ANNUAL FINANCIAL REPORT 

AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2023

Prepared according to IAS/IFRS

(This report has been translated into the English language from the original which was issued in Italian)

1. TABLE OF CONTENTS

1. GOVERNING BODIES AND OFFICERS AS OF DECEMBER 31, 2023

BOARD OF DIRECTORS

Chairman     Marco Pescarmona ^{(1) (3) (5) (7)}

Chief Executive Officer     Alessandro Fracassi ^{(2) (3) (5)}

Directors     Matteo De Brabant

     Fausto Boni

     Klaus Gummerer ^{(4) (6)}

     Guido Crespi ⁽⁴⁾

     Giulia Bianchi Frangipane ⁽⁴⁾

     Camilla Cionini Visani ⁽⁴⁾

     Maria Chiara Franceschetti ⁽⁴⁾

     Stefania Santarelli ⁽⁴⁾

BOARD OF STATUTORY AUDITORS

Chairman     Cristian Novello ⁽⁸⁾

Active Statutory Auditors     Paolo Burlando

     Francesca Masotti

Substitute Statutory Auditors     Filippo Colonna

     Barbara Premoli

INDEPENDENT AUDITORS     EY S.p.A.     

COMMITTEES OF THE BOARD OF DIRECTORS

Audit and Risk Committee     

Chairman     Giulia Bianchi Frangipane

     Camilla Cionini Visani 

     Klaus Gummerer 

Remuneration and Share Incentive Committee

Chairman     Guido Crespi

     Stefania Santarelli 

     Matteo De Brabant

Committee for Transactions with Related Parties

Chairman     Maria Chiara Franceschetti 

     Giulia Bianchi Frangipane 

     Klaus Gummerer

1. The Chairman is the Company's legal representative.

2. The Chief Executive Officer legally represents the Company, disjointly from the Chairman, within the limits of the delegated powers.

3. Executive Director.

4. Independent non-executive Director.

5. Holds executive offices in some Group companies.

6. Lead Independent Director.

7. Executive Director in charge of overseeing the Internal Control System.

8. In charge since April 28, 2023

DIRECTORS' REPORT ON OPERATIONS  

FINANCIAL YEAR ENDED DECEMBER 31, 2023

2. DIRECTORS' REPORT ON OPERATIONS

   1. Introduction

2. Gruppo MutuiOnline S.p.A. (the "Company" or the "Issuer") is the holding company of a group of firms (the "Group") with an important position - through the entities of its "Broking Division" - in the Italian market for the online comparison, promotion and intermediation of products provided by financial institutions, e-commerce operators and utility providers (main websites www.mutuionline.it, www.prestitionline.it, www.segugio.it, www.trovaprezzi.it and www.sostariffe.it) and - through the companies of its "BPO Division" - in the Italian market for the provision of complex business process outsourcing services for the financial sector. Since February 2023, following the acquisition described below, the Broking Division also has a significant position in the Spanish (www.rastreator.com), French (www.lelynx.fr) and Mexican (www.rastreator.mx) markets for the online comparison and intermediation mainly of insurance products.

3. In the following sections, we illustrate the main aspects regarding the operations during the past financial year and the current economic and financial structure of the Group.

• 2. Group organization

4. The structure of the Group and its Divisions is shown schematically in the following diagrams, in which all participations are 100% owned, except those for which a different percentage is indicated.

Broking Division:

BPO Division:

Compared with the composition of the Group as of December 31, 2022, the following changes occurred:

• On February 1^st, 2023, the Group completed the acquisition of 100% of Rastreator.com Ltd, Preminen Price Comparison Holdings Ltd and LeLynx SAS, in accordance with the terms illustrated in the consolidated financial statement as of December 31, 2022. The consideration paid for the acquisition amounts to Euro 150,356 thousand. The main assets of the acquired companies are the Rastreator.com, LeLynx.fr and Rastreator.mx portals, which represent leading operators in the sector of the online comparison and intermediation of mainly insurance products in Spain, Mexico and France.

• On March 24, 2023, the Group acquired, through subsidiary Quinservizi S.p.A., 40% of the share capital of EuroSTA S.r.l., a service company specializing in social security position analysis, document verification, certificate requests and anti-fraud services in the financial sector, for a consideration equal to Euro 355 thousand.

• On April 17, 2023 the Group acquired, through subsidiary Europa Centro Servizi S.r.l., 60% of the share capital of Green Call Service S.r.l., a company which offers services in the area of succession management, for a consideration equal to Euro 183 thousand.

• On May 8, 2023 the Group subscribed for Euro 3 thousand, through subsidiary Centro Istruttorie S.p.A., a 33% stake in the share capital of the newly established Tax & Tech S.r.l., a company qualified for professional activities reserved for members of the Order of Chartered Accountants and Accounting Experts and/or the Register of Auditors.

• On September 5, 2023, Rastreator.com Ltd transferred to the parent company Incomparable S.a.r.l., through distribution of dividends in kind, the stake held in Rastreator Comparador Correduría de Seguros SLU.

• On December 1^st, 2023, the merger of Resolution and Service S.r.l. into Global Care S.r.l. was completed, with retroactive accounting effect from January 1^st, 2023.

• On December 12, 2023, the liquidation of Preminen Dragon Price Comparison Ltd was completed.

6. Broking Division

7. The Broking Division operates in the online comparison and intermediation of products and services in Italy (main market), Spain, France and Mexico.

8. The activities carried out by our Broking Division are organized mainly into the following business lines: 

1. Credit Broking: broking of mortgage loans and consumer loans products in Italy, mainly through the online channel (www.mutuionline.it and www.prestitionline.it websites); 

2. Insurance Broking: online broking of insurance products in Italy, mainly motor third party liability and other motor insurance products (www.cercassicurazioni.it  website);

3. E-Commerce Price Comparison: comparison and promotion of e-commerce operators in Italy (www.trovaprezzi.it website);

4. Telco & Energy Comparison: comparison and promotion of telecommunications and energy services (www.sostariffe.it website);

5. International Markets: online comparison and brokerage of mainly insurance products in Spain (www.rastreator.com website), France (www.lelynx.fr website) and Mexico (www.rastreator.mx website).

9. The activity of the Broking Division is also carried out under the "Segugio.it" brand (www.segugio.it website), which operates as a multibrand aggregator for insurance, credit, telecommunications and energy products. Each section of the website is however managed by the product companies of the Group and the related revenues are reported within the above mentioned business lines.

10. Besides, subsidiary Innovazione Finanziaria SIM S.p.A. - authorized to professionally perform placement services to the public without underwriting or warranties pursuant to article 1, comma 5, letter c-bis) of Legislative Decree no. 58 of February 24, 1998 - manages, by means of website www.fondionline.it, an on-line mutual fund supermarket for Italian clients. 

11. BPO Division

12. The BPO (acronym of Business Process Outsourcing) Division provides outsourcing and IT services mainly to the benefit of financial institutions operating on the Italian market, with a high level of specialization in its reference verticals. The BPO Division also offers a set of proprietary information technology solutions to client companies in its business areas.

13. The activities carried out by the BPO Division are divided into the following business lines, based on the type of service offered and/or underlying product:

1. Mortgage BPO: provides remote loan sales and packaging and mortgage underwriting and closing services; this business line includes notary support services;

2. Real Estate Services BPO: offers real estate appraisal services and technical real estate services for operators in the financial sector and debt collection;

3. Loans BPO: provides application processing and portfolio management services for salary/pension guaranteed loans, and for business loans to companies, also assisted by a guarantee from the State;

4. Insurance BPO: provides management and claim settlement outsourcing services;

5. Investment services BPO: provides complete operational service solutions and technology platforms to investment and asset management companies;

6. Leasing & Rental BPO/IT: provides BPO services and IT core solutions for leasing and long-term rental operators.

• 3. Information about the profitability of the Group 

14. In the following paragraph we describe the main factors affecting the results of the operations of the Group for the year ended December 31, 2023. The income statement and the cash flow data for the year ended December 31, 2023 are taken from the consolidated annual report prepared according to the international accounting standards approved by the European Union and are compared with the same data for the year ended December 31, 2022.

15. The following table shows the consolidated income statements of the Group for the years ended December 31, 2023 and 2022, together with the percentage weight of each item on the Group revenues.

16. 
    

1. % of total revenues

Revenues in the year ended December 31, 2023, are Euro 404,187 thousand, 30.1% up than in the previous year. Please refer to paragraph 2.3.1 for the evolution of revenues by Division and business line.

In the financial year ended December 31, 2023, services costs increase by 34.1% compared to the financial year ended December 31, 2022. This trend is mainly due to the enlargement of the consolidation area, as a result of the above mentioned acquisitions, and to the greater costs incurred by the Group for strategic, tax and legal advice, in particular with respect to such acquisitions. 

Personnel costs increase by 34.4% compared to the financial year ended December 31, 2022, mainly due to the increase of the number of human resources employed by the Group, following the enlargement of the consolidation area.

The following table provides information about the average headcount for the financial years ended December 31, 2023 and 2022:

Other operating costs increase by 9.4%, compared to the financial year ended December 31, 2022.

Depreciation and amortization increase by 104.8% in the financial year ended December 31, 2023 compared to the previous financial year, mainly due to the higher values of the assets recognized following the completion of the purchase price allocations related to the foreign acquisitions, Trebi Generalconsult S.r.l. and Europa Centro Servizi S.r.l.. In particular, the amortization of intangible assets related to purchase price allocations are equal to Euro 30,660 thousand in the financial year ended December 31, 2023, compared to Euro 11,115 thousand in the previous year.

Financial costs for the financial year ended December 31, 2023, show a negative balance, mainly due to the interest expense on the outstanding loans in the period, equal to Euro 14,100 thousand (whose increase compared with the previous year is totally attributable to the increase in interest rates), losses deriving from the recalculation to charges arising from the restatement of estimated liabilities for the exercise of put/call options on the remaining shares of Agenzia Italia S.p.A. and Zoorate S.r.l. for Euro 4,349 thousand, partially offset by the dividends received from Moneysupermarket.com Group PLC ("Moneysupermarket") for Euro 5,989 thousand.

The "Income tax expense" item, mainly includes the current taxes related to the financial year 2023 for Euro 13,029 thousand and the net utilization of the period of the deferred tax assets related to the higher value of assets revaluated during 2020, and deferred tax liabilities, for Euro 1,639 thousand.

• • 1. Revenues

The table below provides a breakdown of our revenues by Division and business line, for the years ended December 31, 2023 and 2022.

1. Percentage of total revenues.

17. Broking Division

In the financial year ended December 31, 2023, revenues of the Broking Division increase by 43.6%, passing from Euro 131,042 thousand in the financial year ended December 31, 2022 to Euro 188,122 thousand in the financial year ended December 31, 2023.

Credit Broking

Credit Broking revenues go from Euro 50,754 thousand in 2022 to Euro 43,406 thousand in 2023 (-14.5%), as a result of a sharp drop in volumes of brokered mortgages compared to the previous financial year, attributable to the contraction of the target market.

Insurance Broking

Insurance Broking revenues grow from Euro 28,399 thousand in financial year 2022 to Euro 33,937 thousand in financial year 2023 (+19.5%), as a result of the increase of the number and average premium of brokered policies.

E-Commerce Price Comparison

E-Commerce Price Comparison revenues go from Euro 37,381 thousand in financial year 2022 to Euro 36,331 thousand in financial year 2023 (-2.8%).

