Earnings Release • Aug 4, 2022
Earnings Release
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August 4th, 2022
| Very strong financial |
|---|
| performance in H1 2022 |
1
2
3
Resilient collections despite macro slowdown
Spain turnaround accelerating
Significant progress on other key activities
4
✓
✓
✓
✓
•1) Excluding from H1 2021 the €4m capital gain realised from the sale of Relais notes
•2) EBITDA ex NRIs margin for H1 2021 and excluding €4m capital gain realised from the sale of Relais notes stands at 27.5%
4 H1 2022 results
5 H1 2022 results
| 1 | Financial performance |
Spain H1 2022 EBITDA well ahead of budget • • On track to achieve EBITDA target for FY 2022 |
|---|---|---|
| 2 | Collections | • Strong REO sales in H1 2022 May and June saw the highest monthly performance in terms of REO sales since 2018 • NPL collections mostly impacted by Sareb off-boarding • |
| 3 | Sareb | NPL portfolio offboarded on July 1st, 2022. REO portfolio to be offboarded in Oct-22 • • Reorganisation costs likely to be lower than €15m |
| 4 | Clients diversification |
Won servicing mandate on €300m portfolio from new investor in Spain • |
| 5 | New initiatives | • Legal Services and SME business units set up and in proactive origination mode • SME business running first pilot with new banking client • Looking to sign the first sizeable mandate with key client in for Legal Services • Actively pitching UTP / Early Arrears capabilities to banks |
| 6 | BidX1 | Successful sale of real estate assets in Spain through BidX1 (on portfolios with limited previous traction) • |
✓
✓
✓
✓
✓
✓
Further diversification by customer and geography
Sustainalytics upgrade
•Note:
•1) Of the €1.1bn UniCredit GACS, approx. €500m represents new GBV for doValue (the reminder was already part of doValue's GBV)
| Item | H1 2021 | H1 2022 | Delta | Comments |
|---|---|---|---|---|
| GBV | €160bn | €150bn | -6.0% | • Decrease in GBV mainly driven by disposals in Italy and Spain (indemnity fee received) |
| Collections | €2.7bn | €2.8bn | +3.7% | • Sareb portfolio (c. €21bn) to be deducted from GBV in Q3 and Q4 2022 Increase in Collection and Collection Rate driven by post • |
| Collection Rate | 3.7% | 4.2% | +0.5 p.p. | COVID normalisation, GBV mix and early signs of productivity gains (doTransformation) |
| Gross Revenues | €254.2m | €271.2m | +6.7% | • Increase in Gross Revenues mainly driven by strong NPL collection performance, more favourable GBV mix and higher |
| Net Revenues | €222.1m | €237.9m | +7.1% | revenues from ancillary activities • Excluding €4m Relais capital gain in H1 2021, Gross Revenues increase is +8.4% and EBITDA ex NRIs increase is +21.5% |
| EBITDA ex NRIs | €72.9m | €83.7m | +14.9% | • Increase in EBITDA mainly driven by higher growth in Gross Revenues and cost discipline on HR side |
| EBITDA ex NRIs margin | 28.7% | 30.9% | +2.2 p.p. | • Limited NRIs at c. €1.3m at EBITDA level • Increase in Net Income ex NRIs driven by increase in EBITDA, |
| Attributable Net Income ex NRIs | €13.5m | €23.3m | +71.9% | lower D&A, lower provisions partially compensated by higher taxes and minorities |
| Net Debt | €387.8m | €461.2m | +18.9% | Increase in Net Debt in LTM driven by BidX1 acquisition • (€10m), share buy-back (€5m), Tax Claim payment (€33m), Capex plan and 2022 dividend payment |
