Earnings Release • Feb 18, 2022
Earnings Release
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February 18th, 2022
| 1 | Record inflows in 2021 and acceleration in 2022 |
• Record €14.7bn of new GBV secured in 2021 (above target range of €9.0-11.0bn) Forward flows for €3.3bn (1.6x of target) plus new mandates for €11.4bn (1.4x mid point of target) • • Already secured €1.5bn of GACS and €500m portfolio in Greece as of Feb-22 • Started pilot project for management of granular Early Arrears with major Italian Bank (new client for doValue) |
✓ |
|---|---|---|---|
| 2 | Solid financial performance in 2021 |
• Gross Revenues of €572m (within upper end of guidance of €565-575m) • EBITDA ex NRI of €201m (above guidance of €190-195m) • Net Income ex NRI of €51m (above guidance of €45-50m) Collection Rate at 4.3% (growing from 3.1% in 2020 and 4.2% in 2019) • • Improvement in collection performance reflecting post-COVID normalisation and contribution of doValue Greece |
✓ |
| 3 | Significant milestones achieved |
• Successful securitisation underwriting with Project Mexico and Project Relais (GBV of €4.8bn and €9m capital gain) Several doTransformation initiatives completed in Q4 2021 / Q1 2022 and others to be activated in Q1 2022 • • Project Frontier (€5.7bn) successfully onboarded on February 7th, 2022 • BidX1 integration well underway in Spain, Portugal and Cyprus and expected launch of BidX1 sale platform by Jun-22 |
✓ |
| 4 | Substantial deleverage in 2021 enabling acceleration of shareholders' distributions |
• Net Debt / EBITDA at 2.0x as of Dec-21 (from 2.6x as of Dec-20) Achieved lower end of leverage target range (2.0-3.0x) • • Expected stable leverage in 2022 (excluding M&A) Dividend Per Share1 of €0.50 for 2021, to grow by at least 20% per annum • • Total dividends > €200m to be paid related to fiscal years 2021-2024 |
✓ |
| 5 | Supportive macro backdrop ahead |
• Normalisation of auction and collection activity not impacted by latest COVID waves • Moratoria and restrictions on foreclosures now lifted across all regions in Southern Europe • Rising inflation and potential interest rate hike likely to lead to additional formation of NPEs |
✓ |
| •Note: •1) |
Dividend per Share of €0.50 subject to Board of Directors approval (March 17th, 2022) and subject to Shareholders approval (April 28th, 2022) |
Inflows overview 2017-2021 (€bn)
New Mandates in 2021 (€bn)
| Item | Guidance for 2021 |
Actual for 2021 |
Outcome | Comment |
|---|---|---|---|---|
| Gross Revenues | €565-575m | €572m | → | Actual result in the upper half of guidance • |
| EBITDA ex NRIs | €190-195m (34% margin) |
€201m (35% margin) |
| • Actual result above guidance |
| Attributable Net Income ex NRIs |
€45-50m | €51m | | Actual result above guidance • |
| Financial Leverage |
2.0-2.2x | 2.0x | | • Actual result at the lower end of guidance Strong deleveraging from 2.6x as of Dec-20 • Achieved lower end of leverage target range (2.0-3.0x) • Expected stable Financial Leverage in 2022 (excluding M&A) • |
| Dividend Per Share1 (DPS) |
€0.50 | €0.50 | = | • DPS to grow by at least 20% per annum in 2021-2024 • Total dividends > €200m related to fiscal years 2021-2024 |
•Note:
•1) Dividend per Share of €0.50 subject to Board of Directors approval (March 17th, 2022) and subject to Shareholders approval (April 28th, 2022)
•Notes:
•1) Q4 2021 and Q4 2020 share the same consolidation perimeter as doValue Greece acquisition was closed in June 2020
•2) Free Cash Flow conversion calculated on EBITDA including NRIs (as per cash flow statement)
