Dovalue S.p.a. · MIL:DOV
Dovalue — Investor Day (January 2022)
76 slides from Dovalue's investor day presentation, Jan 26, 2022
Slide 1: Capital Markets Day
Capital Markets Day January 26th, 2022 Leading the evolution of the credit servicing industry 1 Capital Markets Day
Slide 2: Team
Team Andrea Theodore Francesc Manuela Georgios Alberto Mangoni Kalantonis Noguera Franchi Kalogeropoulos Goretti Head of the Hellenic Region Head of Iberia Group CFO Group CEO Head of Group COO Chairman of doValue CEO of Altamira Asset General Manager of Investor Relations Head of Italy Greece and A
Slide 3: Agenda
Agenda 10.00 - 10.30 1 Key Highlights 10.30 - 10.45 2 Focus on Italy 10.45 - 11.00 3 Focus on the Hellenic Region 11.00 - 11.15 4 Focus on Iberia 11.15 - 11.35 5 Transformation Plan 11.35 - 11.50 6 Financial Targets 11.50 - 12.00 7 Closing Remarks 12.00 - 13.00 8 Q&A 3 Capital Markets Day
Slide 4: Key Highlights
Key Highlights Andrea Mangoni 4 Capital Markets Day
Slide 5: 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 6: 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) +1.9x +2.8x +3.0x 150 34% 565-575 EBITDA margin 190-195 81 31% EBITDA margin 206 64 Dec-16 Sep-21 2016 2021 2016 2021 (guidance) (guidance) 6 Capital
Slide 7: 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 + Revenues Italy Geographies One Country 20% market share1 Hellenic Region 68% LTM Sep-2
Slide 8: 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 9: A track record of cash flow generation and operational resilience
A track record of cash flow generation and operational resilience Strong and consistent cash flow generation, deleveraging post M&A and operational resilience, only marginally impacted by COVID Cash Flow Leverage Collection Rate €348m Free Cash BB / Stable COVID COVID Flow Generation Credit Rating i
Slide 10: Strategic pillars of previous business plan executed
Strategic pillars of previous business plan executed1 Despite COVID disruption in 2020, fully integrated Altamira and FPS acquisitions, laying strong foundations for the next stage of growth Item Status quo2 Execution update Non-NPL 21% €119bn GBV • Significant mandate wins on the back of strong ori
Slide 11: Structural market tailwinds
Structural market tailwinds Several factors to support doValue reference market both in the short, medium and long term • Uptick in new NPEs formation expected from 2022 onwards Moratoria • Inflation and potential increase in interest rates to exacerbate distressed situations ending • Increase in St
Slide 12: Substantial formation of new NPEs expected
Substantial formation of new NPEs expected Approx. €200bn of new NPEs expected in Southern Europe in 2022-2024. Longer term, new NPEs at €50bn+ p.a. (1.0%+ default rate) New NPEs formation (€bn) New NPEs formation Bottom up estimate Top down simulation Italy Hellenic 46% Region 7% €197bn Unlikely Ib
Slide 13: Tangible pipeline of deals expected for 2022
Tangible pipeline of deals expected for 2022 A number of sizeable deals are already in the market for 2022. Pipeline to be further strengthened by formation of new NPEs Gross Book Comment Transaction Country Overview Value Assignment of 2022-2025 servicing contract Sareb Spain ≈ €55bn (current contr
Slide 14: 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 15: doValue strategic evolution 2022-2024 … and beyond
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 investors between investments in in a broadened geographies Tec
Slide 16: Strategic pillars of doValue 2024
Strategic pillars of doValue 2024 GROW ENHANCE TRANSFORM INNOVATE CARE 16 Capital Markets Day
Slide 17: Strategic pillars of doValue 2024: Grow
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 and mandates from new clients + On top of €10bn of mandat
Slide 18: Strategic pillars of doValue 2024: Enhance
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 the upwards products per Early Arrears - clients and d
Slide 19: Strategic pillars of doValue 2024: Transform
Strategic pillars of doValue 2024 Transform 3 Centralisation of Group Governance doTransformation Empower Regional Concept ≈ €55m total investment for Establish Back-office Hubs Global and Local Centralise IT Group Services Transformation (2022-2024) Optimise Cost Base Strategic Improve Client Servi
Slide 20: Strategic pillars of doValue 2024: Innovate
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 Greek NPLs (expanding into Spain) • Generated €6m of revenu
Slide 21: Strategic pillars of doValue 2024: Care
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 Clients Regulators Fitch (Special Servicer) Level 1 (Sep-20
Slide 22: Sustainability targets
