Dovalue S.p.a. · MIL:DOV
Dovalue — FY2023 Earnings Presentation
27 slides from Dovalue's earnings presentation, Feb 23, 2024
Slide 1: Preliminary FY 2023 Financial Results
Preliminary FY 2023 Financial Results February 23rd, 2024 1 Q2 2023 results
Slide 2: Business Highlights
• Business Highlights • Manuela Franchi Group CEO 2 Q2 2023 results
Slide 3: FY 2023 and Q4 Highlights
FY 2023 and Q4 Highlights FY23 in line with expectations with strong performance in Q4 ▪ FY ‘23 EBITDA ex NRI in line with company guidance and analysts’ consensus (-11.5% YoY or -4.1% net of Sareb effect) ▪ 2023 results to be read within a challenging scenario in credit servicing markets in Europe
Slide 4: Results in line with Nov-2023 guidance
Results in line with Nov-2023 guidance Results in line with Nov-2023 guidance Guidance 2023 Press Release Preliminary FY 2024 outlook Nov-23 Jan-24 2023 Slightly (~2%) Gross Revenues (1) €490-500m lower than the lower-end guidance ✓ €486m ▪ DOV is currently finalizing its new CMD for the period 2024
Slide 5: Resilient and diversified growth
Resilient and diversified growth Growth and demonstrated adaptation to challenging market conditions Gross Revenues (€m) (1) Comments EBITDA ▪ In the context of two important M&A transaction, the company has managed Margin %(1) to contain the net leverage ratio withing the range of its financial pol
Slide 6: 2023 FY and Q4 Gross Revenues
2023 FY and Q4 Gross Revenues Growth coming back in Q4 Gross Revenues (€m) (1) Comments -0.8% ▪ Higher NPL revenues in Greece (+25.8% QoQ) thanks to healthy collections environment across the board despite notary strikes in December +31.4% ▪ Pick-up in collection in 4Q thanks to portfolio sales 253
Slide 7: Drill down on diversified revenues
Drill down on diversified revenues Strengthening Revenue Stability Through Diversified Growth Amidst NPL Volume Decline Incidence of diversified revenues Comments 2022 2023 ▪ Increase in incidence of diversified revenues (€558m) (€486m) (non-NPL) from 31% to 33% of gross revenues 8% ▪ Ancillary reve
Slide 8: GBV intake in 2023
GBV intake in 2023 Strong market share in a weak year for primary transactions New mandates in FY 2023 by GBV (€bn) Potential pipeline (€bn) Countries Various Various 42 0.9 4 Forward flow 3.4 4 0.1 0.1 0.4 0.8 0.2 0.3 0.5 0.2 1.0 9.7 1.1 1.0 4.5 23 2.4 Italy Sky Iberia Tahiti onboarded Trafalgar Se
Slide 9: Key milestones of doTransformation
Key milestones of doTransformation Main targets of 2022-24 Business Plan already achieved ▪ Centralisation of Group Governance Targets to be achieved ≈ €55m total ▪ Empower Regional Concept investment for Global and Local Transformation 2022 2023 2024 ▪ Establish Back-office Hubs (2022-2024) reduced
Slide 10: Capital structure
Capital structure Manageable upcoming maturities in the next 18 months Gross debt maturities vs. available cash (€m) Comments ▪ Strong liquidity position ▪ Approximately €2700m of available liquidity through cash, cash generation in 560 the next 18 months and RCF lines – full coverage of August 2025
Slide 11: Financial Results
• Financial Results • Davide Soffietti Group CFO 11 Q2 2023 results
Slide 12: Financials at a glance
Financials at a glance Improved profitability in Q4 thanks to flexible cost structure Q4 Q4 FY FY ∆% Item ∆% ∆% 2022 2023 2022 2023 Excl. Sareb GBV €120bn €116bn -3.4% €120bn €116bn -3.4% -3.4% Collections €1.6bn €1.5bn -2.5% €5.5bn €4.9bn -10.0% +5.1% Collection Rate 4.1% 4.6% +0.5 p.p. Gross Reven
Slide 13: GBV Dynamic
GBV Dynamic New inflows for €9.7bn. GBV EoP worth €68.2bn for Italy, €37.3bn for Hellenic region and €10.9bn for Spain GBV evolution (€bn) (1) Comments ▪ Inflows from existing clients lower than 2022 by €0.4bn (-10.5%). Decline -€4.1bn -3.4% mostly attributable to Santander contract where loans are
