Earnings Release • Nov 11, 2022
Earnings Release
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November 11th, 2022
| Projects | Country | Investor | Date | GBV | Transaction overview |
|---|---|---|---|---|---|
| Neptune I | Greece | Fortress | Q2 2022 | €500m | Servicing mandate from Fortress |
| Iccrea GACS 6 | Italy | Bayview & CRC | Q2 2022 | €650m | GACS securitisation by Iccrea |
| Sky | Cyprus | Cerberus | Q2 2022 | €2.2bn | Portfolio sale by Alpha Bank to Cerberus |
| Itaca | Italy | Bayview & CRC | Q2 2022 | €1.1bn | GACS securitisation by UniCredit |
| Frontier II | Greece | Bracebridge | Q4 2022 / Q1 2023 |
€1.0bn | HAPS securitisation from NBG |
| Virgo | Greece | EOS Group | Q4 2022 | €450m | Secondary NPL sale from Frontier I, doValue retaining servicing mandate |
| Nix | Spain | Fortress | Q4 2022 | €300m | Servicing mandate from Fortress |
| Confidential | Greece | Confidential | Q4 2022 | €500m | Confidential |
| Souq | Greece | Intrum | To complete in Q1 2023 |
€630m | Secondary NPL sale from Cairo I and II (through doLook), doValue retaining servicing mandate |
| Forward flows in 9M 2022 | - | - | - | €1.7bn | Acceleration of forward flows in Q3 2022 vs H1 2022 |
| Total | c. €9bn | Close to 70% done vs our €13-14bn target |
Material slowdown in GDP Inflation not fading away Increasing financing costs Persistently high levels of Stage 2 loans on banks
balance sheets (at c. 13-14% in Italy and Greece and 7% in Spain)
More limited room for manoeuvre by Governments to support the economy considering Debt / GDP levels
Corporate default rates have already increased by 13% as of Jun-22 (vs Dec-21) in Italy
•Sources: EBA, Bloomberg, IMF World Economic Outlook (October 28th, 2022), Osservatorio NPE by CRIBIS Credit Management - Gruppo CRIF (October 24th, 2022)
| Item | 9M 2021 | 9M 2022 | Delta | Comments |
|---|---|---|---|---|
| GBV | €150bn | €137bn | -8.6% | • Decrease in GBV mainly driven by disposals (mostly indemnified) and Sareb NPL portfolio off-boarding Sareb REO portfolio off-boarding finalised on October 1st, 2022 |
| Collections | €4.0bn | €3.9bn | -2.9% | • Resilient Collections notwithstanding reduction in GBV • Stable Collection Rate YoY, with marginal improvement in Italy • |
| Collection Rate | 4.0% | 4.0% | flat | (+0.1 p.p. vs Jun-22), stable in Hellenic Region (vs Jun-22) and marginal decline in Iberia (-0.4 p.p. vs Jun-22) driven by Sareb NPL offboarding |
| Gross Revenues | €385.9m | €425.5m | +10.3% | Increase in Gross Revenues mainly driven by strong NPL and • REO performance, more favourable GBV mix and higher |
| Net Revenues | €338.8m | €380.0m | +12.2% | revenues from ancillary activities |
| EBITDA ex NRIs | €116.1m | €151.9m | +30.8% | Increase in EBITDA due to growth in Gross Revenues and HR • cost discipline |
| EBITDA ex NRIs margin | 30.1% | 35.7% | +5.6 p.p. | Limited NRIs at c. €2.4m at EBITDA level • Increase in Attributable Net Income ex NRIs driven by EBITDA • |
| Attributable Net Income ex NRIs | €22.7m | €45.6m | +101.2% | growth, lower D&A, lower provisions partially compensated by higher taxes and minorities |
| Net Debt | €432.0m | €422.8m | -2.1% | • Decrease in Financial Leverage in the last 12 months driven by both growth in EBITDA and reduction in Net Debt |
