1h19 press release
With a new name, SGA is ready for growth. The first half of 2019 positive results confirm the validity of the full credit management company business model. Società per la Gestione delle Attività – SGA becomes the Asset Management Company operating in the non-performing exposure sector
September 18, 2019 – The Board of Directors of AMCO – Asset Management Company S.p.A., which met yesterday, approved the first half results as at June 30, 2019.
“The results for the first half of 2019 confirm the validity of our model; the transformation of the business structure is completed, and we are ready for further business growth. During the last year SGA transformed itself from a historical company into a dynamic and innovative one, with new technological infrastructures and specialized professionals. We expanded our area of activity from the recovery of “gone concern” assets (non-performing loans) to the proactive management of “going concern” assets (UTP) aimed at rebalancing the financial situation of companies and individuals.
Now we are changing our name: AMCO embeds the historical identity of SGA and looks at the future, within an international and innovative perspective. AMCO reflects our aim to play a role in the NPEs sector in Italy for all our stakeholders, banks and debtors, investors and partners,” said Marina Natale, CEO of AMCO.
1H2019 RESULTS
In the first half of 2019, AMCO reported a net income of €8.2 million. Net equity at June 30 was €786 million.
The positive results for the first half confirm the validity of the new diversified credit management strategy which, thanks to the scalability of the business model and specialized professionals, today makes AMCO one of the main players in the Italian Non-Performing Exposures (NPEs) market.
In particular, at June 30, 2019 assets under management amounted to €20.6[1] billion compared to €20.2 billion at 2018YE and €2.3 billion at 2017YE. The assets increase in the first half of 2019 is also due to the purchase of high-risk assets from the Veneto banks in compulsory liquidation.
| € mln | FY2018[2] | 1H20192 | ||
| Total Revenues | 37.4 | 23.3 | ||
| Total Costs | (28.5) | (20.1) | ||
| EBITDA | 8.9 | 3.3 | ||
| Net impairment gains/losses on credit risk | 25.2 | 9.0 | ||
| Net accruals to provisions for risks and charges | (16.9) | (5.5) | ||
| Others | 0.8 | (0.2) | ||
| Net result of financial activity | 20.4 | 7.6 | ||
| EBIT | 38.4 | 14.1 | ||
| Net interest from financial activity | 0.6 | (2.2) | ||
| Income taxes | 8.5 | (3.7) | ||
| NET PROFIT | 47.5 | 8.2 | ||
AMCO’s 1H2019 net income of €8.2 million in the period is a positive result also considering the costs of transformation. AMCO experienced a significant growth and is now equipped with a new organizational set-up ready to support future business development. Since 2017YE, the headcount tripled: at June 30, 2019 the company employed 211 people, compared with 144 at 2018YE and 71 at 2017YE.
Revenues show a good progression reaching €23.3 million, generated by servicing fees for the management of the Veneto banks’ loan portfolio: these commissions include Master Servicing fees and Special Servicing fees relating to both non-performing loans and securitizations.
Total costs amount to €20.1 million, of which €12.1 million related to staff costs and the remaining €8.0 million to other administrative expenses. The increase in costs is due to the costs related to the transformation and the new size of the company: the costs due to the transformation of the structure represent two thirds of total costs.
The net result is also affected by certain items which are recurring but of a volatile amount due to their nature, such as: net impairment gains from loans to customers of €9.0 million, resulting from the management of the Banco di Napoli loan portfolio, and the net result of financial activity of €7.6 million, which mainly includes the capital gain on the valuation of the investment in the IRF fund (Italian Recovery Fund[3]).
The company has a strong capital position: net equity value amounts to €786 million and the CET1 ratio is at 17.4%, well above the minimum requirements by Regulators (8%) and well above the 12.1% at 2018YE. The Total Capital ratio is also at 17.4%, as no subordinated bonds are outstanding.
In February 2019, AMCO placed the first senior unsecured bond of €250 million to qualified and institutional investors, under the €1 billion EMTN programme. The bond, listed on the Luxembourg Stock Exchange, has a five-year maturity.
AMCO’s debut issuance on the market reported a strong interest, with an order book well above the expected amount and distributed among more than 50 institutional investors.
RENAMING AND REBRANDING PROCESS
The renaming and rebranding contribute to the company evolution, with the aim of playing a role in the NPE sector in Italy.
The new brand identity reflects the nature of a full credit management company, able to entirely oversee the process of management and recovery of impaired loans, acting with promptness, concreteness, sustainability of processes and innovation in management. AMCO reflects the historical identity of SGA, but also underlines its innovation path, making it internationally recognizable.
The renaming and rebranding were performed with the support of the advisor Mercurio GP.
OTHER RECENT EVENTS AFTER JUNE 30, 2019
On July 23 2019, Standard & Poor’s assigned to AMCO a long-term rating of “BBB” with a negative outlook, recognizing the specificity of the company’s governance and the strategic value of its business as the reasons underpinning the rating. In September 2018 Fitch assigned a BBB- rating to AMCO.
In December 2018 AMCO presented a binding offer to Banca del Fucino S.p.A. for the structuring of a securitization of an NPE portfolio for an amount of €314 million. In this context, AMCO acts as Master Servicer and Special Servicer, as well as investor in equity tranches. The transaction, which is in accordance with the 2019-2023 strategic guidelines, was completed on September 14, 2019.
CONFERENCE CALL
The results at June 30, 2019 will be presented today at 11.30 a.m. CET during a conference call held by AMCO’s Top Management.
The conference call can be followed in webcast mode by connecting to the website www.amco.it or through the following URL:
https://services.choruscall.eu/links/amco190918.html
As an alternative to the webcast mode you can participate in the conference call by calling one of the following numbers:
ITALY: + 39 02 805 8811
UK: + 44 121 281 8003
USA: + 1 718 7058794 or toll free: + 1 855 2656 959
The presentation illustrated by the Top Management will be available from the beginning of the conference call on the website www.amco.it.
DECLARATION BY THE MANAGER CHARGED WITH PREPARING THE FINANCIAL REPORTS
The undersigned Silvia Guerrini, in her capacity as the manager charged with preparing the company’s financial reports, hereby declares, in compliance with paragraph 2 of Article 154 bis of the Testo Unico della Finanza, that the accounting information contained in this press release, corresponds to the accounting documents, books and records.
[1] Pro-forma data, includes the assets related to Banca del Fucino.
[2] The results at 30.06.2019 include the effects resulting from the IFRS 16 (“leasing”) first-time adoption. 2018 results do not include these effects as the restatement of 2018 comparative information is not required.
[3] Italian Recovery Fund – formerly called Fondo Atlante – is a close-end alternative investment fund regulated by Italian law, reserved for professional investors, set up for the purchase of financial instruments of different seniority, issued by one or more vehicles set up and/or to be set up for the purchase of banks NPLs. The fund has a maturity at 31/3/2021.