Slide 14: Gross Revenues
Gross Revenues Revenues diversification on track despite mixed signals from NPL core markets Gross Revenues (€m) (1) Comments -13.0% ▪ Group -4.6% ▪ Although Collections drop by 10.0% YoY (+5.1% ex Sareb), gross revenues ex Sareb decreased by 4.6% ex Sareb thanks to replacement of older GBV vintages
Slide 15: Operating Expenses
Operating Expenses Ongoing cost reduction effort despite inflationary pressures in Q4 Operating Expenses ex NRIs (€m) Comments % of ▪ Significant reduction in Operating costs, down 10.6% YoY, driven by Gross 51% 49% 53% 54% doTransformation plan and post-Sareb restructuring in Spain Revenues ▪ Cost
Slide 16: EBITDA ex NRI
EBITDA ex NRI Strong momentum in Q4 while FY comparison was affected by extraordinary items EBITDA ex NRI (€m) Comments -11.5% ▪ Group -5.1% ▪ EBITDA lower because Sareb offboarding and lower indemnities fees in Ex Sareb Greece (Mexico for €45m) 201 ▪ Hellenic Region % of total 4% 4 178 ▪ Strongest
Slide 17: Regional Performance
Regional Performance Improving collection performance overall FY 2023 Group Hellenic Region Italy Iberia Gross Book €37bn €68bn €11bn €116bn Value (32% of total) (59% of total) (9% of total) €2.2bn €1.7bn €1.1bn Collections €4.9bn (43% of total) (34% of total) (23% of total) Collection Rate 4.6% 7.0
Slide 18: Net Income
Net Income Net Income affected by higher provisions in Spanish intangibles with no impact on cash flow Attributable Net Income (€m) Comments ▪ Attributable Net Income of €-19m (€2.7m ex NRIs) ▪ Lower EBITDA of (€25.2m) ▪ Higher D&A and net provisions (€24.2m) vs LY mainly related to impairment on Sp
Slide 19: Cash Flow
Cash Flow Improving working capital dynamic €m FY FY 2022 2023 Comments EBITDA 198.7 175.1 ▪ Positive Cash Flow from Operations of €79.4m in 2023 vs. €83.6m in 2022 Capex (30.8) (21.3) ▪ Better performance on NWC vs 2022 in all regions due to a specific action plan to focus BUs on cash generation. R
Slide 20: Deep down on cash flow dynamics
Deep down on cash flow dynamics Operating Cash Flow (€m) % of EBITDA Change in Other Assets & Liabilities 88% (62.7) 21.3 (11.7) (8.0) (10.0) (15.0) (5.9) 175.1 (23.8) 153.8 79.4 EBITDA Capex EBITDA - Capex Change in NWC IFRS 15 Redundancies IFRS 16 Adj. Accrual Other Operating Cash impact rents sha
Slide 21: Appendix
• Appendix 21 Q2 2023 results
Slide 22: Condensed Income Statement
Condensed Income Statement Condensed Income Statement 12/31/2023 12/31/2022 Change € Change % Servicing Revenues: 419,889 510,164 (90,275) (17.7)% o/w: NPE revenues 366,696 433,538 (66,842) (15.4)% o/w: REO revenues 53,193 76,626 (23,433) (30.6)% Co-investment revenues 1,290 1,507 (217) (14.4)% Anci
Slide 23: Condensed Balance Sheet
Condensed Balance Sheet Condensed Balance Sheet 12/31/2023 12/31/2022 Change € Change % Cash and liquid securities 112,376 134,264 (21,888) (16.3)% Financial assets 46,167 57,984 (11,817) (20.4)% Property, plant and equipment 48,387 59,191 (10,804) (18.3)% Intangible assets 473,339 526,888 (53,549)
Slide 24: Condensed Cash Flow
Condensed Cash Flow Condensed Cash flow 12/31/2023 12/31/2022 EBITDA 175,068 198,708 Capex (21,300) (30,833) EBITDA-Capex 153,768 167,875 as % of EBITDA 88% 84% Adjustment for accrual on share-based incentive system payments (5,853) 5,557 Changes in Net Working Capital (NWC) (11,746) (15,137) Change
Slide 25: 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 26: 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 27: Leading the evolution of the servicing industry
• Leading the evolution of the servicing industry 27 Q2 2023 results