Intrum Ab · OMXSTO:INTRUM
Intrum Ab — Intrum Justitia — Q1 2008 Earnings Presentation
43 slides from Intrum Ab's earnings presentation, Apr 23, 2008
Slide 1: Presented by Michael Wolf, CEO and Monika Elling, CFO
Presented by Michael Wolf, CEO Monika Elling, CFO April 23, 2008
Slide 2: Intrum Justitia's change journey
Intrum Justitia’s change journey Getting there, step by step! Credit Management Services organic growth in Q1; 10.5% 2
Slide 3: Belgium: clear market leader in CMS through Solutius NV acquisition
Belgium Clear market leader in the CMS segment through the acquisition of Solutius NV 15 10 5 0 m m m * d s es tia ol iu su iu tru su +s fi d n t m lu du te r In ve ro m o So on Fi At tru Eu ni C U In EPS neutral 2008 and EPS positive as of 2009 3 * (Graydon and Fiducre larger on the whole, but with
Slide 4: Structural highlights in Q1
Structural highlights in Q1 Scandinavia • Kredittillsynet approved license for Intrum Justitia Norway AS. • “Blue print” for Regionalization moving forward. Southern Europe • France introduced process based Organization in Operations like Sweden did early 2007. • Italy completed the migration to a n
Slide 5: Structural highlights in Q1
Structural highlights in Q1 IT • The Data Centre - Denmark migrated as first country in April. • “Harmonization through Modularization”. HR Strategy • The Group Management Team agreed on core leadership capabilities to deliver the Brand Promise. • The AGM approved a new Long Term Incentive plan for
Slide 6: Intrum Justitia – recession resilient
Intrum Justitia – recession resilient CMS Trends • Private consumption growth declining. • Some markets show signs off weakening payment ability of private households. CMS more in demand as companies are facing a slow down. Purchased Debt Trends • Some major non industry players have withdrawn from
Slide 7: Staying solidly in our niche PD strategy
Staying solidly in our niche PD strategy Total Purchased Debt market (non-performing debts) Secured Unsecured B2B debts B2C debts No bankruptcies Fresh Old Less cash High average Low average credit amount credit amount Less risk 7 Total Purchased Debt market
Slide 8: Financial highlights in Q1
Financial highlights in Q1 • CMS growth above 10% • Scandinavia, ex Norway, continues positive development • Finland showing strength • UK improving but slower performance in Scotland and Ireland. • Southern Europe strong CMS performance, the portfolio acquired in Spain 2005 starting to level off •
Slide 9: Intrum Justitia Group first quarter
Intrum Justitia Group first quarter SEK M Q1 Dev. Q1 Percentage of revenues Q1 Dev. Q1 Development, % 2008 % 2007 2008 ppt 2007 Total revenues 861.5 13.7 757.8 Excl revaluations 855.8 14.5 747.6 EBIT margin 19.3% 0.7 18.6% Operating cost, total -694.8 12.6 -616.8 EBIT margin, excl revaluations 18.8%
Slide 10: Sweden, Norway & Denmark
Market share Regional development > 25% Sweden, Norway & Denmark 10–25% 20% of total revenues • Operationally Sweden/Denmark is showing a 13% revenue growth rate, EBIT growth of Reported Jan-Mar Jan-Mar Change, numbers 2008 2007 % 18% and EBIT margin expansion of 1,3pp. Revenues, 168.7 166.0 1.6 • N
Slide 11: The Netherlands, Belgium & Germany
Market share > 25% < 10% Regional development The Netherlands, Belgium & Germany 19% of total revenues • The acquired Solutius in Belgium is included Reported Jan-Mar Jan-Mar Change, numbers % with SEK 14.5m in revenues and SEK 2.8m 2008 2007 Revenues, 182.2 152.2 19.7 in EBIT, which is part of Solu
Slide 12: Switzerland, Austria & Italy
Regional development Market share Switzerland, Austria & Italy > 25% < 10% 15% of total revenues • Continued momentum on back of the Reported Jan-Mar Jan-Mar Change, acquired Bank Austrian portfolio. The numbers 2008 2007 % acquisition value was Euro 100m, where of Revenues, 137.8 102.6 34.3 IJ inve
Slide 13: France, Spain & Portugal
Regional development Market share 10–25% France, Spain & Portugal 15% of total revenues • Although regulation changes, continues Reported Jan-Mar Jan-Mar Change, numbers % revenue growth on back of 10 consecutive 2008 2007 Revenues, 133.5 123.5 8.1 quarters with double digit revenues growth SEK M ra
Slide 14: Finland, Estonia, Latvia & Lithuania
Market share Regional development > 25% 10–25% Finland, Estonia, Latvia & Lithuania 15% of total revenues • Continued focus on the non-outsourced Reported Jan-Mar Jan-Mar Change, numbers 2008 2007 % market. 19th consecutive quarter with close Revenues, 116.5 99.1 17.6 to or above 10% organic growth.
