Dovalue S.p.a. · MIL:DOV
Dovalue — 9M 2023 Earnings Presentation
29 slides from Dovalue's earnings presentation, Nov 10, 2023
Slide 1: 9M and Q3 2023 results
9M and Q3 2023 results November 10th, 2023 1 Q2 2023 results
Slide 2: Business Highlights
• Business Highlights • Manuela Franchi Group CEO 2 Q2 2023 results
Slide 3: 9M Main highlights
9M Main highlights 9M23 characterized by 3Q seasonality, FY23 in line with expectations Solid operational momentum in 9M: collections up 7.3% YoY1 despite macro conditions ▪ 3Q 23 comparison affected by Mexico indemnity in 3Q 22, will normalize at YE with Q4 seasonally strongest quarter ▪ Primary NP
Slide 4: Expanding along the value Chain
Expanding along the value Chain From a pure servicer’s Business Model to a diversified model Current broad Planned trajectory offering Performing Credit Servicing Non performing Credit Servicing & Real Estate Management Banks Banks/Investors Others Origination Performing Loans Core business Diversif
Slide 5: Macroeconomic trends across group's markets
Macroeconomic trends across group’s markets NPE actual stocks lower than expectations: default rates -1.5% vs 2022 estimates for 2023 and -0.3% for 2024 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
Slide 6: NPL activity in 2023
NPL activity in 2023 Despite a weak credit servicing scenario, but expected to improve in next 2 years, doValue has continued to win servicing of new portfolios Defaulted loans in Italy (€bn) Comments 80 4.5% Defaulted loans 5.0% 4.3% 4.2% ▪ Tenure in credit quality, historical derisking by banks an
Slide 7: doTransformation program is successfully reshaping our cost base
doTransformation program is successfully reshaping our cost base Extract more Enhance productivity Update operating Strengthen human revenues per unit of to lower costs per model and reduce capital GBV managed GBV managed cost break-even point Initiatives Economic Impact • Efficiencies achieved = 16
Slide 8: Tech-infused operational efficiency to maximise value
Tech-infused operational efficiency to maximise value Enhanced capabilities Value added Operational Impact ▪ Propensity Models for debtor segmentation and repayment Artificial likelihood maximizing expected recovery Intelligence 10% ▪ New revenue streams based on services, predicting behaviour, risk
Slide 9: Pipeline of potential new business (18 months)
Pipeline of potential new business (18 months) doValue Market doValue Primary Market Expected Comments pipeline Market share pipeline • Covid guaranteed loans and AMCO outsourcing Italy €15-20bn ~20% €4-5bn • Granular NPL portfolios (€2bn) ▪ Alphabet (ex-Ariadne) (€4.8bn) Hellenic €9bn ~30% €3-4bn ▪
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 Group CFO 11 Q2 2023 results
Slide 12: Financials at a glance
Financials at a glance Q3 Q3 Q3 Delta Excluding 9m 9m 9m Delta Excluding Item 2021 2022 2023 ‘22-’23 Sareb 2021 2022 2023 ‘22-’23 Sareb GBV €150bn €137bn €118bn -14.3% -7.1% €150bn €137bn €118bn -14.3% -7.1% Collections €1.3bn €1.1bn €1.0bn -11.2% +0.3% €4.0bn €3.9bn €3.4bn -13.0% +7.3% Collection R
Slide 13: Gross Book Value
Gross Book Value Gross Book Value – 9m 2023 (€bn) ▪ GBV at €117.8Bn vs. EoP 2022 €120.5Bn, mainly driven by: ▪ Inflows from existing clients: strong contribution from all contracts increasing from €1.7bn in 9M 22 to €2.6bn in 9M 23 (+53%) ▪ Inflows from new clients: +€6.1bn mainly related to seconda
Slide 14: Gross Revenues
Gross Revenues Gross Revenues (€m) Comments -21.2% ▪ Group -11.7% ▪ Collections grow by 7.3% YoY excluding Sareb ex Sareb ▪ Gross revenues decrease YoY mainly due to Sareb off-boarding in Spain and seasonality, with large indemnity recorded in 9M22 vs larger proportion of 426 disposals expected in Q
Slide 15: GBV & Gross Revenues breakdown
