Dovalue S.p.a. · MIL:DOV
Dovalue — Investor Presentation (April 2023)
71 slides from Dovalue's investor presentation, April 2023
Slide 1: Corporate presentation
Corporate presentation April 2023 Leading the evolution of the servicing industry 1 Corporate Presentation
Slide 2: Track Record
Track Record 2 Corporate Presentation
Slide 3: A highly attractive business model
A highly attractive business model Independent & capital light servicing platform, fee-based business model, limited balance sheet deployment, focus on high value-added activities Business Model Key Strengths No acquisition of credit portfolios ✓ • Banks Disposals / Securitisations Investors 1 Capit
Slide 4: A track record of profitable growth
A track record of profitable growth Substantial growth across all key metrics since IPO Gross Book Value (€bn) Gross Revenues (€m) EBITDA ex NRIs (€m) +1.5x +2.7x +3.1x 36% EBITDA margin 558 202 120 81 31% EBITDA margin 206 64 Dec-16 Dec-22 2016 2022 2016 2022 4 Corporate Presentation
Slide 5: A track record of diversification
A track record of diversification Achieved substantial diversification in terms of geographies and clients, ability to operate across the entire credit spectrum At IPO Today #1 position in Southern Europe Iberia + Gross Italy Hellenic Geographies One Country ~ 20% market share1 Region Revenues 2022
Slide 6: A track record of successful acquisitions and integration
A track record of successful acquisitions and integration Proven track record of Core Acquisitions and of investments in Digital Platforms Core Acquisitions Investments in Digital Platforms Joint Venture with Debitos €368m investment (85% stake) Innovative platform for single names & portfolio sales
Slide 7: A track record of deleveraging and operational resilience
A track record of deleveraging and operational resilience Strong deleveraging post M&A and operational resilience, only marginally impacted by COVID Leverage Collection Rate Fitch: BB (Positive) Credit Rating Closing of FPS S&P: BB (Stable) Credit Rating acquisition 4.3% 4.2% 4.1% 2.6 2.6 2.5 Closin
Slide 8: Key clients and maturity of agreements
Key clients and maturity of agreements Beyond 2019 2020 2021 2022 2023 2024 2025 2026 2027 2027 or GBV Key considerations run-off (Dec-22) ▪ Forward flow agreement expires at the end of 2025 Forward Flow Agreement Stock Agreement €8bn ▪ Residual NPL and REO stock managed until the end of 2029 ▪ Forw
Slide 9: Collections resilience through cycles
Collections resilience through cycles Low correlation between collections and GDP Conservative underwriting, strong delivery +8% actual Cumulated gross collections on a large Italian NPL vs underwriting Cumulated gross collections on all Italian NPL portfolios portfolio managed by doValue managed by
Slide 10: 2022 Results
2022 Results 10 Corporate Presentation
Slide 11: Key highlights
Key highlights Gross Revenues EBITDA2 Net Income2 Leverage Strong financial €558 million €202 million €51 million 2.1x performance -2.4% YoY +0.4% YoY -0.3% YoY Conservative balance +1.5% YoY adjusted1 +11.5% YoY adjusted1 sheet Collections GBV Collections Collection Rate Resilient outperforming €12
Slide 12: Financial results vs guidance
Financial results vs guidance 2021 2022 Item Guidance Actual Outcome Guidance Actual Outcome Gross Revenues €565-575m €572m ✓ €555-565m €558m ✓ Notwithstanding the expiry of the Sareb contract as well as €190-195m €202m overall challenging EBITDA ex NRIs €190-195m (33-34% margin) €201m (35% margin)
Slide 13: Strong financial performance in 2022
Strong financial performance in 2022 Key Metrics1 (€m) Comments -2.4% +1.5% • +1.4% on Gross Revenues Italy Solid • +20.4% on EBITDA ex NRIs performance • Strong UTP and Ancillary Activities coupled 572 558 with effective cost control 502 509 • +15.9% on Gross Revenues Hellenic +0.4% +11.5% Region •
Slide 14: Resilient collections despite GBV trend and macro headwinds
Resilient collections despite GBV trend and macro headwinds GBV Collections Comments Italy €72.0bn -5% €1.7bn +1% • Growing collections despite GBV reduction YoY YoY • Relevant secondary sales in the market Hellenic +15% +38% • Higher collections in line with increased GBV €36.8bn €1.8bn Region YoY
Slide 15: GBV intake in 2022
GBV intake in 2022 Regions Projects Country GBV Transaction overview Neptune Greece €510m Servicing mandate from Fortress Frontier II Greece €1.0bn HAPS securitisation from NBG Hellenic Souq Greece €630m Secondary NPL sale from Cairo I and II through doLook (doValue retaining servicing mandate) Regi
