Dovalue S.p.a. · MIL:DOV
Dovalue — H1 2023 Earnings Presentation
31 slides from Dovalue's earnings presentation, Aug 3, 2023
Slide 1: H1 2023 results
H1 2023 results August 3rd, 2023 1 Q2 2023 results
Slide 2: Business Highlights
• Business Highlights • Manuela Franchi Group CEO 2 Q2 2023 results
Slide 3: Back on the right trajectory
Back on the right trajectory Positive momentum in Q2: stable collections despite macro conditions Q2 revenues growth YoY to €127m (+8%)1 with positive underlying trajectory across all regions Q2 EBITDA growth YoY to €50m (+37.9%)1 with margin increasing from 31.7% to 38.9% boosted by Spanish turnaro
Slide 4: Greece performing strongly
Greece performing strongly A successful macro story… … for a successful acquisition doValue invested at the right time in one of the most Target ▪ All targets of Buyer and 2022 Seller case exceeded successful turnaround economies in Europe (despite COVID 2022 at Actual and Russia-Ukraine conflict),
Slide 5: Spain back on track
Spain back on track Swinging to profitability Ready for a new market ▪ Pilot project with Sabadell on EA successful, transformed From into a contract 3.7 buying contracts ▪ New NPL SMEs collaboration with Caixabank, the largest EBITDA 0.4 to bank in Spain Ex Sareb winning ▪ New business won for €0.6
Slide 6: The Italian Job
The Italian Job Stable top line, lower cost base Dynamic secondary developing ahead 400 €bn 345 ▪ Stable collection in H1 (1.2%) NPE in the 326 326 320 312 €m GBV Collection -1.2% despite challenging macro Italian 300 878.6 868.4 environment and lower GBV system 165 191 (5.7%) have 200 227 242 266 r
Slide 7: Macroeconomic trends across group’s markets
Macroeconomic trends across group’s markets Myth: banks are no longer generating NPEs, even in this challenging macro environment Gross of Gross of Gross of disposals: disposals: disposals: NPEs on €119bn €36bn €117bn 117 111 banks’ 109 109 109 79 74 54 balance 71 107 sheet 61 60 30 105 52 51 104 (2
Slide 8: Pipeline of potential new business (12-18 months)
Pipeline of potential new business (12-18 months) doValue Market doValue Expected Comments pipeline Market share pipeline ▪ €12bn AMCO / Project GLAM Italy €21bn 30% €6bn ▪ €4bn residential mortgages (performing + NPL) ▪ €4bn total (10 mandates). Average size of €400m ▪ €6bn State sponsored projects
Slide 9: doValue Transformation journey bringing new capabilities to boost Productivity and Growth
doValue Transformation journey bringing new capabilities to boost Productivity and Growth From building blocks to Smart Automation, Data Analytics, AI & Digital Channels Unlock new dimensions of productivity and seamlessly connect with customers and internal workforce Transform raw data into knowled
Slide 10: ESG strategy
ESG strategy Rating ESG Group Sustainability Plan - Target 2023 Moody’s Analytics Upgraded from “Limited” to “Robust” with an ESG Overall ▪ Purchase of certified 100% renewable electricity, reducing related Scope 2 emissions (market-based Score of 50 points method) July-23 ▪ People Engagement Survey
Slide 11: Financial Results
• Financial Results • Davide Soffietti Deputy Group CFO 11 Q2 2023 results
Slide 12: Financials at a glance
Financials at a glance Q2 Q2 Excluding H1 H2 Excluding Item Delta Delta 2022 2023 Sareb 2022 2023 Sareb GBV €150bn €117bn -21.8% -9.0% €150bn €117bn -21.8% -9.0% Collections €1.5bn €1.3bn -12.2% +10.8% €2.8bn €2.4bn -13.7% +10.3% Collection Rate n/a n/a n/a 4.2% 4.4% +0.2 p.p. Gross Revenues €140m €
Slide 13: Gross Book Value
Gross Book Value Gross Book Value (€bn) 120.5 2.0 2.5 3.6 120.8 117.2 (2.4) (1.7) (3.6) +39% of new mandates vs. H1 2022 ex Frontier (10+ new contracts vs. 2 new contracts in H1 2022) GBV Forward New GBV Mandates secured GBV Collections/sales Net write-off Disposals Dec 2022 flows mandates Jun 2023
Slide 14: Gross Revenues
Gross Revenues Gross Revenues (€m) Comments ▪ Group ▪ Positive underlying growth ex Sareb thanks to strong collections in Spain and Greece -15.5% -1.9% ▪ Reduction in outsourcing fees driven by lower insourcing in Italy ex Sareb and Sareb off-boarding 271 ▪ Italy -8.7% +8.1% 28% 229 ▪ Stable collect
Slide 15: Operating Expenses
Operating Expenses Operating Expenses ex NRIs (€m) Comments % of Gross ▪ Decline in OpEx by 16.9% 55% 52% 57% 56% Revenues ▪ All cost categories have been reduced Y-o-Y and Q-o-Q ▪ Decline in HR costs by 11.2% -16.9% ▪ Mainly driven by Sareb restructuring program partially offset by HR requirements
Slide 16: EBITDA
EBITDA EBITDA ex NRIs (€m) Comments ▪ Group ▪ Reduction in OpEx / Outsourcing and turnaround in Spain have -4.6% driven an increase in EBITDA margin both Q-o-Q and Y-o-Y +11.6% Ex Sareb 84 80 ▪ Italy +12.1% 8% 7 +37.9% 74% ▪ EBITDA negatively impacted by lower revenues for (€6.3m Ex Sareb Group cost
Slide 17: Regional Performance H1
Regional Performance H1 doValue Group 2023 Italy Hellenic Region Iberia Gross Book €71bn €35bn €12bn €117bn Value (61% of total) (29% of total) (10% of total) €0.9bn €1.0bn €0.6bn Collections €2.4bn (36% of total) (39% of total) (25% of total) Collection Rate 4.4% 2.4% 6.8% 9.5% Gross €82m €111m €36
Slide 18: Net Income
Net Income Attributable Net Income (€m) Comments ▪ Attributable Net Income of €4m (positive for €17m ex NRIs) -27.6% ▪ Lower EBITDA by €3.8m vs H1 2022 23 ▪ Higher previsions related to redundancies (Sareb effect): €10.7m +26.7% vs. €2.9m in H1 2022 (30% from Spain). The payback period for 1 redunda
Slide 19: Cash Flow
Cash Flow €m H1 H1 2022 2023 Comments EBITDA 82.4 79.8 ▪ Positive Cash Flow from Operations of €23.4m in H1 2023 vs. Capex (9.7) (5.4) cash absorption of €6.0m in H1 2022 Delta NWC1 (48.8) 6.3 ▪ Positive effect on NWC in All Regions due to a specific action plan to focus BUs on cash generation Delta
Slide 20: Financial Structure
Financial Structure Net Debt (€m) Comments Leverage ▪ Strong liquidity position ▪ Around €100m cash position as of Jun-23 after dividend payment. 2.2x 1,8x 2.1x 2.2x 2.4x 2.3x €120m at July end after cash-in, payment of salaries and coupon on SSN 2025 461 423 430 479 455 433 ▪ Approximately €120m of
Slide 21: Closing Remarks
• Closing Remarks • Manuela Franchi Group CEO 21 Q2 2023 results
Slide 22: Closing remarks
Closing remarks Results trajectory in line with our expectations ▪ Pick-up in revenues in Q2 driven by improving collections in Greece and Spain ▪ Cost disciple across all countries & good execution of Spanish turnaround ▪ Macro headwinds and proactive approach of banks will underpin new business op
Slide 23: Appendix
• Appendix 23 Q2 2023 results
Slide 24: Condensed income statement
Condensed income statement Condensed Income Statement 6/30/2023 6/30/2022 Change € Change % Servicing Revenues: 202,961 246,399 (43,438) (17.6)% o/w: NPE revenues 175,294 207,051 (31,757) (15.3)% o/w: REO revenues 27,667 39,348 (11,681) (29.7)% Co-investment revenues 748 754 (6) (0.8)% Ancillary and
Slide 25: Condensed balance sheet
Condensed balance sheet Condensed Balance Sheet 6/30/2023 12/31/2022 Change € Change % Cash and liquid securities 96,746 134,264 (37,518) (27.9)% Financial assets 51,988 57,984 (5,996) (10.3)% Property, plant and equipment 54,439 59,191 (4,752) (8.0)% Intangible assets 507,614 526,888 (19,274) (3.7)
Slide 26: Condensed cash flow
Condensed cash flow Condensed Cash flow 6/30/2023 6/30/2022 12/31/2022 EBITDA 79,834 82,407 198,708 Capex (5,444) (9,659) (30,833) EBITDA-Capex 74,390 72,748 167,875 as % of EBITDA 93% 88% 84% Changes in Net Working Capital (NWC) (*) 6,261 (48,840) (15,137) Changes in other assets/liabilities (51,96
Slide 27: 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% 15% Italy ▪ Higher share of Revenues vs GBV from Hellenic €117bn €203m 36% Region and Iberia reflects difference in average Hellenic (H1 202
Slide 28: 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 7% Arrears 8% Arrears 4% 1% 3% REOs ▪ Higher share of Revenues from non-NPL €117bn 14% €203m1 products reflects higher fees on such
Slide 29: 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 30: 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 31: Leading the evolution of the servicing industry
• Leading the evolution of the servicing industry 31 Q2 2023 results