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 Security (100% participation by 2022) responsibly • Client S
Slide 23: Guidance for 2021 and financial targets to 2024
Guidance for 2021 and financial targets to 2024 Guidance Financial Targets1 for 2021 to 2024 • Expected inflows to more than compensate increased collections, write-offs and Gross Book Value ≈ €144bn ≈ €160bn disposals. Strong origination, collections (+200 bps), more favourable GBV mix ≈ 4.0% • Enh
Slide 24: Consolidation opportunities
Consolidation opportunities Consolidation and acquisition Key considerations drivers 1 Continued focus on servicing with a capital light model 2 Current geographies offer most attractive opportunities 3 Sareb process to reshape structure of Spanish market Acquisition of Expand Potential for Accretiv
Slide 25: Focus on Italy
Focus on Italy Andrea Mangoni 25 Capital Markets Day
Slide 26: Key achievements in Italy since IPO
Key achievements in Italy since IPO Maintained # 1 position, diversifying client and product offering, mitigating profitability pressure due to shift from banks to investors • Broad client diversification achieved 1 Clients • Added more than 20 clients in Italy through active origination effort • 75
Slide 27: Servicers market in Italy
Servicers market in Italy Most servicers in Italy either active as investors (with limited third party client growth) or dependant on few key clients Top 10 credit servicers by GBV (€bn) Fee environment Share 20% doValue 75 * Historical trend at doValue (2017-2021) Outlook 11% Cerved 41 * Banks Decr
Slide 28: Expected uptick in formation of new NPEs in Italy
Expected uptick in formation of new NPEs in Italy Expectation of approximately €90bn of new NPEs in Italy in 2022-2024 New NPEs formation (€bn) New NPEs formation Bottom up estimate Top down simulation 90 Unlikely ≈ €60bn given Scenario ≈ 3.0% of new NPEs strength of 16 A default rate per annum macr
Slide 29: Revenue buckets in Italy
Revenue buckets in Italy Business plan targets driven by further expansion of product offering and enhanced profitability Current Revenues Ambition Product offering development Comment (LTM Sep-21) for 2024 status • Maintain leadership, in particular on GACS ✓✓✓ - > 75% share in 2020-2021 NPLs €139m
Slide 30: Efesto UTP Fund successful case study
Efesto UTP Fund successful case study An innovative “open platform” approach to the management of UTPs Rationale & Capabilities Efesto UTP fund structure Rationale • Re-launch of SMEs and RE assets with turnaround potential Efesto UTP Fund • Achieve UTP deconsolidation targets of banks • Possibility
Slide 31: Reducing costs and optimising operations
Reducing costs and optimising operations Significant milestones have been achieved and additional projects are underway Projects in 2019-2021 Operating costs in Italy Projects in 2022-2024 • Merger of NPL platforms completed • Process standardisation & triage model - Improved systems and higher effi
Slide 32: Historical performance and targets
Historical performance and targets Italian business now stabilised after structural shift in client mix. Profitability to be enhanced by doTransformation program Gross Revenues and EBITDA (€m) Key drivers of historical performance €77bn €82bn €79bn €78bn €75bn c. €81bn • Organic decrease in UniCredi
Slide 33: Focus on the Hellenic Region
Focus on the Hellenic Region Theodore Kalantonis 33 Capital Markets Day
Slide 34: Key achievements in the Hellenic Region
Key achievements in the Hellenic Region Confirmed # 1 position as independent servicer in the Hellenic market through Project Frontier and Project Mexico • Successful carve-out of Eurobank platform to build a leading independent player 1 Clients - Leadership in Greek HAPS securitisations (€6bn Proje
Slide 35: Servicers market in the Hellenic Region
Servicers market in the Hellenic Region Relatively concentrated market structure with top 4 players representing 80% of the market Top 10 credit servicers by GBV (€bn) Fee environment Share Historical trend at doValue Greece (2020-2021) Outlook 29% doValue 38 * 22% CEPAL 29 Banks Stable Base fee 21%
Slide 36: Expected uptick in formation of new NPEs in the Hellenic Region
Expected uptick in formation of new NPEs in the Hellenic Region Expectation of approximately €14bn of new NPEs in the Hellenic Region in 2022-2024 (on top of current excess NPEs of €10bn+) New NPEs formation (€bn) New NPEs formation Bottom up estimate Top down simulation ≈ €14bn of new NPEs expected
Slide 37: Revenue buckets in the Hellenic Region
Revenue buckets in the Hellenic Region Further boost leadership position through acquisition of key mandates, both primary and secondary Current Revenues Ambition Product offering development Comment (LTM Sep-21) for 2024 status • Maintain market leadership (in particular HAPS) and enhance NPLs €100