Telco & Energy Comparison

Telco & Energy Comparison revenues go from Euro 10,769 thousand in financial year 2022 to Euro 16,511 thousand in financial year 2023 (+53.3%), as a result of strong growth in brokered energy contracts.

18. International Markets

Revenues from the International Markets business line, which refer to the foreign companies acquired in 2023, amounted to Euro 52,987 thousand in the period under consolidation, since February 1, 2023.

19. BPO Division

Revenues of the BPO Division increase, going from Euro 179,728 thousand in financial year 2022 to Euro 216,065 thousand in financial year 2023 (+20.2%). 

Mortgage BPO

Mortgage BPO revenues go from Euro 32,627 thousand in financial year 2022 to Euro 33,691 thousand in financial year 2023 (+3.3%).

Real Estate Services BPO

Real Estate Services BPO revenues go from Euro 29,504 thousand in financial year 2022 to Euro 31,991 thousand in financial year 2023 (+8.4%). 

Loans BPO

Loans BPO revenues go from Euro 26,185 thousand in financial year 2022 to Euro 29,043 thousand in financial year 2023 (+10.9%).

Insurance BPO

Insurance BPO revenues go from Euro 34,806 thousand in financial year 2022 to Euro 46,158 thousand in financial year 2023 (+32.6%), due to an increase in volumes processed, and to the full contribution of Onda S.r.l., whose results are consolidated starting from May 2022.

Investment Services BPO

Investment Services BPO revenues go from Euro 11,330 thousand in financial year 2022 to Euro 10,559 thousand in financial year ended 2023 (-6.8%).

Leasing & Rental BPO/IT

Leasing & Rental BPO/IT revenues go from Euro 40,312 thousand in financial year 2022 to Euro 61,713 thousand in financial year 2023 (+53.1%), due to both the growth in activity volumes of Agenzia Italia S.p.A. and the full contribution of Trebi Generalconsult S.r.l., whose results are consolidated starting from November 1^st, 2022.

• • 2. EBITDA

20. EBITDA is calculated as net income before income tax expense, net financial income/(expenses), and depreciation and amortization.

21. The following table presents a reconciliation between net income and EBITDA for the financial years ended December 31, 2023 and 2022:

22.    

23. EBITDA increases in the financial year ended December 31, 2023, passing from Euro 88.568 thousand in 2022 to Euro 108.204 thousand in 2023 (+22.2%). This change is mainly due to the enlargement of the consolidation area.

The table below provides a breakdown of EBITDA by Division, for the years ended December 31, 2023 and 2022:

1. Percentage of total revenues, if appropriate by Division (EBITDA  margin).

EBITDA in the financial year ended December 31, 2023 is 26.8% of revenues, down compared to 28.5% in the financial year ended December 31, 2022.

This trend is partially related to the slightly lower margins realized by the recently acquired companies, also due to the one-off costs incurred, and partially to a decrease in revenues from Mortgage Broking, which are characterized by higher margins.

• • 3. Operating income (EBIT)

24. Operating income (EBIT) decreases from Euro 66.542 thousand in the financial year ended December 31, 2022 to Euro 63.101 thousand in the financial year ended December 31, 2023 (-5.2%) as detailed in the following table

25.    

1. Percentage of total revenues, if appropriate by Division (operating margin).

The operating income margin in financial year 2023 is 15.6% of revenues, slightly down if compared to 21.4% of financial year 2022. 

Such result is due to the decrease of the operating income margin of the Broking Division, going from 30.0% in 2022 to 21.6% in 2023, and the decrease of the operating income margin of the BPO Division, going from 15.2% in 2022 to 10.4% in 2023. 

This trend is mainly due to higher amortization related to the higher values of intangible assets recognized as a result of the purchase price allocation related to the foreign acquisitions, of Trebi Generalconsult S.r.l. and Europa Centro Servizi S.r.l.. In particular, amortization attributable to the purchase price allocation is equal to Euro 30,660 thousand in the financial year ended December 31, 2023 (of which Euro 13,751 thousand for the Broking Division and Euro 16,909 thousand for the BPO Division), compared to Euro 11,115 thousand in the previous financial year (of which Euro 4,164 thousand for the Broking Division and Euro 6,951 thousand for the BPO Division).

• • 4. Net income

26. Net income decreases in the financial year ended December 31, 2023, passing from Euro 47,529 thousand in 2022 to Euro 35,361 thousand in 2023 (-25.6%).  

27. This result is attributable to higher amortization and higher financial expenses recognized in the financial year ended December 31, 2023.

• 4. Information about the financial resources of the Group

28. The following table presents the net financial position as of December 31, 2023 and 2022, prepared according to ESMA orientation 32-382-1138 of March 4, 2021 and to Consob guidance n. 5/21 of April 29, 2021:

29.  

30. 
    

31. The net financial position as of December 31, 2023 shows a negative cash balance of Euro 300,201 thousand, worsening for Euro 104,954 thousand if compared to December 31, 2022, mainly due to the cash flow absorbed as a result of the acquisition of the foreign companies, described above. We point out that cash and cash equivalents include readily liquidable short-term bank deposits for Euro 37,000 thousand.

32. For a description of the evolution of cash flows in the financial year ended December 31, 2023, please refer to the following paragraph 2.4.2.

• • 1. Current and non-current indebtedness

33. Current and non-current indebtedness as of December 31, 2023 and 2022 is summarized in the following table.

34. 
    

35. Long and medium-term bank borrowings

36. Long and medium-term bank borrowings as of December 31, 2023 and December 31, 2022 are summarized in the following table:

The decrease of non-current bank borrowings is mainly due to the voluntary early repayment of a loan signed with Crédit Agricole Italia S.p.A. on June 28, 2018, as well as to the repayment of the maturing principal amounts for Euro 62,714 thousand, partly offset by new loans obtained during 2023.  In particular:

• on October 30, 2023 the Issuer signed a loan agreement with Credito Emiliano S.p.A., for an amount equal to Euro 5,000 thousand, with a variable interest rate equal to 3-month Euribor, increased by a spread of 0.90%. 

• on November 20, 2023 the Issuer signed a loan agreement with Unicredit S.p.A., for an amount equal to Euro 30,000 thousand, with a variable interest rate equal to 3-month Euribor, increased by a spread of 1.72%. In addition, on 50% of the disbursed amount, for an amount equal to Euro 15,000 thousand, a derivative contract was signed to hedge the interest rate, which is converted to a fixed rate at 3.37%, increased by the margin of 1.72%;

Regarding the pre-existing loans, we remind that: 

• on March 30, 2020, the Issuer signed a loan agreement with Crédit Agricole Italia S.p.A., for an amount equal to Euro 15,000 thousand, expiring on June 30, 2026, at a yearly fixed rate equal to 1.05%;

• on May 21, 2020, subsidiary Agenzia Italia S.p.A. signed a loan agreement with Banco BPM S.p.A., for an amount equal to Euro 10,000 thousand, expiring on December 31, 2024, at a yearly fixed rate equal to 1.09%;

• on February 26, 2021, the Issuer signed a loan agreement with Unicredit S.p.A., for an amount equal to Euro 10,000 thousand, expiring on February 28, 2026, with a variable interest rate equal to 3-month Euribor increased by 1.60%. On such loan we took a derivative contract to hedge the variable rate, which converts the 3-month Euribor interest rate into a yearly fixed rate of minus 0.15%;

• on March 30, 2021, the Issuer signed a loan agreement with Intesa SanPaolo S.p.A., for an amount equal to Euro 80,000 thousand, expiring on March 30, 2028, with a fixed interest rate equal to 1.45%;

• on September 9, 2021, the Issuer signed a loan agreement with Credito Emiliano S.p.A., for an amount equal to Euro 20,000 thousand, expiring on September 9, 2026, with a fixed interest rate equal to 0.58%. We point out that such loan was mainly used for the early reimbursement of the previous loans of the same bank, which had a residual debt equal to Euro 16,798 thousand;

• on July 29, 2022, the Issuer signed a loan with Intesa SanPaolo S.p.A., composed of two tranches, respectively of Euro 40,000 thousand and 60,000 thousand, both disbursed in 2022. The contract provides, for both tranches of the loan, an expiration date on December 31, 2028, with an interest rate equal to the 6-month Euribor rate, increased by a margin of 2.00%. In addition, on 60% of the disbursed amount, and until December 31, 2026, a derivative contract was signed to hedge the interest rate, which is converted to a fixed rate at 1.396%, increased by the margin of 2.00%;

• on August 9, 2022 the Issuer signed a loan with Credit Agricole Italia S.p.A. , and disbursed in the fourth quarter 2022 for Euro 60,000 thousand, with expiration date on June 30, 2028, with a variable interest rate equal to 3-month Euribor, increased by a spread of 1.65%; 

• on August 9, 2022, the Issuer signed a loan with Unicredit S.p.A. for an amount equal to Euro 50,000 thousand, with expiration date on August 31, 2027, with a variable interest rate equal to 3-month Euribor, increased by a spread of 1.80%. In addition, on 60% of the financed amount, equal to Euro 30,000 thousand, and until August 29, 2025, a derivative contract was signed into to hedge the interest rate, which is converted to a fixed rate at 1.435%, increased by the margin of 1.80%. 

• on September 5, 2022, the Issuer signed a loan with Banco BPM S.p.A., for a total amount equal to Euro 50,000 thousand, with a variable interest rate equal to 6-month Euribor, increased by a spread of 1.80% on a credit line equal to Euro 35,000 thousand ("Line A"), with expiration date at June 30, 2028, and a spread of 2.00% on a bullet credit line equal to Euro 15,000 thousand ("Line B"), with expiration date on December 31, 2028. In addition, on 50% of the financed amount, and until the expiration date of each credit line, a derivative contract was signed into to hedge the interest rate, which is converted to a fixed rate at 2.39% for the Line A, and 2.485% for the Line B, increased by the margins described above;

• on November 2, 2022, the Issuer signed a loan with Credito Emiliano S.p.A., for an amount equal to Euro 10,000 thousand, with expiration date on November 2, 2026, with a variable interest rate equal to 1-month Euribor, increased by a spread of 0.90%.

37. Other non-current financial liabilities

38. Other non-current financial liabilities consist in the financial liabilities for the exercise of the put/call option for the residual 49.9% stake of Gruppo Lercari S.r.l., for the residual 15.5% stake of Agenzia Italia S.p.A., for the residual 8% stake of Zoorate S.r.l., and for the residual 40% stake of Green Call S.r.l. S.r.l., and in the leasing liabilities deriving from the adoption of the IFRS 16 standard. 

39. Other current financial liabilities

40. Other current financial liabilities consist in the current portion of the leasing liabilities deriving from the adoption of the IFRS 16 standard.

• • 2. Cash flow analysis

41. In this paragraph we present an analysis of the consolidated cash flows of the Group for the financial years ended December 31, 2023 and 2022.

42. The following table shows a summary of the consolidated statements of cash flows for the financial years ended December 31, 2023 and 2022.

43.  

44. In the financial year ended December 31, 2023 the Group absorbed liquidity for an amount equal to Euro 111,550 thousand, compared to a cash generation of Euro 101,803 thousand during the previous financial year. The cash absorption is attributable to the cash flow absorbed by the investment and financing activities, partially offset by the cash generated by the operating activity. 

45. Cash flow generated by operating activities

46. Operating activities show a cash generation equal to Euro 93.501 thousand in the financial year ended December 31, 2023, up if compared to the cash generated in the financial year ended December 31, 2022, equal to Euro 61.991 thousand.

