regions. Fees are expected to be stable, apart from the contractual arrangement, the changes are already embedded in the Eurobank contract and the change in the Sareb fees. We are assuming limited disposals or almost no disposal on the Eurobank book, as it has been announced by Eurobank itself. Even if this assumption was going to change, we have already managed the disposal through Mexico and the disposal of the Cairo book, securing this contract at very strong fees. We are not afraid of this potential change.
Outsourcing costs are expected to remain at around 12% of revenue, with indemnities to be in line with historical amounts in 2022 and reduce in the next two years. Moving now to the cost structure. We expect to grow EBITDA margin by 500 basis points. All in all, EBITDA will grow by 6%-7% per annum. The contribution to the cost side is different over time. On HR side, we will decrease the contribution to 35%, while the other cost items will slightly decrease as a percentage of revenue. However, the other cost items are instrumental to make the lower contribution of the HR costs.
We are using technology to reduce the contribution, the growth in EBITDA in terms of contribution of HR costs. Because we invest in IT, we will not increase HR cost. Real estate will be declining because of lower location, and this effect is not much on the cost side but rather on the liability side because of the IFRS 16. We will continue to focus, as we have done in the last three years on SG&A, by reducing all cost items and streamlining even more cost group functions.
It's important to understand that the driver in collection, which is driving also the improvement in EBITDA margin, it's due to mostly to the existing book and to the renewal of the existing, of a better penetration of the existing book on top of the younger vintages brought by the new contracts. This is particularly important for Spain compared to the other regions. In fact, in Spain, we are working on the current GBV by growing, how much we actively manage of that book. That's why the new additions are not significant what we expect in the Hellenic region. We are talking about EUR 1 billion-EUR 2 billion per annum. Different dynamics is in Iberia and Italy, where the NPL offload by banks is expected to be higher.
The margin in the different region will have a different dynamic. It's important to say that while for 2022, we mentioned that we expect a stable EBITDA vis-à-vis 2021 indications, this doesn't mean that we are not growing in 2022. This is a very important point. 2022 has a declining EBITDA due to Sareb by EUR 20 million. Of the circa EUR 200 million of EBITDA, we back to the organic basis is 180. We are effectively growing by 10% from 180 back to the guidance we have given for 2021.
A significant step up due to the new contracts coming on board this year and to the new business we will win this year and to the cost initiative we have initiated and will foster more growth this year. All in all, the pick-up in the next two years will be driven in all region by the components we just mentioned. In the following page, you have a directional trend in all the markets where we show a stable GBV, growing revenue and a much stronger growth in the EBITDA. Let's now focus on the net income dynamic. All in all, we have almost 2x growth of net income, ordinary net income. The higher than EBITDA growth is driven by two elements primarily.
D&A, we are reducing significantly the contribution of the D&A of the existing contract. Please don't forget that we are adding Frontier, which was paid, and therefore we have an additional amortization for that. We are adding CapEx in 2021 for around EUR 30 million, and 2022 for around EUR 40 million, which obviously amortize over the next years. Still a declining D&A trajectory, but more declining on the contract side, less so obviously on the new CapEx, which create the total. On the risk provision, we expect obviously this to be driven primarily by the exit schemes. We will continue to rejuvenate the workforce with voluntary exit scheme.
On the interest cost, this is quite easy to project, given that we have two bonds outstanding with very clear cost, and the difference is driven by IFRS 16 adjustments and amortized cost of financing. Lastly, we expect a blended effective tax rate of around 25%. We have minorities which contributes between EUR 12 million and EUR 17 million over the plan per annum, with stable partners being Eurobank in Greece and Santander in Spain. Let's now focus on cash flow. We have talked about our transformation plan, which has already done significant progresses in 2021.
Obviously, we will go into the details at the year-end results with EUR 30 million investments, primarily driven by the plan in Italy of the merger of the platforms and the plan in Greece of the change in the operating performance because we want to be in 2023, 2024, a linear organization also in Greece. We will go down to industry standards, which are usually between 3%-5% of revenue in CapEx. We will be on the lower end due to transformation journey done already in 2023. In terms of free cash flow generation, we expect to produce more than EUR 300 million.
