Dovalue S.p.a. · MIL:DOV
Dovalue — Q1 2023 Earnings Presentation
33 slides from Dovalue's earnings presentation, May 12, 2023
Slide 1: Q1 2023 results
Q1 2023 results May 12th, 2023 1 Q1 2023 results
Slide 2: Business Highlights
• Business Highlights • Manuela Franchi Group CEO 2 Q1 2023 results
Slide 3: 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 4: 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 5: 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 6: 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 7: 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 8: 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 9: 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 10: 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 11: 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 12: Financial Results
• Financial Results • Davide Soffietti Deputy Group CFO 12 Q1 2023 results
Slide 13: 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 14: 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 15: 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 16: 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 17: 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 18: 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 19: 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 20: 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 21: 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 22: Closing Remarks
• Closing Remarks • Manuela Franchi Group CEO 22 Q1 2023 results
Slide 23: 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 24: Appendix
• Appendix 24 Q1 2023 results
Slide 25: 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 26: 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 27: 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 28: 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 29: 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 30: 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 31: 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 32: 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 33: Leading the evolution of the servicing industry
• Leading the evolution of the servicing industry 33 Q1 2023 results