47. This increase is due to both the higher liquidity generated by operating income and the dynamics of the change in net working capital, for the analysis of which refer to paragraph 2.4.3.

48. Cash flow generated by investing activities

Investing activities absorbed cash for Euro 148,108 thousand in the financial year ended December 31, 2023, compared to Euro 159,301 thousand of absorbed cash in the financial year ended December 31, 2022. The cash absorbed is mainly attributable to the consideration paid (net of cash acquired) for the acquisition of 100% of the share capital of Rastreator.com Ltd, Preminen Price Comparison Holdings Ltd and LeLynx SAS, for Euro 141,512 thousand and the subscription of notes related to "Igloo" securitization promoted by subsidiary Centro Finanziamenti S.p.A. for Euro 2,343 thousand.

49. Cash flow generated by financing activities

50. Financing activities absorbed cash for Euro 56,943 thousand in the financial year ended December 31, 2023, compared to a cash generation of Euro 199,113 thousand in the financial year ended December 31, 2022.

51. The cash flows absorbed during the financial year ended December 31, 2023 are due to the repayment of principal of outstanding loans of Euro 62,713 thousand, partly offset by the subscription of new bank loans for Euro 35,000 thousand, and the transactions of purchase and sale of own shares for an amount equal to Euro 10,073 thousand.

• • 3. Composition and changes in net working capital

52. The following table presents the breakdown of the components of net working capital as of December 31, 2023 and 2022.

53.   

54. Net working capital decreases by Euro 12,857 thousand in the financial year ended December 31, 2023. 

Such trend is mainly related to the increase of other current liabilities due to the consolidation of foreign companies, the increase in payables to personnel and the increase in payables for advances from customers. 

Finally, the increase in trade receivables and trade payables is mainly attributable to the consolidation of foreign companies. 

• 5. Table of reconciliation of the consolidated net income and equity with the Issuer's data

55. Among "Other consolidation adjustments" we also include the higher values deriving from the goodwill recognized upon the first consolidation of the acquired participations.

• 6. Research and development

56. Within the Group, several development teams regularly work with the objective of improving and enhancing the IT systems and the software platforms used to supply services to consumers and financial institutions. 

57. The capitalized costs related to software development in the financial year ended on December 31, 2023 amount to Euro 12,686 thousand (Euro 7,514 thousand in 2022). The increase compared to the previous year is attributable to the increase of resources dedicated to development activities mainly due to the expansion of the enlargement of the consolidation area.

58. The proprietary software platforms represent the core of the operations of the companies of the Group in both Divisions and must be continuously expanded and enriched to improve their commercial effectiveness, incorporate legislative changes, manage new kinds of products, simplify processes, increase efficiency, improve consulting ability, increase operators' productivity, adapt to the increasingly sophisticated requirements of our client financial institutions, and ensure data protection and security.

• 7. Own shares

On April 27, 2023, the shareholders' meeting revoked, for the unused portion, the previous authorization for the purchase and sale of own shares dated April 28, 2022 and authorized the purchase of own shares within the limits of retained earnings and distributable reserves from the last approved statutory financial statements of the Issuer and for a period of 18 months, and for a maximum which does not exceed the maximum limit established by the applicable pro tempore regulations, with the following purposes:

1. for activities in support of market liquidity;

2. for the possible use of shares as consideration in extraordinary transactions, including exchanges of participations with other subjects, as part of transactions in the Company's interest;

3. to allot own shares purchased to distribution programs, against payment or free of charge, of stock options or shares to employees, directors and other personnel of the Company or its subsidiaries, as well as to the service of programs for the free allocation of shares to shareholders;

4. for the execution of the contract signed between the Issuer and the company acting as specialist operator on the stock market;

5. for an efficient investment of the liquidity of the Group.

During the year ended December 31, 2023 the Issuer purchased 486.797 own shares equal to 1.217% of ordinary share capital. During the same period following the exercise of vested stock options held by some employees of the Group, the Issuer sold 228.725 own shares equal to 0.572% of ordinary share capital.

Therefore, as of December 31, 2023 the Issuer holds 2,747,026 own shares, equal to 6.868% of ordinary share capital, for a total cost equal to Euro 44,667 thousand. As of the same date, the subsidiaries of the Group do not hold any shares of the Issuer.  

During the first months of 2024, the Issuer purchased 74,277 own shares equal to 0.186% of ordinary share capital. During the same period, the Issuer sold, following the exercise of vested stock options held by some employees of the Group, 233,282 own shares, equal to 0.583% of the share capital. 

As of the date of approval of this report, therefore, the Issuer holds a total of 2.588.021 own shares, equal to 6.470% of ordinary share capital, for a total cost equal to Euro 44,667 thousand, equal to Euro 17.26 per share. As of the same date, the subsidiaries of the Group do not hold any shares of the Issuer.  

• 8. Report on corporate governance

For the report on corporate governance and on the adhesion to the codes of conduct, please refer to the report approved by the Board of Directors on March 14, 2024 and attached to this document.

• 9. Non-financial report ex Legislative Decree n. 254/2016

The Issuer, in compliance with article 5 comma 3, letter b, of the Legislative Decree n. 254/2016, prepared the non-financial consolidated report which represents a separate report. The non-financial consolidated report 2023, prepared according to the option "In accordance" of the "GRI Standards", is available on the Internet site of the Group.

• 10. Shareholdings of the members of the governing and controlling bodies, general managers and managers with strategic responsibilities

The following table shows the participations in the ordinary share capital of the Issuer held by the members of the governing and controlling bodies, general managers and managers with strategic responsibilities in the year ended December 31, 2023.

Besides, it is worth pointing out that Marco Pescarmona holds a 50% indirect shareholding in Alma Ventures S.A. (through Guderian S.p.A.) and Alessandro Fracassi holds a 50% indirect shareholding in Alma Ventures S.A. (through Casper S.r.l.) and that Alma Venture S.A., as of December 31, 2023 holds 13,448,847 shares of the Issuer, equal to 33.62% of the ordinary share capital, of which 607.777 purchased during the financial year ended December 31, 2023.

• 11. Evolution of the Italian residential mortgage market 

The contraction of the residential mortgage market continued in the fourth quarter of 2023 and in January 2024, as a result of the increase in market interest rates in the previous months.

Data from Assofin, an association representing the main banks active in the sector, show a drop in new gross originations by 24.2% in October, 28.5% in November, 18.9% in December 2023 and 15.6% in January 2024. Data from CRIF, the company that manages the main credit information system in Italy, report a 17.2% year-on-year drop in credit bureau inquiries for residential mortgage applications for the whole of 2023.

Since January 2024, as a result of the drop of market rates for longer maturities, it is again possible to obtain mortgages with a 30-year fixed rate below 3.00%. This situation is likely to cause a recovery in demand for both purchase mortgages and remortgages, which is likely to lead to a gradual return to market growth later this year.

• 12. Foreseeable evolution 

      1. Broking Division

The performance of the Broking Division in financial year 2023 has been positive, thanks to the enlargement of the consolidation area with the International Markets and the growth of Insurance Broking and Telco & Energy Comparison.

Expectations for financial year 2024 for the Broking Division are for growth in all business lines, with the exception of E-Commerce Price Comparison, which has been in significant decline since the autumn of 2023, but could improve its outlook if the Digital Markets Act is properly implemented.

Credit Broking

In 2023, Credit Broking saw significantly declining business volumes and results, mainly due to the sharp drop in mortgage demand. Looking forward to 2024, the drop of mortgage interest rates since January is leading to a recovery in demand, suitable for generating a gradual year-on-year growth in the volumes of mortgages brokered and, consequently, in the main economic parameters of the business.

Insurance broking

Insurance Broking recorded good growth during 2023, supported by rising insurance premiums. Growth is likely to continue in financial year 2024.

Telco and Energy comparison

Telco & Energy Comparison in 2023 recorded strong year-on-year growth in volumes and results, driven by an increase in the number of energy contracts brokered. For 2024, although electricity and gas prices are falling, the ongoing completion of energy market liberalization may fuel demand and support further growth.

E-Commerce price comparison

E-Commerce Price Comparison saw a deterioration in the last part of 2023, attributable to both weak consumption and a general deterioration at the European level in the visibility of comparison shopping services on the Google search engine. The first months of 2024 are also characterized by a drop in volumes and results. However, the Digital Markets Act has become effective as of March 7, 2024 and the desirable full enforcement of the same are likely to reverse the current outlook for business contraction. 

International Markets

Regarding International Markets, the acquired companies recorded stable revenues and an EBITDA margin of already over 20% during 2023, thanks to favorable insurance market conditions and operational improvements adopted. For 2024, while fine-tuning efforts continue, a greater focus on growth is expected, with TV advertising restarting in Spain. 

• • 2. BPO Division

The performance of the BPO Division in 2023 has been substantially in line with the forecasts communicated during the year with revenues and EBITDA growing double-digit compared to 2022. This increase is largely attributable to the positive effect of acquisitions. Despite this, there was a slight drop in percentage operating margin, mainly affected by the decrease of business activity in Mortgage BPO.

Analyzing the performance net of acquisitions, revenue growth would have been over 5% compared to the previous year, with a slight reduction in EBITDA and thus a reduction in percentage operating margin penalized by the unfavorable trend of Mortgage BPO.

For financial year 2024, in a context of lower interest rates, the retail lending market is expected to recover, particularly for mortgages. However, Ecobonus-related activities, which provided a significant contribution in the past three years, will progressively decline to irrelevancy. Overall, management anticipates a year of slight growth in both revenues and EBITDA, albeit with differentiated dynamics across business lines.

Mortgage BPO

2023 was a particularly difficult year for this business line. Despite a recovery in para-notary business related to low-margin remortgages in the second half of the year, the contraction of underwriting and commercial services generated overcapacity that negatively impacted overall margins. For 2024, management expects significant improvement due to the recovery of real estate transactions, although current budget forecasts of client banks do not yet reflect this expectation.

Real Estate Services BPO

In spite of forecasts, services related to Ecobonus incentives have contributed significantly for the whole 2023, with a run-off phase beginning only in the last few months. Remaining activities are expected to be visible until the first half of 2024. Although growth in real estate appraisal activities is expected for this year, linked to market trends, this will not be sufficient to offset the end of incentives, leading to a predicted decline in both revenues and margins for this business line in 2024.

Loans BPO

2023 saw a double-digit increase in both revenues and margins, thanks to consolidation in the management of SME guaranteed loan portfolios and in subsidized credit, also enhanced by the acquisition of a new customer. The outlook for 2024 indicates a continuation of growth, albeit at a more moderate pace than in 2023.

Insurance BPO

This year was distinguished by substantial growth in the insurance segment, both through enlarged scope of business and organic growth stimulated by demand for appraisal services in response to weather-related damages. 2024 is expected to confirm the exceptional revenue and margin levels achieved in 2023, while maintaining a focus on recovering percentage margins. 

Investment Services BPO

This business line saw a drop in turnover in 2023, negatively affected by the trend in assets under management for the main client, beyond management's expectations. For 2024, the forecast remains stable compared to 2023.

