Intrum Ab · OMXSTO:INTRUM

Intrum Ab — Intrum Justitia — Q2 2010 Earnings Presentation

36 slides from Intrum Ab's earnings presentation, Jul 19, 2010

  1. Slide 1: Interim report January-June 2010

    Interim report January-June 2010 July 19th 2010 © Intrum Justitia AB 2010. All rights reserved.

  2. Slide 2: Presented by Lars Wollung and Bengt Lejdström

    Presented by Lars Wollung CEO and President Bengt Lejdström CFO © Intrum Justitia AB 2010. All rights reserved.

  3. Slide 3: Operational highlights 2010

    Operational highlights 2010 • Strong performance despite slow economic recovery in Europe – Group EBIT growing by 13%, fx adjusted – EBIT growth in Scandinavia, Benelux and UK & Ireland • Market for PD investments improving – ROI 19.4% in second quarter – More investment opportunities than 6 months

  4. Slide 4: Growth drivers

    Growth drivers Service offering expansion Acquisitions - CMS companies - Clients CMS units Purchased debt - Own investments - Investment partnerships Information superiority & operational excellence 4 © Intrum Justitia AB 2010. All rights reserved.

  5. Slide 5: © Intrum Justitia AB 2010. All rights reserved.

    © Intrum Justitia AB 2010. All rights reserved.

  6. Slide 6: Financial highlights 2010

    Financial highlights 2010 • EBIT margin 19.5% (15.5%) Q2 (excl PD revaluations) • Solid financial platform & increased cash flow – Net debt to equity ratio of 80.5% (114.5) – Strong development of operating cash flow • Strong performance in Purchased Debt – ROI up 2.9 ppt to 19.4% – PD investments S

  7. Slide 7: Financial summary

    Financial summary Apr–June Jan–June Rolling 12 2010 2010 2009-2010 Revenues, SEK M: 923 1,878 3,947 EBIT, SEK M: 179.6 339.0 690.9 EBIT margin, %: 19.5 18.0 17.5 Organic growth, %: -1.2 1.0 - PD investments: 198.3 369.1 760.1 Net debt to equity: 80.5 80.5 80.5 7 © Intrum Justitia AB 2010. All rights

  8. Slide 8: Purchased Debt

    Purchased Debt 22 percent of total revenues Apr-Jun Apr-Jun Change Fx Adj Reported numbers 2010 2009 % % • Q2 ROI is 19.4% (16.5%) Revenues, SEKm 201.9 248.8 -18.9% -9.3% • Investments in Q2 were SEK 198.3 M (368.9) EBIT, SEKm 104.7 96.0 9.1% 21.9% • Accounting change in the Netherland have EBIT mar

  9. Slide 9: Purchased Debt – revaluations

    Purchased Debt – revaluations Q2 Q2 H1 FY PD revaluations, SEK M 2010 2009 2010 2009 Sweden, Norway & Denmark 0.2 -0.3 0.2 -0.7 Netherlands & Belgium 0.0 0.0 0.0 0.0 Germany , Austria & Switzerland 2.9 0.0 2.9 2.4 France, Spain Portugal & Italy -0.3 -2.9 -0.3 -30.1 Finland, Estonia, Latvia & Lithuan

  10. Slide 10: Purchased Debt, investments

    Purchased Debt, investments 2001–2010 SEK M 1 200 996* 1 000 870 872 871 822 800 211 600 179 996 369 400 822 870 872 258 201 267 369 200 106 198 258 201 267 171 0 106 111 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 * Incl acquisition of Austrian portfolio of written-off receivables with an agg

  11. Slide 11: PD ROI – rolling 12 months

    PD ROI – rolling 12 months PD carrying value: SEK 2 151.6 M ROI 12: 17.4% PD carrying value ROI 12 SEK M 20% 2 400 2 000 15% 1 600 10% 1 200 800 5% 400 0 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2006 2007 2008 2009 2010 11 © Intrum Justitia AB 2010. All rights reserved.

  12. Slide 12: © Intrum Justitia AB 2010. All rights reserved.

    © Intrum Justitia AB 2010. All rights reserved.