| Selected Activities Q4 2021 and Q1 2022 |
Overarching Plan and Objective | ||
|---|---|---|---|
| 1 | Centralised management of IT blueprint apps in Q4 2021 |
✓ | |
| 2 | Group IT policies approved and implemented in Q4 2021 |
✓ | ≈ €55m total investment for Global and Local Transformation (in 2022-2024) |
| 3 | Merger of NPL platforms in Italy completed on January 27th, 2022 |
✓ | |
| 4 | Project Frontier (€5.7bn) successfully onboarded on February 7th, 2022 |
✓ | |
| 5 | Establishment of Central Procurement Department | ✓ | |
| 6 | Transfer of resources from local IT to the Group started in Q1 2022 |
✓ | |
| 7 | Group IT acting as service provider for infrastructure services and security since Q1 2022 |
✓ | |
| 8 | Common IT KPIs rolled out in Q1 2022 | ✓ | Run rate €25-30m in savings per annum after 2024 (including operations) |
| 9 | Creation of two Loan Administration and Property Management Hubs by end of 2022 |
✓ |
| Overview | Transaction | Country | GBV | Comment | Secured by doValue |
|---|---|---|---|---|---|
| Sareb | Spain | ≈ €55bn | Assignment of 2022-2025 contract (current contract expires in Jun-22) |
- | |
| €17bn Italy Iberia 18% 6% |
Ariadne | Greece | ≈ €5bn | Disposal by PQH (Greek Bad Bank) of NPL portfolio |
- |
| €17bn Current NPL transaction pipeline in Hellenic Region pipeline Southern Europe 76% (ex Sareb) |
Starlight | Cyprus | ≈ €2bn | Disposal by Hellenic Bank of servicing platform with GBV (incl. securitisation) and forward flows |
- |
| (excluding Sareb process) |
Sky | Cyprus | ≈ €2bn | Disposal by Alpha Bank of NPL portfolio in Cyprus |
- |
| SLBO | Greece | ≈ €2bn | Sale and lease back of non-performing real estate portfolio (Ministry of Finance) |
- | |
| Frontier II | Greece | ≈ €1.5bn | Second HAPS securitisation by NBG | - | |
| UniCredit UTP | Italy | ≈ €1bn | Partnership for management of UTP portfolio |
- | |
| Confidential | Portugal | ≈ €1bn | Potential carve out of servicing platform with GBV and forward flows |
- | |
| Italy GACS 1 | Italy | ≈ €1.0bn | GACS securitisation of non-performing loans Italian bank |
✓ | |
| Italy GACS 2 | Italy | ≈ €500m | GACS securitisation of non-performing loans Italian bank |
✓ | |
| Greek Portfolio | Greece | ≈ €500m | Reassignment by investor of servicing mandate from existing servicer |
✓ | |
| Total | ≈ €72bn | ≈ €2.0bn | |||
| Tot. (ex Sareb) | ≈ €17bn | ≈ €2.0bn |
As per Business
•Note: Financial data for 2017-2020 presented as initially published (not restated)
2017 2018 2019 2020 2021 2022 2023 2024
•Notes:
•1) Dividend Yield based on current share price
•2) Dividend per Share of €0.50 subject to Board of Directors approval (March 17th, 2022) and subject to Shareholders approval (April 28th, 2022)
| Item | FY 2020 | FY 2021 | Delta | Comments |
|---|---|---|---|---|
| GBV | €158bn | €149m | broadly stable |
• GBV dynamic driven by acceleration of collections post COVID and by one-off disposals by banks clients, partially offset by |
| Collections | €4.3bn | €5.7bn | +34% | inflows • Approx. €8.3bn of mandates already secured and to be onboarded in 2022 (€158bn pro-forma GBV) |
| Collection Rate | 3.1% | 4.3% | +1.2 p.p. | • Increase in Collection Rate driven by post COVID normalisation and early signs of productivity gains (doTransformation) |
| Gross Revenues | €420.5m | €572.1m | +36% | • Strong increase in Gross and Net Revenues driven by post COVID recovery and enlarged perimeter (doValue Greece) |