Leasing & Rental BPO/IT

The performance of Leasing and Rental BPO/IT in 2023 was remarkable, with strong revenue growth partially due to the consolidation of the IT business of Trebi Generalconsult S.r.l. acquired at the end of 2022. In addition to the effects of the acquisition, the organic business of Agenzia Italia S.p.A. also showed significant growth, benefiting from the normalization of logistics in the automotive sector and one-off revenues related to extraordinary transactions on managed leasing portfolios. Results in terms of EBITDA were very positive. For 2024, expectations are to maintain performance in line with the excellent results of 2023.

• 13. Other information

      3. Offices

The registered offices of the Issuer and most of the Italian subsidiaries are located in via F. Casati, 1/A, Milan, and the Group's administrative headquarter in Italy is in via Desenzano, 2 in Milan. For more details, see the section on the scope of consolidation. 

• • 2. Relations with related parties

Related party transactions, including intra-group transactions, are part of the ordinary business operations of the Group, and do not include any unusual or atypical transactions.

Relations with related parties are mainly relations with the companies of the Group.

59. In particular, the main items refer to receivables of the Issuer from some of its subsidiaries derived from the adhesion to the tax consolidation regime for Euro 11,237 thousand, and receivables of the remaining subsidiaries from the Issuer derived from the adhesion to the tax consolidation regime for a total amount equal to Euro 4,253 thousand.

60. Concerning the main commercial relationships among companies of the Group, they are mainly represented by services, provided at arm's length. In particular, we highlight:

• revenues for advertising services provided by subsidiary Segugio.it S.r.l. for a total amount equal to Euro 28,445 thousand;

• revenues for rent and office residence services, related to the operating offices in Cagliari and Monastir, and the operating offices in via Desenzano 2 and viale Sarca 222, Milan, provided by subsidiary PP&E S.r.l. to other companies of the Group, for a total amount equal to Euro 3,623 thousand;

• revenues for outsourcing services provided by subsidiaries Finprom S.r.l. and Finprom Insurance S.r.l. to other companies of the Group, for a total amount equal to Euro 9,362 thousand.

61. As of December 31, 2023, in the face of the different commercial relationships among the companies of the Group, there are trade receivables/payables among the different companies of the Group for a total amount of Euro 30,664 thousand.

62. During the financial year ended December 31, 2023:

• subsidiary Innovazione Finanziaria SIM S.p.A. resolved and paid dividends to the Issuer for an amount of Euro 806 thousand;

• subsidiary Finprom S.r.l. resolved and paid dividends to the Issuer for an amount of Euro 3,368 thousand;

• subsidiary Agenzia Italia S.p.A. resolved and paid dividends to MOL BPO S.r.l. for an amount of Euro 2,535 thousand;

• subsidiary MutuiOnline S.p.A. resolved dividends to the Issuer for an amount of Euro 2,300 thousand;

• subsidiary CercAssicurazioni.it S.r.l. resolved dividends to the Issuer for an amount of Euro 4,200 thousand;

• subsidiary 7Pixel S.r.l. resolved dividends to the Issuer for an amount of Euro 2,600 thousand;

• subsidiary Eagle & Wise Service S.r.l. resolved dividends to the Issuer for an amount of Euro 2,900 thousand;

• subsidiary Quinservizi S.p.A. resolved dividends to the Issuer for an amount of Euro 2,600 thousand;

• • 3. Risk management

Risk management of the Group is based on the principle that operating risk or financial risk is managed by the person in charge of the business process involved.

The main risks are reported and discussed at Group top management level in order to create the conditions for their coverage, assurance and assessment of residual risk.

Exchange and interest rate risk

Currently the financial risk management policies of the companies of the Group provide a balanced split between fixed-rate and variable-rate loans, aimed at optimizing the cost of the loans over time. As of today, the risk of incurring greater interest costs as a result of unfavorable variations of market interest rates, as better analyzed in the following, is mitigated by the subscription of hedging derivatives, which change the rate from floating to fixed, on a portion of the Group's debt.

The following table provides a summary of the exposure to changes in interest rates of the Group's financial debt:

* Contractually fixed rate or variable rate covered by a swap to a fixed rate

63. A possible unfavorable variation of the Euribor, equal to 1.0%, should produce an additional overall expense for the Group equal to Euro 1,509 thousand in 2024. 

For the remaining loans already described in paragraph 2.4.1, a fixed rate is applied instead.

As regards to the coverage of exchange rate risk, it is worth pointing out that, as of the reference date of this report, there are no significant assets or liabilities denominated in currencies different from the Euro, with the exception of the Moneysupermarket.com Group PLC shares, amounting to Euro 141,865 thousand as of December 31, 2023, denominated in pounds, whose fluctuation can be considered limited. 

Therefore, this risk is considered limited for the Group.

Credit risk

The current assets of the Group, with the exception of cash and cash equivalents, consist mainly of trade receivables for an amount of Euro 135,026 thousand, of which the overdue portion as of December 31, 2023 is equal to Euro 32,863 thousand, of which Euro 7,206 thousand is overdue for over 90 days.

Most of the gross overdue receivables were paid by the clients during the first months of 2024. As of the date of approval of this report, receivables not yet collected, overdue as of December 31, 2023, amount to Euro 9,655 thousand, of which Euro 5,656 thousand are receivables already overdue for over 90 days as of December 31, 2023.

Trade receivables are mainly from banks, financial intermediaries, insurance companies, leasing/rental companies and public sector entities, considered highly reliable but, facing receivables for which we consider a credit risk could arise, we allotted an allowance for doubtful receivables equal to Euro 8,333 thousand.

The Group monitors counterparty risk by analyzing the solvency and standing of customers before entering business relations with them and trying to limit an excessively high concentration of receivables from a few counterparties.

For this purpose, it is worth mentioning that we do not notice any significant concentration of revenues on any client: in 2023 the revenues from the main client of the Group represent 3.9% of total consolidated revenues.

Liquidity risk

Liquidity risk represents the risk that a company is not able to procure financial resources to support short-term operations.

The total amount of liquidity as of December 31, 2023 is Euro 150,097 thousand, and current financial liabilities equal to Euro 83,310 thousand; therefore, the management believes that liquidity risk for the Group is limited.

Current geopolitical situation - crisis in Ukraine

With regards to the current geopolitical situation, it should be noted preliminary that the Group is not directly exposed to the Russian and Ukrainian economies. The consequences of the invasion of Ukraine by the Russian Federation are not currently such as to give rise to concern for the businesses of Group companies and are not expected to have any impact on their ability to continue operating as going concerns: however, any significant fall in consumer confidence and/or disposable income could have a negative impact on the volumes of the various lines of business. The Group also constantly monitors the trend of inflation and energy costs, whose impacts are not considered significant in view of the nature of the businesses of the Group companies.

Operating risk and going concern

The technological component is an essential element for the operating activities of the Group; therefore, there is the risk that the possible malfunctioning of the technological infrastructure may cause an interruption of client services or loss of data. However, the companies of the Group have developed a series of plans, procedures and tools to guarantee business continuity and data security. 

Considering the economic and financial situation, in particular the level of available reserves, and taking into account the trend of the net working capital and of the economic and financial situation, the separated and consolidated financial reports have been prepared considering the assumption of going concern respected.

It should also be considered that the Group, as in previous years, achieved positive economic results, and, despite uncertain macroeconomic scenarios, that future economic forecasts are also positive. Finally, the Group has adequate financial resources to meet its future obligations over a period of at least 12 months from the date of approval of the financial statements, and it can, where necessary, activate additional levers to rapidly liquidate significant investments.

Risk linked to Climate Change

With regard to possible impacts related to climate change, the Group, operating in the service sector, has not identified any particular physical risks or significant transitional risks. Therefore, a quantitative assessment of the impacts of physical and transitional risks has not been carried out. With reference to climate change and energy transition, the management, considering the characteristics of the business models of the Group companies, has not identified significant impacts on the economic results or working practices adopted by the Group.

For a more detailed analysis, please refer to the consolidated non-financial statement 2023, available on the Group's website.

• • 4. Information concerning environment and human resources

With regards to the management of human resources and of environmental matters for the financial year ended December 31, 2023, we are not aware of any events that could entail any responsibility for the Group.

• 14. Net income allocation and dividend distribution proposal

The net income of the Issuer for the financial year ended December 31, 2023 is equal to Euro 8,063,699.00. This income is influenced by the distribution of part of the distributable reserves of the subsidiaries. 

The board of directors resolved to propose to the shareholders' meeting the following allocation, of the net income of the year: 

• Euro 0.12 per outstanding share, equal to a total estimated amount of Euro 4,491,391.20, as dividend distribution, gross of any applicable withholding tax, from July 10, 2024, with ex-dividend date on July 8, 2024 and record date July 9, 2024.

• for the residual portion, equal to an estimated amount of Euro 3,572,307.80, to retained earnings.

The Company's statutory financial statements for the year ended December 31, 2023 will be approved by the shareholders' meeting of Gruppo MutuiOnline S.p.A., to be held on April 29, 2024 (single call).

Milan, March 14, 2024

For the Board of Directors

The Chairman

(Ing. Marco Pescarmona)

____________________________

CONSOLIDATED ANNUAL REPORT 

AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2023

Prepared according to IAS/IFRS

3. CONSOLIDATED ANNUAL REPORT AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2023

   15. Financial statements

       1. Consolidated statement of financial position 

• • 2. Consolidated income statement

• • 3. Consolidated comprehensive income statement

• • 4. Consolidated statement of cash flows

• • 5. Consolidated statement of changes in shareholders' equity

• 2. Notes to the consolidated financial statements

1. General information

64. Gruppo MutuiOnline S.p.A. (the "Company" or the "Issuer") is the holding company of a group of firms (the "Group") with a significant position - through the entities of its "Broking Division" - in the Italian market for the online comparison, promotion and intermediation of products provided by financial institutions, e-commerce operators and utility providers (main websites www.mutuionline.it, www.prestitionline.it, www.segugio.it, www.trovaprezzi.it and www.sostariffe.it) and - through the companies of its "BPO Division" - in the Italian market for the provision of complex business process outsourcing services for the financial sector. Since February 2023, the Broking Division also has a significant position in the Spanish (www.rastreator.com), French (www.lelynx.fr) and Mexican (www.rastreator.mx) markets for the online comparison and intermediation mainly of insurance products.

This consolidated annual report, including the consolidated statement of financial position, consolidated comprehensive income statement, consolidated statement of cash flows and consolidated statement of changes in shareholders' equity as of and for the year ended December 31, 2023 and the relevant notes, has been prepared in accordance with IFRS issued by the International Accounting Standard Board ("IASB") and the related interpretations SIC/IFRIC, adopted by the European Commission. Besides it has been prepared in accordance with CONSOB resolutions No. 15519 and No. 15520 dated July 27, 2006, with ESMA orientation 32-382-1138 of March 4, 2021, with the guidance Consob n. 5/21 of April 29, 2021, and with art. 149-duodecies of the Issuer Regulations. 

IFRS should be understood as the International Financial Reporting Standards, the International Accounting Standards ("IAS"), the interpretations of the International Financial Reporting Interpretation Committee ("IFRIC"), previously denominated Standing Interpretations Committee ("SIC"), as adopted by the European Commission as of December 31, 2023 and published in the EU regulations as of this date.

65. In particular, the IFRS have been consistently applied to all the periods presented.

The Group has elected the "non-current/current" presentation for the statement of financial position, the presentation of costs by nature for the income statement, the comprehensive income statements and the indirect method for the preparation of the statement of cash flows.

The statement of changes in shareholders' equity was prepared according with IAS 1.