Slide 16: Leading the evolution of the servicing industry
Leading the evolution of the servicing industry Credit value chain doValue live projects and advanced discussions Executing operating model which can best support banks with value-added services to Stage 2 address growing concerns regarding high Stage 2 loans levels €5.3trn On the basis of local rep
Slide 17: Financial highlights
Financial highlights Item 2021 2022 Delta Delta Comments (ex Sareb) GBV €149bn €120bn -19.4% -5.1% • Decrease in GBV mainly driven by disposals (mostly indemnified) and Sareb portfolio off-boarding • Resilient Collections notwithstanding reduction in GBV Collections €5.7bn €5.5bn -4.3% +6.3% • Stabl
Slide 18: Gross Book Value
Gross Book Value Gross Book Value (€bn) 9.2 149.5 3.8 ( 5.5 ) 120.5 4.5 124.9 ( 8.7 ) ( 7.1 ) ( 20.7 ) GBV Forward flows New mandates Collections / Net write-offs Disposals Sareb portfolio GBV Mandates secured GBV (Dec-21) Sales off-boarding (Dec-22) (not onboarded as (Dec-22, of Dec-22) pro-forma)
Slide 19: Gross Book Value and Gross Revenues (1 of 2)
Gross Book Value and Gross Revenues (1 of 2) GBV Gross Revenues Comments by region by region • Well diversified GBV by region and client type Iberia Iberia 10% 22% Italy • Higher share of Revenues vs GBV from Hellenic 33% Region and Iberia reflects difference in average €120bn €558m Hellenic (Dec-22
Slide 20: Gross Book Value and Gross Revenues (2 of 2)
Gross Book Value and Gross Revenues (2 of 2) GBV Gross Revenues Comments by product by product UTPs Early UTPs Early • Well diversified GBV by product and security REOs 8% Arrears 7% Arrears 3% 1% 2% REOs • Higher share of Revenues from non-NPL €120bn 15% €510m1 products reflects higher fees on such
Slide 21: Gross Revenues
Gross Revenues Gross Revenues (€m) Comments €66m €58m • Gross Revenues decline by 2.4% Outsourcing Fees Outsourcing Fees - Mainly driven by Sareb off-boarding and capital gains recorded in 2021 (11.5% of Gross (10.4% of Gross - Excluding Sareb, Gross Revenues grew by 1.5% Revenues) Revenues) - Growt
Slide 22: Operating Expenses
Operating Expenses Operating Expenses ex NRIs (€m) Comments • Decline in OpEx by 2.2% in absolute terms 53% of 54% of - Driven by decline in HR and SG&A costs Gross Revenues Gross Revenues - Partially offset by increase in IT costs - Increase in EBITDA ex NRIs margin (from 35.1% to 36.1%) -2.2% % of
Slide 23: doTransformation plan update
doTransformation plan update Overarching Plan Status update Recent highlights and Objectives as of November 2022 Reduced investment plan to ~ €45m SAP at Group level ✓ (due to negotiation savings, plan rationalisation and ✓ absence of Sareb requirements) Downsizing Core Banking in Spain Committed in
Slide 24: Text Mining Case Study
Text Mining Case Study Text Mining is an 1) Easily search data and information contained in advanced search documents optimising the engine that uses time to process specific debt Artificial collection work-streams Intelligence for Benefits automatic 2) Obtain data with a rapid for the and complete
Slide 25: EBITDA
EBITDA EBITDA ex NRIs (€m) Comments • EBITDA ex NRIs growth of 0.4% 35.1% 36.1% EBITDA ex NRIs EBITDA ex NRIs - Strong achievement considering 2.4% decline in Gross Revenues margin margin - EBITDA ex NRI margin moving towards Business Plan targets % of total +0.4% % of total • Italy EBITDA ex NRIs g
Slide 26: Regional Performance (2022)
Regional Performance (2022) doValue Hellenic Italy Iberia Group Region Gross Book Value €120bn €72bn €37bn €12bn €1.7bn €1.8bn €2.0bn Collections €5.5bn (31% of tot) (33% of tot) (36% of tot) Collection Rate 4.1% 2.5% 6.1% 9.2% €183m €253m €123m Gross Revenues €558m (33% of total) (45% of total) (22
Slide 27: Net Income
Net Income Attributable Net Comments Earn-out payable to Eurobank Income (€m) • Attributable Net Income decreased by 30.5% - Lower D&A by €23.3m - Lower Provisions for Risk and Charges by €11.6m - Lower Interest Expenses by €4.0m1 Net Income negatively impacted in 4Q22 by -0.3% - Earn-out payable to
Slide 28: Cash Flow
Cash Flow Cash Flow in 2022 (€m) 2022 2021 • Positive cash flow of €11.1m (pre-dividend to shareholders of doValue) EBITDA €198.7m €199.3m • Capex of €30.8m Capex €(30.8)m €(29.6)m • Positive cash release from Net Working Capital of €2.9m Adj. for accrual on share based payments €5.6m €1.0m Delta NW
Slide 29: Capex
Capex Capex (€m) Comments • Capex plan on track with business plan presented in Jan-22 63 • Overall expenditure for 2022-2023 marginally reduced by €6m 57 - Savings through negotiations with suppliers - Overall rationalisation of capex plan - Absence of Sareb contract (implying lower IT investment r