| Financial Leverage | 2.4x | 2.2x | +0.2x | Leverage increase in Q2 2022 mainly driven by dividend • payment and NWC, partially already normalised in Jul-22 |
| % of Gross Revenues |
149 | % of tot | % of tot | 154 | % of Gross Revenues |
|---|---|---|---|---|---|
| 10% 1% 6% |
24 3 15 |
16% 2% 10% |
17% 2% 11% |
27 3 17 |
10% 1% 6% |
| 42% | 107 | 72% | 69% | 107 | 39% |
| H1 2021 | HR IT |
RE SG&A |
H1 2022 |
•Notes:
•1) Excluding from H1 2021 the €4m capital gain realised from the sale of Relais notes, the ratio of Operating Expenses ex NRIs to Gross Revenues stands at 60%
EBITDA
| doValue Group |
Italy | Hellenic Region |
Iberia | |
|---|---|---|---|---|
| Collections | €2.8bn | €0.8bn (31% of tot) |
€0.8bn (27% of tot) |
€1.2bn (42% of tot) |
| Collection Rate | 4.2% | 2.5% | 5.0% | 7.1% |
| Gross Revenues | €271m | €96m (35% of tot) |
€101m (37% of tot) |
€75m (28% of tot) |
| EBITDA ex NRIs | €84m | €29m (35% of tot) |
€50m (59% of tot) |
€5m (6% of tot) |
| EBITDA margin ex NRIs |
31% | 30% | 49% | 7% |
•Notes:
•1) Collections exclude curing
•2) Collection Rate calculated on the basis of GBV in stock for the LTM Jun-22
18 H1 2022 results
| H1 2022 | H1 2021 | |
|---|---|---|
| EBITDA | €82.4m | €72.9m |
| Capex | €(9.7)m | €(7.0)m |
| Adj. for accrual on share based payments | €3.4m | €0.6m |
| Delta NWC | €(37.5)m | €(7.9)m |
| Delta other assets and liabilities | €(44.6)m | €(21.8)m |
| Taxes | €(6.0)m | €(2.4)m |
| Financial charges | €(12.7)m | €(13.0)m |
| Financial assets investments / (divestments) | €1.9m | €(20.3)m |
| Dividends paid to shareholders | €(36.6)m | €(18.9)m |
| Net Cash Flow | €(59.4)m | €22.8m |
| 1 | Attractive dividend policy | • • |
Committed to DPS growth of 20% per annum in 2021-2024 (starting from DPS of €0.50 for 2021) More than 35% of current market cap returned in the next 3 years as dividends |
✓ |
|---|---|---|---|---|
| 2 | No direct exposure to Russia / Ukraine |
• • |
Managed loans are mostly secured to domestic real estate located in Southern Europe Less than €20m of GBV related to Russian / Ukrainian borrowers (in Greece / Cyprus) |
✓ |
| 3 | No short term exposure to interest rates in financing structure |
• • |
Current debt made of fixed coupon bonds (€265m / 2025 @ 5% coupon, and €300m / 2026 @ 3.375% coupon) No refinancing needs before 2025 |
✓ |
| 4 | Limited exposure to inflation in the cost structure |
• • |
Pure servicing business, HR makes 69% of cost base (IT 11%, real estate 2% and SG&A 17%) Mild link of cost base to inflation |
✓ |
| 5 | Gross Book Value mostly secured to real estate assets |
• • |
Approx. 73% of GBV is secured (vs 23% being unsecured) and mostly backed by real estate assets Real estate is good medium term inflation hedge, supporting collection performance |
✓ |
| 6 | Potential increase in NPEs | • | In addition to post-COVID flows (already expected to materialise in 2022), the current dramatic situation in Ukraine and the sanctions affecting Russia, coupled with macro slowdown, inflation and rising interest rates, will most likely add more pressure to certain corporate sectors and households in Southern Europe leading to increased NPE formation |
✓ |
| 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 |