66. These consolidated financial statements have been prepared in Euro, the currency of the primary economic environment in which the Group operates.

67. All the amounts included in the tables of the following notes are in thousands of Euros, except where otherwise stated.

68. These consolidated financial statements have been prepared according to the going concern assumption, due to the economic and financial results achieved.

The Board of Directors approved the publication of the present document on March 14, 2024.

2. Basis of preparation of the consolidated financial statements

The following consolidation procedures have been applied in the preparation of the consolidated financial statements as of and for the year ended December 31, 2023.

The consolidated financial statements of the Group include the financial statements of Gruppo MutuiOnline S.p.A. and its subsidiaries, over which the Company exercises direct or indirect control and the value measured with the equity method of joint ventures and of associated companies. Subsidiaries are consolidated from the date when control is acquired until the date when it ceases. Control is connected with the ongoing existence of all the following conditions:

• power over the investee;

• the possibility of achieving a return resulting from ownership of the investment;

• the investor's ability to use its power over the investee to affect the amount of its return.

The existence of potential voting rights exercisable, if substantial, at the reporting date is also taken into consideration for the purposes of determining control.

Furthermore, it is worth pointing out that once control of an entity is obtained, transactions, in which further minority interests are acquired or sold, without modifying the control exercised on the subsidiary, are considered transactions with the shareholders and therefore should be recorded as equity transactions, without recording any effect in the comprehensive income statement. Subsidiaries are consolidated on a line-by-line basis. The criteria adopted for consolidation on a line-by-line basis are:

• the assets and liabilities, income and expenses of the entirely consolidated entities are taken line by line, attributing to minority interest the portion of the shareholders' equity and net income for the year due to it; this portion is disclosed separately in the consolidated statement of financial position and consolidated comprehensive income statement;

• the purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets acquired, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Assets, liabilities and possible liabilities acquired are booked at the fair value at the date of the acquisition. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recognized as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the income statement, after an audit of the correct measurement of the fair value of the assets and the liabilities acquired and of the cost of acquisition. Business combinations between entities under "common control" are accounted for with the pooling of interest method, thus recognizing assets and liabilities of the acquired entity without fair value adjustments, but adjusted for eventual differences of accounting standards used and IFRS;

• inter-company transactions and balances, as well as the relevant tax effects, are eliminated. Significant unrealized inter-company gains and losses are eliminated; as an exception, unrealized losses are not eliminated when they provide evidence for impairment of the asset transferred;

• gains and losses from the disposal of investments in subsidiaries are recognized in the income statement for an amount equal to the difference between the sale price and the net assets of the investment.

A joint venture is an arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

Associated companies are companies, which are neither subsidiaries nor joint-ventures, on which the Issuer exercises a significant influence. Significant influence is presumed when the Issuer owns, directly or indirectly, more than 20% of the ordinary share capital of a company.

Joint ventures and associated companies are evaluated with the equity method.

3. Scope of consolidation

The consolidation area includes all the entities on which the Issuer exercises control, directly or indirectly, and the companies on which the Issuer exercises a significant influence. 

The controlled and associated entities as of December 31, 2023 are:

69.  

70.  

71. During the financial year ended December 31, 2023 the consolidation area changed with reference to the acquisition of 100% of Rastreator.com Ltd, Preminen Price Comparison Holdings Ltd, LeLynx SAS, which entered into the consolidation area on February 1, 2023, and Green Call Service S.r.l., which entered into the consolidation area on April 17, 2023.

For the calculation of the equivalent value in Euro of the financial and economic amounts in foreign currency of the foreign subsidiaries and branches, we applied the following exchange rates:

Balance sheet items have been converted by using the exchange rate as of December 31, 2023, while income statement items have been converted by using the average exchange rate of the year. 

4. Accounting policies

The consolidated financial statements are prepared at cost, with the exception of items specifically described in the following notes, for which the measurement at fair value is adopted. The fair value is the price at which an asset could be exchanged, or a liability discharged, between knowledgeable, willing parties in an arm's length transaction.

IFRS 13 provides for a hierarchy of fair value which classifies on three levels the inputs for the assessment adopted to evaluate fair value. The hierarchy of fair value gives the highest priority to quoted prices (not adjusted) on active markets for the same assets and liabilities (data of Level 1) and the lowest priority to unobservable inputs (data of Level 3). 

Level 1 inputs are quoted prices (not adjusted) for the same assets and liabilities on active markets, which the entity may access as of the assessment date.

Level 2 inputs are inputs different from the quoted prices included in Level 1 which can be observed directly or indirectly for the asset or the liability. 

Level inputs 3 are unobservable inputs for the asset or the liability.

Receivables are derecognized if the right to receive the cash flows has been transferred or when the entity no longer controls such financial assets.

Payables are derecognized only when they are settled or the specific obligation is met or canceled or expired.

The principal accounting policies are set out below.

1. Intangible assets

Intangible assets are non-monetary assets that are distinctly identifiable and able to generate future economic benefits. These items are recognized at purchase cost and/or internal production cost, including all costs to bring the assets available for use, net of accumulated amortization and impairment, if any. 

The item includes the goodwill referred to business combinations.

Amortization commences when the asset is available for use and is systematically calculated on a straight-line basis over the estimated useful life of the asset. 

(a)     Research and development costs

Research and development costs are recognized as an expense as incurred. Costs incurred on development projects are recognized as intangible assets when:

• development activity is clearly identified and its costs can be measured reliably;

• technological feasibility is demonstrated;

• the intention of completing the project and selling the intangible goods generated are demonstrated;

• a prospective market exists or, in case of internal use, the benefits of the intangible asset for the production of intangible goods generated by the project is demonstrated;

• the necessary technological and financial resources for the completion of the project are available. 

Amortization is usually calculated on a straight-line basis over 5 years, which represents the estimated useful life of the assets.

(b)     Trademarks, licenses and other rights

Licenses and other rights are amortized on a straight-line basis in order to allocate their acquisition cost over the shorter of useful life and duration of the relevant contracts, starting from the moment of acquisition of the rights and usually lasting for a period of 3 to 5 years.

 For trademarks and customer equity values, amortization is calculated using the straight-line method and it is equal to a period of 10 years.

2. Property, plant and equipment 

Property, plant and equipment are stated at historical cost of acquisition or production less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition. 

All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be reliably measured. When assets are composed of different identifiable components whose useful life is significantly different, each component is depreciated separately applying the "component approach". 

Depreciation is charged to each asset on a systematic basis over the estimated useful life from the date of initial recognition.

Property, plant and equipment are depreciated with useful lives as follows:

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

3. Investments measured with the equity method

A joint venture is an arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

An associated entity is a company, which is neither a subsidiary nor a joint venture, on which the Issuer exercises a significant influence. Significant influence is presumed when the Issuer owns, directly or indirectly, more than 20% of the ordinary share capital of a company.

Joint ventures and investments in associated entities are measured for an amount equal to the corresponding fraction of equity in the last financial statements of the same entities, after the transfer of dividends and the application of adjustments in accordance with the disclosures for the preparation of the financial statements. 

Gains and losses arising from changes of the adjusted equity of associated companies are recorded in the income statement for the period in which they arise.

4. Leases

IFRS 16 sets out the principles for the recognition, measurement, presentation and the disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. At the commencement date of a lease, a lessee recognizes a liability to make lease payments (i.e. the lease liability) and an asset representing the right to use the underlying asset during the lease (i.e. the right of use asset). Lessees separately recognize the interest expenses on the lease liability and the depreciation expense on the right of use asset.

Lessees will be also required to re-measure the lease liability on the occurrence of certain events (e.g. a change in the lease term, a change in the future lease payments resulting from a change in an index or rate used to establish those payments). The lessee will generally recognize the re-measurement amount of the lease liability as an adjustment to the right of use of the asset.

The standard includes two recognition exemptions for lessees:

• leases of low value assets (a situation that could arise for the Group with reference to operating leases for office equipment such as photocopiers, currently recognized in the balance sheet under the item "Other operating costs");

• short-term leasing contracts (e.g. leases with a lease term of 12 months or less).

Positions that are affected by the application of IFRS 16, with a significant effect for the Group are linked to: 

• leasing contracts for the office site of the Group; 

• cars under long-term rental contracts used by Group personnel.

5. Business combinations 

Business combinations are valued with the acquisition method. 

The cost of the acquisition is determined by the sum of the considerations transferred in a business combination, measured at the fair value at the acquisition date, the acquired liabilities and the equity instruments issued. The assets, the acquired liabilities and the potential liabilities in a business combination are initially measured at their fair value.

The minority interests in the acquired entity are measured at their fair value and at the pro-quota value of the net assets recognized for the acquired company.

The surplus between the considerations transferred, the amount of the minority interests and the fair value of the non-controlling participations held before the acquisition date, compared to the fair value of the controlling stake of the net assets acquired, is recorded as goodwill.

If the value of the net assets acquired at the acquisition date exceeds the sum of the considerations transferred, of the minority interests and of the fair value of any previously held participation in the acquired company, this surplus is recorded as income of the closed transaction in the income statement.

72. It is worth pointing out that the Group, based on shareholders' agreements related to the acquisition of Agenzia Italia S.p.A., considers applicable IAS 32 rather than IFRS 10, and recognized in the consolidated financial statement the financial liability related to the put/call option over the shares not yet purchased, without recognizing non-controlling interest. According to such approach, the business combination is accounted on the basis of the assumption that the Group could get economic benefits also on shares under the put/call option. No non-controlling interest was recognized also when we determined the goodwill arising from the acquisition. 

73. With reference to the acquisition of Lercari Group, the Group has applied the approach, provided for by IFRS 10, of the partial recognition of minority interests, on the basis of which, at the end of the financial year, the minority interests have been reclassified as financial liabilities, related to the put/call option on the residual stake of 49.9%.

According to provisions of IFRS 3, in step acquisitions (acquisitions achieved in stages) a business combination is achieved only after control has been obtained, and at this moment all the acquired entity's identifiable net assets should be measured at the fair value; minority interests should be measured based on their fair value or based on the proportionate share of the fair value of identifiable net assets of the acquired entity (a method already permitted under the previous version of IFRS 3).

In a step acquisition of an associate, the previously held investment, until then accounted according to IAS 39 ("Financial instruments: recognition and measurement"), or according to IAS 28 ("Investments in Associates") or according to IFRS 11 ("Joint arrangements), shall be treated as if it had been sold and repurchased as of the date on which control is acquired. This participation should be measured at its "sale" date fair value and the resulting profit or loss of this measurement should be recorded in the income statement. In addition, any value previously recorded in the shareholder's equity, which should be charged in the income statement after the sale of the relevant assets, should be reclassified in the income statement. The goodwill or income (in case of badwill) deriving from the deal concluded with the subsequent acquisition should be determined as the sum of the compensation paid to acquire the control, the value of minority interests (measured according to one of the methods permitted by the standard), and the fair value of the previously held minority shareholdings, net of the fair value of the identifiable net assets of the acquired entity. 

In addition, according to IFRS 3 the costs related to the acquisition of business combinations are recognized as expenses in the period in which these costs are incurred. Finally, under IFRS 3 contingent consideration is recognized as a part of the transfer price of the acquired net assets and is measured at the acquisition date fair value. The fair value of these liabilities is restated as of the date of each financial report. Similarly, if the combination agreement includes the right to return some consideration components if specified conditions are met, that right is classified as an asset by the acquirer. Any subsequent changes in the fair value of the net assets acquired should be recognized as adjustments to the original accounting treatment only if they are determined by additional or better information about the fair value and occur within 12 months from the acquisition date; all other changes must be recorded in profit or loss.