| Financial Leverage | 2.6x | 1.8x | -0.8x | • Strong operating cash flow generation in the last 12 months partially compensated by doTransformation Capex, BidX1 acquisition and dividend payment in May-22 |
• Reduction in OpEx as % of Gross Revenues (from 58% to 54%) - Increase in EBITDA margin (from 30.1% from 35.7%)
EBITDA
• EBITDA ex NRIs increase by +31%
| doValue Group |
Italy | Hellenic Region |
Iberia | |
|---|---|---|---|---|
| Gross Book Value | €137bn | €72bn | €38bn | €26bn |
| Collections | €3.9bn | €1.2bn (31% of tot) |
€1.1bn (29% of tot) |
€1.6bn (40% of tot) |
| Collection Rate | 4.0% | 2.6% | 5.0% | 6.7% |
| Gross Revenues | €426m | €133m (31% of total) |
€193m (45% of total) |
€100m (24% of total) |
| EBITDA ex NRIs | €152m | €35m (23% of total) |
€115m (76% of total) |
€2m (1% of total) |
| EBITDA margin ex NRIs |
36% | 26% | 60% | 2% |
•Note:
•1) Collection Rate in Iberia for the last months impacted by the off-boarding of the Sareb NPL portfolio on July 1st, 2022
16 9M 2022 results
17 9M 2022 results
| 9M 2022 | 9M 2021 | |
|---|---|---|
| EBITDA | €149.6m | €115.9m |
| Capex | €(13.7)m | €(12.6)m |
| Adj. for accrual on share based payments | €4.8m | €1.5m |
| Delta NWC | €(7.5)m | €(21.0)m |
| Delta other assets and liabilities | €(69.3)m | €(35.6)m |
| Taxes | €(25.4)m | €(6.1)m |
| Financial charges | €(20.2)m | €(24.4)m |
| Financial assets divestments / (investments) | €2.4m | €21.1m |
| Tax Claim in Spain | - | €(33.0)m |
| Share buy back (LTI) | - | €(4.6)m |
| Dividends paid to minorities | €(5.0)m | €(2.5)m |
| Dividends paid to doValue shareholders | €(36.8)m | €(20.1)m |
| Net Cash Flow | €(21.0)m | €(21.4)m |
| Net Debt (€m) | Comments | |
|---|---|---|
| 2.0x Net Debt / EBITDA |
1.8x Net Debt / EBITDA |
Significant liquidity position with no maturities before 2025 • - Approx. €160m cash position as of Sep-22 |
| • All bond debt structure - €265m issued in Aug-20 (5.0% coupon, 2025 maturity) - €300m bond issued in Jul-21 (3.375% coupon, 2026 maturity) |
||
| 402 300 |
423 298 |
- Standard & Poor's: BB rating and Stable outlook - Fitch: BB rating and Positive outlook |
| 261 | 260 | • Leverage at 1.8x as of Sep-22 (vs 2.0x as of Dec-21) - Below lower end of leverage target range of 2.0-3.0x |
| 8 (167) |
25 (160) |
Approx. €130m of total gross credit lines • - Pool of Italian, Spanish and Greek banks |
| Dec-21 | Sep-22 | |
| Cash Bank Debt |
Bond 2025 Bond 2026 |
| Item | Actual Results 2021 |
Guidance 2022 |
Comments |
|---|---|---|---|
| Gross Revenues | €572m | €555-565m | • Growth of c. 4% excluding Sareb and gains on Relais / Mexico |
| EBITDA ex NRIs | €201m (35% margin) |
€190-195m (34% margin) |
Growth of c. 13% excluding Sareb and gains on Relais / Mexico • |
| Attributable Net Income ex NRIs | €51m | €45-50m | • Reflecting marginal reduction in EBITDA vs 2021 |
| Financial Leverage | 2.0x at the end of 2021 |
~ 2.2x at the end of 2022 |
• Limited cash flow generation expected in Q4 due to doTransformation Capex and other one-off items and normalisation of LTM EBITDA by year-end vs Sep-22 |
| Dividend per Share1 | €0.50 per share (paid in May-22) |
€0.60 per share1 | In line with Business Plan 2022-2024 target of at least 20% • CAGR in Dividend per Share in 2021-2024 |
Potential upside on Attributable Net Income ex NRI range
•Note:
•1) Dividend per Share for 2022 subject to Board of Directors approval as well as to Shareholders approval
