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Why Spain is causing doValue to collapse (which is holding on to Gardant)

2 months ago babelfish

Why Spain is causing doValue to collapse (which is holding on to Gardant)

In 2023 doValue recorded a net loss of 17.8 million euros. And now it is aiming for an aggregation with Gardant. Facts, numbers and insights

Bad news for doValue, an operator active in the management of credit portfolios and properties deriving from impaired loans. Bad numbers and dark scenarios.

Here are the facts, numbers and scenarios.

DOVALUE'S 2023 ACCOUNTS

In 2023 doValue chaired by Giovanni Castellaneta (in the photo) recorded a net loss of 17.8 million euros, compared to a profit of 16.5 million in 2022. The decline is mainly due to the decrease in Ebitda level, the increase of depreciation and amortization and net provisions compared to 2022, mainly related to the write-down of Spanish contracts, as well as lower asset fair value results and higher taxes.

ALL THE RESULTS OF DOVALUE

In particular, on the 2023 accounts the overall negative non-monetary impact of the accounting adjustments on the Group's net result amounts to 39.2 million euros. Adjusted net profit (excluding non-recurring items) amounted to 1.8 million, down from 50.6 million in 2022. Ebitda stood at 175.3 million euros, recording a decrease of 11%. .8% compared to 2022, when it was equal to 198.7 million. Net revenues, equal to 443.2 million euros, decreased by 11.4% compared to 500.4 million in 2022. Gross revenues were 485.7 million, with a decrease of 13% compared to 558 .2 million recorded in 2022 (or a 4.6% decline excluding Sareb).

As of December 31, 2023, doValue's gross book value stood at 116.4 billion euros, with a modest decline of 3.4% compared to the 120.5 billion recorded at the end of 2022. This figure is attributable to 9, 7 billion Gbv of new acquisitions, 4.9 billion of collections, 4.5 billion of write-downs and 4.4 billion of customer disposals, largely offset by compensation commissions. During 2023, the group was awarded approximately 6.3 billion new mandates: 1 billion in Italy, 4.5 billion in the Hellenic Region and 0.8 billion in the Iberian Region. In relation to the 2023 accounts, the board of directors will not propose the distribution of a dividend at the 2024 shareholders' meeting.

For 2024, the forecasts are for a pipeline of short and medium-term servicing mandates in the doValue markets amounting to 40 billion euros, the actual completion of new primary operations potentially slowed down by the solidity of the banks' balance sheets and the stability of NPL reports. Furthermore, "2024 will be a year of transformation, cost rationalization and investments and will lay the foundations to support growth in 2025 and 2026".

THE AGGREGATION WITH GARDANT

Dovalue has entered into exclusive negotiations for a potential aggregation with Gardant. The operation is part of the 2024-2026 strategic plan.

In detail, Dovalue, Elliott Advisors Limited and Tiber Investments, a company linked to funds managed by Elliott, have entered into a non-binding agreement that identifies the key terms for a potential aggregation with Gardant on the basis of which negotiations will proceed from today on an exclusive basis, with the aim of finalizing a binding agreement for the potential transaction with Gardant.

The transaction potentially involves the acquisition of 100% of Gardant by Dovalue and would allow Dovalue to further strengthen its positioning in the management of NPEs in Italy together with strong strategic partners. The transaction under negotiation improves the industrial and synergistic potential of the new group with an expected increase in Cash EPS, cash generation and financial solidity of the new group, strengthening its balance sheet. Furthermore, Dovalue is planning to refinance all or part of the issued debt. The new group is expected to achieve a Net Financial Position/Ebitda ratio ex NRI of approximately 2.0x by 2025 thanks to its growth profile, cash generation and capital increase.

Key terms of the deal include: a cash and Dovalue share component to be issued at a significant premium to Dovalue's current share price, following which Elliott Advisors Limited, Tiber or related companies would come to own a stake in the approximately 20% in the capital of Dovalue; Elliott Advisors Limited, Tiber or related companies (as future shareholders) and the current reference shareholders of Dovalue will be asked to support the transaction, including the subscription of a capital increase with pre-emptive rights which will be launched by the company after closing in order to strengthen the capital structure in the context of the acquisition; and the finalization of the terms for the financing and underwriting of the capital increase, necessary for the transaction, with primary financial counterparties. In this regard, the company has also received the availability of a primary investment bank, under specific terms and conditions, for the underwriting of the capital increase.

THE OBJECTIVES TO 2026 (AND NO DIVIDENDS IN 2024)

The 2024-2026 Industrial Plan, explains the doValue note, is based on conservative hypotheses that reflect the current difficult market dynamics, with a strong focus on technological innovation and cost efficiency in order to protect profitability and encourage generation of cash flow.

The financial objectives for 2026 envisage the achievement of the following results:

  • Gross revenues in 2026 in the range of 480-490 million euros, of which 35-40% non-NPL;
  • Gross Book Value in 2026 of approximately 110 billion euros, with a collection rate of approximately 5.5%;
  • Ebitda ex-NRI in the range of 185-195 million euros, with an Ebitda margin of approximately 39%;
  • Ex-NRI operating cash flow in the range of 140-150 million euros, with financial leverage in the range of 2.1x-2.3x;
  • Dividend policy with no distribution in calendar 2024, 0.15 euro/share in 2025 provided that the financial leverage is <2.8x in 2024 and 0.25 euro/share in 2026 provided that the financial leverage is <2, 5x in 2025.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/dovalue-risultati-economici-2023/ on Thu, 21 Mar 2024 09:07:44 +0000.