6. Impairment

The Group verifies, at least annually, whether there are indicators of a potential loss in value of intangible and tangible assets. If the Group finds that such indications exist, it estimates the recoverable value of the relevant asset.

In addition, intangible assets with an indefinite useful life or that are not available for use and goodwill are subject to an impairment test each year, or more frequently if there is an indication that the asset may have been subject to a loss in value.

The ability to recover the assets is ascertained by comparing the reported value to the related recoverable value, which is represented by the greater of the fair value less disposal costs and the value in use.

In the absence of a binding sale agreement, the fair value is estimated on the basis of recent transaction values in an active market, or based on the best information available to determine the amount that could be obtained from selling the asset.

The value in use is determined by discounting expected cash flows resulting from the use of the asset, and if significant and reasonably determinable, the cash flows resulting from its sale at the end of its useful life.

Cash flows are determined on the basis of reasonable, documentable assumptions representing the best estimate of the future economic conditions that will occur during the remaining useful life of the asset, with greater weight given to outside information.

The discount rate applied takes into account the implicit risk of the business segment.

When it is not possible to determine the recoverable value of an individual asset, the Group estimates the recoverable value of the unit that incorporates the asset and generates cash flows ("CGU", shorthand of Cash Generating Unit).

A loss of value is reported if the recoverable value of an asset is lower than its carrying value.

This loss is booked to the income statement unless the asset was previously written up through a shareholders' equity reserve. In this case, the reduction in value is first allocated to the revaluation reserve.

If, in a future period, a loss on assets, other than goodwill, does not materialize or is reduced, the carrying value of the asset or CGU is increased up to the new estimate of recoverable value, and may not exceed the value that would have been determined if no loss from a reduction in value had been reported.

The recovery of a loss of value is posted to the income statement, unless the asset was previously reported at its revalued amount. In this case, the recovery in value is first allocated to the revaluation reserve.

The value in use of an asset that does not generate independent cash flows is determined in relation to the CGU to which this asset belongs. Impairment is recognized in the income statement whenever the carrying amount of the asset and of the related CGU exceeds its recoverable value. Whenever the circumstances causing the impairment cease to exist, the book value of the asset, except the goodwill, is restored with the recognition in the income statement, up to the net value that the asset would have had if it were not impaired and regularly depreciated.

Goodwill is not amortized, but is subject annually, or more frequently if specific events or changes in circumstances indicate that the asset might be impaired, to tests in order to identify possible impairments. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

The impairment of goodwill recorded as of the date of the financial report is shown in the income statement under depreciation of intangible assets.

7. Cash and cash equivalents

Cash and cash equivalents include cash, bank deposits and highly liquid short-term investments (readily convertible to cash within three months). Overdrafts are included in short-term borrowings and are measured at fair value.

8. Financial assets at fair value through OCI

Upon initial recognition, the Group can elect to irrevocably classify its equity investments as equity instruments designated at fair value through other comprehensive income ("OCI") when they meet the definition of equity under IAS 32 "Financial Instruments: Presentation" and are not held for trading. The classification is determined on an instrument-by-instrument basis. Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognized in the profit and loss statement when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.

9. Financial assets at fair value through profit and loss

Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Financial assets at fair value through profit and loss are classified in the financial statements at fair value and the fair value changes are recorded in profit and loss. 

10. Trade receivables

Trade receivables are valued initially at fair value and subsequently at amortized cost using the effective interest rate basis. 

Any losses arising as a result of impairment reviews are recognized in the income statement. In particular, IFRS 9 requires the Group to record expected credit losses on all its debt securities, loans and trade receivables, either over a 12-month period or on a lifetime basis (e.g. lifetime expected loss). The Group opted for the simplified approach and therefore records the expected losses on all trade receivable based on their residual contractual duration. The Group however continues to analytically consider the specificity of the sector and of some clients in its assessments.

In the presence of impairment indicators, the values of the assets are reduced to the present value of expected future cash flows and the differences are recognized in the income statement, with a provision for bad debts as counterbalance, offsetting trade receivables. If in subsequent periods the reasons for such impairments are no longer valid, the values of the assets are reinstated up to the amortized cost as if the impairment had never occurred.

11. Own shares

Own shares are booked as a reduction of shareholders' equity. Being the shares without nominal value, the purchase cost is deducted from the share capital for an amount implicitly corresponding to the nominal value and from the distributable reserves for an amount equal to the remaining part of the purchase cost. 

12. Trade payables and financial liabilities

Financial liabilities, trade payables and other debts are initially recognized at fair value, net of transaction costs incurred, and are subsequently stated at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method. Amortization is determined based on the effective interest rate which equates, at the initial moment, the present value of cash flows connected with the liability and its initial recorded amount (amortized cost method).

Whenever expected future cash flows change, and these could be reliably estimated, the value of the liability is recalculated on the basis of the new cash flows and the initial effective interest rate.

13. Provisions for risks and charges

Provisions are recognized when; (i) the existence of a current obligation, legal or implicit, arising from a past event, is probable; (ii) it is probable that the fulfillment of the obligation will be onerous; (iii) the amount of the obligation can be reliably estimated. Provisions are recognized based on the best estimate of the expenditure required to settle the present obligation or to transfer it to a third party at the balance sheet date. When the financial effect of the timing of the obligation is significant and the dates of the payments can be reliably estimated, the provision is discounted back. Provisions are measured at the present value of the payments expected to be required to settle the obligation using a rate that reflects current market assessments of the time value of money and the risks specific to the obligation.

14. Defined benefit program liability

Employee termination benefits ("Trattamento Fine Rapporto", or "TFR"), which are compulsory for Italian companies in accordance with the civil code, are considered by IFRS as a defined benefit program, based, among other things, on the period of employment and the remuneration of the employee during a predefined period. 

The TFR liability is determined by independent actuaries using the Projected Unit Credit Method to account for the time value of money. According to "revised" IAS 19 the adjustments deriving from the changes in actuarial assumptions are recorded in equity, by means of the recognition in the comprehensive income statements. 

The implicit interest cost for the adjustment of the present value of the TFR liability over time is recognized in the financial expenses in the income statement.

The legislative changes that become effective in 2007 had no material impact on the evaluation method adopted by the Group because the percentage of employees adhering to the funds at the relevant date was low and besides the greater part of employees of the companies of the Group is employed in companies that did not exceeded the limits, provided by the new law and calculated on the average number of employees in 2006, over which a company is obliged to contribute the accrued fund to the National Institute for Social Security ("INPS") when employees choose to keep their TFR in the company.

The Group also introduced a long-term incentive plan in favor of certain employees, linked to certain economic indicators achieved by the Group in the medium term. In accordance with IAS 19, the cost of this plan is recognized on a straight-line basis over the duration of the plan, in the income statement under personnel costs, together with interest and remeasurements of the related liability.

15. Share based payments

The Group has a stock option plan for the benefit of directors, employees and other personnel. As per IFRS 2 ("Share based payments"), stock option plans are valued at the fair value of the option at grant date, using methods that take into account the exercise price and vesting period of the option, the current stock price, the expected volatility and dividend payout of the shares, and the risk-free interest rate determined on the day of the option grant. 

As of the grant date, the expense related to the stock option plan is recognized on a straight-line basis in personnel costs in the income statement over the vesting period of the option, and in a reserve in shareholders' equity.

16. Revenue recognition

Revenues and other income are recognized net of discounts, allowances and bonuses and of the provision for possible repayments of commissions upon early repayment or insolvency of brokered loans.

IFRS 15 provides for the recognition of revenues for an amount which reflects the compensation at which the entity believes to be entitled in the economic transaction with the customer for the transfer of products and services.

Revenues are recognized in the income statement when it is probable that future economic benefits will flow to the Group.

The methods of revenue recognition for the main activities of the Group are as follows: 

(a)      Credit, insurance, telecommunications and energy broking services, and e-commerce price comparison

Revenues from credit, insurance, telecommunications and energy broking services are recognized upon the actual disbursement of loans by lenders, the actual underwriting of contracts by insurance companies or the subscription of the contract for telecommunications or energy. The Group is entitled to receive its commission for the service provided only when the operation is closed with the disbursement of a loan, the activation/renewal of an insurance policy or a utility contract.

Those revenues include fees whose recognition is based on information coming from consumers and not yet confirmed by the client companies as of the end of the financial year.

Revenues from e-commerce price comparison activities are recorded at the time of click (in the case of pay per click) or at the time of product purchase (in the case of pay per sale).

(b)      BPO services

Revenues from BPO services are recognized based on the type of services provided and contractual conditions agreed with clients. In particular, we can identify the following categories of services provided:

• provision of services whose revenues accrue upon the completion of each phase of processing, regardless of the effective outcome of the process; 

• provision of services whose revenues accrue upon the completion of the processing and is subject to the effective closing of a transaction, such as a loan disbursement. In such case, the measurement of the revenue, in accordance with IFRS 15, depends on the stages effectively accomplished, on their contractual value, and the probabilities of success of the applications; 

• promotion and placement of financial products, whose revenues are represented by success fees based on the amount of the operations finalized;

• agreements which provide for document collection activities concerning Investment Services BPO. The standard provides for the evaluation of revenues based on their stand-alone selling price: when the unit value of any job is decreasing during the years of the contract effectiveness, without any justification deriving from economies of learning and at the same value of the service provided. Considering the ongoing agreement with the client, and the analysis performed on the basis of the available data, the Group believes it is not appropriate to proceed with a linearization of the unit value of revenues associated to each job; 

• agreements, regarding the provision of administrative credit collection services on behalf of insurance companies. In such case, we take into consideration, for the determination of the total compensation of the contract, both the possible implicit financial impact in transactions where the timing of payments agreed by the parties gives the customer a financial benefit, and the probability of cashing these receivables, on which the fees due to the company are established.

17. Government grants

Government grants are recognized when it is reasonably certain that the Group will respect the related conditions and they will be received.

18. Cost recognition

Costs are recognized as the assets and services are consumed during the relevant period or when they are sustained, when it is not possible to determine future economic benefits.

19. Financial income and expenses

Interest income and expenses are recognized in the accrual period on the net value of the relevant financial assets and liabilities using the effective interest rate method.

Financial expenses are recognized on an accrual basis and recorded in the income statement in the accrual period.

20. Taxation

Current income taxes are accounted on the basis of estimated taxable income and the relevant applicable tax rates.

Deferred income taxes are determined based on temporary differences arising between the tax bases of assets and liabilities (excluding goodwill) and their carrying amounts, and differences arising from undistributed reserves registered in the shareholders' equity of the subsidiaries when the timing of reversal of these differences is under the Group's control and they will probably reverse within a reliably foreseeable period. Deferred income tax assets, including those on tax loss carryforwards, and not offset by deferred tax liabilities, are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Deferred income taxes are calculated using tax rates (and laws) that are expected to apply when the related deferred income tax assets are realized or the deferred income tax liabilities are settled. 

Current and deferred income taxes are recognized in the income statement with the exception of the items that are recognized directly in shareholders' equity in which case the tax effect is accounted for in the relevant equity reserve. Current and deferred tax assets and liabilities are netted only when the entity has a legally enforceable right to offset the recognized amounts.