  13. Slide 13: Credit Management Services

    Credit Management Services 78 percent of total revenues Apr-Jun Apr-Jun Change Fx Adj • Organic growth is -1.0% (1.0% excl Reported numbers 2010 2009 % % UK&I) Revenues, SEKm 814.8 900.8 -9.5% 1.1% • Fx adjusted EBIT growth of 9.8% EBIT, SEKm 99.5 101.3 -1.8% 9.8% EBIT margin % 12.2% 11.2% 1.0 ppt -

  14. Slide 14: Sweden, Norway & Denmark

    Market share Regional development > 25% Sweden, Norway & Denmark 10–25% 21 percent of total revenues Apr-Jun Apr-Jun Change Fx Adj • Improved sales growth and EBIT Excl. PD Revaluations 2010 2009 % % Revenues, SEKm 195.5 179.5 8.9% 10.0% • Satisfying revenue development in Denmark; EBIT, SEKm 41.5 3

  15. Slide 15: The Netherlands & Belgium

    Market share Regional development > 25% The Netherlands & Belgium < 10% 14 percent of total revenues Apr-Jun Apr-Jun Change Fx Adj • Continued positive organic growth and market share gains in both countries Excl. PD Revaluations 2010 2009 % % Revenues, SEKm 128.7 170.2 -24.4% -15.4% • Extension of

  16. Slide 16: Germany, Austria & Switzerland

    Market share Regional development > 25% Germany, Austria & Switzerland < 10% 22 percent of total revenues Apr-Jun Apr-Jun Change Fx Adj • Sales and efficiency program continues Excl. PD Revaluations 2010 2009 % % Revenues, SEKm 199.0 222.3 -10.5% -3.6% according to plan EBIT, SEKm 47.4 53.3 -10.9% -

  17. Slide 17: France, Spain, Portugal & Italy

    Regional development Market share France, Spain, Portugal & Italy 10–25% 20 percent of total revenues Apr-Jun Apr-Jun Change Fx Adj • Region still challenged by weak macro Excl. PD Revaluations 2010 2009 % % situation Revenues, SEKm 186.8 225.2 -17.1% -7.1% • Satisfying PD performance in the region

  18. Slide 18: Finland, Estonia, Latvia & Lithuania

    Market share Regional development > 25% Finland, Estonia, Latvia & Lithuania 10–25% 15 percent of total revenues Apr-Jun Apr-Jun Change Fx Adj • Breakthrough in the Finnish energy sector Excl. PD revaluations 2010 2009 % % Revenues, SEKm 141.9 155.9 -9.0% 1.8% • Stabilization of CMS EBIT and margins

  19. Slide 19: United Kingdom & Ireland

    Regional development Market share United Kingdom & Ireland <10% 3 percent of total revenues Apr-Jun Apr-Jun Change Fx Adj • Good profitability and stable operations in both Excl. PD Revaluations 2010 2009 % % countries Revenues, SEKm 23.8 53.4 -55.4% -50.9% • Good PD performance from existing portfo

  20. Slide 20: Poland, Czech Rep., Slovakia & Hungary

    Market share Regional development > 25% Poland, Czech Rep., Slovakia & Hungary 10–25% 5 percent of total revenues Apr-Jun Apr-Jun Change Fx Adj • Still unsatisfactory but sequentially improved Excl. PD Revaluations 2010 2009 % % result in the region Revenues, SEKm 45.8 49.5 -7.5% -1.9% • Improvement

  21. Slide 21: Balance sheet – Highlights

    Balance sheet – Highlights 30 June 30 June Dev SEK m 2010 2009 % Total assets 6333.5 7149.5 -11% Goodwill 1758.8 1899.4 -7% Total financial fixed assets 2335.8 2682.3 -13% -whereof Purchased Debt 2151.6 2406.6 -11% Shareholders' equity 2387.2 2357.9 1% Net debt/equity ratio, % 80.5 114.5 -34 21 © In

  22. Slide 22: Cash flow statement

    Cash flow statement Jan-June 2010 Jan-Jun Jan-Jun Dev SEK m 2010 2009 % Operating earnings (EBIT) 337.6 314.9 7.2% Depreciation 86.5 79.5 8.8% Amortization of purchased debt 395.7 415.6 -4.8% Income tax paid -74.4 -130.7 -43.1% Changes in working capital -6.2 -115.4 -94.6% Other -46.4 -86.3 -46.2% C

  23. Slide 23: Revenues and operating margin, rolling 12 months

    Revenues and operating margin, rolling 12 months Revenues: SEK 3,329m Revenues: SEK 3 959 M Margin: 20.5 % Margin: 19.1% SEK M Revenues EBIT margin % 4,000 20 3,500 15 3,000 2,500 10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2005 2006 2007 2008 2009 2010 23 Excl. disposals, r

  24. Slide 24: Q&A

    Q&A 24 © Intrum Justitia AB 2010. All rights reserved.