Slide 30: Financial Structure
Financial Structure Net Debt (€m) Comments • Significant liquidity position 2.0x 2.1x Net Debt / Net Debt / - More than €130m cash position as of Dec-22 EBITDA EBITDA • Approx. €133m of total gross credit lines - Pool of Italian, Spanish and Greek banks 402 430 • All bond debt structure, no maturity
Slide 31: Market Overview
Market Overview 31 Corporate Presentation
Slide 32: Market themes
Market themes Market themes • Tangible pipeline of servicing mandates totalling c. €36bn in Southern Europe • NPE ratios at historical lows, Stage 2 loans remain elevated Macro • Higher inflation and increase in interest rates exacerbate distressed situations environment • Expectation of new wave of
Slide 33: Sizeable medium term pipeline
Sizeable medium term pipeline Overview of pipeline (€bn) Some deals initially expected for 2022 have been postponed to 2023 52 18 Healthy pipeline of €52bn 34 for the short to medium term 11 14 9 Secondary NPL transactions gaining traction Italy Hellenic Region Iberia Total Secondaries Total (includ
Slide 34: Focus on Italy
Focus on Italy Stage 2 loans (%) Corporate default rates (%) COVID-19 7.5 7.4 Forecast pandemic 6.9 14.0 13.8 13.6 13.3 13.4 13.1 13.1 12.6 5.8 5.6 5.6 5.2 Stage 2 loans remain at 11.3 11.4 historically high levels 4.3 and default rates are 9.7 4.2 3.8 expected to increase in 9.2 9.1 8.9 8.8 9.1 3.7
Slide 35: Real estate: outlook and doValue's initiatives
Real estate: outlook and doValue’s initiatives Supporting factors Critical factors doValue’s initiatives Adsolum recently re-launched focused on RE development Inflation supporting rents / real Higher interest rates First significant project involving a assets portfolio of residential developments R
Slide 36: Widening the reference market
Widening the reference market Innovation and extension of long term relationship with clients will enable a substantial increase of doValue reference market Reference markets Today Tomorrow doValue existing capabilities in NPLs, REOs, UTPs and Early Arrears Broaden the scope of the product offering,
Slide 37: Business Plan
Business Plan 37 Corporate Presentation
Slide 38: doValue strategic evolution 2022-2024 … and beyond
Business Plan 2022-2024 approved on January 25th, 2022 doValue strategic evolution Strengthening strategic Pursuing Leading the and long term integration evolution of the Achieving partnership and cross credit servicing diversification with banks and fertilisation industry through and scale investor
Slide 39: Strategic pillars of doValue 2024
Business Plan 2022-2024 approved on January 25th, 2022 Strategic pillars of doValue 2024 GROW ENHANCE TRANSFORM INNOVATE CARE 39 Corporate Presentation
Slide 40: Strategic pillars: Grow
Business Plan 2022-2024 approved on January 25th, 2022 Strategic pillars of doValue 2024 Grow 1 Replenish GBV organically Track Record Business Plan ≈ €9bn ≈ €13-14bn expected average inflows new mandates per annum in 2022-2024 per annum (average 2019-2021) Including both forward flows agreements an
Slide 41: Strategic pillars: Enhance
Business Plan 2022-2024 approved on January 25th, 2022 Strategic pillars of doValue 2024 Enhance 2 Enhance product offering At IPO 2021 2024 NPL REO - UTP - Cross Leveraging Climb the Capitalise on fertilization on best credit client base to across practices value-chain sell more geographies, within
Slide 42: Strategic pillars: Transform
Business Plan 2022-2024 approved on January 25th, 2022 Strategic pillars of doValue 2024 Transform 3 Centralisation of Group Governance doTransformation Empower Regional Concept ≈ €45m total investment for Establish Back-office Hubs Global and Local Centralise IT Group Services Transformation (2022-
Slide 43: Strategic pillars: Innovate
Business Plan 2022-2024 approved on January 25th, 2022 Strategic pillars of doValue 2024 Innovate 4 Innovation strategy developed internally • Joint venture between doValue and Debitos 2020 • Online NPL trading platform (Innovation Centre) and through M&A • Exclusive partnership for Italian and Gree
Slide 44: Strategic pillars: Care
Business Plan 2022-2024 approved on January 25th, 2022 Strategic pillars of doValue 2024 Care 5 Best in class Servicer and ESG Ratings Act professionally, demonstrate ongoing operational excellence for responsibly and sensitively the benefit of all key stakeholders Servicer Ratings Rating Scope Clie
Slide 45: Sustainability targets