| Net Revenues | €370.4m | €506.5m | +37% | Lower outsourcing costs at c. 11% of Gross Revenues • |
| EBITDA ex NRIs | €127.5m | €200.9m | +58% | Strong growth in EBITDA driven by increase in Net Revenues • and more favourable geographical mix post closing of |
| EBITDA ex NRIs margin | 30.3% | 35.1% | +4.8 p.p. | acquisition of doValue Greece (positively affecting EBTIDA margin). Limited NRIs at c. €1.6m above EBITDA level • Growth in Net Income ex NRIs driven by increase in EBITDA, |
| Attributable Net Income ex NRIs | €12.0m | €50.7m | +4.2x | partially compensated by increased D&A, interests and taxes |
| Net Debt | €410.5m | €401.8m | -2% | • Achieved lower end of leverage target range of 2.0-3.0x Cash Flow in 2021 impacted by acquisitions of stake in BidX1 • (€10m), share buy-back (€5m), Tax Claim (€33m) and |
| Financial Leverage | 2.6x | 2.0x | -0.6x | unwinding of COVID-related arrangement with Eurobank (payment of fees in advance) |
•Note: •1) Gross Revenues including Servicing Revenues only
•1) Gross Revenues including Servicing Revenues only
•2) Breakdown assumed in line with GBV
•1) Considering doValue Greece as fully consolidated for the entire 2020 (whilst acquisition of doValue Greece was closed in June 2020)
•Note:
•1) Considering doValue Greece as fully consolidated for the entire 2020 (whilst acquisition of doValue Greece was closed in June 2020)
EBITDA
•1) Considering doValue Greece as fully consolidated for the entire 2020 (whilst acquisition of doValue Greece was closed in June 2020)
| E-MARKET SDIR CERTIFIED |
|---|
| doValue Group |
Italy | Hellenic Region |
Iberia | |
|---|---|---|---|---|
| Collections | €5.7bn | €1.7bn (30% of tot) |
€1.3bn (23% of tot) |
€2.7bn (47% of tot) |
| Collection Rate | 4.3% | 2.4% | 6.0% | 6.6% |
| Gross Revenues | €572m | €180m (31% of tot) |
€220m (38% of tot) |
€172m (30% of tot) |
| EBITDA ex NRIs | €201m | €40m (20% of tot) |
€119m (59% of tot) |
€42m (21% of tot) |
| EBITDA margin ex NRIs |
35% | 22% | 54% | 25% |
•Notes:
•1) Collections exclude curing
•2) Collection Rate includes doValue Greece (which was previously excluded, up to 9M 2021 results)
•3) Collection Rate calculated on the basis of GBV in stock for the entire 2021
Cash Flow
48% EBITDA conversion into Free Cash Flow
| Net Debt (€m) | Comments | |
|---|---|---|
| 2.6x Net Debt / EBITDA PF |
2.0x Net Debt / EBITDA |
• Significant liquidity position with no maturities before 2025 - Approx. €167m cash position as of Dec-21 • All bond debt structure achieved in Q3 2021 - €265m issued in Aug-20 (5.0% coupon, 2025 maturity) - €300m bond issued in Jul-21 (3.375% coupon, 2026 maturity) |
| 411 | 402 | - Full reimbursement of bank debt in Jul-21 - Previously bank debt had an amortising repayment profile |
| 259 | 300 | - Improved liquidity profile (bullet) and longer maturity - Fitch and Standard & Poor's BB rating confirmed at Stable Outlook and achieved targets for rating category |
| 284 | 261 | Financial Leverage at 2.0x as of Dec-21 (vs 2.6x as of Dec-20) • - Achieved lower end of leverage target range of 2.0-3.0x |
| (132) | 8 (167) |
|
| • Approx. €120m of committed credit lines - Pool of Italian, Spanish and Greek banks - Increased by c. €30m in January 2022 |
||
| 2020 | 2021 | |
| Cash Bank Debt |
Bond 2025 Bond 2026 |
| Condensed Income Statement (€ '000) | 12/31/2021 | 12/31/2020 RESTATED |
Change € '000 | Change % |
|---|---|---|---|---|
| Servicing Revenues: | 528,626 | 386,082 | 142,544 | 37% |
| o/w: NPE revenues | 446,097 | 318,442 | 127,655 | 40% |
| o/w: REO revenues | 82,529 | 67,640 | 14,889 | 22% |