  25. Slide 25: Appendix

    Appendix 25 © Intrum Justitia AB 2010. All rights reserved.

  26. Slide 26: Financial objectives

    Financial objectives • Organic growth of 10 percent per year • Generate earnings before tax, at least in line with annual organic growth • Actively seek growth opportunities through selective acquisitions • Achieve an annual return on investment in Purchased Debt of at least 15 percent • Maintain a

  27. Slide 27: Intrum Justitia in brief

    Intrum Justitia in brief Europe’s leading provider of credit management services, with operations in 22 countries Revenue 2009 FY: SEK 4.1 billion Avrg nr of employees in Q2: 3 115 Listed on NASDAQ OMX, Stockholm, Mid-Cap Market capitalization, June 30, 2010: SEK 6.1 billion CEO & President: Lars Wo

  28. Slide 28: © Intrum Justitia AB 2010. All rights reserved.

    © Intrum Justitia AB 2010. All rights reserved.

  29. Slide 29: Purchased Debt, carrying value

    Purchased Debt, carrying value -10.6% yoy SEK M 2 500 2 300 2 100 1 900 1 700 1 500 1 300 1 100 900 700 500 300 100 -100 2003 2004 2005 2006 2007 2008 2009 2010 29 © Intrum Justitia AB 2010. All rights reserved.

  30. Slide 30: Organic growth 2003-2010

    Organic growth 2003-2010 Organic growth % in Q2(10): -1.2% 15 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 2005 2006 2007 2008 2009 2010 30 © Intrum Justitia AB 2010. All rights reserved.

  31. Slide 31: EBIT* Margin Y-o-Y

    EBIT* Margin Y-o-Y Ppt 6 5 4 3 2 1 0 -1 -2 -3 -4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2005 2006 2007 2008 2009 31 *Excluding Goodwill write-downs, restructuring ,disposals © Intrum Justitia AB 2010. All rights reserved.

  32. Slide 32: Mix of forward flows and one-offs

    Mix of forward flows and one-offs 100% 8% 8% 90% 16% 28% 31% 37% 33% 80% 44% 42% 38% 51% 48% 46% 50% 48% 51% 52% 70% 61% 60% 50% 92% 92% 40% 84% 72% 69% 63% 67% 30% 56% 58% 62% 49% 52% 54% 50% 52% 49% 48% 20% 39% 10% Forward flows One-offs 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 200

  33. Slide 33: A broad indication going forward

    A broad indication going forward • Carrying value 30 Jun 2010: SEK 2 152 M  11% y-o-y (SEK 2 407 M) Gross collection: Carrying value x 2.25 Cash flow distribution 30 Jun of Gross collection 2010 2009 Y1 26% 25% Y2 19% 18% Y3 14% 15% Y4 11% 11% Y5 8% 9% Y6 6% 7% Y7 5% 5% Y8 3% 3% Y9 3% 2% Amortizati

  34. Slide 34: Q2 write-up was the first after six consecutive negative adjustments

    Q2 write-up was the first after six consecutive negative adjustments. 2 000 1 500 1 000 500 0 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 -500 -1 000 -1 500 -2 000 © Intrum Justitia AB 2010. All rights reserved.

  35. Slide 35: Gross collections versus active forecast

    Gross collections versus active forecast 12% 10% 8% 6% 4% 2% 0% Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 -2% -4% -6% © Intrum Justitia AB 2010. All rights reserved.

  36. Slide 36: Carrying Value PD – segmented in acquired year

    Carrying Value PD – segmented in acquired year - 2008-2010 represents 52% of carrying value 250 EUR M 200 2010 150 2009 2008 2007 2006 100 2005 2004 <2004 50 0 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 36 © Intrum Justitia AB 2010. All rights reserved.

Intrum Justitia — Q2 2010 Earnings Presentation on 6ix