Gruppo MutuiOnline SpA
MIL:MOL
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Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the presentation of Gruppo MutuiOnline Third Quarter 2021 Results Conference Call. [Operator Instructions]. At this time, I would like to turn the conference over to Mr. Marco Pescarmona, Chairman; Mr. Alessandro Fracassi, CEO; and Mr. Francesco Masciandaro, CFO of Gruppo MutuiOnline. Please go ahead.
Thank you, and welcome, everybody, to our Q3 conference call. We will rely as usual on the presentation that you can find on our website and start from Page 17 with the current trading and outlook. You can see with the Q3 highlights that we had a good performance overall with revenues in Q3 of EUR 71.4 million, which is up 21.9% compared to the EUR 58.6 million of Q3 2020. And well, the EBIT was also up, but I will not comment -- EBITDA comment, which is EUR 22.9 million, and that's up 26.3% compared to the EUR 18.1 million of the same period of the previous year.
Reason I'm not focusing on EBIT is because our EBIT is always affected by PPA amortization. So it's difficult to read it in a simple way. And net income is in the quarter, EUR 9.7 million, which is down 8.2% year-on-year, but this also includes a reclassification of an item that has to do with the sale of the Cerved shares. Basically, we had recognized the P&L in the first 2 quarters, the profits on the Cerved shares that have been sold in the first half.
And we reclassified those profits as flowing directly to other comprehensive income, therefore, going directly to shareholders' equity and not going through the P&L. So in Q3, we reversed what we have recognized in the first half. So that explains this drop. Looking at the 2 divisions, both divisions contributed to the results with the Broking Division recording EUR 32.6 million of revenues, which is actually 9.3% compared to EUR 25.2 million in the same period of last year.
EBITDA of the Broking Division was EUR 13.6 million, which is up 23.9% compared to the EUR 11 million of Q3 2020. The EBITDA margin was, in Q3 2021, equal to 41.7%, while it was 43.5% in the same period of the previous year. Looking at the BPO Division, revenues were EUR 38.8 million in Q3 2021. That's up 16.3% compared to the EUR 33.4 million of Q3 2020. EBITDA is -- was in Q3 2021 equal to EUR 9.3 million for the BPO Division. That's up 29% year-on-year compared to the EUR 7.1 million of Q3 2020. The EBITDA margin is 23.9% in Q3 2021. And that compares to 21.4% in the same period of the previous year.
If we look at the 9 months, you can see that basically Q3 confirmed the growth of first half of the year. And overall, now, we are at EUR 230.2 million of revenues in the 9 months. That's up 28.8% year-on-year compared to the EUR 178.7 million of the previous year. Just as a reminder, this growth includes the change in consolidation area, so both the Broking and the BPO Division, benefit of this. The Broking Division now includes from January 1 as [indiscernible] in the Energy & Telco Comparison business line and the BPO Division includes the Lercari group, which represents the majority of the revenues of Insurance BPO.
But irrespective of this, we would have had growth anyway, both in the 9 months and in the quarter. The EBITDA for the 9 months is EUR 67.5 million, that's up 28.8% compared to the EUR 52.4 million of the first 9 months of 2020. You can also see that the weight of the 2 divisions in -- especially in terms of EBITDA in the 9 months at 46% of the total, the BPO Division and 54%, the Broking Division. This confirms what we always said that the 2 divisions tend to be, let's say, the same size, more or less the same importance for the group.
In the -- finally, the net income for the 9 months is EUR 33.2 million, and that's up 7% compared to the EUR 31 million of the same period of the previous year. And this includes also the fact that in the first half, we did an impairment for bit less than EUR 3 million for our historical business in Insurance BPO. And also, we probably have a more conservative estimate of the tax rate for this year than we had last year.
Then I don't think that looking at the 2 divisions for the 9 months, given particular insight just confirms what we already see. What is said was highlighting is the evolution of the net financial position in the third quarter because we basically had a very significant growth in cash and cash equivalents, which went from -- which increased by EUR 85 million between June 30 and September 30. And this is due to the fact that basically, we tender the Cerved shares and sold them. So we received north of EUR 60 million just because of that.
And then on top of that, the usual cash inflation coming from the operations, plus some adjustments, but that's more like normal fluctuations and so on of working capital. So the key thing is the net financial position because of this because in the quarter, we didn't have any relevant change in indebtedness. Basically, the net financial position went from negative EUR [indiscernible] million, which is not far from 0. And by the way, you will notice that -- so this is almost a flat net financial position.
