Dovalue S.p.a. · MIL:DOV
Dovalue — Investor Presentation (May 2023)
69 slides from Dovalue's investor presentation, May 2023
Slide 1: Corporate presentation
Corporate presentation May 2023 Leading the evolution of the servicing industry 1 Corporate Presentation
Slide 2: Track Record
Track Record 2 Corporate Presentation
Slide 3: 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 4: 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 4 Corporate Presentation
Slide 5: 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 + Gross Italy Hellenic Geographies One Country ~ 20% market share1 Region Revenues 2022
Slide 6: 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 7: 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 FPS S&P: BB (Stable) Credit Rating acquisition 4.3% 4.2% 4.1% 2.6 2.6 2.5 Closin
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: Q1 2023 Results
Q1 2023 Results 10 Corporate Presentation
Slide 11: Results in line with management expectations
Results in line with management expectations €4bn new GBV GBV Collections Collection Rate Resilient collections already secured notwithstanding macro €120 billion €1.1 billion in 2022 4.1% environment flat vs Dec-22 -17.6% Y-o-Y To contribute to Gross Stable vs year-end 2022 Revenues in H2 2023 +17%
Slide 12: Overperformance in a mixed operating environment
Overperformance in a mixed operating environment Market doValue General ~ • General macro slowdown impacting collections activity • Higher inflation and financing costs impacting ability to settle debt ✓ • Geographical diversification partially hedging macro-environment • Strong relative performance
Slide 13: 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 €72bn -3% €0.4bn -4% deterioration of macro environment and normalized YoY YoY court auctions activity (currently slowing, after post- COVID acceleration) • Str
Slide 14: 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 15: Strong cost discipline expected to continue
Strong cost discipline expected to continue OpEx ex NRIs (€m) Comments 20% reduction • 20% reduction in OpEx achieved in the last 15 months (Q1 2023 vs Q1 2022) - Particularly strong performance in Italy (-21%) and Iberia (-32%) - OpEx ex NRIs increased by 2% in the Hellenic Region due to higher per
Slide 16: 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 17: 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 18: Financial highlights
Financial highlights Item Q1 2022 Q1 2023 Delta Comments GBV €153bn €120bn -21.2% • Decrease in GBV mainly driven by disposals (mostly indemnified) and by Sareb portfolio off-boarding in H2 2022 Collections €1.3bn €1.1bn -17.6% • Resilient collections performance despite Sareb portfolio off-boarding
Slide 19: 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 €120bn €101m 34% Region and Iberia reflects difference in average Hellenic (Mar-23
Slide 20: 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 8% Arrears 7% Arrears 3% 1% 3% REOs • Higher share of Revenues from non-NPL €120bn 13% €88m1 products reflects higher fees on such
Slide 21: Gross Book Value
Gross Book Value Gross Book Value (€bn) 1.4 3.9 124.1 120.5 0.9 120.2 ( 1.1 ) ( 0.8 ) ( 0.7 ) GBV Forward flows New mandates Collections / Net write-offs Disposals GBV Mandates secured GBV (Dec-22) Sales (Mar-23) (not onboarded as of (Mar-23, Mar-23) pro-forma) • Forward flows: €0.9bn (strong contri
Slide 22: Gross Revenues
Gross Revenues Gross Revenues (€m) Comments €15m €10m • Group Outsourcing Fees Outsourcing Fees - Key driver of the decline is the Sareb off-boarding (11.5% of Gross (9.5% of Gross Revenues) Revenues) • Italy -22.7% - Decline in NPL revenues & ancillary activities - Growth in UTP revenues % of total
Slide 23: Operating Expenses
Operating Expenses Operating Expenses ex NRIs (€m) Comments • Decline in OpEx by 19.7% 59% of 61% of - All cost categories have decreased Y-o-Y Gross Revenues Gross Revenues • Decline in HR costs by 16.2% -19.7% - Mainly driven by Sareb restructuring program % of Gross % of Gross - Notable reduction
Slide 24: EBITDA
EBITDA EBITDA ex NRIs (€m) Comments • Group 30.0% 29.7% EBITDA ex NRIs EBITDA ex NRIs - Reduction in OpEx / Outsourcing fees not fully offsetting reduction in Gross margin margin Revenues % of total 39 -23.4% % of total • Italy - Reduction in OpEx not fully offsetting reduction in Gross Revenues 4%
Slide 25: Regional Performance (Q1 2023)
Regional Performance (Q1 2023) doValue Hellenic Italy Iberia Group Region Gross Book Value €120bn €72bn €36bn €12bn €0.4bn €0.4bn €0.3bn Collections €1.1bn (35% of tot) (40% of tot) (25% of tot) Collection Rate 4.1% 2.4% 6.4% 8.7% €34m €51m €16m Gross Revenues €101m (34% of total) (51% of total) (15
Slide 26: Net Income
Net Income Attributable Net Income (€m) Comments • Attributable Net Income negative for €3m (positive for €0.5m ex NRIs) - Lower EBITDA by €8.8m vs Q1 2022 - Higher Provisions for Risk and Charges by €4.6m vs Q1 2022 10 - Lower Result from assets valued at fair value by €2.0m vs Q1 2022 - Lower taxe
Slide 27: Cash Flow
Cash Flow Cash Flow (€m) Q1 2023 Q1 2022 • Positive Cash Flow from Operations of €22.1m (+42% vs Q1 2022) EBITDA €30.1m €38.9m • Capex of €1.4m reflect seasonality and doTransformation plan Capex €(1.4)m €(5.1)m • Better management of working capital with limited cash absorption Adj. for accrual on
Slide 28: Financial Structure
Financial Structure Net Debt (€m) Comments • Significant liquidity position 2.1x 2.2x Net Debt / Net Debt / - More than €120m cash position as of Mar-23 EBITDA EBITDA • Approx. €133m of total gross credit lines - Pool of Italian, Spanish and Greek banks 430 433 • All bond debt structure, no maturity
