Dovalue S.p.a. · MIL:DOV
Dovalue — Debt Investor Presentation (January 2024)
48 slides from Dovalue's debt investor presentation, January 2024
Slide 1: Investor Presentation January 2024
Investor Presentation January 2024 1
Slide 2: Disclaimer
Disclaimer This presentation is strictly confidential and is being furnished to you solely for your information. It may not be reproduced or redistributed to any other person, and it may not be published, in whole or in part, for any purpose. By attending this presentation and receiving this present
Slide 3: Today’s presenters
Today’s presenters Manuela Franchi Davide Soffietti Daniele Della Seta Group CEO & General Manager of Group CFO Head of M&A and Strategic Finance Corporate Functions ▪ Joined doValue in 2016 as Head of IR, ▪ Joined doValue in 2016 and doNext in ▪ Joined doValue in 2019 as Head of M&A M&A and Finance
Slide 4: Introduction
Introduction ▪ On 12-Jan-2024, we published a press release stating that our Board of Directors had approved a new IAS 34 compliant consolidated interim report as of 30-Sep-2023 (the “New Report”) — The New Report takes into account certain material events that occurred after the approval of the exi
Slide 5: Agenda
• 1. Company overview • 2. Market overview • 3. Key credit highlights • 4. Historical financials and financial policy • 5
Slide 6: 1. Company overview
. Company overview . Market overview Key credit highlights SB W N - . Historical financials and financial policy Appendix
Slide 7: doValue at a glance
doValue at a glance Leading independent credit and real estate servicer Well diversified AuM across countries and clients in Southern Europe GBV of AuM by region – 3Q 2023 GBV of AuM by client type – 3Q 2023 Leading player1 in markets with combined NPL stock of Iberia c.€145bn2 and >€620bn3 NPE tran
Slide 8: Understanding our business model
Understanding our business model: doValue is focused on high value activities in credit and REO management Secondary transactions Primary transactions Asset originators Banks & Financial Disposals / Securitisations1 Investors Real Estate asset owners Institutions Outsourcing Outsourcing Including da
Slide 9: How do we win contracts?
How do we win contracts? Key clients M&A platform ▪ doValue purchases from banks their internal servicing division as a going-concern and enters into long-term SLA 1 transaction contracts for their NPE stock future flows during the term of the SLA with banks ▪ doValue uses its platform to offer outs
Slide 10: doValue’s journey of growth and diversification
doValue’s journey of growth and diversification Acquisition of minority stake On 14th July 2017, Corporate investments in Fortress acquires doBank (now transformation BidX1 (15%) and 100% of UCCMB doValue) 4 and rebranding 12 Quero Quitar 23 from Unicredit is listed on the in doValue (12%) - Project
Slide 11: Strategic pillars to drive sustainable growth in the near-term
Strategic pillars to drive sustainable growth in the near-term Description Limited balance sheet Replenish GBV deployment for new Explore current Increase market share Extract more value out organically and with new clients of a stable headline GBV servicing contracts and macro-environment as strate
Slide 12: 2. Market overview
. Company overview Market overview Key credit highlights pow N Historical financials and financial policy Appendix
Slide 13: Key themes in the markets we operate
Key themes in the markets we operate • Inflation and interest rates are weighing on households and SMEs in a credit tightening environment • Expectation of new wave of NPL generation, but banks are well capitalised and no sign of asset deterioration yet • Relevance of UTP (government willingness to
Slide 14: Macroeconomic trends across Group’s markets
Macroeconomic trends across Group’s markets NPEs on banks’ balance sheet (2021-2023 2Q) (€bn) Macroeconomic outlook EU avg. 2023 ▪ S&P’s BBB/A-2 Stable rating confirmed in October, 78.8 74.0 NPL ratio GDP +0.7% notwithstanding slower budgetary consolidation and 71.4 60.8 59.9 1.8% ‘21-H1 ‘23 growth
Slide 15: Market pipeline
Market pipeline For Illustrative Purposes Only Illustrative Primary Market Comments market pipeline1 • Granular NPL portfolios Italy ~€20-25bn • AMCO outsourcing • Covid guaranteed loans ▪ Alphabet (ex-Ariadne) Hellenic ~€10-12bn ▪ HAPS 3 securitisations (structure recently renewed) Region ▪ SLBO (G
Slide 16: 3. Key credit highlights
• • • 3. Key credit highlights • • 16
Slide 17: Key credit highlights
Key credit highlights Leading independent credit and real estate servicer in Southern Europe with 1 holistic and proactive approach to sustainability 2 Favorable and structural markets trends with high barriers to entry One stop shop servicer with a highly diversified business 3 across geographies,
Slide 18: Leading player in the largest and most attractive NPL markets in Europe