And also the liabilities are all long term -- almost all long term. So it's a very comfortable position that gives us flexibility going forward. So we wanted just to highlight this. Now looking at the more qualitative aspects regarding the residential mortgage market, we'll make some comments about what we are seeing and the outlook. The market in Q3 was basically stable year-on-year. And the market was characterized by strong drop of remortgaging activity, but growth on purchase mortgage is pretty much as expected.
If we look at the Assofin data, which is basically information about the originations, the actual closed mortgages. Basically, new originations were up 14.6% in July, then they were down 11.7% in August, and they were up 1.2% in September 2021. And this is -- this includes the effect of a drop of remortgages that went from 30% more or less to more than 40% in July to more than 40% in September. And of course, this is going to be even -- this trend is going to continue.
If you look at data from CRIF, which manages the main credit bureau in Italy, which basically sort of a forward-looking indicator. If you read that number of credit report inquiries, you see that they were down in Q3 2021 by 22.6% for the entire quarter. And looking at September alone, they were down 19.2%. This points to a likely decline in the market. And -- so what do we expect going forward for the market, we expect to see continuation of the growth of purchase mortgages, especially if economic situation improves and people continue to buy houses.
But we expect, at the same time, an even stronger decline year-on-year of remortgages, especially if interest rates pick up, but already the decline was [ 14% ] in September, and we said this could be even deeper, let's say. So this is the outlook for the mortgage market. Looking at our own businesses. Well, the Broking Division in Q3, nice growth. This growth came from Insurance Broking came from Personal Loan Broking.
It came from the inclusion in the consolidation area of SOS Tariffe, so came from Energy -- Telco & Energy Comparison. E-commerce Price Comparison was basically flat year-on-year as expected after a very weak second quarter in a year-on-year comparison. So that was very much as expected. But then we had a positive surprise because we posted revenue growth also for Mortgage Broking despite the fact that we've been seeing declining application volumes because of remortgages.
And the same happened for the market actually. And this is due to the delay, which is not always completely predictable between when you receive applications and when you see closed mortgage volumes. So compared to our original expectation, this was marginally better because we expected Mortgage Broking to do -- to perform a bit weaker. For the rest of the year, we can make the following hypothesis. We can expect the contraction of Mortgage Broking for Q4, and we have to see maybe also for the beginning of next year. We don't know yet. But this is because of the large drop of remortgages, while we see a slight growth of purchase mortgages.
And this is from what we see in terms of incoming applications. And keep in mind, is always that for us, remortgages for our Broking Division are more important in terms of weight than the market -- than they are for the market. We expect to see continued growth in Insurance Broking and Consumer Loans Broking. This is because we are spending more money in marketing, but also because we have made, and we continue to make a number of operational improvements.
We expect growth of Telco & Energy Comparison because of the change in the enlargement of the consolidation area. But we also expect to see an increased weight of the energy sector because with the increasing prices of energy, people are possibly more inclined to fees. Finally, we expect that this is -- this relies on the performance of the Black Friday, which is [indiscernible] at the end of this month. We expect substantial stability year-on-year of E-commerce Price Comparison and continuity with the trend observed [ here it is ] -- in Q3 2021.
And so these are our expectations. And finally, it's -- we just want to point out that likely the European Court of Justice dismissed all Google's appeal against the decision on Google Shopping of July 27, 2017, in all relevant aspects. So basically, this decision now has been confirmed is no longer just a decision of an administrative body, but has been confirmed by a court of Justice, which makes the -- you know that makes it stronger.
And of course, this judgment confirms our positions. You remember, we have started some legal actions against Google for damages, then those were interacted. Now we really have to read the decision in detail to see its implications for our ability to bring forward claims and also its implications on the -- possibly on the compliance mechanism [indiscernible] Google put in place.
So really, it's a very good news, but it's still hard to say what the practical indications would be for us, and we'll have to start with -- now I leave it to Alessandro...
Yes, just some quick words on the BPO Division. Marco has already commented on the numbers. As you see also in Q3, the improvements in revenues and margins continue compared to last year and the same quarter of last year. And if you take out the seasonality effect, basically all the trends that we discussed in previous -- when commenting the results of H2 are confirmed. The revenue growth is driven basically by the extension of the consolidation area. The other businesses, let's say, not considering the Insurance business are growing anyway.