This is pre-dividends and pre-M&A, with an acceleration obviously in 2023 and 2024 just because in 2022 we have higher CapEx spend. All in all, we want to protect our shareholders from the dynamic of the net income, so to secure constant growth in dividends, because we expect the cash flow to drive the leveraging and therefore to go beyond the D&A dynamic which impacts the net income. In terms of financial structure, we have even strengthened our sources of liquidity by growing our RCF lines by around EUR 40 million. We mentioned that this is pre-M&A and pre-dividends. Our M&A strategy is two-legged. One in market consolidation.
Why allow us, even if it's we are not active, or in the case we are active, to protect fees and to grow fees in a consolidating environment. It will reduce the number of competitor. It will help us to expand the product offer in the easiest way and achieve revenue and cost synergies in a more efficient manner. In this market, we have obviously already experienced the Altamira and the Eurobank transaction that have been completed in terms of integration. The market offers more, as Andrea has mentioned. On the right-hand side, it's important to focus on what is next in terms of technology. We want to decrease even further correlation with credit, NPL, and GBV cycle.
Move to a less labor-intensive model to be more a technology model, less HR intensive. With the products and offer, which is complementary to current offer, to expand our reference market. We have done some step in this direction, but we will do more. Like we did in 2018 and then in 2019, we have told you which are the areas where we wanted to grow, which were the markets where we wanted to grow. We didn't include them in our financial targets, but we did what we had planned and what we had promised to you, and we will do so also in this next phase. Just a snapshot again on our targets. Growing GBV, but pro forma for the contracts won, it's a quite stable GBV. Growing collection rate from 4%-6%.
EBITDA revenue CAGR by 3%-4%. EBITDA CAGR of 6%-7%. Growth in net income per annum by at least 15%. Financial leverage in the medium term, around 2x, at peak, around 3x. Use free cash flow generation to remunerate shareholders and to make acquisitions. All in all, we are delivering. We expect to deliver to our shareholder only through dividends and EPS accretion more than 30% of our current market cap. This is clearly summarized in the last page of this presentation, where you can see the dynamic of all these components to make appealing for our current stakeholders and future stakeholders to invest in doValue.
I leave the final remarks to Andrea.
Thank you, Manu. We try to get across the sense of our recent journey and what lies ahead of us. Our 2021-2024 business plan is ambitious, but it's not out of reach. I really believe we can do better leveraging on our strategy on the adjacent market. As Manuela said before, the impact of this strategy is not included in our financial target. You can consider it as a solid and credible option value.
I believe we have all the ingredients to succeed both in terms of growth and in terms of delivering our at least 20% CAGR dividend per share we are committing on. But the main ingredient is the management the top management team of the company both the manager you are familiar with so Manuela my right hand. She sit on the left but the new complement so Alberto, George, Theodore, and Francesc first-class manager now ready to answer your question. Thank you for your time.
Thank you very much, Andrea. It's 12 o'clock sharp, so it's quite remarkable we managed to stick to our plan. Hopefully it's a good sign. As customary, we now open for questions. I think you need to press the star and one to register your question, and then I'll take them and redirect them to the relevant people here in the room or connected remotely. I think I see the first questions come from Borja Ramirez at Citi. Good to hear from you, Borja. Go ahead.
Yes. Thank you, Alberto. Good morning, and thank you very much for the very detailed presentation. It's very useful. I have two quick questions, if I may. The first one is related to the future inflows of any new contracts. I would like to check if you expect this to be more skewed towards banks or maybe investors. In relation to this, also it would be greatly appreciated if you could kindly provide any details on any potential opportunity from NPLs related to the government guaranteed loans, where some banks are mentioning there could be an increase in NPLs related to these loans.