1 Leading player in the largest and most attractive NPL markets in Europe… doValue #1 Top 7 #1 #1 Ranking1 Banks NPL ratio 2.4% 1.5%5 1.8% 1.1% 3.0% 1.8% 1.3% 2.8% 2.8% 4.6% 1.9% (Jun-23) EU avg.: 1.8% NPE transactions 352 (Since 2015, €bn)2 169 113 91 90 41 24 6 21 21 15 12 NPL stock, banks only (J
Slide 19: … with a holistic and proactive approach to sustainability
1 … with a holistic and proactive approach to sustainability 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 p
Slide 20: Favorable and structural markets trends with high barriers to entry
2 Favorable and structural markets trends with high barriers to entry Key drivers of volumes (GBV) and revenues High barriers to entry Impact on ✓ Top investors need trusted partners across geographies Driver Impact Macro correlation doValue financials ✓ Local connectivity Scale ✓ Improving unit eco
Slide 21: Independent one-stop-shop servicer…
3 Independent one-stop-shop servicer… doValue is a pure NPL / REO servicer with high level of specialisation, integrating activities including real estate management, commercial information and legal activities Products doValue Value proposition operations Early Arrears / UTP ✓ ▪ Early actions on pr
Slide 22: … with a highly diversified business
3 … with a highly diversified business Sep-2023 AuM (€118bn of GBV) 9M 2023 Revenues (€291m1) Commentary Excl. ancillary ▪ Acquisitions in Spain and Greece led Iberia Iberia services to diversification from countries 10% 17% across Southern Europe since 2019 By region Hellenic Italy ▪ High collectio
Slide 23: Attractive capital light business model…
4 Attractive capital light business model… Benefits of asset-light servicing model ✓ Very limited purchase of NPE portfolios and only if supportive of servicing mandate with limited capex needs (mostly related to IT), resulting in c.84% underlying cashflow generation1 for LTM Sep-23, and proven dele
Slide 24: … with proven track record of resiliency
4 … with proven track record of resiliency Collection Rate (Collections LTM / GBV of AuM)1 Commentary 4.3% 4.4% 4.5% 4.2% 4.2% 4.1% 4.1% 4.1% 4.1% 4.0% ▪ Collection Rates have increased on 3.7% 3.6% 3.5% 3.3% 3.1% account of initiatives to improve efficiency despite COVID and macro- challenges ▪ Div
Slide 25: Focus on operational efficiency …
5 Focus on operational efficiency … Key Focus Initiatives & Investments Achievements ✓ From Holding structure to Group Structure with centralised corporate function at group level and the reorganisation into regional hubs ✓ Regional Hubs consolidating common back-office activities across countries S
Slide 26: … with strong orientation towards digitalisation and technological innovation
5 … with strong orientation towards digitalisation and technological innovation Enhanced capabilities Value added ▪ Propensity Models for debtor segmentation and repayment likelihood maximising expected Artificial Intelligence recovery ▪ Increased revenue streams based on services, predicting behavi
Slide 27: Stable underlying cashflow generation and limited capex coupled with prudent financial structure
6 Stable underlying cashflow generation and limited capex coupled with prudent financial structure Underlying cashflow generation and EBITDA margins (2020-LTM Sep-23) (%) Adjusted EBITDA excl. NRI 30% 35% 36% 35% margin1 Underlying 85% 85% 85% 84% cashflow generation2 2020 2021 2022 LTM Sep-23 Net d
Slide 28: … driven by visible revenue streams through long-term contracts
6 … driven by visible revenue streams through long-term contracts Beyond Residual Gross 2019 2020 2021 2022 2023 2024 2025 2026 2027 2027 or Life at GBV Revenue Key considerations run-off 20271 (Sep-23) (9M 2023) ] GACS Stock Agreement 15 yrs €28bn €69m ▪ NPL stock managed until run-off securitisati
Slide 29: Experienced management team supported by deep bench of investment professionals
7 Experienced management team supported by deep bench of investment professionals Manuela Davide Georgios Theodore Tassos Mariano Sara Franchi Soffietti Kalogeropoulos Kalantonis Panoussis Chemes Elisabetta Paoni Group CEO Group CFO Group COO Executive Chairman CEO of Greece CEO of Spain General Cou
Slide 30: 4. Historical financials and financial policy
• • • • 4. Historical financials and financial policy • 30
Slide 31: GBV under management generating visible revenues
GBV under management generating visible revenues GBV of Assets under Management evolution 2020-Sep-23 Commentary €bn ▪ GBV reduction since 2020 is primarily attributed to the expiry of the 134 127 120 127 118 SAREB servicing contract in Iberia 158 149 137 ▪ While the Hellenic Region has been growing
Slide 32: Flexible cost structure with proven discipline
Flexible cost structure with proven discipline Operating expenses1 Commentary €m ▪ Positive impact from cost discipline measures, in-sourcing strategy and EBITDA restructuring in Spain visible in Margin 30% 35% 36% 36% 34% Ex NRI1 reported operating expenses ▪ HR costs reduction mainly driven by 307
Slide 33: Positive cashflow generation