| Co-investment revenues | 8,846 | 429 | 8,417 | n.s. |
| Ancillary and other revenues | 34,579 | 34,024 | 555 | 2% |
| Gross revenues | 572,051 | 420,535 | 151,516 | 36% |
| NPEOutsourcing fees | (29,998) | (22,147) | (7,851) | 35% |
| REO Outsourcing fees | (24,217) | (17,407) | (6,810) | 39% |
| Ancillary Outsourcing fees | (11,369) | (10,608) | (761) | 7% |
| Net revenues | 506,467 | 370,373 | 136,094 | 37% |
| Staff expenses | (215,851) | (172,911) | (42,940) | 25% |
| Administrative expenses | (91,269) | (80,813) | (10,456) | 13% |
| Total "o.w. IT" | (30,183) | (26,440) | (3,743) | 14% |
| Total "o.w. Real Estate" | (6,159) | (5,484) | (675) | 12% |
| Total "o.w. SG&A" | (54,927) | (48,889) | (6,038) | 12% |
| Operating expenses | (307,120) | (253,724) | (53,396) | 21% |
| EBITDA | 199,347 | 116,649 | 82,698 | 71% |
| EBITDA margin | 35% | 28% | 7% | 26% |
| Non-recurring items included in EBITDA | (1,572) | (10,869) | 9,297 | (86)% |
| EBITDA excluding non-recurring items | 200,919 | 127,518 | 73,401 | 58% |
| EBITDA margin excluding non-recurring items | 35% | 30% | 5% | 16% |
| Net write-downs on property, plant, equipment and intangibles | (87,174) | (79,313) | (7,861) | 10% |
| Net provisions for risks and charges | (25,547) | (11,272) | (14,275) | 127% |
| Net write-downs of loans | 545 | 162 | 383 | n.s. |
| Profit (loss) from equity investments | 83 | (2) | 85 | n.s. |
| EBIT | 87,254 | 26,224 | 61,030 | n.s. |
| Net income (loss) on financial assets and liabilities measured at fair value | 1,071 | (3,466) | 4,537 | (131)% |
| Financial interest and commissions | (32,839) | (23,416) | (9,423) | 40% |
| EBT | 55,486 | (658) | 56,144 | n.s. |
| Non-recurring items included in EBT | (26,152) | (25,139) | (1,013) | 4% |
| EBT excluding non-recurring items | 81,638 | 24,481 | 57,157 | n.s. |
| Income tax for the period | (16,902) | (33,132) | 16,230 | (49)% |
| Profit (Loss) for the period | 38,584 | (33,790) | 72,374 | n.s. |
| Profit (loss) for the period attributable to Non-controlling interests | (10,241) | 3,383 | (13,624) | n.s. |
| Profit (Loss) for the period attributable to the Shareholders of the Parent Company | 28,343 | (30,407) | 58,750 | n.s. |
| Non-recurring items included in Profit (loss) for the period | (24,083) | (47,550) | 23,467 | (49)% |
| O.w. Non-recurring items included in Profit (loss) for the period attributable to Non-controlling interest | (1,694) | (5,110) | 3,416 | (67)% |
| Profit (loss) for the period attributable to the Shareholders of the Parent Company excluding non-recurring items Profit (loss) for the period attributable to Non-controlling interests excluding non-recurring items |
50,732 | 12,033 | 38,699 | n.s. |
| 11,935 | 1,727 | 10,208 | n.s. | |
| Earnings per share (in Euro) | 0.36 | (0.38) | 0.74 | n.s. |
| Earnings per share excluding non-recurring items (Euro) | 0.64 | 0.15 | 0.49 | n.s. |
•Note: Data related to 2020 have been restated following the completion of the Purchase Price Allocation of doValue Greece
| Condensed Balance Sheet (€ '000) | 12/31/2021 | 12/31/2020 RESTATED | Change € '000 | Change % |
|---|---|---|---|---|
| Cash and liquid securities | 166,635 | 132,486 | 34,149 | 26% |
| Financial assets | 61,895 | 70,859 | (8,964) | (13)% |
| Property, plant and equipment | 34,204 | 36,176 | (1,972) | (5)% |
| Intangible assets | 552,422 | 564,136 | (11,714) | (2)% |
| Tax assets | 152,611 | 126,157 | 26,454 | 21% |
| Trade receivables | 206,360 | 175,155 | 31,205 | 18% |
