Dovalue S.p.a. · MIL:DOV
Dovalue — Investor Presentation (September 2024)
54 slides from Dovalue's investor presentation, September 2024
Slide 1: Corporate Presentation September 2024
Corporate Presentation September 2024
Slide 2: Agenda
AGENDA 1. Key highlights of the Business Plan 2. Gardant transaction 3. Business Plan assumptions 4. 1H24 Results 1
Slide 3: Key highlights of the Business Plan
Key highlights of the Business Plan 2
Slide 4: doValue today (2023A)
doValue today (2023A) GBV IN 4 COUNTRIES MARKET LEADERSHIP LEADER IN NPL COLLECTIONS €116bn Mainly secured 15yrs avg residual #1in Southern Europe ~15% market share2 life1 Revenues by product (%) Revenues by client (%) Banks GROSS REVENUES 10 CLIENTS Other DIVERSIFIED PORTFOLIO 33 BEYOND NPL 67 €481
Slide 5: New doValue: the Asset-Light Credit Management Leader in Southern Europe
New doValue: the Asset-Light Credit Management Leader in Southern Europe Uniquely positioned as asset-light Credit Management Leader in the Leader in Southern most attractive European geographies Europe, Hellenic region and Italy Long-term industrial relationships with shareholders who are among the
Slide 6: Our history: creation of a European strategic financial services provider
Our history: the creation of a European strategic financial services provider UCCMB acquisition IPO Debanking Investments in Fintechs by Fortress (BidX1, Quero Quitar) 2015 2016 2017 2018 2019 2020 2021 2022 2023 Further business diversification Integration with doValue Spain doValue Greece (SMEs BU
Slide 7: Resilient through a perfect storm, positioned for tailwinds
Resilient through a “perfect storm” that is almost over and well positioned to take advantage of expected tangible tailwinds ”Perfect storm” almost behind doValue resilience Tangible market tailwinds 2023 vs 2021 ex-Sareb: GBV (3)% Banks achieving record results CAGR, Revenues (2)% CAGR and Expected
Slide 8: Business Plan 24-26: beyond servicing, investing to unlock new frontiers
Business Plan 24-26: beyond servicing, investing to unlock new frontiers ... Strengthen doValue’s position as leading independent financial services provider GBV of €116bn #1 in Hellenic Solid financial structure, doValue Independent & 110+ clients #1 in Italy best YTM among competitive capital ligh
Slide 9: Beyond servicing: target products to expand
Beyond servicing: target products to expand 2024 – 2026 NEW BUSINESS TO TARGET PRODUCT STRATEGY PRIORITIES Expand 1 core (credit collection) to new segments and industries Asset management co- Mortgage Advisory investment fund brokerage JV unit 2 New solutions beyond servicing M&A in new areas to 3
Slide 10: Consolidated diversification across geographies
Consolidated diversification across geographies, taking advantage of different market phases DISTRIBUTION OF LOAN PORTFOLIO TRANSACTIONS1 (%) DOVALUE PROFITABILITY Cumulated transactions’ volume (€bn) EBITDA MARGIN (%) 2021 2022 2023 GREECE FAVOURABLE 110 MARKET 64% HELLENIC 55% 59% 57% 33% 3% Limit
Slide 11: Recap of our mission, vision and core values
Recap of our mission, vision and core values Our values lead our way of working and day-to-day behaviors OUR VALUES Create value for our clients CO Focus on SS LL Create an and shareholders by offering NE Goal Communication AB high-standard financial innovative E oriented and inclusive strategy tran
Slide 12: Tangible ambitions by 2026 (including Gardant)
Our aspiration translates into tangible ambitions by 2026 (including Gardant) AMBITION 2026 20% Leader in providing financial solutions in Southern Europe Market share1 €9bn p.a. Keeping leadership in a stable market GBV inflows 35-40% A more diversified group with solid growth path Non NPL revenues
Slide 13: Our strategic pillars
Our strategic pillars Strengthening of business development team and proactive approach to Client oriented approach 1 to enhance origination and preserve core business consolidate leadership on core business and unlock new growth opportunities Boost customer experience to sustain long-term relations
Slide 14: Targeted strategies adapted to different markets
Targeted strategies adapted to different markets to consolidate our presence in all countries CORE ENGINE 1 ENGINE 2 OF GROWTH GRANULAR NON BANKS NPL UTP EARLY ARREARS PERFORMING UNSECURED STAGE 2 • LT agreements • Already managed for ERB • Already managed for ERB with Banks • Expanding to other ban