• Cash flow generation in 2022 to be absorbed by doTransformation capex, change in NWC and other assets & liabilities, Sareb NRIs and Dividend paid in May-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 |
Confident to achieve top end of the 2022 guidance ranges
•Note:
•1) Dividend per Share for 2022 subject to Board of Directors approval as well as to Shareholders approval
24 H1 2022 results
| Servicing Revenues: 246,399 232,396 14,003 6% o/w: NPE revenues 207,051 193,427 13,624 7% o/w: REO revenues 39,348 38,969 379 1% Co-investment revenues 754 4,134 (3,380) (82)% Ancillary and other revenues 24,029 17,666 6,363 36% Gross revenues 271,182 254,196 16,986 7% NPE Outsourcing fees (11,841) (15,336) 3,495 (23)% REO Outsourcing fees (14,657) (11,308) (3,349) 30% Ancillary Outsourcing fees (6,800) (5,439) (1,361) 25% Net revenues 237,884 222,113 15,771 7% Staff expenses (107,046) (106,780) (266) 0% Administrative expenses (48,431) (42,446) (5,985) 14% Total "o.w. IT" (17,405) (14,901) (2,504) 17% Total "o.w. Real Estate" (3,100) (3,282) 182 (6)% Total "o.w. SG&A" (27,926) (24,263) (3,663) 15% Operating expenses (155,477) (149,226) (6,251) 4% EBITDA 82,407 72,887 9,520 13% |
|---|
| EBITDA margin 30% 29% 2% 6% |
| Non-recurring items included in EBITDA¹⁾ (1,312) (3) (1,309) n.s. |
| EBITDA excluding non-recurring items 83,719 72,890 10,829 15% |
| EBITDA margin excluding non-recurring items 31% 29% 2% 8% |
| Net write-downs on property, plant, equipment and intangibles (30,986) (38,316) 7,330 (19)% |
| Net provisions for risks and charges (2,302) (6,746) 4,444 (66)% |
| Net write-downs of loans 241 386 (145) (38)% |
| Profit (loss) from equity investments - - - n.s. |
| EBIT 49,360 28,211 21,149 75% |
| Net income (loss) on financial assets and liabilities measured at fair value (500) (543) 43 (8)% |
| Net financial interest and commissions (14,057) (13,553) (504) 4% |
| EBT 34,803 14,115 20,688 147% |
| Non-recurring items included in EBT²⁾ (1,839) (6,275) 4,436 (71)% |
| EBT excluding non-recurring items 36,642 20,390 16,252 80% |
| Income tax for the period (8,173) (2,561) (5,612) n.s. |
| Profit (Loss) for the period 26,630 11,554 15,076 130% |
| Profit (loss) for the period attributable to Non-controlling interests (4,339) (3,007) (1,332) 44% |
| Profit (Loss) for the period attributable to the Shareholders of the Parent Company 22,291 8,547 13,744 n.s. |
| Non-recurring items included in Profit (loss) for the period (567) (5,350) 4,783 (89)% |
| O.w. Non-recurring items included in Profit (loss) for the period attributable to Non-controlling interest 418 (357) 775 n.s. |
| Profit (loss) for the period attributable to the Shareholders of the Parent Company excluding non-recurring items 23,276 13,540 9,736 72% |
| Profit (loss) for the period attributable to Non-controlling interests excluding non-recurring items |
| 3,921 3,364 557 17% |
| Earnings per share (in Euro) 0.28 0.11 0.17 n.s. |
| Earnings per share excluding non-recurring items (Euro) 0.29 0.17 0.12 73% |
¹⁾ Non-recurring items in Operating expenses include the costs of consultancies related to business developement projects
²⁾ Non-recurring items included below EBITDA refer mainly to (i) termination incentive plans, to (ii) charges for an ongoing arbitration, (iii) insurance reimbursements, with (iv) related tax effects