My second question, just to check if I understood correctly, you expect to prioritize capital returns over M&A based on your target, as you mentioned, of dividend growth. Is it correct to assume that you would first pay dividends or and/or share buybacks, increasing leverage to 2x net EBITDA by 2024, and then any potential M&A opportunity that may arise would be on top, and leverage could go up to 3x in the highest scenario. Would this be a correct assumption? Thank you.
Maybe just to start from the last question. Your understanding is correct. We will fine-tune our dividend policy to remain at around the 2x level. I think if you calculate the dividend per share at 20% figure, you might end up slightly below 2x by 2024, which means that we might actually increase the dividend. We could also do share buybacks as a complement to the dividend. Clearly, the 3x leverage is only something that we will touch, you know, through M&A. It's not something we will go towards with the dividend policy we have in mind. Maybe on the inflows, Andrea, maybe you can take this one.
Okay. In terms of breakdown of the inflow in our plan, more or less 20% will come from banks and 80% from investors. The investors market includes the securitization project. This is an important stuff because as we said before, we are currently dominating the securitization market both in Italy and in Greece. We are quite positive on it. On the public guarantee scheme in Italy, our plan do not include the impact of this plan in terms of NP generation when the public guarantee will expire.
We are working hard on it. This is why I said before. I think our strategy on the adjacent market will be important in terms of value creation, because I presume the switch of the current loan from Stage 3 to Stage 2 when the public guarantee will expire will produce an in a significant. Significant increase in the high-risk component of the performing loan.
Thank you, Andrea. Anything else, Borja?
Thank you. That was very clear. Thank you very much.
Okay, thank you very much. Good to hear from you. The next questions comes from Nicholas Binder at Intermonte. Nicholas, please go ahead.
Hi. Good morning to everyone, and thank you for the presentation. I have three questions. The first one is related to Sareb. The base case scenario embeds the renewal of the contract. I was wondering, looking at the alternative scenario, how much could be the one-off cost in order to carry out the restructuring process. Always regarding Spain, what are your assumption for the tax claim in Spain? The second one is related to the unlikely to pay segment. I was wondering if you could provide us some colors about the remuneration this segment, so base fee and variable fee.
The last one, regarding the potential buyback program, do you have in mind the target price or multiple target to look at in order to decide if carry out buyback rather than cash distribution? Thank you.
I will take this question, Nicholas. On the Sareb no renewal case, the one-off cost we estimated are around EUR 10 million. On the other side, we will not have to face the costs of the new operating model that Sareb would impose us. We have said in the past, moving to a Sareb new model means also a new contract means also a new operating model, which has around EUR 5 million-EUR 6 million of costs. The net difference is pretty much four million in the two scenarios in terms of a one-off effect. For the tax claim, we are proceeding as we had communicated to you.
In terms of actions to the insurance, as you know, we have already recovered a portion of it. We expect by this year to have outcome from the judges. In the meanwhile, to be conservative, we have not included recovery, so it will be an upside to our net income. Because as you know, that would be an extraordinary element, given that it has been fully expensed last year. Maybe to go back to the previous question was posed by Borja, also on the leverage.
Obviously, with the dividend distribution we have mentioned and the free cash flow we have mentioned, we will be able to go below the 2x from a, you know, financial standpoint, and we will use that capacity eventually to return more. Going to the last point on share buyback, it's we haven't defined a share price of reference. We would like to see also the dynamic this year, taking into account eventually a trade-off from higher distribution, because that's also an option through dividends and the share buyback. We will obviously make a proposal by the time AGM will approve the dividend for the 2021 results.
In terms of UTP remuneration, I think we should probably go back to a slide which was in the Italian session, which speaks about the Efesto fund. There we have mentioned the profitability of our UTP book, which is accretive. We have a revenue model with around 100 basis point base fee, so 1%. As you can appreciate, it's much higher than what you see too a couple of pages before in terms of base fee on the NPL side. Collection fees a year, they're not collection, they are restructuring fees, which are not very different from them in terms of amount, a percentage of restructuring compared to the NPL.
Obviously, from these two dynamics, you can see why the bid margin is substantially higher than the one of the NPL business.
Thank you. Very clear.
