Insider
A significant increase of 28.3% was recorded in the cash inflows of the 4th quarter 2021 of KEDIPES, which amounted to € 115.5 million at the highest quarterly level since the beginning of the pandemic, compared to € 90 million for the third quarter of 2021 .
According to the results announced today, the annual cash inflows for 2021 amounted to € 403 million, marking at the same time a significant increase of 29% compared to the inflows of € 311.8 million for 2020, while the cumulative cash inflows from start of operations of KEDIPES amounted to € 1.2 billion.
The statement of the Chairman of the Board of Directors of KEDIPES, Lambros Papadopoulos:
Cash inflows have exceeded the targets, as they are higher than the targets set in the Business Plan, due to the new framework agreement of KEDIPES with ALTAMIRA, according to which the remuneration of the management company is variable and largely depends on the asset management performance.
With the last payment of € 60m. in cash to the State in December 2021, the total amount of repayment of state aid in cash amounted to € 250m. in 2021 and cumulatively at € 570m. from the beginning of the work of KEDIPES.
While the good performance of 2021 has been positively affected by the stability of the legal framework for sales, any negative changes in this framework as well as other existing or proposed laws concerning KEDIPES and credit companies / asset management companies in general, which are under discussion in the House of Representatives, will significantly affect the fulfillment of the Business Plan and the ability to fully repay the state aid. Finding sustainable restructuring solutions with customers remains a strategic goal of KEDIPES, as can be seen from the amount of restructuring, which has so far reached € 1.1 billion.
Significant progress has been made in the Ledra Project, as the Company has entered the final phase of exclusive negotiation with the dominant bidder for the purchase of the loan portfolio. We hope that the relevant agreement will be signed in February and the completion of the transaction is expected within the first half of 2022.
The consultations with ALTAMIRA regarding the basic financial terms, the revised portfolio service agreement (SLA), the key performance ratios (KPIs) and the Reverse SLA are almost completed, and are subject to approval by the respective Boards of the two Companies, as well as and by the European Commission's Directorate-General for Competition (DG Comp), regarding Commitment 18 and the condition that the Service-Level Agreement must comply with market conditions (market conformity).
The Compensation Scheme of the affected staff of the former SKT that was transferred to ALTAMIRA was successfully completed, with 119 people choosing to renounce the right to return to KEDIPES. In addition, 10 people have returned to KEDIPES from ALTAMIRA, while another 20 people have accepted the Voluntary Retirement Plan (VET). All the above actions are in line with potential savings in the annual labor costs of KEDIPES up to € 6m. – with a total implementation cost for KEDIPES at € 7.5m.
Regarding the staff of KEDIPES, only 39 people accepted the CEA and KEDIPES is in the process of consulting with the unions for the abolition of a significant number of jobs. The dialogue is conducted on the basis of an updated relevant study by an independent external consultant, which was presented to the unions, and demonstrates that the number of KEDIPES staff should not exceed 300 in the immediate first phase.
Financial Developments of the Fourth Quarter 2021
The cash inflows of the fourth quarter of 2021 amounted to € 115.5m. recording a significant increase of 28.3% against € 90.0m. for the third quarter of 2021 and 19.6% against € 96.6m. of the 4th quarter of 2020. The receipts of the 4th quarter from the management of loans and real estate amounted to a total of € 114.0m. or 1.6% of the nominal value of the loan and real estate portfolio of € 7,128m. at the end of the third quarter 2021.
The annual cash inflows for 2021 amounted to € 403.0m. recording a significant increase of 29.4%, in relation to the inflows of € 311.8m. for 2020. The annual receipts 2021 from the management of loans and real estate amounted to a total of € 394.8m. or 5.4% of the nominal value of the loan and real estate portfolio of € 7,323m. on December 31, 2020. The cumulative cash inflows from the start of operations of KEDIPES on 1/9/2018 until 31/12/2021 amounted to € 1,224m. Receipts from loan and real estate management amounted to € 1,176.5m. or 14.61% of the nominal value of the loan and real estate portfolio of € 8,051m. on 1/9/2018.
Operating expenses and asset management expenses of the Fourth Quarter 2021 amounted to € 33.4m, increased by 30.7% from € 25.7m. for the third quarter of 2021, while they are increased by 4.3% from € 32.0m. for the fourth quarter of 2020.
Annual operating expenses and asset management expenses for 2021 amounted to € 113.2m, increased by 7.0% from € 105.7m. for 2020.
The increase mainly concerns staff salaries since in September 2021 a Single Collective Staff Agreement was signed and retroactive staff benefits were paid for the period from 1 July 2020, as well as expenses related to asset management.
As already announced, on November 1, 2021, the Voluntary Withdrawal Plan (VET) was completed and the plan, which included the three options presented to the staff of the former SKT, was transferred to ALTAMIRA. The SEA was selected by a total of 59 people, of which 39 from the staff of KEDIPES, while the remaining 20 from staff of the former SKT who were transferred to ALTAMIRA. Regarding the Plan for the staff of the former SKT that was transferred to ALTAMIRA, out of the 149 affected staff members, 119 chose to remain in ALTAMIRA while renouncing their right to return to KEDIPES, while 10 people decided to return to KEDIPES.