Business Plan 2022-2024 approved on January 25th, 2022 Sustainability targets Sustainable Development Areas Selected targets for 2022 and 2023 Goals (United Nations) • ISO 37001 certification by 2022 • Training on Ethical Code and Privacy (75% participation by 2023) Operate • Training on Cyber Secur
Slide 46: Sustainability achievements in 2022
Business Plan 2022-2024 approved on January 25th, 2022 Sustainability achievements in 2022 E Environmental • Purchased 100% paper with sustainability characteristics (FSC, PEFC, EcoLabel) ✓ • Promoted annual training plan covering both soft and hard skills in line with company and local needs • Inte
Slide 47: M&A aimed at consolidation and broadening reference market
Business Plan 2022-2024 approved on January 25th, 2022 M&A aimed at consolidation and broadening reference market A two legged M&A strategy focussed on in-market consolidation and broadening the reference market In-market consolidation with revenue / cost Acquisition in adjacent areas broadening syn
Slide 48: Financial policy
Business Plan 2022-2024 approved on January 25th, 2022 Financial policy Leverage target 1 - Maximum net leverage of 3.0x Net Debt / EBITDA - Target to remain between 2.0-3.0x in the medium term, as per Business Plan 2022-2024 target ✓ - Strong cash flow generation leads to clear and consistent delev
Slide 49: Attractive shareholders' distribution policy
Business Plan 2022-2024 approved on January 25th, 2022 Attractive shareholders’ distribution policy Dividend Per Share (€) Total dividends to be paid > €200m related to Fiscal Years 2021-2024 6% 7% 9% 11% Dividend Dividend Dividend Dividend Yield Yield Yield Yield Current market capitalisation > 30%
Slide 50: doTransformation
doTransformation 50 Corporate Presentation
Slide 51: Why doTransformation
Why doTransformation A history of acquisitions coupled with an evolving industry in need of innovation require a transformation plan Countries Products Functions The Challenge and the Opportunity Complexity to be organised and managed Risks to be controlled and mitigated x x = Upgrading quality of s
Slide 52: Achievements from previous business plan and next steps
Achievements from previous business plan and next steps Excellent client service and collection performance will lead to winning more business and retaining market leadership What has been done so far What’s next • Central corporate functions created serving all Maintain industry Superior 5 countrie
Slide 53: Grow Revenues
Grow Revenues Enhanced origination and business development effort to boost revenue growth What How Targets • Common business development team (“Group product experts”) - Support all regions and provide tailor made solutions to clients - Anticipate market trends and clients needs Enhance products an
Slide 54: Optimise Costs
Optimise Costs Commitment to continue optimising every cost line to support EBITDA margin also leveraging on new Group structure Operating costs1 (ex NRIs) From Holding structure to Group structure as % of Gross Revenues 36% EBITDA +200 bps c. 38% EBITDA Before: Holding structure margin EBITDA margi
Slide 55: People aligned to Group targets and ambitions
People aligned to Group targets and ambitions HR Increasing efficiency and productivity to optimise FTEs allocation and Revenue generation What Actions Datapoints Revenues / FTE (€k) • Same corporate applications across 5 countries New tools to work • Use of key business applications across regions
Slide 56: Streamlining operations
Streamlining operations IT Eliminated 2 Back Offices (consolidating into Italy, Greece and Spain) and 10 Data Centres (preserving geographical diversification) Before After No Regional Hubs 3 Regional Hubs (in 3 countries) 5 Back Offices (across 5 countries) 3 Back Office Hubs (in 3 countries) 28 14
Slide 57: Creating Back Office Hubs
Creating Back Office Hubs IT Transforming back-office activities to achieve operational excellence and further exploit outsourcing Overview Key Actions Simplify the operating model and change how back offices Ops transformation (both local and group) will bring operate saving of 15% vs. current oper
Slide 58: Technology enabler of rationalisation and growth
Technology enabler of rationalisation and growth IT IT investments facilitate superior performance, higher security, data enhancement, simplification and Opex reduction Key drivers ONE doValue Group IT (Main KPIs) Application • Maximise blueprint applications 2021 2024 • Achieve 50% reduced complexi
Slide 59: Our digital journey has already begun, wish to join?