Slide 15: United Kingdom & Ireland
Regional development Market share < 10% United Kingdom & Ireland 9% of total revenues • EBIT y-o-y composition is improving in Reported numbers Jan-Mar Jan-Mar Change, England, but reversing in Ireland and 2008 2007 % Scotland. Revenues, SEK M 59.8 67.5 -11.4 EBIT, SEK M -6.6 -4.8 37.5 • Good CMS pi
Slide 16: Poland, Czech Rep., Slovakia & Hungary
Market share Regional development > 25% 10–25% Poland, Czech Rep., Slovakia & Hungary 7% of total revenues Reported Jan-Mar Jan-Mar Change, • The forth consecutive quarter with numbers 2008 2007 % exceptional performance. Normal Revenues, 63.0 46.9 34.3 comparisons as of Q2 2008 SEK M EBIT, SEK M 16
Slide 17: Central costs
Regional development Central costs Q1 relative y-o-y: SEK 25.6m (28.7) • Decrease in staff stock option cost & bonuses (SEK -10.0m) • Costs related to data center in Amsterdam and common intranet platform (SEK 9,5m) • Strategic projects (SEK 3,5m) Q4 relative y-o-y: SEK 31.7m (23.8) =>Q1 2008 has lo
Slide 18: Credit Management Services
Credit Management Services 82% of total revenues • Good revenue growth trend with an Reported Jan-Mar Jan-Mar Change, numbers 2008 2007 % increased organic growth to 10.5%. Revenues, SEK M 766.8 670.5 14.4 • Move concept sales rather than transaction EBIT, SEK M 119.0 100.0 19.0 sales EBIT margin, %
Slide 19: CMS Growth and Operating margin
CMS Growth and Operating margin % 20 15 10 5 0 2006-Q1 Q2 Q3 Q4 2007-Q1 Q2 Q3 Q4 2008-Q1 -5 Rolling 4 quarter Operating margin % Growth % (incl. FX) 19
Slide 20: Purchased Debt
Purchased Debt 18% of total revenues 36 % of total EBIT • Purchased Debt delivers ROI of 15.3 percent Reported numbers Jan-Mar Jan-Mar Change, (19.0) 2008 2007 % Revenues, SEK M 169.6 133.5 27.0 • PD investments in Q1(08) were SEK 204m EBIT, SEK M 72.6 63.7 14.0 vs SEK 117m in Q1(07). EBIT margin, %
Slide 21: Purchased debt, investments
Purchased debt, investments 2001–2008 New Guidance: Annual investments in small and medium SEK M size portfolios SEK 700m 1,200 996* 1,000 870 822 800 600 400 258 267 201 204 200 106 0 2001 2002 2003 2004 2005 2006 2007 2008-Q1 * Incl acquisition of Austrian portfolio of written-off receivables with
Slide 22: Purchased debt, carrying value Q1 2001–2008
Purchased debt, carrying value Q1 2001–2008 +40% y-o-y SEK M 2,000 1,800 1,600 Continued momentum 1,400 1,200 1,000 800 600 400 200 0 2003 2004 2005 2006 2007 2008 22
Slide 23: Accounting for purchased portfolios
Accounting for purchased portfolios SEK M Q1 2008 Q1 2007 Gross collection 305.2 240.8 Amortization -135.6 -107.3 Reported revenues 169.6 133.5 Commission + service line costs -97.0 -69.8 Operating earnings (EBIT) 72.6 63.7 EBIT margin 42.8% 47.7% Amortization rate, % 44.4 44.6 Amortization rate exc
Slide 24: Purchased Debt, revaluations
Purchased Debt, revaluations • Portfolios performing with IRR IFRS between 8 and 25 percent are not revaluated Book value SEK M • Net revenue and EBIT impact Well above expectations of revaluations: positive SEK 25% 5.7M (10.2). 8% In total 377 portfolios were Well below revaluated in Q1 expectation
Slide 25: Other guidance
Regional development Other guidance Capex • Q1 Capex SEK 53.1m (SEK 22.5m) • Guidance 2008: SEK 120–150m, of which approximately SEK 20m is IJ Datacenter Tax rate • Guidance for 2008: 25 percent impact from country mix of EBIT; Italy: remaining for M&S: SEK 18m; and outcome of outstanding tax disput
Slide 26: Cash flow statement
Cash flow statement Q1 and Full-year 2007 SEK M Q1 Q1 Dev. Full-year Full-year Dev. 2008 2007 % 2007 2006 % Operating earnings (EBIT) 166.7 141.0 18.2 667.8 586.7 13.8 Income tax paid -37.2 -44.3 -16.0 -153.6 -164.5 -6.6 Changes in working capital -100.4 -27.6 263.8 -31.4 7.6 N/A Cash flow from oper
Slide 27: Balance sheet – Highlights
Balance sheet – Highlights SEK M 31 Mar 2008 31 Mar 2007 Dev. % Total assets 5705.3 4607.2 23.8 Goodwill 1750.7 1557.3 12.4 Total financial fixed assets 2058.3 1440.6 42.9 whereof Purchased Debt 1913.8 1364.8 40.2 Shareholders’ equity 1916.3 1660.5 15.4 Net debt/equity ratio, % 92.5 86.1 — 27
Slide 28: Revenues and operating margin, rolling 12 months
Revenues and operating margin, rolling 12 months Revenues: SEK 3,328.9m Margin: 20,49 % Revenues, SEK M EBIT margin, % SEK M % 3,200 20 3,100 3,000 2,900 15 2,800 2,700 2,600 2,500 10 2005- Q2 Q3 Q4 2006- Q2 Q3 Q4 2007- Q2 Q3 Q4 2008- Q1 Q1 Q1 Q1 28
Slide 29: Our strategic rotation is yielding results!