| Assets held for sale | 30 | 30 | - | n.s. |
| Other assets | 17,225 | 16,485 | 740 | 4% |
| Total Assets | 1,191,382 | 1,121,484 | 69,898 | 6% |
| Financial liabilities: due to banks/bondholders | 568,459 | 543,042 | 25,417 | 5% |
| Other financial liabilities | 78,864 | 76,075 | 2,789 | 4% |
| Trade payables | 73,710 | 51,824 | 21,886 | 42% |
| Tax Liabilities | 114,461 | 91,814 | 22,647 | 25% |
| Employee Termination Benefits | 10,264 | 16,465 | (6,201) | (38)% |
| Provisions for risks and charges | 55,940 | 87,346 | (31,406) | (36)% |
| Other liabilities | 90,903 | 71,164 | 19,739 | 28% |
| Total Liabilities | 992,601 | 937,730 | 54,871 | 6% |
| Net Equity | 198,781 | 183,754 | 15,027 | 8% |
| Total Liabilities and Net Equity | 1,191,382 | 1,121,484 | 69,898 | 6% |
•Note: Data related to 2020 have been restated following the completion of the Purchase Price Allocation of doValue Greece
•Note: Data related to 2020 have been restated following the completion of the Purchase Price Allocation of doValue Greece
| 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 |
| Forward Flows | Agreement with commercial bank related to the management of all future NPL generation by the bank for number of years, customary feature of credit servicing platforms spun off by commercial banks |
| FTE | Full Time Equivalent, i.e. a unit that indicates the workload of an employed person in a way that makes workloads comparable across various contexts |
| GACS | Garanzia Cartolarizzazione Sofferenze, i.e. the State Guarantee scheme put together by the Italian Government in 2016 which favoured the creation of a more liquid NPL market in Italy and allowed banks to more easily deconsolidate NPL portfolios through securitisations |
| GBV | Gross Book Value, i.e. nominal value of assets under management by doValue, represents the maximum / nominal claim by banks / investors to borrowers on their portfolios |
| HAPS | Hercules Asset Protection Scheme, i.e. the State Guarantee scheme put together by the Greek Government in 2019 with the aim of favouring the creation of a more liquid NPL market in Greece and to allow banks to more easily deconsolidate NPL portfolios through securitisations |
| NPE | Non-Performing Exposure, i.e. the aggregate od NPL, UTP and Early Arrears |
| NPL | Non-Performing Loan, i.e. loans which are more than 180 days past due and have been denounced |
| NRI | Non-Recurring Items, i.e. costs or revenues which are non-recurring by nature (typically encountered in M&A or refinancing transactions) |
| Performing Loans |
Loans which do not present problematic features in terms of principal / interest repayment by borrowers |
| REO | Real Estate Owned, i.e. real estate assets owned by a bank / investor as part of a repossession act |
| UTP | Unlikely to Pay, i.e. loans that are between 90-180 days past due and denounced or more than 180 past due and not denounced |
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Certification pursuant article 154 BIS, paragraph 2 of Italian Legislative Decree no. 58 of 24 February 1998 (the Consolidated Financial Law)
Pursuant to Article 154 bis, paragraph 2, of the "Consolidated Law on Finance", Mrs Elena Gottardo, in her capacity as the Financial Reporting Officer with preparing the financial reports of doValue S.p.A, certifies that the accounting information contained in this document, is consistent with the data in the supporting documents and the Group's books of accounts and other accounting records.
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