Substitute tax relates to the revaluation of assets according to Italian tax legislation and is recognized in income tax expense in the income statement. Other taxes, not related to income, are recognized in other operating costs in the income statement.

21. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

IFRS 9 Adoption

74. IFRS 9 sets out the accounting of financial instruments with reference to the following areas: classification and measurement, impairment and hedge accounting. 

75. The main areas of intervention on the discipline operated by the standard are described below.

Classification and measurement of the financial assets and liabilities

76. The Group does not own at present any financial liability measured at fair value through profit and loss due to the adoption of the so-called fair value option. 

77. Concerning financial assets, the new standard provides that the classification of the assets depends on the characteristics of the financial flows linked to such assets and to the business model used by the Group for their management. The Group at present does not own nor managed during the financial year any financial asset, such as debt securities, with sale purpose nor in absolute terms, except for the financial instruments managed as part of the core business of the company Centro Finanziamenti S.p.A. and for the financial instruments acquired following the change in the consolidation area occurred in the period. In addition, the Group does not own participations as investments which could be included under IFRS 9 or derivatives, even embedded ones. Trade receivables are held to be cashed at the contractual maturities of the cash flows related to them in capital and interest, where applicable. The Group assessed the characteristics of the contractual cash flows of these instruments and concluded that they respect the criteria for the measurement at amortized cost according to IFRS 9. Therefore, it was not necessary to reclassify these financial instruments. We can reach the same conclusions for the items recorded as cash and cash equivalents.

78. Impairment

79. IFRS 9 requires the Group to record expected credit losses on all its debt securities, loans and trade receivables, either over a 12-month period or on a lifetime basis (e.g. lifetime expected loss). The Group opted for the simplified approach and therefore records the expected losses on every trade receivable based on their residual contractual duration. The standard allows the adoption of matrixes for the measurement of the provision, capable of incorporating forecast information and not limited to historical evidences, as a practical expedient. The Group however continues to analytically consider the specificity of the sector and of some clients in its assessments. 

80. Hedge accounting 

81. Given that IFRS 9 does not modify the general principle according to which an entity accounts for the effective hedging instruments, the main changes compared to the previous regulation IAS 39 are the following: (i) the hedge effectiveness test is only perspective and can also be based on qualitative aspects, replacing the previous 80-125% test and focusing on the economic relationship between hedge and hedged element; (ii) the possibility to designate as subject to hedging only a component of risk also for non-financial elements (provided that the risk component can be separately identifiable and reliably estimated); (iii) introduction of the cost of hedging concept; (iv) greater possibility to designate groups of elements as subject to hedging, including stratifications and some net positions. Without hedge accounting, the changes in the fair value of derivatives will continue to be recorded in the income statement.

22. Earnings per share 

(a)     Basic

Basic earnings per share are calculated by dividing the net income attributable to the Group by the weighted average number of ordinary shares outstanding during the year, excluding own shares.

(b)     Diluted

Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding, excluding own shares, assuming the exercise of all potentially dilutive rights, whilst the Group's net income is adjusted to account for the effect of the conversion, net of taxes. The diluted earnings per share are not calculated in the event of losses, given that any such calculation would result in an improvement in the Group's results.

23. Accounting estimates and judgments

The preparation of the financial statements requires the application by the directors of principles and accounting methodologies that sometimes require the use of estimates and judgments based on historical experience and other assumptions that are believed to be reasonable under the circumstances. The application of these estimates and assumptions impacts on the amounts included in the statement of financial position, income statement, statement of cash flows and the notes to the financial statements. The resulting accounting estimates could differ from the related actual results because of the uncertainty influencing the assumptions.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are discussed below.

(a)     Deferred taxes

Deferred tax assets/liabilities are recognized on the basis of expectations of future earnings. The estimate of future earnings for purposes of the recognition of deferred taxes depends on factors that could vary over time and significantly affect the amount of deferred tax assets/liabilities.

(b)     Stock options

The valuation of stock option plans is based on valuation techniques that take into consideration the expected volatility of share prices and the dividend yield. Should different assumptions be applied, the valuation of the stock option plans and the related expenses could be different.

(c)     Impairment test for the evaluation of goodwill and participations

The impairment test provides for the use of valuation methods based on estimations and assumptions which could be subject to significant changes with subsequent impacts on the results of the evaluations done.

(d)     Fair value of net assets acquired in a business combination 

Pursuant to IFRS 3, the Group records the identifiable acquired assets and liabilities at fair value as of the date of acquisition of control. The residual amount is recorded as goodwill arising from the acquisition. These values are determined by estimating the identifiable assets and liabilities, based on reasonable and realistic assumptions using the information available at the date when control was acquired, which had an effect on the value of the recognized assets, liabilities and goodwill, as well as on the revenues and expenses for the period. 

24. New principles effective starting from the financial year ended December 31, 2023 not relevant to the Group

82. The following standards, amendments and interpretations, applicable from January 1st, 2023, are not relevant or they did not involve effects for the Group:

• IFRS 17 Insurance Contracts;

• Definition of Accounting Estimates - Amendments to IAS 8;

• Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2;

• Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to IAS 12.

With reference to amendments to IAS 12, we specify that Group has applied the temporary exemption provided by the amendments to IAS 12, issued by IASB on May 23, 2023, regarding the recognition and related disclosure to be provided in the consolidated financial statements in relation to deferred tax assets and liabilities arising from the application of the minimum level of taxation ("Global Minimum Tax") provided by Directive (EU) 2022/2523 of 14 December 2022, under the so-called "Pillar Two". 

On 28 December 2023, Legislative Decree No. 209 of 27 December 2023 implementing the international tax reform which came into effect on December 29, 2023, containing the Italian provisions related to Pillar Two was published in the Official Gazette. 

In light of the above, a preliminary analysis was conducted in order to aimed at estimating the potential expected impacts deriving from the application of Pillar Two at a Group level in 2024.

The Group conducted an assessment of its potential exposure to income taxes (both current and deferred), which showed that the effective Pillar Two tax rates in the jurisdictions in which the Group operates exceed 15%. Based on available information, it is believed that there will be no significant exposure to Pillar Two income taxes in these jurisdictions.

5. Financial risk analysis

Risk management of the Group is based on the principle that operating risk or financial risk is managed by the person in charge of the business process involved.

The main risks are reported and discussed at Group top management level in order to create the conditions for their coverage, assurance and assessment of residual risk.

Exchange and interest rate risk

Currently the financial risk management policies of the companies of the Group provide a balanced split between fixed-rate and variable-rate loans, aimed at optimizing the cost of the loans over time. As of today, the risk of incurring greater interest costs as a result of unfavorable variations of market interest rates, as better analyzed in the following, is mitigated by the subscription of hedging derivatives, which change the rate from floating to fixed, on a portion of the Group's debt.

The following table provides a summary of the exposure to changes in interest rates of the Group's financial debt:

* Contractually fixed rate or variable rate covered by a swap to a fixed rate

83. A possible unfavorable variation of the Euribor, equal to 1.0%, should produce an additional overall expense for the Group equal to Euro 1,509 thousand in 2024. 

For the remaining loans already described in paragraph 2.4.1, a fixed rate is applied instead.

As regards to the coverage of exchange rate risk, it is worth pointing out that, as of the reference date of this report, there are no significant assets or liabilities denominated in currencies different from the Euro, with the exception of the Moneysupermarket.com Group PLC shares, amounting to Euro 141,865 thousand as of December 31, 2023, denominated in pounds, whose fluctuation can be considered limited. 

Therefore, this risk is considered limited for the Group.

Credit risk

The current assets of the Group, with the exception of cash and cash equivalents, are constituted mainly by trade receivables for an amount of Euro 135,026 thousand, of which the overdue portion as of  December 31, 2023 is equal to Euro 32,863 thousand, of which Euro 7,206 thousand is overdue for over 90 days.

Most of the gross overdue receivables were paid by the clients during the first months of 2024. As of the date of approval of this report, receivables not yet collected, overdue as of December 31, 2023, amount to Euro 9,655 thousand, of which Euro 5,656 thousand are receivables already overdue for over 90 days as of December 31, 2023.

Trade receivables are mainly from banks, financial intermediaries, insurance companies, leasing/rental companies and public sector entities, considered highly reliable but, facing receivables for which we consider a credit risk could arise, we allotted an allowance for doubtful receivables equal to Euro 8,333 thousand.

The Group monitors counterparty risk by analyzing the solvency and standing of customers before entering into business relations with them and trying to limit an excessively high concentration of receivables from a few counterparties.

For this purpose, it is worth mentioning that we do not notice any significant concentration of revenues on any client: in 2023 the revenues from the main client of the Group represent 3.9% of total consolidated revenues.

Liquidity risk

The total amount of liquidity as of December 31, 2023 is Euro 150,097 thousand, and current financial liabilities equal to Euro 83,310 thousand; therefore, the management believes that liquidity risk for the Group is limited.

Current geopolitical situation - crisis in Ukraine

With regards to the current geopolitical situation, it should be noted preliminary that the Group is not directly exposed to the Russian and Ukrainian economies. The consequences of the invasion of Ukraine by the Russian Federation are not currently such as to give rise to concern for the businesses of companies of the Group and are not expected to have any impact on their ability to continue operating as going concerns: however, any significant fall in consumer confidence and/or disposable income could have a negative impact on the activity volumes of the various lines of business. The Group also constantly monitors the trend of inflation and energy costs, whose impacts are not considered significant in view of the nature of the businesses of the Group companies.

Operating risk and going concern

The technological component is an essential element for the operating activities of the Group; therefore, there is the risk that the possible malfunctioning of the technological infrastructure may cause an interruption of client services or loss of data. However, the companies of the Group have developed a series of plans, procedures and tools to guarantee business continuity and data security. 

Considering the economic and financial situation, in particular the level of available reserves, and taking into account the trend of the net working capital and of the economic and financial situation, the separated and consolidated financial reports have been prepared considering the assumption of going concern as fulfilled.

It should in fact be considered that the Group, as in previous years, achieved positive economic results, and, despite uncertain macroeconomic scenarios, that future economic forecasts are also positive. Finally, the Group has adequate financial resources to meet its future obligations over a period of at least 12 months from the date of approval of the financial statements, and it can, where necessary, activate additional levers to rapidly liquidate significant investments.Risk linked to Climate Change

With regard to possible impacts related to climate change, the Group, operating in the service sector, has not identified any particular physical risks or significant transitional risks. Therefore, a quantitative assessment of the impacts of physical and transitional risks has not been carried out. With reference to climate change and energy transition, the management, considering the characteristics of the business models of the Group companies, has not identified significant impacts on the economic results or working practices adopted by the Group.

For a more detailed analysis, please refer to the consolidated non-financial statement 2023, available on the Group's website. 

6. Segment reporting

The primary segment reporting is by business segments; the board of directors of the Issuer identifies the business segments of the Group in Broking and BPO Division:

• Broking Division: the division operates in the Italian market for credit and insurance distribution, operating as a credit intermediary and insurance broker. The credit products that we broker are mainly mortgages and personal loans, provided to retail clients primarily through remote channels and secondarily through the territorial network. The lenders using the credit intermediation services of the Broking Division are primary universal and specialized banks and include some of the main financial institutions operating in the Italian market. The brokered insurance products are mainly auto and motorcycle insurance policies, distributed through remote channels. Moreover, the Division also performs comparison and/or promotion of further products, including e-commerce products, bank accounts and utilities (ADSL, electricity and gas). Since February 2023, the division has extended its presence to Spain, France and Mexico, where it conducts online distribution mainly of insurance products.