Intrum Justitia’s change journey Our strategic rotation is yielding results! 29
Slide 30: Appendix
intrum (# justitia
Slide 31: Organic growth
Organic growth Organic growth has reached a new level in Q1(08): 10.5% % Trend 10 Financial target 5 0 -5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2003 2004 2005 2006 2007 2008 31
Slide 32: Growth by region
Growth by region* Intrum Justitia Group* Q1: 14.5% | FY: 9.6% *Excl revaluation of PD portfolios SE, NO & DK Q1: 7.2% | FY: 6.6% FI, EE, LV & LT UK & IE Q1: 19.5% | FY: 12.2% Q1: –11.4% | FY: –2.7% NL, BE & DE Q1: 19.7% | FY: 6.2% PL, CZ, SK & HU Q1: 22.8% | FY: 32.7% FR, ES & PT Q1: 8.1% | FY: 14.7
Slide 33: Financial objectives
Financial objectives Presented at the Capital Markets Day in May 2007 • Organic growth of 10% per year • Generate pre-tax earnings at least in line with annual organic growth • Actively seek out opportunities to grow through selective acquisitions • Achieve an annual return on investments in Purchas
Slide 34: Financial calendar 2008
Financial calendar 2008 • Interim Report January–March 2008 April 23, 2008 • Capital Markets Day May 15, 2008 • Interim Report January–June 2008 July 22, 2008 • Interim Report January–September 2008 October 23, 2008 • Full Year Report 2008 February 10, 2009 34
Slide 35: Ownership structure as of March 31, 2008
Ownership structure as of March 31, 2008 Total number of shares: 77,956,251 Number of shares Capital and votes, % Landsbanki Íslands 9,129,784 11.5 Cevian Capital 7,841,479 9.9 SEB fonder 3,985,978 5.0 Swedbank Robur fonder 2,964,889 3.7 SHB/SPP fonder 2,277,849 2.9 Lannebo fonder 2,230,500 2.8 Park
Slide 36: We have the broadest geographical coverage
We have the broadest geographical coverage Intrum Justitia UK service offering Nordic DACH CEE Benelux Latin & IE Credit decision Credit information services Payment monitoring & Pre legal collection Debt surveillance Purchased Debt Intrum Justitia geographical coverage 36
Slide 37: We have the broadest geographical coverage
We have the broadest geographical coverage Intrum Justitia UK service offering Nordic DACH CEE Benelux Latin & IE Credit decision Experian, Atradius, D&B Credit information services Lindorff Creditreform Moorcroft, Payment Sergel, EOS / DID Robinson monitoring & Pre Svea Info- Way legal collection (
Slide 38: We have the broadest geographical coverage
We have the broadest geographical coverage Intrum Justitia UK service offering Nordic DACH CEE Benelux Latin & IE Credit decision Credit information services Payment monitoring & Pre legal collection Debt surveillance Purchased Debt Intrum Justitia geographical coverage 38
Slide 39: A broad indication going forward
A broad indication going forward Book value 31 Dec 2007: SEK 1,877M => + 42% y-o-y (SEK 1,318 M) Gross collection: Book value x 2 Cash flow distribution of Gross collection Year 1 24% (27%) Year 2 18% (19%) Year 3 15% (14%) Year 4 11% (11%) Year 5 8% (8%) Flatter shape of the curve Year 6 6% (6%) du
Slide 40: Segment distribution of portfolios
Segment distribution of portfolios Other, 12% (13) Mail order, 4% (5) Finance, Bank loan, 10% (8) 50% (49) Telecom, 10% (12) Credit card, 14% (13) Distribution of portfolios by purchase price, end of December 2007 (end of December 2006) 40
Slide 41: Historical collections and forecasts
Historical collections and forecasts 300,000 250,000 Collections 2. Original forecast 200,000 Suggested forecast 4. Multiplier forecast 150,000 3. 100,000 1. 50,000 0 41
Slide 42: Annual portfolio acquisitions – an update
Annual portfolio acquisitions – an update 1. SEK 700M in annual smaller and medium sized portfolios 2. Larger deals on top of the SEK 700M are looked for, but visibility is low 3. Larger deals (> EUR 20M) will normally be shared with our partners 42
Slide 43: Catalyst for a sound economy
Catalyst for a sound economy Disclaimer: Except for the historical information contained herein, the matters discussed in this presentation include forward looking statements that involve risk and uncertainties that could cause actual results to differ materially from those predicted by such forward