And at a slower pace than what we have seen, let's say, in H2, so in the first 2 quarters. There, you remember, we commented about a double-digit growth for Q3, which has some seasonality effects we saw only single-digit growth. But for revenues, while margins are still improving because of the improvement in the mix. When looking at the single business lines, for the level of details that we give when conducting quarterly results, it's important to point out that the revenues of Mortgage BPO are down, basically, quarter -- I mean year-on-year for Q3. They are not, obviously, when you look at the [ 9 ] months. And it is basically because now we are really feeling the impact of the reduction of para-notarial services, which are connected with the financing. We confirm the fact that we expect, obviously, to be down also in Q4. But in the end, the year-end results should be in line with those of last year.
This is a little bit of a -- it's not as good as we had hoped. You remember, I was saying it would be a little over in terms of last year. I guess, will be just at that level. But again, the margin, we reduced also as a positive thing because basically, we have substituted something that is cyclical, like refinancing with something that's more stable like our traditional outsourcing services in mortgages, which are connected with the origination of new mortgages.
And as you know, this is strategically good and also good for our margins. The other business line, looking also looking forward to what will happen by the end of the year, we'll be growing or stable. Just let me point out that the last quarter of 2021 for our Leasing/Rental BPO will be impacted negatively by the well-known slowdown and good days in the delivery of new cars by the OEM [indiscernible] well-known of this impact, at least in Europe. And as some of the things that we do, obviously, not all the business. But some of the things that we do is connected to new immatriculation of cars.
If they are not delivered, we cannot do the administrative services that we tender to the company that buy these vehicles. So obviously, again, this is not something that worries us. It's just a delay, and we'll see revenues next year. But you can imagine that we serve especially [indiscernible]. And it can be understood that in many cases, the OEMs tend to favor vehicles that will be delivered to individuals more than the ones that are delivered to [ fleet ] or the ones that are already delivered to rent-a-car companies, which are normally sold [indiscernible] down.
So probably the last one, you -- the first one that go at the end of the line for OEMs. And I guess that closes also my short remarks on the BPO Division. Basically, what we said at the end of H2 is confirmed. And the pipeline of new things that we are looking forward for 2022 remains positive. So the medium-term outlook stays positive. Thank you. Back to you, Marco.
I think we are done with the comments, and we can open it to questions. So please, operator, go ahead.
[Operator Instructions]. The first question is from Aleksandra Arsova with Equita.
Can you hear me?
Yes, now we can.
So 3 on my end. The first one is on the expectation for the fourth quarter. So taking all the things together, some of the business lines, stable or going and the Mortgage Broking slightly down, the Mortgage BPO, more or less flat. Should we expect, all in all, a fourth quarter which is still growing? Considering also that we have still a significant portion of Lercari and [indiscernible], which was present only maybe for 1 month last year in the fourth quarter of 2020.
The bottom line of the question is if maybe still mid-single-digit or something in this range for the fourth quarter is reasonable? And a similar question for operating margins. Both at EBITDA and EBIT level, we see in the third quarter an improvement, [ that's ] due to an improved business mix. So should we consider a similar let's say, business mix or margins also for the fourth quarter? Or should we go back to lower margin since some of the business lines with higher marginality, such as the Mortgage Broking or the car Leasing BPO will suffer a little bit in the fourth quarter?
And the last one, it's about the implications on some of the maneuvers we saw with the budget law. First of all, the revaluation of the intangible assets. If I remember correctly, you decided to use this benefit, but now the law is changing. So if you will still use the 50 years, rather than 20-year use of the revaluation of assets tax benefit? Or -- so how you will approach this issue?
And the tax rate, this year, you're more conservative, like 30%, 31% of tax rate. And so if we should consider this as a new tax rate also for the next years? Or we will be back to something more close to 25% or in this range?
Okay. Well, on the first 2 questions, the expectations for Q4, there is nothing particularly special about Q4. Of course, we are expecting, especially Mortgage Broking, to be down. It took a bit longer, slightly to happen in Q4. We said Mortgage BPO is doing slightly worse than expected, but margins are in [indiscernible].
Margins will improve anyway.