GBV & Gross Revenues breakdown GBV Gross Revenues Comments by client type by client type ▪ Well diversified GBV by region and client type Commercial ▪ Higher share of Revenues vs GBV from Banks Commercial Banks reflects higher than average Securitisation 19% Securitisation Commercial fees related to
Slide 16: Operating Expenses
Operating Expenses Operating Expenses ex NRIs (€m) Comments % of ▪ Significant reduction in Operating costs, down 17% YoY, driven by Gross 48% 58% 54% 56% doTransformation plan Revenues ▪ Cost efficiency measures implemented in all regions, and in particular in Spain post Sareb -17.0% ▪ All cost cat
Slide 17: EBITDA
EBITDA EBITDA ex NRIs (€m) Comments -24.0% ▪ Group -16.0% ▪ EBITDA on an underlying basis (net of Sareb effect and Mexico indemnity in Ex Sareb 3Q22) stable YoY thanks to significant cost efficiency measures and right- 152 sizing in Spain -47.9% ▪ Italy 116 115 -46.0% ▪ EBITDA negatively impacted by
Slide 18: Regional Performance 9m
Regional Performance 9m doValue Group 2023 Italy Hellenic Region Iberia Gross Book €69bn €38bn €11bn €118bn Value (58% of total) (32% of total) (10% of total) €1.2bn €1.4bn €0.8bn Collections €3.4bn (34% of total) (41% of total) (25% of total) Collection Rate 4.5% 2.5% 6.1% 9.2% Gross €113m €172m €5
Slide 19: Net Income
Net Income Attributable Net Income (€m) Comments ▪ Attributable Net Income of €6m (€19m ex NRIs) ▪ Lower EBITDA of €34m vs 9M 22 mainly due to effect of indemnity in Q3 22 -57.7% ▪ Higher D&A and net provisions (€7.5m) vs LY ▪ Lower taxes due to lower EBT (€3.0m) 46 6 ▪ Ordinary items below EBITDA:
Slide 20: Cash Flow
Cash Flow €m 9M 9M 2022 2023 Comments EBITDA 149.6 115.3 ▪ Positive Cash Flow from Operations of €37.9m in 9M 2023 vs. €63.9m in 9M 2022. Difference mainly due to Mexico indemnity recorded in 3Q 2023 Capex (13.7) (9.2) ▪ Better performance on NWC vs 9M22 in all regions due to a specific action Delta
Slide 21: Financial Structure
Financial Structure Net Debt (€m) Comments Leverage ▪ Strong liquidity position ▪ Around €92m cash position as of Sept. 2023 after dividend payment. 2.2x 1.8x 2.1x 2.2x 2.4x 2.9x ▪ Approximately €120m of total gross credit lines 461 423 430 479 486 433 ▪ Pool of Italian, Spanish and Greek banks 300
Slide 22: 2023 Guidance and closing remarks
2023 Guidance and closing remarks Positive results trajectory despite challenging macro Guidance 2023 environment Gross Revenues €490-500m ▪ Solid collection performance, in particular in Greece and Spain ▪ Strong macro momentum in Greece with improvement to investment grade by S&P outlining positiv
Slide 23: Appendix
• Appendix 23 Q2 2023 results
Slide 24: Condensed income statement
Condensed income statement 9/30/2023 9/30/2022 Change € Change % Servicing Revenues: 291,498 390,305 (98,807) (25.3)% o/w: NPE revenues 251,623 326,188 (74,565) (22.9)% o/w: REO revenues 39,875 64,117 (24,242) (37.8)% Co-investment revenues 1,064 1,141 (77) (6.7)% Ancillary and other revenues 42,592
Slide 25: Condensed balance sheet
Condensed balance sheet 9/30/2023 12/31/2022 Change € Change % Cash and liquid securities 95,667 134,264 (38,597) (28.7)% Financial assets 52,374 57,984 (5,610) (9.7)% Property, plant and equipment 52,410 59,191 (6,781) (11.5)% Intangible assets 500,735 526,888 (26,153) (5.0)% Tax assets 115,127 118
Slide 26: Condensed cash flow
Condensed cash flow 9/30/2023 9/30/2022 12/31/2022 EBITDA 115,335 149,562 198,708 Capex (9,160) (13,733) (30,833) EBITDA-Capex 106,175 135,829 167,875 as % of EBITDA 92% 91% 84% Adjustment for accrual on share-based incentive system (4,761) 4,810 5,557 payments Changes in Net Working Capital (NWC) (
Slide 27: 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 28: 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 29: Leading the evolution of the servicing industry
• Leading the evolution of the servicing industry 29 Q2 2023 results