Slide 29: 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 30: Market Overview
Market Overview 30 Corporate Presentation
Slide 31: Market themes
Market themes Market themes • Tangible pipeline of servicing mandates totalling c. €58bn 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 32: A growing medium term pipeline
A growing medium term pipeline Overview of pipeline (€bn) +€6bn vs Feb-23 58 +€6bn vs Growing pipeline of €58bn +€1bn vs Feb-23 for the short to medium Feb-23 18 term +€1bn vs 40 Feb-23 +€5bn vs Feb-23 11 Secondary NPL transactions gaining 10 traction 19 Italy Hellenic Region Iberia Total Secondarie
Slide 33: 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 13.3 13.4 13.1 13.1 12.6 5.8 5.6 5.6 5.2 Stage 2 loans remain at 11.3 11.4 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 9.1 3.7
Slide 34: 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 35: 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 36: Business Plan
Business Plan 36 Corporate Presentation
Slide 37: 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 38: Strategic pillars of doValue 2024
Business Plan 2022-2024 approved on January 25th, 2022 Strategic pillars of doValue 2024 GROW ENHANCE TRANSFORM INNOVATE CARE 38 Corporate Presentation
Slide 39: 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 40: 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 41: 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 42: 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 43: 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 44: ESG Strategy
ESG Strategy MSCI ESG Research Group Sustainability Plan - Target 2023 ▪ MSCI ESG Research upgraded doValue from AA to AAA in Mar-23 ▪ Purchase of certified 100% renewable electricity, Rating history E reducing related Scope 2 emissions (market-based method) ▪ People Engagement Survey participation
Slide 45: 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 46: 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 47: Attractive shareholders' distribution policy
Business Plan 2022-2024 approved on January 25th, 2022 Attractive shareholders’ distribution policy Dividend Per Share (€) Total dividends to be paid > €200m related to Fiscal Years 2021-2024 6% 7% 9% 11% Dividend Dividend Dividend Dividend Yield Yield Yield Yield Current market capitalisation > 30%
Slide 48: doTransformation
doTransformation 48 Corporate Presentation
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 36% EBITDA +200 bps c. 38% EBITDA Before: Holding structure margin EBITDA margi
Slide 53: Remuneration
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 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 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 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: Appendix
Appendix 59 Corporate Presentation
Slide 60: Shareholders' structure
Shareholders’ structure Top Shareholders Comments • High quality and relatively stable shareholder base No. Institution Type Country Stake • Fortress is founding shareholder 1 Fortress Private Equity USA c. 28% - Active also in NPL investing - Historical client of doValue. In Dec-21, increased its s
Slide 61: Board of Directors
Board of Directors Board of Directors Comments No. Name Role Type • Board of Directors - Composed of 60-40% Independent / Non-Independent members 1 Giovanni Castellaneta Chairman Independent - Composed of 50-50% Women / Men members 2 Manuela Franchi Acting CEO Not independent (executive) • Manuela F
Slide 62: Corporate Structure
Corporate Structure Overview Recent Events • Dec-20: merger of doValue Greece Holding by doValue Greece • Nov-20: merger of doSolutions S.p.A. in doValue S.p.A. doValue S.p.A. - doValue IT/back office company - Following the partnership with IBM signed in July 2020 - Significant employee transfer fr
Slide 63: Group Organisational Structure
Group Organisational Structure Overview Chief Group Control Officer Board of Directors (Paolo Poncetta) CEO (Andrea Mangoni) General Manager of Country Manager Regional Manager Regional Manager Corporate Functions and General Counsel Italy Iberia Hellenic Region Group Chief Financial Officer (Sara P
Slide 64: 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 65: Condensed income statement
Condensed income statement Condensed Income Statement (€ ‘000) Q1 2023 Q1 2022 Change € Change % Servicing Revenues: 87,917 117,390 (29,473) (25.1)% o/w: NPE revenues 76,653 99,259 (22,606) (22.8)% o/w: REO revenues 11,264 18,131 (6,867) (37.9)% Co-investment revenues 377 378 (1) (0.3)% Ancillary an
Slide 66: Condensed balance sheet
Condensed balance sheet Condensed Balance Sheet (€’000) 3/31/2023 12/31/2022 Change € Change % Cash and liquid securities 126,345 134,264 (7,919) (5.9)% Financial assets 52,395 57,984 (5,589) (9.6)% Property, plant and equipment 55,174 59,191 (4,017) (6.8)% Intangible assets 517,734 526,888 (9,154)
Slide 67: Condensed cash flow
Condensed cash flow Condensed Cash Flow (€ ‘000) Q1 2023 Q1 2022 2022 EBITDA 30,117 38,919 198,708 Capex (1,449) (5,064) (30,833) EBITDA-Capex 28,668 33,855 167,875 as % of EBITDA 95% 87% 84% Adjustment for accrual on share-based incentive system payments 678 1,056 5,557 Changes in Net Working Capit
Slide 68: 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 69: Leading the evolution of the servicing industry
• Leading the evolution of the servicing industry 69 Corporate Presentation