[indiscernible] the mix is improving. So I wouldn't expect -- of course, you can expect some slowdowns from the areas where we were already expecting slowdowns. But I wouldn't have any particular expectation about drastic change of anything in Q4.
I don't think it will be a surprise Q4.
It will be a continuation of the slowdown in some areas, hopefully, other areas that go fine, but the continuation of what we have seen so far, maybe less growth or I don't know. We have not made a sense, and we are not giving any guidance on exactly what it will look like, but it would be a continuous evolution of the present situation, the lines that we have highlighted. And regarding the budget law and the revaluation of intangibles. This is -- give some background for especially those that are -- who are listening that are not reading Italian newspapers.
Basically, the budget law this year introduced a retroactive, let's say, correction to the possibility to do a revaluation of assets also for fiscal purposes. Basically, the revaluation of assets was a possibility to take intangible assets and to get an expert valuation of the asset, [indiscernible] and be able to both book the increased equity under Italian GAAP, it's not allowed under IFRS. But also to amortize with -- to fiscally amortize those assets over their normal lives, therefore, generating a reduction in the tax shield.
So that generated a lot of deferred tax assets when we did it. For us, it was around EUR 100 million of deferred tax assets, which we booked as a one-off income when we approved the full year 2020 results. Now the law -- the new -- the proposal of the budget law -- because this is just a proposal, it's not a law. The proposal is that for all the assets with a long life. So the assets with the life of 18 years or longer, that includes, in our case, in particular, the trademarks.
Instead of doing the tax amortization over the normal life of the asset, the tax amortization should be done in 50 years. So we decided to do this because we expect that it would work in a certain way, you would amortize in '18 years. Now they tell you that it will amortize fiscal in 50 years. They give us sort of a [ debt or ] basically, you can undo the revaluation, which is a bit of a joke.
But anyway, this is the option that we have. So the comment is -- on this is -- well, first of all, it's not a law yet, it's just a draft. And -- which makes also sense. We should have done it before, not afterwards. But -- because this is -- this revaluation of intangible assets is going to cost a lot of -- to the state, at least it was going to cost a lot under the original movement.
So anyway, this is still a proposal even if it's from the government. And we don't know exactly what it will look like at the end, possibly maybe instead of 50 years, it will be 30 years, whatever. So it would be possibly and hopefully, something in the [indiscernible]. And we will be able to know the consequences in detail only at that point. For now, what we can say is that this affects only half of our revaluations because half of our revaluations are the ones that are the most interesting from in terms of tax shield and tax assets they generate are the revaluations of software assets that have shorter lives.
Now it's 5 years -- they're amortizing in 5 years. And so this is outside of the proposed changes. So this would be untouched. The other half, so that's roughly EUR 50 million of deferred tax assets. For now, we are not talking about touching this. The other EUR 50 million is trademarks and so on. And for us, it could possibly even make sense to keep it -- even if it's with an amortization in 50 years, it's not as attractive, but feel it could make sense.
But we will take a decision once we have a clear picture. And again, it's a pity that we have these retroactive things even if we understand the reasons why we are intervening on this. Regarding the tax rate, I think -- but maybe Francesco will correct me if I'm wrong, that last year, we still had some benefits from the patent box. So we had some one-off benefits from an old tax regime that had to do with trademarks that gave us some tax benefits and that reduced the effective tax rate.
This year, we don't have that. And so the calculations are based on basically the -- standard tax rates both for state and local taxes. So there is [indiscernible]. So I don't think we will see 25% tax rate at the end of the year. It would be -- it's 23.9% [indiscernible] local. So it's 27.9%, and the tax base on the local is a bit higher than the base for the state tax.
So it will be a bit higher than last year, certainly. Even if [indiscernible] in Q3, it's just an estimate you will have a precise figure only with the full year results. So I hope this answers the questions.
The next question is from Filippo Prini with Kepler.
The first one is on Mortgage Broking. The 22.6% reduction of new application that you showed in your presentation can be taken roughly as a trend expected in Q4 or if you want to defer the next months? Or given that you are more exposed than market average to refinancing the [indiscernible] trend could be different? The second one is on BPO, could you please confirm that despite flagging the potential impact of stoppage of [indiscernible] for the business of Agenzia Italia does not affect your half -- full year out for this business? And the last -- basically, the last 2 ones, very briefly. The first is if you can share with us the potential next steps, maybe in terms of the [indiscernible] about your lawsuits filed against Google?