Slide 38: Reducing costs and optimising operations
Reducing costs and optimising operations Journey to higher efficiency levels to reduce cost base in the medium term and protect margins Change Grow Enhance post carve-out operating model by focusing on increasing Onboard new portfolios, while establishing a blueprint process efficiency Retail initia
Slide 39: Historical performance and targets
Historical performance and targets Attractive fee levels driving above average profitability, increased productivity to support profitability going forward Gross Revenues and EBITDA (€m) Key drivers of business plan performance €34bn €34bn €32bn c. €40bn • Strong profitability underpinned by attract
Slide 40: Focus on Iberia
Focus on Iberia Francesc Noguera 40 Capital Markets Day
Slide 41: Key achievements in Iberia since Altamira acquisition
Key achievements in Iberia since Altamira acquisition Maintained # 1 position, mitigated profitability pressure and acted as REOs best practices provider to the rest of doValue Group • Ongoing diversification of client base lowering reliance on Santander and Sareb 1 Clients - Portfolio of clients cu
Slide 42: Servicers market in Iberia
Servicers market in Iberia Relatively fragmented market structure in Iberia could lead to a consolidation wave post Sareb Top 10 credit servicers by GBV (€bn) Fee environment Share 17% doValue Historical trend at Altamira Spain (2017-2021) Outlook (Altamira) 42 ** Aliseda + Anticipa 13% (Blackstone)
Slide 43: Expected uptick in formation of new NPEs in Iberia
Expected uptick in formation of new NPEs in Iberia Expectation of approximately €90bn of new NPEs in Iberia in 2022-2024 New NPEs formation (€bn) New NPEs formation Bottom up estimate Top down simulation 92 Unlikely ≈ €60-70bn given Scenario ≈ 2.0-2.5% of new NPEs strength of 26 A default rate per a
Slide 44: Revenue buckets in Iberia
Revenue buckets in Iberia Key objective for 2024 is to transform the operating model and develop new revenue streams Current Revenues Ambition Product offering development Comment (LTM Sep-21) for 2024 status • Further develop model into more granular and unsecured NPEs NPLs €100m ✓✓ ✓✓✓ • Increase
Slide 45: Sareb possible scenarios
Sareb possible scenarios Strategic value of Sareb in the Spanish servicing market, doValue is focussed on obtaining the renewal of contract and preserving market share Current situation regarding Sareb Potential scenarios Haya c. 35% Financial impact Marginally positive EBITDA One-off set-up costs t
Slide 46: Transformation to increase productivity and improve performance
Transformation to increase productivity and improve performance 4 pillars for this transformation program under one single agenda – Lego & doTransformation Process E2E: NPL, Property & Asset Golden source for data 1 3 • • Process Transformation, Real Estate Development and Data • Deploy new asset ma
Slide 47: Historical performance and targets
Historical performance and targets Key focus in improving profitability with new generation contracts Gross Revenues and EBITDA (€m) Key drivers of business plan performance €46bn €45bn €45bn €42bn c. €42bn • New generation contracts with no upfront fee implying nominal pressure on EBITDA • GBV no l
Slide 48: Transformation Plan
Transformation Plan Manuela Franchi Georgios Kalogeropoulos 48 Capital Markets Day
Slide 49: 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 50: 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 51: 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 52: 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 32% EBITDA +500 bps c. 37% EBITDA Before: Holding structure margin EBITDA margi
Slide 53: 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 GBV / FTE (€m) • Same corporate applications across 5 countries New tools to work • Use of key business applications across regions 48 +4
Slide 54: 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 55: 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 56: Technology as enabler of cost rationalisation and growth
Technology as enabler of cost rationalisation and growth IT IT investments facilitate superior applications performance, higher security, data enhancement, simplification and reduction of Opex Key drivers ONE doValue Group IT (Main KPIs) Application • Maximise blueprint applications 2021 2024 • Achi
Slide 57: 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 58: 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 59: Key milestones of doTransformation