Positive cashflow generation Adjusted EBITDA1 evolution 2020 - Sep-23 Commentary €m €120m €140m €84m €64m €38m ▪ EBITDA result reflects combination of lower gross revenue and result from 85% 85% 85% 91% 92% significant cost efficiency measures 201 202 ▪ Lower EBITDA in Italy due to lower 4 152 reven
Slide 34: Stable financial structure in line with our leverage target
Stable financial structure in line with our leverage target Net Debt1 (€m) Comments ▪ Strong liquidity position Leverage 2.6x 2.0x 2.1x 2.9x ▪ Approximately €96m cash position as of Sep-2023 402 486 ▪ Approximately €138m of total gross credit lines 411 430 ▪ Pool of Italian, Spanish and Greek banks
Slide 35: 9M 2023 Restatement Impact
Update: Approval of new IAS 34 compliant consolidated interim report as of 30-Sep-2023 Balance sheet Cash flow P&L Intangibles in ▪ In light of the preliminary Business Plan 2024- 2026 for the Iberia Region, which was Net write-downs doValue Spain approved by the Board of Directors on 12-Jan-2024, d
Slide 36: 9M-2023 Highlights and guidance on FY23
9M-2023 Highlights and guidance on FY23 9M-23: Positive results trajectory despite Guidance 2023 Press Release challenging macro-environment Nov-23 Jan-24 Slightly (~2%) Gross lower than the Revenues €490-500m lower-end guidance ▪ Solid collection performance, in particular in Greece and Spain ▪ Str
Slide 37: Financial policy
Financial policy Leverage target 1 - Maximum net leverage of 3.0x Net Debt / EBITDA - Target expected to remain between 2.0-3.0x in the medium term, as per Business Plan 2022-2024 target ✓ Dividend policy 2 - Dividend of €0.60 paid in 2023 related to the fiscal year 2022 ✓ M&A strategy 3 - doValue k
Slide 38: Appendix
1. Company overview 2. Market overview 3. Key credit highlights 4. Historical financials and financial policy Appendix
Slide 39: Update: Approval of new IAS 34 Compliant Consolidated Interim Report
Update: Approval of new IAS 34 Compliant Consolidated Interim Report as of 30-Sep-2023 Item 9M-23 9M-23 9M-22 (€m, unless otherwise stated) Jan-24 Nov-23 ▪ Pursuant to IAS 34, the New Report has to take into account certain significant events that occurred after 30-Sep-23 and up to the approval date
Slide 40: Competitive environment
Competitive environment Top servicers by country by market share (% of total AuM) Italy Greece1 Spain €423bn AuM €86bn AuM €180bn AuM doValue 17% doValue 34% Hipoges 21% Intrum IT 9% Cepal 28% Aliseda/Anticipa 15% Cerved 9% Intrum 26% Servihabitat 13% AMCO 9% Quant 6% Haya 13% Prelios 7% Veraltis 3%
Slide 41: Recent developments: regulation
Recent developments: regulation Current regulatory framework NPL Directive Direct supervision from Bank of Italy for doNext since license is required to operate in its capacity as Master On 24 November 2021 the European Parliament approved the new Directive Servicer pursuant to Italian Law 130/99 (r
Slide 42: Governance and shareholder structure
Governance and shareholder structure Top Shareholders Comments • High quality and relatively stable shareholder base No. Institution Type Country Stake • Fortress is founding shareholder - Active mainly in NPL investing, shareholder of doValue since its formation following the Diversified Investment
Slide 43: Financial highlights (FY 2022)
Financial highlights (FY 2022) Item 2021 2022 Delta Delta Comments (ex Sareb) GBV of €149bn €120bn -19.4% -5.1% Assets under Management ▪ Decrease in GBV mainly driven by disposals (mostly indemnified) and Sareb portfolio off-boarding ▪ Resilient Collections notwithstanding reduction in GBV Collecti
Slide 44: Focus on fee structure
Focus on fee structure Gross revenues breakdown by fees Commentary €m ▪ The impact of outsourcing fees on 572 558 gross revenues has reduced 66 11% 58 10% progressively due to vertical 421 426 46 11% 335 integration and in-source of small 51 12% 31 unsecured tickets, previously 9% 506 89% 500 90% ou
Slide 45: Glossary
Glossary “Ancillary services” refers to our business unit focused primarily on providing clients, banking and investors, with an array of data services connected to the Servicing activities, such as data quality services, focused on improving loan and real estate data, alongside activities such as:
Slide 46: Glossary (cont’d)
Glossary (cont’d) “GACS” refers to the request by banks and financial intermediaries with registered offices in Italy to the Ministry of Economy and Finance for the granting of a guarantee to cover the payments contractually provided for, including both interest and principal, on the senior tranche
Slide 47: Glossary (cont’d)
Glossary (cont’d) “Pure servicer” refers to a Servicer which does not own or acquire any portfolios of the non-performing or similar assets, but solely acts as a Servicer for such portfolios of third parties, banks or investors who originate or acquire portfolios. “Real estate owned” or “REO” refer
Slide 48: Leading the evolution of the servicing industry
• Leading the evolution of the servicing industry 48