And second -- and the last one is if you confirm that any impact on the tendering of the Cerved shares -- It could be treated always as -- to shareholders' equity to the [indiscernible] on capital and not more to the profit and loss.
Okay. Well, I'll take a few questions, and Alessandro will answer on BPO. Let's start about the trend of Mortgage Broking or in general, I think it makes sense to take the data from CRIF as a serious indication of where the market is [ aiming ]. So -- but this is the entire market. So these figures are 20% down year-on-year in Q3. And for us, I would say there would be 2 balancing effects. One is, of course, that we are overweight, especially in Broking, but also in a way sometimes also in BPO because of the para-notarial services.
We are overweight in mortgages. But at the same time , remortgages have -- for Mortgage Broking lower commissions and also in general, we might be able to increase our market share, then It depends. But in the past, that has certainly helped us. So I would say you imagine that the fact that we're overweight, remortgages could be balanced by the other factors. And so I think it makes sense to take the rough indication of where things could go -- the data from CRIF.
But again, it's very hard to make a forecast. And this could be relevant for a couple of quarters, then possibly the growth of purchase mortgages will likely prevail in driving our performance. Regarding the action, the -- what we could do also is a consequence or after the decision of the European Court of Justice, if we [indiscernible] Google, if you could do this or that, there are 2 points.
One reason that we still need to start with the Court decision. And this will take a while. And the second point is that we'll have to decide on a legal strategy and we could make sense to keep the bigger strategy confidential anyway. So we might not want to disclose in any case what our next moves will be. So for now, we still don't know what we will do. But even when we will know, we don't know if we will say in advance what the next move will be.
So of course, whenever we do something that is public or where we are obliging for people, we will do that. Otherwise, we'll keep our options open.
Anyway, we are very happy with the decision...
Yes. It was -- This was even stronger than the -- I mean, it contains additional elements on top of the decision of 2017 and also reinforces all that is happening at the European level in terms of new legislations, it confers the need of the fact that the digital market [ fact ] is going in the right direction. So we have a positive feeling. Then it would be a very long thing. And before we see [ money ] or before we see real changes, it might take time, but everything is going in the right directions apparently.
Then third point on the recognition of the capital gain and the channel shares, basically, this is something that we really started in detail at the moment after tendering the shares to know exactly how this should be treated and also we discussed this at length with [indiscernible] and with our auditors. Basically, it turns out that when you -- and again, yes, Francesco, correct me if I'm wrong, but when you make an investment, you have to decide whether this is a financial or an industrial investment.
This is a [ free classification ] up to the management. We originally classified as investment in [indiscernible] industrial. And if it is classified as industrial, all the changes in value of the shares go through other comprehensive income, which means that they go directly to shareholders' equity and reserves. They don't go through the P&L. And it turns out that this has to apply also to anything that [indiscernible] subsequently, and you are not allowed to change this classification. So maybe we have the [ Cerved ] -- we did the investment in Cerved, but also with industrial angle, then it turned out, as you know, after we were not able to appoint anybody to the Board and so on, this industrial angle was no more.
But given that we have classified it in a certain way at the beginning, it turns out that we have to treat it in a consistent way. So the correct treatment is all the gains or the losses don't go through the P&L. We in fact, contrary to this, consider the gains -- the realized gains of Q2 or Q1, maybe -- [indiscernible] of the 2 certainly, as going to the P&L. Then we realized this was not correct. This was not having really materially impact, requiring a statement or anything like that.
And we basically -- and did this recognition in Q3. So of course, the shareholder equity is the same, but it has also -- it has all gone now in the 9 months through other comprehensive income and not [P&L ]. I hope that's clear.
Yes. Regarding the automotive BPO, which is, I guess, the last question that we need to answer. You remember, we were very cautious at the beginning of the year and then the results of [indiscernible] positively. We keep a positive outlook for the last quarter. Obviously, not as positive it could be because it will be impacted by this. But I believe we will see results for Agenzia Italia over the one of last year's still in growth.
[Operator Instructions] Gentlemen, there are no more questions registered at this time.
Okay. Then we will thank everybody for participating. And as always, we are available for one-on-one calls or if you want to visit us, we are also so happy to welcome you in our offices.
Yes. Hoping the COVID situation does not worsen too much. Anyway, thank you, everyone, and see you next time.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.