Our digital journey has already begun, wish to join? It started from Greece…now being rolled out to other countries too Advanced messaging system Digital Signatures eRequests eKYC SMS, email and From contract Submit inquiry and 100% virtual and Viber signing up to service requests remote process Mas
Slide 60: Efficiencies on procurement and office footprint
Efficiencies on procurement and office footprint RE & SG&A Centralised procurement function has already yielded savings for c. 3% of current operating cost base Real Estate Costs Global Procurement strategy (office footprint reduction) Rationalisation of 50% of footprint (2018-2024), with Defined pr
Slide 61: Appendix
Appendix 61 Corporate Presentation
Slide 62: Shareholders' structure
Shareholders’ structure Top Shareholders Comments • High quality and relatively stable shareholder base No. Institution Type Country Stake • Fortress is founding shareholder 1 Fortress Private Equity USA c. 28% - Active also in NPL investing - Historical client of doValue. In Dec-21, increased its s
Slide 63: Board of Directors
Board of Directors Board of Directors Comments No. Name Role Type • High quality and relatively stable Board of Directors - Composed of 50-50% Independent / Non-Independent members 1 Giovanni Castellaneta Chairman Independent - Composed of 40-60% Women / Men members - Number of members increased (by
Slide 64: Corporate Structure
Corporate Structure Overview Recent Events • Dec-20: merger of doValue Greece Holding by doValue Greece • Nov-20: merger of doSolutions S.p.A. in doValue S.p.A. doValue S.p.A. - doValue IT/back office company - Following the partnership with IBM signed in July 2020 - Significant employee transfer fr
Slide 65: Group Organisational Structure
Group Organisational Structure Overview Chief Group Control Officer Board of Directors (Paolo Poncetta) CEO (Andrea Mangoni) General Manager of Country Manager Regional Manager Regional Manager Corporate Functions and General Counsel Italy Iberia Hellenic Region Group Chief Financial Officer (Sara P
Slide 66: Management income statement
Management income statement Condensed Income Statement (€ ’000) 2022 2021 Change € Change % Servicing Revenues: 510,164 528,626 (18,462) (3)% o/w: NPE revenues 433,538 446,097 (12,559) (3)% o/w: REO revenues 76,626 82,529 (5,903) (7)% Co-investment revenues 1,507 8,846 (7,339) (83)% Ancillary and ot
Slide 67: Management balance sheet
Management balance sheet Condensed Balance Sheet (€ ‘000) 31-Dec-2022 31-Dec-2021 Change € Change % Cash and liquid securities 134,264 166,668 (32,404) (19)% Financial assets 57,984 61,961 (3,977) (6)% Property, plant and equipment 59,191 34,204 24,987 73% Intangible assets 526,888 545,225 (18,337)
Slide 68: Management cash flow
Management cash flow Condensed Cash flow (€ ‘000) 2022 2021 EBITDA 198,708 199,347 Capex (30,833) (29,640) EBITDA-Capex 167,875 169,707 as % of EBITDA 84% 85% Adjustment for accrual on share-based incentive system payments 5,557 1,027 Changes in NWC (Net Working Capital) 2,854 (9,285) Changes in oth
Slide 69: Segment reporting
Segment reporting Year 2022 Condensed Income Statement (excluding non-recurring items) Italy Hellenic Region Iberia Total (€ ‘000) Servicing revenues 145,093 249,394 115,677 510,164 o/w NPE Revenues 145,094 229,892 58,552 433,538 o/w REO Revenues (1) 19,502 57,125 76,626 UTP Servicing - - - - Co-inv
Slide 70: Disclaimer
Disclaimer This disclaimer applies to all documents and information provided herein and to any verbal or written comments of person presenting them. This presentation and any materials distributed in connection herewith, taken together with any such verbal or written comments, including the contents
Slide 71: Leading the evolution of the servicing industry
• Leading the evolution of the servicing industry 71 Corporate Presentation