21 9M 2022 results
| Condensed Income Statement (€ '000) | 9/30/2022 | 9/30/2021 | Change € | Change % |
|---|---|---|---|---|
| Servicing Revenues: | 390,305 | 355,806 | 34,499 | 10% |
| o/w: NPE revenues | 326,188 | 296,968 | 29,220 | 10% |
| o/w: REO revenues | 64,117 | 58,838 | 5,279 | 9% |
| Co-investment revenues | 1,141 | 4,186 | (3,045) | (73)% |
| Ancillary and other revenues | 34,083 | 25,887 | 8,196 | 32% |
| Gross revenues | 425,529 | 385,879 | 39,650 | 10% |
| NPE Outsourcing fees | (16,111) | (22,401) | 6,290 | (28)% |
| REO Outsourcing fees | (19,514) | (16,898) | (2,616) | 15% |
| Ancillary Outsourcing fees | (9,891) | (7,748) | (2,143) | 28% |
| Net revenues | 380,013 | 338,832 | 41,181 | 12% |
| Staff expenses | (158,580) | (159,365) | 785 | (0)% |
| Administrative expenses | (71,871) | (63,566) | (8,305) | 13% |
| Total "o.w. IT" | (25,578) | (21,429) | (4,149) | 19% |
| Total "o.w. Real Estate" | (5,161) | (4,966) | (195) | 4% |
| Total "o.w. SG&A" | (41,132) | (37,171) | (3,961) | 11% |
| Operating expenses | (230,451) | (222,931) | (7,520) | 3% |
| EBITDA | 149,562 | 115,901 | 33,661 | 29% |
| EBITDA margin | 35% | 30% | 5% | 17% |
| Non-recurring items included in EBITDA | (2,357) | (236) | (2,121) | n.s. |
| EBITDA excluding non-recurring items | 151,919 | 116,137 | 35,782 | 31% |
| EBITDA margin excluding non-recurring items | 36% | 30% | 6% | 19% |
| Net write-downs on property, plant, equipment and intangibles | (47,919) | (57,978) | 10,059 | (17)% |
| Net provisions for risks and charges | (7,317) | (8,894) | 1,577 | (18)% |
| Net write-downs of loans | 265 | 429 | (164) | (38)% |
| Profit (loss) from equity investments | - | 83 | (83) | (100)% |
| EBIT | 94,591 | 49,541 | 45,050 | 91% |
| Net income (loss) on financial assets and liabilities measured at fair value | (1,170) | 615 | (1,785) | n.s. |
| Net financial interest and commissions | (21,279) | (25,676) | 4,397 | (17)% |
| EBT | 72,142 | 24,480 | 47,662 | n.s. |
| Non-recurring items included in EBT | (8,490) | (12,727) | 4,237 | (33)% |
| EBT excluding non-recurring items | 80,632 | 37,207 | 43,425 | 117% |
| Income tax for the period | (22,984) | (7,034) | (15,950) | n.s. |
| Profit (Loss) for the period | 49,158 | 17,446 | 31,712 | n.s. |
| Profit (loss) for the period attributable to Non-controlling interests | (9,977) | (4,609) | (5,368) | 116% |
| Profit (Loss) for the period attributable to the Shareholders of the Parent Company | 39,181 | 12,837 | 26,344 | n.s. |
| Non-recurring items included in Profit (loss) for the period | (6,849) | (10,284) | 3,435 | (33)% |
| O.w. Non-recurring items included in Profit (loss) for the period attributable to Non-controlling interest | (400) | (438) | 38 | (9)% |
| Profit (loss) for the period attributable to the Shareholders of the Parent Company excluding non-recurring items | 45,630 | 22,683 | 22,947 | 101% |
| Profit (loss) for the period attributable to Non-controlling interests excluding non-recurring items | 10,377 | 5,047 | 5,330 | 106% |
| Earnings per share (in Euro) | 0.50 | 0.16 | 0.33 | n.s. |
| Earnings per share excluding non-recurring items (Euro) | 0.58 | 0.29 | 0.29 | 102% |
| Condensed Balance Sheet (€ '000) | 9/30/2022 | 12/31/2021 | Change | Change % |
|---|---|---|---|---|