After the completion of the SEA and the actions concerning the staff of ALTAMIRA, the staff of KEDIPES amounts to 360 people. KEDIPES examines all legal and other actions provided by law, including the examination of possible redundancies and is in the process of consulting with all staff unions.
The loans at nominal value amounted to € 6,422m. at the end of the Fourth Quarter 2021 from € 6,506m. for the third quarter of 2021 and € 6,688m. in the 4th quarter of 2020. The total leverage from the start of operations from September 1, 2018 until the 4th quarter of 2021 amounted to 12.9% and excluding contractual interest on loans amounted to 30.1%. The total restructuring and / or recovery solutions through the management company ALTAMIRA amounted to € 191m. for the 4th quarter 2021 against € 174m. for the third quarter 2021. The total solutions for the whole year 2021 amounted to € 703m. in relation to € 876m. for 2020. The total solutions from the start of work of KEDIPES until the 4th quarter of 2021 amounted to € 2,797m. or 38% of the initial loan balance of € 7,371m. Assets at the end of the Fourth Quarter 2021 amounted to € 7,181m. at face value and include cash € 117m, real estate € 609m. and serviced loans € 623m. The total leverage from the start of operations from September 1, 2018 until the fourth quarter of 2021 amounted to 13.0% and excluding contractual interest on loans to 28.4%. Within the framework of the ESTIA project, until December 31, 2021, the applications which were evaluated and have received final approval from the Ministry of Labor concern 486 accounts with a contractual balance of € 102.2m. The process of evaluating the appeals by the Ministry of Labor is in progress. In relation to the Asset Protection Scheme, to date, the Hellenic Bank (ET) has submitted claims totaling € 112.2m. for the period September 1, 2018 to September 30, 2021, with the most recent requirement for the third quarter 2021 amounting to € 0.4m. KEDIPES has made an additional payment of € 4.4m. in November 2021, setting the total payments at € 78.2m. or 70% of the claims submitted to date. SEDIPES / KEDIPES and Hellenic Bank are in a consultation process to confirm the remaining amount of receivables.
According to the data of Hellenic Bank, the contractual value of the assets covered by the Plan on 30/9/2021 amounts to € 1,797m. in relation to € 2,608m. at the beginning of the Plan. The reference price of the assets on 30/9/2021 amounts to € 1,434m. in relation to € 2,271m. at the beginning of the Plan (reference price is the amount covered by the Plan) showing a total reduction of 37% from the beginning of the Plan.
In addition, at the end of October 2021, based on the terms of the agreement, Hellenic Bank, exercising a relevant option during the third anniversary, has withdrawn loans with a Reference Price of € 2.3m. and has paid a fee of € 22.8m. to the Republic of Cyprus. As a result, the payments of the Hellenic Bank to the Republic of Cyprus as guarantor of the Plan amounted to a cumulative € 42.1m.
The net cash flows after the repayment of expenses and liabilities of the Fourth Quarter 2021 amounted to € 65.9m, recording an increase of 19.5% compared to € 55.1m. for the third quarter of 2021, and a significant increase of 694% against € 8.3 for the fourth quarter of 2020 which included payment against the Loan Guarantee Plan of € 55.6m. The net cash flows after the repayment of expenses amounted to € 254.0m for 2021 compared to € 146.0m in 2020 and € 606m. cumulatively from the beginning of KEDIPES work. Following a decision of the Board of Directors of KEDIPES, a payment of € 60m was made on December 21st. against state aid, raising the total amount of state aid repayment in cash to € 250m. in 2021 and at € 570m. from the start of KEDIPES operations in September 2018. The transfer of real estate to the state of € 140m is pending. approximately which will increase the total repayment to € 710m. The future repayment of state aid is directly related to the possible transformation of KEDIPES into a national asset management company, according to the relevant announcements of the Ministry of Finance. KEDIPES is ready to contribute in this direction and until the relevant decisions and approvals are taken, we remain committed to our mission based on the Commitments made to the Directorate-General for Competition of the European Commission.
Other Developments after the Reporting Date
The final phase of the Ledra project for the sale of a loan portfolio is in progress as the stage of exclusive negotiation with the dominant bidder has begun. We hope that the relevant agreement will be signed in February and the transaction is expected to be completed within the first half of 2022. The consultations with ALTAMIRA are almost complete regarding the basic financial terms, the revised portfolio service agreement (SLA) by the key indicators (KPIs) and the Reverse SLA. They are subject to approval by the respective Boards of Directors of the two Companies as well as the European Commission's Directorate-General for Competition, regarding Commitment 18 and the condition that the agreement must comply with market conditions.
A detailed presentation of the management results up to 31/12/2021 has been posted on the website of KEDIPES at the link: https://kedipes.com.cy/effects-management/