Key milestones of doTransformation 2022 will be the core year of doTransformation, setting the base for improved operations and better margins going forward Goals already met Targets to be achieved 2020 2021 2022 2023 2024 • Italian IT & Back office • AAM RE Platform across • Group IT centralised •
Slide 60: Financial Targets
Financial Targets Manuela Franchi 60 Capital Markets Day
Slide 61: Gross Book Value stability, rotation towards better vintages
Gross Book Value stability, rotation towards better vintages Strong origination activity to more than offset collections resulting in a stable GBV Gross Book Value (€bn) Key drivers • Expected inflows of c. €13-14bn per annum in 2022-2024 4.0% 4.0% c. 5.5-6.0% - Total of c. €39bn representing c. 26%
Slide 62: Revenue growth supported by increased collection rates
Revenue growth supported by increased collection rates Revenues growth reflects stable GBV, growth in collection rates and more favourable GBV mix Gross Revenues (€m) Key drivers • Stable GBV in aggregate 4.0% 12% c. 12% GBV and - Favourable increase of GBV in the Hellenic Region +1.2x Collections •
Slide 63: Cost base streamlined through doTransformation
Cost base streamlined through doTransformation The doTransformation program will enable to grow EBITDA margin maximising operational leverage (c. 85-90% of OpEx are fixed costs) Operating Expenses1 ex NRIs (€m) Key drivers • HR costs from 40% of Gross Revenues to c. 35% 4.0% 32% c. 37% • Reduction o
Slide 64: EBITDA growth driven by performance in the Hellenic Region
EBITDA growth driven by performance in the Hellenic Region Strong growth in EBITDA contribution by the Hellenic Region, combined with a stable Italian business and transformation of Iberia EBITDA ex NRIs (€m) Key drivers • Gross Revenues / FTE to increase by c. 10% (2021-2024) 4.0% 32% c. 37% • Cons
Slide 65: 300 bps EBITDA margin improvement
Directional business plan profile by region Better GBV vintage, improved collections and increased efficiencies to support growth of Gross Revenues and EBITDA at Group level Gross Book Value (€bn) Gross Revenues (€m) EBITDA ex NRIs (€m) 180 800 300 3-4% CAGR 6-7% CAGR (2021-2024) (2021-2024) 300 bps
Slide 66: Net Income expected evolution
Net Income expected evolution Substantial increase in recurring Net Income from 2021 to 2024 mainly related to EBITDA growth and declining D&A Attributable Net Income ex NRIs (€m) Key drivers +1.8x • Mostly related to amortisation of Altamira / doV. Greece PPA - Approx. €85-90m expected in 2021 (LTM
Slide 67: Capex plan
Capex plan A €42m Capex plan in 2022 (in addition to €30m spent in 2021) will contribute to doValue operational excellence and leadership in the sector Capex evolution (€m) Capex considerations 4.0% 4% c. 5% c. 7% c. 3% c. 3% • The Capex plan is aimed at delivering savings equivalent to Benefit 42 8
Slide 68: Free Cash Flow generation to accelerate in 2023-2024
Free Cash Flow generation to accelerate in 2023-2024 Total expected Free Cash Flow generation > €300m in 2022-2024, with 2022 being a transition year due to Capex plan and other factors Free Cash Flow (€m) Key drivers of cash flow generation > €300m • Cash flow generation mainly impacted by Total Fr
Slide 69: M&A aimed at consolidation and broadening reference market
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 synergies reference market • Increase GBV • Increase scope
Slide 70: Guidance for 2021 and financial targets to 2024
Guidance for 2021 and financial targets to 2024 Guidance Financial Targets1 for 2021 to 2024 • Expected inflows to more than compensate increased collections, write-offs and Gross Book Value ≈ €144bn ≈ €160bn disposals. Strong origination, collections (+200 bps), more favourable GBV mix ≈ 4.0% • Enh
Slide 71: An attractive shareholder remuneration plan
An attractive shareholder remuneration plan Dividends and Net Income Growth to deliver a > 24% total return for shareholders in the next three years Dividend per Share (€) CAGR of at least 20% (2021-2024) Net Income Total Return ex-NRI €0.50 > 24% CAGR of + ≈ 15% = per annum 2021 2022 2023 2024 (202
Slide 72: Closing Remarks
Closing Remarks Andrea Mangoni 72 Capital Markets Day
Slide 73: doValue strategic evolution 2022-2024 … and beyond
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 investors between investments in in a broadened geographies Tec
Slide 74: Appendix
Appendix 74 Capital Markets Day
Slide 75: Glossary
Glossary BPO Business Process Outsourcing, i.e. the outsourcing of non-strategic support activities by banks Early Arrears Loans that are up to 90 days past due Agreement with commercial bank related to the management of all future NPL generation by the bank for number of years, customary feature of
Slide 76: Disclaimer
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