• BPO Division (Business Process Outsourcing Division): operates in the Italian market for outsourcing services to financial institutions, which consist principally of performing complex commercial, underwriting and portfolio servicing activities related to mortgages and secured loans, in the market for management and claim settlement outsourcing services, in the market of BPO and IT services for leasing and long-term rental operators and, finally, in the market for the provision of back office outsourcing services supporting financial advisors and investment companies. The financial institutions using the services of the BPO Division include primary national and international financial institutions.

Detailed information relative to each division is provided below. For this purpose, it is worth highlighting that the allocation of the costs incurred by the Issuer and by PP&E S.r.l. for the benefit of each Division is based on the relevant headcount in Italy at the end of the period.

Revenues by Division

Operating income by Division

As follows we provide the concentration of revenues by client for each Division:

• 1. Percentage of total Division revenues

Assets by Division 

The allocation of property, plant and equipment shared by both Divisions is based on space occupied.

The item "not allocated" mainly includes the value of the Moneysupermarket.com Group PLC shares, equal to Euro 141,865 thousand, and the assets attributable to the Issuer and the subsidiary P.P.&E. S.r.l..

Liabilities by Division

The item "not allocated" mainly includes the financial liabilities of the Issuer for Euro 432,726 thousand, and the other liabilities attributable to the Issuer and the subsidiary P.P.&E. S.r.l..

7. Business combinations

Acquisition of Rastreator.com Ltd, LeLynx SAS and Preminen Price Comparison Holdings Ltd 

84. On February 1^st, 2023 the Group completed the acquisition of 100% of Rastreator.com Ltd, Preminen Price Comparison Holdings Ltd and LeLynx SAS, in accordance with the terms illustrated in the consolidated financial statement as of December 31, 2022. The consideration paid for the acquisition amounts to Euro 150,356 thousand. The main assets of the acquired companies are the Rastreator.com, LeLynx.fr and Rastreator.mx portals, which represent leading operators in the sector of the online comparison and intermediation of mainly insurance products in Spain, France and Mexico.

85. Following the analysis aimed at determining the fair value of the assets, mainly represented by the software platforms and the trademarks, the liabilities and potential liabilities of each acquired entity, we allocated the purchase price paid for the acquisition, as follows:

Specifically, the Rastreator CGU (attributable to Rastreator Comparador Correduria de Seguros SLU and Preminen Mexico S.A. de C.V.) and the LeLynx CGU (attributable to LeLynx SAS) were identified.

The results of the acquired companies are included in the new "International markets" business line, within the Broking Division, starting from the acquisition date.

The total costs linked to the acquisition are equal to Euro 2,230 thousand and are recorded in the income statement among "Service costs".

87. Acquisition of Green Call Service S.r.l.

On April 17, 2023 the Group acquired, through the subsidiary Europa Centro Servizi S.r.l., 60% of the share capital of Green Call Service S.r.l., a company which offers telemarketing and communication services through call centers, for an amount equal to Euro 183 thousand.

Following the analysis aimed at determining the fair value of the assets, the liabilities and potential liabilities, the management defined the allocation of the purchase price paid for the acquisition of Green Call Service S.r.l., as follows:

88. 
    

89. The results of Green Call Service S.r.l. will be included in the Real Estate Service BPO business line, within the BPO Division, starting from the acquisition date. 

Completion of the purchase price allocation of Trebi Generalconsult S.r.l.

We remind that, on October 28, 2022, the Group acquired, through subsidiary Agenzia Italia S.p.A., 100% of the share capital of Trebi Generalconsult S.r.l. ("Trebi"). The agreed consideration for the purchase of 100% of the share capital of Trebi is equal to Euro 89,500 thousand, of which Euro 77,500 thousand paid at closing and Euro 12,000 thousand retained as escrow to guarantee potential indemnity obligations arising from the sale and purchase agreement, with progressive release over a four-year period.

As a result of the completion of the purchase price allocation during 2023, a higher software value of Euro 46,500 thousand and deferred tax liabilities of Euro 12,974 thousand were recognized, as detailed below:

90. NON-CURRENT ASSETS

8. Intangible assets

The following table presents the situation and the variation of the item as of and for the year ended December 31, 2023 and 2022:

The item "Proprietary software" includes the higher value of the software recognized following the consolidation of Rastreator (Euro 21,283 thousand), of LeLynx SAS (Euro 13,602 thousand), of  Trebi Generalconsulting S.r.l. (Euro 37,200 thousand), of the Lercari Group (Euro 9,640 thousand), of SOS Tariffe (Euro 5,895 thousand), of Zoorate (Euro 2,218 thousand), of the Onda Group (Euro 4,231 thousand) of Luna Service (Euro 591 thousand), and personnel costs capitalized for the creation and development of the proprietary software platforms used by Group companies to perform their activities. The increases in the financial year ended December 31, 2023, are related to purchases and capitalizations for Euro 13,649 thousand, and to the recognition of the higher value of the software following the consolidation of foreign companies.

The item "Trademarks, licenses and other rights" includes the higher value of the trademark recognized following the consolidation of Rastreator (Euro 11,212 thousand), of LeLynx (Euro 6,184 thousand), the Lercari Group (Euro 3,500 thousand), of SOS Tariffe (Euro 2,096 thousand) and the value of the licenses for the utilization of third-party software. The increases in the financial year ended December 31, 2023 mainly to the recognition of the higher value of software as a result of the consolidation of foreign companies.

The item "Goodwill" includes the goodwill emerged from the allocation of the purchase prices of the investments acquired. The increase of the year equal to Euro 56,376 thousand refers to the recognition of the goodwill allocated following the acquisition of Rastreator (Euro 56,376 thousand), of LeLynx SAS (Euro 36,099 thousand), of Green Call Service S.r.l. (Euro 75 thousand), partly offset by the decrease of goodwill related to Trebi Generalconsult S.r.l., which after the completion of the purchase price allocation, decreases by Euro 33,526 thousand, as described in the section on business combinations.

The item "Other intangible assets" mainly includes the customer equity value allocated following the consolidation of Europa Centro Servizi S.r.l. in 2022 (and amortized over a 10-year time horizon) equal to Euro 6,963 thousand as of December 31, 2023.

9. Recoverability of intangible assets

The following table presents the detailed goodwill reported as of December 31, 2023 and subject to impairment test, which differs if compared to the previous year due to the recognition of the goodwill arising from the acquisition made during the fiscal year.

Each goodwill recorded in the financial statements as of December 31, 2023 and indicated above belongs to a specific CGU.

We specify that, starting from 2023, the results attributable to the company Trebi Generalconsult S.r.l. are included in the CGU Agenzia Italia S.p.A. CGU, as the parent company, while the results of the companies Sovime S.r.l. and Green Call Service S.r.l. are now included in the Europa Centro Servizi S.r.l. CGU, as the parent company. This change has been supported by impairment tests before and after the change.

As regards the determination of the recoverable amount of the CGUs, based on the value-in-use method, the cash flows generated by the CGUs themselves have been estimated. Forecasts of operating cash flows derive from the related business plans of four years' duration, approved by the Board of Directors of the Issuer held on March 14, 2024.

The main assumptions regarding the value-in-use of the CGUs are the operating cash flows during the four-year forecast period, the discount rate and the growth rate used to determine the terminal value, equal to 2.0%.

The composition of future cash flows has been determined based on reasonable, prudent and consistent criteria regarding the attribution of future general expenditures, capital investment, financial balance and the main macroeconomic variables. Finally, it is worth pointing out that cash flow forecasts refer to ordinary activities and, therefore, they are not comprehensive of cash flows deriving from possible extraordinary activities.

The terminal value has been estimated with the discounted cash flow formula for perpetuities. 

The value-in-use of the CGUs has been determined by discounting the value of the estimated future cash flows, including the terminal value, which are supposed to be derived from ongoing activities, at a discount rate, net of taxes, adjusted for risk and reflecting the weighted average cost of capital.

In particular, the discount rate used is calculated starting from the Weighted Average Cost of Capital ("WACC") of the two Divisions of the Group, for the determination of which, reference was made to indicators and parameters observable on the reference market of the CGUs in question, at the current value of money. In particular, the determination of the WACC refers to the following parameters:

• Risk free rate: 2.32%, equal to the yield on 10-year Bunds at the beginning of January 2024;

• Market equity risk premium: 7.81%, source: Damodaran, Italy, January 2024; such value already includes the risk about Italian public debt;

• Beta unlevered (different for the two Divisions): 1.26 for the Broking Division and 1.08 for the BPO Division using as a source 3-year unlevered betas provided by Infrontanalytics.com, for a set of comparable operators, as of the beginning of January 2024;

• Target financial structure: D/E ratio of 0.20. 

Based on the above, the discount rate is 10.28% for the Broking Division and 9.20% for the BPO Division. It is specified that a WACC of 7.77% was instead applied for LeLynx CGU, while a WACC of 9.40% was applied for Rastreator CGU.

As of December 31, 2023, the in-use values of the CGUs evaluated, determined as described above, are higher if compared to the carrying amounts of the assets allocated to them, goodwill included.   

Keeping into consideration the actual situation of volatility of the markets and of uncertainty upon future economic perspectives, we developed a sensitivity analysis on the recoverable value of goodwill. 

In particular, we developed a sensitivity analysis on the recoverable amount of the CGUs, assuming an increase of the discount rate, a decrease on the perpetual growth rate. 

The sensitivity analysis, pursuant to paragraph 134 of IAS 36, of the results of impairment test for the CGUs for which we that did not notice any impairment shows the following margins of tolerance:

• Discount rate: the value in-use of the CGUs remains higher compared to the book value of the CGUs also forecasting an increase of discount rate as follows: 

• increase of discount rate until 19.94% for the Agenzia Italia CGU;

• increase of discount rate until 21.61% for the 7Pixel CGU;

• increase of discount rate until 11.01% for the Rastreator CGU;

• increase of discount rate until 10.83% for the LeLynx CGU;

• increase of discount rate until 22.53% for the Eagle & Wise CGU;

• increase of discount rate until 19.77% for the Europa CGU;

• increase of discount rate until over 100% for the Quinservizi CGU;

• increase of discount rate until 12.82% for the Gruppo Lercari CGU;

• increase of discount rate until 13.43% for the SOS Tariffe CGU.

• growth rate "g": the value in-use of the CGUs remains higher compared to the book value of the CGUs also forecasting a drop of the implicit growth rate ("g rate") as follows:

• decrease of "g rate" until -16.36% for the Agenzia Italia CGU;

• decrease of "g rate" until -20.11% for the 7Pixel CGU; 

• decrease of "g rate" until -0.08% for the Rastreator CGU ;

• decrease of "g rate" until -1.98% for the LeLynx CGU ;

• decrease of "g rate" until -26.92% for the Eagle & Wise CGU;

• decrease of "g rate" until -17.48% for the Europa CGU;

• decrease of "g rate" over -100.00% for the Quinservizi CGU;

• decrease of "g rate" until -3.06% for the Gruppo Lercari CGU;

• decrease of "g rate" until -2.39% for the SOS Tariffe CGU.

Based on the analyses performed, the Directors of the Issuer considered recoverable the book value of the goodwill recorded in the consolidated financial statements as of December 31, 2023.

10. Property, plant and equipment

The following table presents the situation and the variation of the item as of and for the year ended December 31, 2023 and 2022: