Dovalue S.p.a. · MIL:DOV
Dovalue — Investor Presentation (September 2023)
70 slides from Dovalue's investor presentation, September 2023
Slide 1: Corporate presentation
Corporate presentation September 2023 Leading the evolution of the servicing industry 1 Corporate Presentation
Slide 2: Track Record
Track Record 2 Corporate Presentation
Slide 3: doValue at a glance
doValue at a glance Gross Revenues by Region ex Sareb – FY 2022 (€m) EBITDA ex NRIs & ex Sareb (€m) A diversified group leader in Southern Europe High margins with strong cash conversion EBITDA-Capex/ 85% 84% EBITDA % Iberia +11.5% 15% YoY 196 176 Italy €509m 36% +1.5% Hellenic YoY Region 49% 2021 2
Slide 4: 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 Capital
Slide 5: 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 5 Corporate Presentation
Slide 6: Evolving into a diversified business footprint
Evolving into a diversified business footprint 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 R
Slide 7: Successfully integrating new acquisitions and expanding digital expertise
Successfully integrating new acquisitions and expanding digital expertise 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 A
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: H1 2023 Results
H1 2023 Results 10 Corporate Presentation
Slide 11: 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 12: 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 13: 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 14: 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 15: Resilient collections despite GBV trend and exogenous factors
Resilient collections despite GBV trend and exogenous factors GBV Collections Comments ▪ Resilient collections considering GBV trend, Italy €71bn -5% €0.9bn -1% deterioration of macro environment YoY YoY ▪ Growing UTP revenues ▪ Decrease in revenues due to lower indemnity fees ▪ Strong collection pe
Slide 16: doTransformation program already yielding results
doTransformation program already yielding results Key Objectives Next Steps ▪ Hybrid centralization and integration model already ▪ Actively working on the regional integration in place to empower local capabilities 95% (Operations) for the Hellenic region ▪ Faster reaction to market conditions and
Slide 17: doValue Transformation journey bringing new capabilities
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 18: Strong cost discipline expected to continue
Strong cost discipline expected to continue OpEx ex NRIs (€m) Comments ▪ Decline in OpEx by 14.2% ▪ All cost categories have been reduced 77 77 74 ▪ Decline in HR costs by 7.4% 71 ▪ Mainly driven by Sareb restructuring program partially offset by 66 23 24 62 HR requirements for new business in Spain
Slide 19: Leading the secondary NPL market in Greece
Leading the secondary NPL market in Greece doValue Country GBV Status Transaction overview projects Secondary NPL Virgo Greece €450m ✓ Completed Secondary NPL sale from Frontier I (doValue retaining servicing mandate) market very in Q4 2022 established in Greece with several sizeable Completed Frame
Slide 20: Continuing to push the boundaries of credit management
Continuing to push the boundaries of credit management Credit value chain Figures relate to Southern European doValue live projects and advanced discussions banks balance sheets Working on operating model which can best support banks with value-added services to address growing Stage 2 concerns rega
Slide 21: Financials at a glance
Financials at a glance Q2 Q2 Excluding H1 H1 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 22: 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 23: 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 24: 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) Mandates GBV Forward New GBV GBV Collections/sales Net write-off Disposals secured Dec 2022 flows mandates Jun 2023
Slide 25: 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 26: 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 27: 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 28: Regional Performance H1 2023
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 29: 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 30: 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 31: 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 32: Market Overview
Market Overview 32 Corporate Presentation
Slide 33: Market themes
Market themes Market themes ▪ Tangible pipeline of servicing mandates totalling c. €54bn in Southern Europe (including €18bn of secondaries) ▪ NPE ratios at historical lows, Stage 2 loans remain elevated Macro ▪ Higher inflation and increase in interest rates exacerbate distressed situations environ
Slide 34: 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 35: 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 36: 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 13.313.4 13.1 13.1 12.6 5.8 12.2 5.6 5.6 5.2 Stage 2 loans remain at 11.311.4 11.3 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
Slide 37: 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 38: 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 39: Business Plan
Business Plan 39 Corporate Presentation
Slide 40: 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 41: Strategic pillars of doValue 2024
Business Plan 2022-2024 approved on January 25th, 2022 Strategic pillars of doValue 2024 GROW ENHANCE TRANSFORM INNOVATE CARE 41 Corporate Presentation
Slide 42: 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 43: 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 44: 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 45: 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 46: 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 47: 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 48: 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 49: 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 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: 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 S&P: BB (Stable) Credit Rating FPS 2.3x acquisition 4.3% 4.4% as of 4.2% July En
Slide 63: Key drivers supporting our 2023 performance
Key drivers supporting our 2023 performance New GBV already ▪ Already secured €4bn of mandates (onboarded in Mar-23 or be onboarded in mid 2023) secured ▪ Expected to generate Gross Revenues in H2 2023 Revenues ▪ Strong secondary sales pipeline in particular in Greece which will allow to book dispos
Slide 64: Shareholders' structure
Shareholders’ structure Top Shareholders Comments ▪ Fortress is founding shareholder No. Institution Type Country Stake ▪ Active in NPL investing ▪ Historical client of doValue. In Dec-21, increased its stake from 27% to 28% 1 Fortress Private Equity USA 28.27% ▪ Bain Capital acquired stake in 2020-
Slide 65: Financial highlights (FY 2022)
Financial highlights (FY 2022) 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.
Slide 66: 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 67: 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 68: 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 69: 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 70: Leading the evolution of the servicing industry
• Leading the evolution of the servicing industry 70 Corporate Presentation