Slide 15: Country specific priorities
Country specific priorities OVERARCHING PRIORITIES HELLENIC ITALY SPAIN • Achieving leadership in cost-to- serve and increase operating • Discontinuity on Sareb • Younger NPE market with high • Developed NPE market leverage to manage business • NPL ratio higher vs other collection rate • Opening bey
Slide 16: Gardant transaction
Gardant transaction 15
Slide 17: Gardant is a Leading Italian Credit Management Platform
Gardant is a Leading Italian Credit Management Platform Business Description (figures for 2024E) Group Structure Gardant Mgmt & • Gardant boasts a comprehensive credit management offering other shareholders across the entire value chain, including performing loans, UTPs 11% 89% and NPLs, master & sp
Slide 18: Compelling Financials and Attractive Flow Contracts
Compelling Financials and Attractive Flow Contracts Gardant boasts an excellent level of profitability thanks to high-quality and long-term forward flow servicing agreements with Banco BPM and Banca BPER and focus on UTP / Asset management Key Financials Key Commercial Agreements 2024E GBV Joint Ven
Slide 19: Consolidating doValue's Leadership in the Italian Market
Consolidating doValue’s Leadership in the Italian Market >€90bn Pure-Play Servicing Italian Servicer with Long-Standing Relationships with Banks and Financial Investors Italian NPE Landscape Asset-light NPE asset Banking Forward Servicer Anchor Shareholders Italian Special Servicing NPE GBV (€bn) bu
Slide 20: Enhanced Scale & Breadth of Offering
Enhanced Scale & Breadth of Offering The acquisition achieves a well-balanced portfolio in terms of client category (banks, securitisation vehicles and investors), in addition to achieving a larger and highly attractive GBV, with Italy increasing its contribution to the Group 2023A 2024E GBV GBV in
Slide 21: Creating Long-Term Value through Industrial Synergies
Creating Long-Term Value through Industrial Synergies The envisaged combination of doValue and Gardant is expected to generate up to €15m of annual pre-tax synergies (c.€5m already in 2025), with cumulative one-off restructuring costs of approx. €15m Cost Synergies (c. 80%) Revenue Synergies (c. 20%
Slide 22: Ticking all the boxes of Strategic Agenda and M&A Guidelines
’Ticking all the boxes’ of doValue’s Strategic Agenda and M&A Guidelines The transaction is also perfectly in line with the Rationale, Focus and Guidelines for M&A indicated in the CMD on 21st March 2024, with respect to M&A Acceleration of 24-26 Industrial Plan Objectives Key Guidelines for M&A Con
Slide 23: Gardant Transaction Highlights
Gardant Transaction Highlights Consideration for Gardant envisages a €230m cash component and 20% ownership in the Combined Entity • The Acquisition consideration is composed of: (i) €230m upfront cash consideration and (ii) new doValue shares issued at €4 per share, significant premium to current s
Slide 24: Simplified Sources & Uses
Simplified Sources & Uses Uses Sources Upfront cash consideration 230 Financing package B 500 A Refinance 2025 SSNs 264 Rights Issue 150 Additional liquidity(2) 156 C Total Uses 650 Total Sources 650 A: A Gardant Cash Consideration of €230m, includes refinancing of Gardant existing net debt (€50m) B
Slide 25: Solid Capital Structure with Ample Coverage of 2025-2026 Maturities
Solid Capital Structure with Ample Coverage of 2025-2026 Maturities Ample and well-diversified liquidity position post-closing, with the new financing package of c.€500m coupled with improved Free Cash Flows for 2025-2026 providing solid coverage for the amortisation of the Term Loan and to support
Slide 26: Acquisition process status
Acquisition process status August September October November COMMENTS ▪ EGM called for the 11 Company 2 3 4 6 steps REVERSE RESERVED September, 2024 EGM CAPITAL RIGHTS STOCK INCRESE ISSUE SPLIT ▪ Timing of rights issue FOR POC dependant on M&A closing and regulatory approvals 1 5 ▪ Regulatory filing
Slide 27: Targets (including Gardant acquisition)