All right, I see Andrea Lisi from Equita next in line. Ciao, Andrea. Over to you.
Ciao. Thank you for the presentation. Really clear. I have several questions. I hope you can answer all of them. Maybe we can split into two groups. The first one is if you can provide some examples of additional services you can provide or you're interested in providing or maybe developing it internally or through an acquisition. The second one is on the EUR 13 billion-EUR 14 billion indication of new inflows per year. If it is reasonable to continue to assume a forward flow, an impact from forward flow in the region of EUR 5 billion. Or if it is expected to be a bit above considering the end of moratoria and so on.
If you can provide us an indication in these EUR 13 billion-EUR 14 billion which will be the weight of the secondary market in both, especially Italy and Spain, I imagine. Another question is on the slide where you provided the EBITDA of the last 12 months, starting from September ending September 2021 in Italy, Spain, and Greece. Obviously, the first quarter last year was more impacted by the COVID than the last quarter this year. If you can provide us some indication about the real figures for 2021 in Italy, Spain, and Greece in terms of EBITDA.
Related to this point, in Italy, we see an EBITDA margin that ends in the region of 25% in 2024. That is a level which is quite below the pre-COVID levels, which was in my mind a target which was achievable also for you to come back to the pre-COVID levels. If you can tell us what in some way has changed or what are your assumptions there. Very last one. Sorry for the number of question. On Italy and Spain, we see a significant drop in the EBITDA margin, obviously in Spain also because of Sareb.
Why should not we see the same thing also in Greece? Especially in Greece, we are observing, on the one end, good growth in terms of revenues for gross book value, a 15% increase. We just wanted to understand which are the most challenging assumption you have assumed there, and also which are the contingencies you've taken, if any assumptions go different from what you expected. Thank you.
I can take this question, Andrea. In terms of additional services, take into account that we have deployed the operating model and the operating system, and the team working on the real estate services in Greece and in Italy, much broader than what we used to do in these countries. All in all, in Italy, you can recall that we used to do only valuations and auction facilitation. We have deployed, you know, the technology that allows us to manage assets. When the assets are repossessed, which is a trend we are seeing that has started. It was supposed to start earlier, but due to COVID and to the blockage of the auction, it has delayed. Now it's a reality after the end of that limitation.
Assets are being repossessed, will be sold, so there is also a process of commercialization and management of assets, which is important. Second, earlier years means managing smaller ticket with a continuous flow from the bank to the servicer and back to the bank. Because the main aim is to bring them back to performing, which is something we were not used to both in Italy and in Spain. Obviously, Greece has specific contracts with Eurobank, and they've done it historically. This is a new trend for Italian banks for sure. Andrea mentioned a pilot project which we are starting with a major Italian bank. There will be more, because these banks were not focused on this asset class before.
They were just receiving their arrears, not doing anything about them, and waiting that if they naturally go back to performing or they go down to non-performing status. Now, because the amount of NPL production could be significant following moratoria, they are actively doing strategies to do that. We want to be ready to service all of these, both in the Italian market, where it's a reality, and from next year also in Spain. Securitizations are, you know, our probably strongest tool in Italy and has been in the last two years. GACS are securitizations. HAPS are securitizations. It's something which has not been a reality in the Spanish market and in Portugal.
It's going to become a product there very soon. Legal services, as Francesc Noguera mentioned, this is done just as a support to the NPL strategy so far. We have the capabilities in-house, and we have the ability to do it as a job. We do it already in Italy. It's a revenue line. That will be a revenue line, and not just a support to NPL, in Spain from next year. Andrea, I leave it to you for... These are just examples. The other one is on the data side, where we have data quality enabled by technology in Italy, and we will do the same for the other countries.
Yeah.
I leave to Andrea to address the topics on Greece and Spain.
Yes. You are right in terms of projection. Greece is extremely important, both in absolute and in relative terms. I mean, the Hellenic region. The reason why the situation of the Hellenic region is completely different in comparison to the Italian and Spanish one is first of all because the market dynamics are completely different. In Greece, we are currently experiencing an extremely high and higher growth of the market in comparison to Italy and Spain that for NPL are right now mature market. In parallel, the competition is significantly lower. We have three, I mean, important players in the Greek market.