| Cash and liquid securities | 159,518 | 166,668 | (7,150) | (4)% |
| Financial assets | 58,459 | 61,961 | (3,502) | (6)% |
| Property, plant and equipment | 34,116 | 34,204 | (88) | (0)% |
| Intangible assets | 529,596 | 545,225 | (15,629) | (3)% |
| Tax assets | 150,756 | 152,996 | (2,240) | (1)% |
| Trade receivables | 197,849 | 206,326 | (8,477) | (4)% |
| Assets held for sale | 10 | 30 | (20) | (67)% |
| Other assets | 15,683 | 17,226 | (1,543) | (9)% |
| Total Assets | 1,145,987 | 1,184,636 | (38,649) | (3)% |
| Financial liabilities: due to banks/bondholders | 582,297 | 568,459 | 13,838 | 2% |
| Other financial liabilities | 73,481 | 76,017 | (2,536) | (3)% |
| Trade payables | 57,775 | 73,710 | (15,935) | (22)% |
| Tax liabilities | 105,001 | 113,060 | (8,059) | (7)% |
| Employee termination benefits | 8,836 | 10,264 | (1,428) | (14)% |
| Provisions for risks and charges | 37,196 | 44,235 | (7,039) | (16)% |
| Other liabilities | 78,278 | 104,888 | (26,610) | (25)% |
| Total Liabilities | 942,864 | 990,633 | (47,769) | (5)% |
| Share capital | 41,280 | 41,280 | - | n.s. |
| Reserves | 84,947 | 96,299 | (11,352) | (12)% |
| Treasury shares | (4,340) | (4,678) | 338 | (7)% |
| Profit (loss) for the period attributable to the Shareholders | ||||
| of the Parent Company | 39,181 | 23,744 | 15,437 | 65% |
| Net Equity attributable to the Shareholders of the Parent Company |
161,068 | 156,645 | 4,423 | 3% |
| Total Liabilities and Net Equity attributable to the | ||||
| Shareholders of the Parent Company | 1,103,932 | 1,147,278 | (43,346) | (4)% |
| Net Equity attributable to Non-Controlling Interests | 42,055 | 37,358 | 4,697 | 13% |
| Total Liabilities and Net Equity | 1,145,987 | 1,184,636 | (38,649) | (3)% |
| Condensed Cash Flow (€ '000) | 9/30/2022 | 9/30/2021 | 12/31/2021 |
|---|---|---|---|
| EBITDA | 149,562 | 115,901 | 199,347 |
| Capex | (13,733) | (12,648) | (29,640) |
| EBITDA-Capex | 135,829 | 103,253 | 169,707 |
| as % of EBITDA | 91% | 89% | 85% |
| Adjustment for accrual on share-based incentive system payments |
4,810 | 1,547 | 1,027 |
| Changes in NWC (Net Working Capital) | (7,458) | (21,002) | (9,285) |
| Changes in other assets/liabilities | (69,263) | (35,562) | (21,340) |
| Operating Cash Flow | 63,918 | 48,236 | 140,109 |
| Corporate Income Tax paid | (25,368) | (6,149) | (12,827) |
| Financial charges | (20,200) | (24,406) | (31,220) |
| Free Cash Flow | 18,350 | 17,681 | 96,062 |
| (Investments)/divestments in financial assets | 2,428 | 21,096 | (26,489) |
| Tax claim payment | - | (32,981) | (32,981) |
| Treasury shares buy-back | - | (4,603) | (4,603) |
| Dividends paid to minority shareholders | (5,002) | (2,502) | (2,502) |
| Dividends paid to Group shareholders | (36,763) | (20,093) | (20,722) |
| Net Cash Flow of the period | (20,987) | (21,402) | 8,765 |
| Net financial Position - Beginning of period |
(401,791) | (410,556) | (410,556) |
| Net financial Position - End of period |
(422,778) | (431,958) | (401,791) |
| Change in Net Financial Position | (20,987) | (21,402) | 8,765 |
•Note: •1) Gross Revenues including Servicing Revenues only
27 9M 2022 results
| 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", Mr Davide Soffietti, in his 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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