Targets (including Gardant acquisition) 2026 2026 POST Comments CMD GARDANT • EBITDA including actual synergies estimates for 2026 EBITDA ex NRIs €185-195 €240-255 • Guardant business contributing to improved EBITDA cash conversion thanks to low capex requirements (also considering economy of scale
Slide 28: Business plan assumptions
Business plan assumptions 27
Slide 29: Key Business Plan Assumptions 2024-2026 (stand-alone)
Key Business Plan Assumptions 2024-2026 (stand-alone) Status Quo in 2023A Business Plan 24-26° (stand-alone) • The BP assumes a continuation of the 2023 macroeconomic • “Perfect Storm” with high interest rates, healthy banks, low NPL Macro generation and low primary NPL dealflow dynamics, despite si
Slide 30: GBV proven to be resilient over time
GBV proven to be resilient over time Diversified client base with long-term contracts and high percentage of real estate backed and corporate NPLs assuring a resilient and long-term collection profile in all key geographies Key Portfolio & Residual Life Key drivers Client GBV at end 2023 (€bn) Durat
Slide 31: GBV future flows and new mandates
GBV future flows and new mandates New inflows are conservatively expected at levels slightly below 2023, not considering expected increases in NPE generation throughout Europe Future flows (€bn) Key drivers €3.5bn p.a. 21A-23A • Conservative forecast of future flows of c.€2bn per annum over the 2024
Slide 32: Higher Collection driven by better quality and productivity
Higher Collection driven by better quality and productivity Collections rates to benefit from replacement of old-vintage GBV with newer GBV from new business Collections (€bn) GBV composition by type/age of mandates (%, ex-Sareb) Hellenic Region Italy Spain ~5% CAGR 6.2 +3% CAGR 21-23A ex-Sareb 23A-
Slide 33: Stable Revenues supported by increased diversification
Stable Revenues supported by increased diversification doValue’s new solutions to address client needs are expected to foster non-NPL revenues in the near future, while maintaining a capital light business model Gross Revenues by Nature (€m) Key drivers • Slight decline on NPL-related revenues at th
Slide 34: Continuing Opex reduction, also thanks to transformation
Continuing Opex reduction, also thanks to transformation The cost base is expected to remain stable in 2026 thanks to the successful execution of doTransformation, coupled with further transformation initiatives aimed at protecting margins from inflationary pressures, with a total of €50m run-rate c
Slide 35: Transformation to contain inertial cost increases
Transformation to contain inertial cost increases doValue is launching further transformational initiatives to reduce its cost base, with estimated cost savings of €25m to 2026. The full run-rate impact of these initiatives in 2024 would lead to EBITDA increasing by approx. €10m Track record in Spai
Slide 36: EBITDA growth driven by improvements across all regions
EBITDA growth driven by improvements across all regions Gradual growth in EBITDA mainly driven by improvements in Italy and Spain and continuing solidity of the Greek business EBITDA ex NRI (€m) Key drivers % EBITDA margin +15% 201 202 179 160-170 185-195 • Expected €185-195m of EBITDA in 2026 corre
Slide 37: Financial policy
Financial policy Leverage • Maximum leverage of 3.0x Net Debt / EBITDA with medium term target of 2x Targets • Strong cash flow generation leads to clear and consistent deleveraging On a stand-alone basis – To be reviewed in the context of the Gardant acquisition Dividend • 2024: suspension of divid
Slide 38: 1H 2024 Results
1H 2024 Results 37
Slide 39: European NPL stock rising (1/2)
European NPL stock rising (1/2) EU/EEA NPL stock evolution from Q4 2022 to Q1 2024 by classes (€bn) Comments • Early signs of worsening asset quality for banks began to appear +2.6% in 2023 and continuing in H1 2024: weak economic growth, rising 350 2.9% 2.7% 2.8% 2.8% 2.9% living costs and higher r
Slide 40: European NPL stock rising (2/2)
European NPL stock rising (2/2) NPL stock evolution from Q4 2022 to Q1 2024 by country (€bn) Comments Banks’ total assets 2,554 Δ-4.3% • Inversion of NPL trend with a +1.5% (+€0.6bn) in Q1 2024 +1.5% • NPL secondary market EU directive under implementation: expected 45.9 46.0 43.4 increase in liquid
Slide 41: GBV intake
GBV intake GBV onboarded as of June 30th, 2024 (€m) Potential pipeline (€bn) Contribution Vs announced Targets o/w €2.7bn secondary €6.0bn €2.0bn €8.0bn mandates in Greece 37 56% 33% 12% ~50% ~77% ~57% Forward 4 • All potential deals ongoing as portfolio flows sales 3,027 0.5 • Almost all potential
Slide 42: Beyond Non-performing
Beyond Non-performing REVENUES AND MARGIN ENGINE 2 OF GROWTH NEW LINES OF BUSINESS BY BUSINESS LINE (€m, %) GRANULAR EARLY UTP PERFORMING NON BANKS Mortgage ARREARS UNSECURED brokering 33% STAGE 2 Non-NPL revenues • Company set up in Greece €8bn €300m (finThesis) NPL GBV under €700m First stage 2 €2
Slide 43: Financials at a glance
Financials at a glance ITEMS (*) Q2 Q2 ∆% H1 H1 ∆% COMMENTS (€m) 2024 2023 YoY 2024 2023 YoY • Reduction in gross revenues due to lower REO revenues in Spain and postponement of Gross ongoing disposal to 2H in Greece €117m €126m -7.5% €214m €226m -5.7% Revenues • Trend partly offset by in ancillary
Slide 44: GBV dynamics
GBV dynamics GBV evolution COMMENTS Positive GBV dynamic with commercial efforts yielding results and robust NPE generation from forward flow contracts +1.4% • Inflows from new clients amounting to €3.0bn: €1.7bn from Greece, €0.3bn from Italy (Luzzatti) and €1bn from Spain (primarily from Sabadell,
Slide 45: Gross Revenues
Gross Revenues Gross Revenues (€m) COMMENTS • Group • Gross revenues slightly decreasing YoY driven by lower disposals, partially offset by -5.7% higher ancillaries in Italy and Greece 226 214 • Hellenic Region 15% 33 25 • Overall drop in revenues by -2.7% YoY, due lo lower disposals in Greece partl
Slide 46: Operating Expenses
Operating Expenses Operating Expenses ex NRIs (€m) COMMENTS % of Gross Revenues • Total Operating expenses 51% 54% 55% 58% • Operating costs broadly stable in H1 2024 despite in 2023 it was positively impacted by one-off events • Overall cost discipline across the group with continuing effort in Spa
Slide 47: EBITDA ex NRIs
EBITDA ex NRIs EBITDA ex NRIs (€m) COMMENTS • Group • Results above expectations • EBITDA at €67.4m in H1 2024 (-17.5% YoY) -17.5% • Decline mainly driven by corresponding lower direct revenues and comparison and one-off positive effect from release of previous CEO’s variable compensation 82 • NRI c
Slide 48: From EBITDA to Attributable Net Income
From EBITDA to Attributable Net Income EBITDA to Net Income bridge (€m) Ex 67.4 37.1 22.5 6.9 Ex NRI NRI Margin 31.5% 17.4% 10.5% 3.2% % EBITDA Net write- Net Net write-down EBIT Net financial Net result of EBT Income tax Minorities Attributable downs on provisions of loans & interests and financial
Slide 49: Cash Flow
Cash Flow €m Q2 Q2 H1 H1 COMMENTS 2023 2024 2023 2024 EBITDA 49.7 40.1 79.8 65.0 • Cash flow from operations, equal to €19.6m, in H1, -€3.8m lower than LY (€23.4m) counterbalanced by -€14.8m lower EBITDA, resulting in an improved cash conversion (30.2%) mainly due to: Capex (4.0) (4.8) (5.4) (6.6) •
Slide 50: Financial Structure
Financial Structure Net Debt (€m) COMMENTS Leverage • Significant increase in cash position in Q2 (+€44m QoQ) 2.7x 3.0x 2.9x • Net leverage under control and stable at 2.9x despite lower LTM EBITDA • Significant cash-in in April related to Arbitration with Altamira Asset Management Holding (€22.7m)
Slide 51: Regional Performance
Regional Performance H1 2024 Hellenic Group Region Italy Spain GBV €118bn €38bn €68bn €12bn Collections €2.1bn €0.8bn €0.8bn €0.5bn TMR 4.2% 6.1% 2.4% 8.8% Gross Revenues (1) €214m €108m €80m €25m €67m €(0.7)m EBITDA ex NRIs (1) €53m €21m (2) n.m. EBITDA ex NRIs 31.5% 49.3% 26.8% (2) n.m. margin (1)
Slide 52: Guidance for 2024 and impact of Gardant transaction
Guidance for 2024 and impact of Gardant of transaction 2024 2024 GUIDANCE1 GARDANT Gross revenues €460-480m €135m Impact of Gardant acquisition on reported 2024 financial statements Gross Book Value ~€115bn ~€22bn • Pro rata impact on P&L depending on closing date (expected Q4 ‘24) EBITDA ex NRIs €1
Slide 53: Disclaimer
Disclaimer This disclaimer applies to all documents and information provided herein and to any verbal or written comments of person presenting them by doValue S.pA. and its affiliates (collectively, the “Company”) or any person on behalf of the Company, and any question and answer session that follo
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