Meanwhile, the Italian and Spanish markets are still extremely fragmented. All in all, in Greece, you have higher growth and lower competition for the benefit of the fees first. The second reason why is on top of the first class, really first class performance of doValue Greece, because the result of the company last year were impressive. The difference is in Greece we are today in the same situation where we were in Italy and Spain a few years ago. Just to be simple, we and our competitor are deploying capital to enter into a long-term contract.
The fee of this long-term contract are set to remunerate the capital deployment I said before. In terms of the EBITDA margin, the situation is apparently definitely better than the situation we have in Italy and Spain.
On the fee side, there is evidence, which is different from the others. You can see it in the Greek section. Now, here it's not only Greece, but also Cyprus. While in the past, you used to see Cyprus from 2019 and before under Altamira. You need to take that into account as well. Cyprus has higher profitability. The main point is the investor fees in Greece have actually been increasing. It's quite the opposite than you know the effect of the competition bringing fees down in the market. This is evidence because here we are projecting what has happened in the last two years.
We have experienced better contracts because there are little servicers and they want to work with us. The results achieved on the book managed are over the business plan. All in all, going back also to your question, Andrea, regarding the EBITDA margin of Italy. The main reconciliation from the pre-COVID levels is that, one, in the pre-COVID, we were already assuming the obvious inclusion of the other countries. The improvement to the target was driven also by the other country. We saw a shift, a very strong acceleration of the sale of portfolio of UniCredit, which obviously had a higher margin business to fees at market level.
This is why, you know, probably the target was around just below 30% margin, and we are at 25%. The remaining gap is explained by the group function. We concentrate, you know, all the people which work for group, even if they are located in other parts of the organization under the Italian cap. You had asked two question. One was on the inflows. The historical inflows targets were on average, you know, EUR 8 billion of new contracts and EUR 2 billion of new inflows. Now we are talking about 13, which is EUR 4 billion-EUR 5 billion of inflows, and still around EUR 8 billion of new contracts.
We are not increasing the forward flow beyond these levels. This could be one of the contingency you have been describing or you have been asking for. The other one is definitely on the fee side. Because of the experience we have put ourselves assuming new business on the lower end of all the contracts won in the countries where we are assuming new business. In all the new countries, we are assuming the lowest pricing we have achieved across new clients. In terms of EBITDA margin for this year, we confirm, obviously, our guidance which is driving an EBITDA margin around 33%-34% for this year, as I said, based on guidance.
We prefer to announce the final year-end results on the seventeenth of February.
Thank you very much. Thank you.
Thank you, Andrea, and thank you, Manuela. I think the next set of questions will come from Andreas Markou at Berenberg. Hi, Andreas. Over to you.
Yes. Hi, everyone. Can you hear me? Hello, can you hear me?
Yes, we can.
Okay, perfect. Thanks very much for the presentation and taking my questions. Most of them are actually a follow-up of some of the already asked questions. The first one is on the margins in Italy. As the previous analyst mentioned, you know, your expectations seem a bit, let's say, undemanding versus historic and also versus Q3, where margins were actually at 26%. You explained obviously the reasons with the group costs and the UniCredit portfolio sales. Despite that, I mean, given that the product mix is changing in Italy, I mean, you mentioned, for example, UTPs having margins higher than 60% and then all the kind of other ancillary businesses, area arrears, et cetera, should also be beneficial to margins.
Are you not basically baking in a bigger share of revenues from these high margin businesses affecting the impact you mentioned earlier? That's the first one.
Andreas, we. Oh.
No, no.
Okay. I'll do like, I'll give the financial answer and Andrea, obviously the more strategic and holistic one. We want to be reasonably conservative in our expectations because we really want to deliver on our plan. This is the main message we want to give to you. We have assumed accretive new products. We will do on the cost side better than we have indicated. We have assumed, like, as you saw, additional initiatives, but the historical ones have been super achieved. You might recall, we spoke about 7%-10% reduction in FTEs.