| Condensed Balance Sheet | 6/30/2022 | 12/31/2021 | Change € | Change % |
|---|---|---|---|---|
| Cash and liquid securities | 121,080 | 166,668 | (45,588) | (27)% |
| Financial assets | 59,786 | 61,961 | (2,175) | (4)% |
| Property, plant and equipment | 35,468 | 34,204 | 1,264 | 4% |
| Intangible assets | 536,030 | 545,225 | (9,195) | (2)% |
| Tax assets | 158,273 | 152,996 | 5,277 | 3% |
| Trade receivables | 228,110 | 206,326 | 21,784 | 11% |
| Assets held for sale | 10 | 30 | (20) | (67)% |
| Other assets | 14,098 | 17,226 | (3,128) | (18)% |
| Total Assets | 1,152,855 | 1,184,636 | (31,781) | (3)% |
| Financial liabilities: due to banks/bondholders | 582,244 | 568,459 | 13,785 | 2% |
| Other financial liabilities | 74,905 | 76,017 | (1,112) | (1)% |
| Trade payables | 57,966 | 73,710 | (15,744) | (21)% |
| Tax liabilities | 112,915 | 113,060 | (145) | (0)% |
| Employee termination benefits | 8,710 | 10,264 | (1,554) | (15)% |
| Provisions for risks and charges | 39,490 | 44,235 | (4,745) | (11)% |
| Other liabilities | 97,437 | 104,888 | (7,451) | (7)% |
| Total Liabilities | 973,667 | 990,633 | (16,966) | (2)% |
| Share capital | 41,280 | 41,280 | - | n.s. |
| Reserves | 84,868 | 96,299 | (11,431) | (12)% |
| Treasury shares | (4,340) | (4,678) | 338 | (7)% |
| Profit (loss) for the period attributable to the Shareholders of the Parent Company | 22,291 | 23,744 | (1,453) | (6)% |
| Net Equity attributable to the Shareholders of the Parent Company | 144,099 | 156,645 | (12,546) | (8)% |
| Total Liabilities and Net Equity attributable to the Shareholders of the Parent Company | 1,117,766 | 1,147,278 | (29,512) | (3)% |
| Net Equity attributable to Non-Controlling Interests | 35,089 | 37,358 | (2,269) | (6)% |
| Total Liabilities and Net Equity | 1,152,855 | 1,184,636 | (31,781) | (3)% |
| Condensed Cash flow | 6/30/2022 | 6/30/2021 | 12/31/2021 |
|---|---|---|---|
| EBITDA | 82,407 | 72,887 | 199,347 |
| Capex | (9,659) | (7,040) | (29,640) |
| EBITDA-Capex | 72,748 | 65,847 | 169,707 |
| as % of EBITDA | 88% | 90% | 85% |
| Adjustment for accrual on share-based incentive system payments | 3,392 | 605 | 1,027 |
| Changes in NWC (Net Working Capital) | (37,528) | (7,861) | (9,285) |
| Changes in other assets/liabilities | (44,605) | (21,772) | (21,340) |
| Operating Cash Flow | (5,993) | 36,819 | 140,109 |
| Corporate Income Tax paid | (5,971) | (2,409) | (12,827) |
| Financial charges | (12,716) | (13,021) | (31,220) |
| Free Cash Flow | (24,680) | 21,389 | 96,062 |
| (Investments)/divestments in financial assets | 1,868 | 20,281 | (26,489) |
| Equity (investments)/divestments | - | - | - |
| Tax claim payment | - | - | (32,981) |
| Treasury shares buy-back | - | - | (4,603) |
| Dividends paid to minority shareholders | - | - | (2,502) |
| Dividends paid to Group shareholders | (36,561) | (18,908) | (20,722) |
| Net Cash Flow of the period | (59,373) | 22,762 | 8,765 |
| Net financial Position - Beginning of period |
(401,791) | (410,556) | (410,556) |
| Net financial Position - End of period |
(461,164) | (387,794) | (401,791) |
| Change in Net Financial Position | (59,373) | 22,762 | 8,765 |
29 H1 2022 results
30 H1 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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