We did a reduction of around 250 people out of workforce of 1,200, which means more productivity because people out, but also people in with obviously more specific experience and background on the new things we are doing. We would rather you know achieve better results, but promise what we are strongly comfortable with.
Okay. That's clear.
I think Manuela was clear enough. From my side, unless I prefer to have a discussion on this point on February seventeenth. Because as Manuela said, probably on this point, we were a little bit conservative.
Okay. My next question is on the kind of REO and UTP businesses. I remember a couple of years ago mentioning a lot about the UTP market, how it's gonna bring a lot of new GBV, you know, boost profitability, et cetera, et cetera. It's actually moved a bit slower than, you know, what the market and I think what yourselves have been expecting. What is your conviction today on the UTP market and also the REO businesses going forward? Given that, you know, maybe learning from the historic lessons of maybe the market moving a bit slower than what we expected.
No, on the UTP, you're right. In terms of size, I mean, asset under management, our growth was slightly lower than our expectation. The problem we have with UTP is we do not wanna dilute our current profitability. This is why in terms of dynamic of AUM, we are more conservative in terms of expectation. Again, our current profitability is extremely high, +60%. We do not want to dilute it. It's a matter of running the trade-off between size and profitability. On the REO, now we were late, but now we are substantially in line with our previous expectations.
Maybe more on this, Andrea.
The impact
Consider, COVID was very key.
This is because the impact of the pandemic on the auctions so on the development of the REO business in Italy was dramatic. We had more or less six months of course shut down, et cetera. During this period, the real estate market was completely stopped. In the second part of the year, the market itself was still slightly recovering. Considering this negative impact of the pandemic, we are, I think, in line both in business and as Manuela said before, in operational terms.
Mm-hmm. Okay, that's clear. Maybe the next question is on Spain. I mean, this has proven to be a bit of a difficult region for you, not maybe managing costs as quickly as we expected, again, when you bought Altamira. I mean, given now that today we're probably in a much more difficult situation with the uncertainty of Sareb, and then whatever direction the contract goes, you still need to do a lot of work to actually get the EBITDA in absolute terms back to what it is today. Can you maybe just give us a bit of more detail on your conviction and your execution plans and how you're monitoring execution, and maybe a bit of insight on the kind of UTP early arrears platform that you're intending to build in Spain?
Okay. Before leaving the floor to Francesc to answer your question, Andrea, I wanna give you my view on the recent test, what happened after the acquisition of Altamira. Frankly speaking, I think we did couple of mistakes. The first one is, as you mention, we were not aggressive enough on the cost side. This is why the current situation is completely different in comparison to Italy, for example. The second mistake we did was on the NPL side. As Francesc pointed out, the company is the undisputed leader in Spain in the real estate market.
As you can see, this year, last year, sorry, the results on this business are impressive. Our problem was on the NPL side because historically the approach of Altamira was more or less keep the low-hanging fruit on the NPL for the benefit of the short-term result, but deteriorating at the same time the medium-term performance. Now we have a new management in place. This management is completely changing the rules of the game both in general and in particular on NPL.
We are working on it, and we really believe the contribution of the NPL business to the result of Altamira will be important and not in the medium run because we have a real cash program in place. I think in the second half of the year you will see some material result coming from the program itself. On this important point, I wanna leave the floor to Francesc to complete the answer.
Well, I think you summarized most of the issues on the answer, Andrea. Just to complement what you have said, one thing which is very important is that most of the growth in EBITDA in the next years comes from what we manage presently, especially NPLs. This transformation of the model addresses the fact that we need to extract more value from the NPL base that we have from customers. We will gain in revenues, we will gain in EBITDA. There will be more collections per FTE, overall more productivity at perimeter of assets, which is very important.
On top of that, something that we explained throughout the presentation, we are developing new capabilities, especially the SME model for NPLs, which we already manage NPLs of SMEs in Altamira, but we see a large opportunity in having a very particular model to address fully for the Spanish market. On top of that as well, we are also betting a lot on investors. We have recruited new managers in Altamira, new team, very skilled and very expert in this segment of customers, and we are now focusing on growing with them as well. Finally, another very important driver is the real estate development business line with the spin-off that I mentioned before. It's something that we already do for blue chip customers, Landco, Santander, Sareb, and so on, and Bain as well.
We think that we can grow a lot on there in the next years.
Okay. Thank you very much. That's clear. Maybe final question from my end. We've seen Fortress increasing their share, and also some of your peers are receiving tender offers and kind of going private. Any comment potentially from you guys, how would a potential tender offer be viewed by yourself?
We have no information, no information at all, and no comments to do on the tender offer. No information on our side, zero. On Fortress, I think Fortress increase his stake of the company because Fortress strongly believe on our perspective in terms of value creation. I can't answer for Fortress. I think the idea of Fortress, it's not take the company private, because again, it's a matter of value creation.
The top management of the company and Fortress are fully aligned on what the independence of the company is important in terms of value creation. We, as we said during our presentation, have a differentiated customer base versus the IPO time. The perception of the market of the value as an independent company is key to support our growth perspective. More or less all our post-IPO external growth was not Fortress driven. I really believe we are in line with Fortress. Fortress will support the growth of the company. What we are doing together in Greece is extremely important. We are...
I'm talking about the Frontier project, the Neptune project, and I think there is more to come. I really do not believe the current priority of Fortress is to take this company private.
Okay. Thank you very, very much. Very clear. Thank you.
Good to have you on this call. I see no more question on the queue. Maybe Andrea Lisi from Equita just appeared.
A follow-up. If you can provide us an indication on cost, which is the proportion between fixed and variable cost now, and which level is reasonable to expect at the end of the plan. Last one is if you can provide a bit more detail on the free cash flow generation we should expect for 2022. We see it is reasonable to expect higher CapEx. Wondering to understand a bit better on the dynamic of working capital you spread there. Thank you.
Andrea, on the cost side, we should look to page 63. You can see here that, you know, the key components of the cost. Where you find variable cost is mostly on the HR side and some on the IT side. We are talking today about 15% of the HR costs being variable and only about 10% of the IT costs being variable. All in all, probably of the total operating costs, taking aside the outsourcing fees, because the outsourcing fees are completely variable. We don't have a base fee there. We are talking between 6-16, 17%.
In the future, because we are going to have a rotation of the population and the new population has higher component of variable than the current one, the 15% I mentioned would probably be more around 20-22%, while on the other cost item, I think it will continue to be the same. All in all, you know, the variable net of the outsourcing will grow from 16%-17% to 22%-23%. In terms of free cash flow generation, I think on the CapEx on the EBITDA, we have given an indication, so similar to the guidance of 2021. On the interest is very clear and also on the tax side.
On the CapEx, we have given a specific figure. On the working capital side, we have a reference on page 68, where we expect some opposite trend vis-à-vis the past, because of the reversal of the fee in Greece, in the sense that there was a big upfront fee, especially in the first two years, paid by Eurobank, due to the negotiation we had during the COVID times, that indicated, you know, a higher base fee to offset potential decline in collection. Actually, we were lucky because our Greek team was able to deliver same collection as they expected pre-COVID. Now with the reversal that we benefit from it.
That's why we include a reference that the fee trajectory of Eurobank contract by contract is declining because it had this significant peak, you know, element in the first two years. All in all, I think working capital negative effect is around EUR 10 million in 2022 expected. Obviously, this is, you know, a planning assumption. We will try to do better and have, you know, less impact. This is our base assumption.
Thank you. Very clear.
All right. I see the question queue is clear. Unless there's any late question, I think we can wrap it up. I hope you enjoyed these three hours we spent together. We tried to give you a lot of information to really give you a sense of where we're heading to. I wanted to thank all the team, you know, here in Rome and connected remotely for spending the time together with you analysts investors. Thank you very much and speak soon. Goodbye.