Intrum Ab · OMXSTO:INTRUM
Intrum Ab — Intrum Justitia — Investor Day (June 2010)
96 slides from Intrum Ab's investor day presentation, Jun 1, 2010
Slide 1: Welcome
Welcome Intrum Justitia Investor Day Stockholm, June 1st 2010 1
Slide 2: Programme
Programme 12:00 Registration and buffet Lunch 12:45 Welcome/Introduction Lars Wollung Regaining growth: President and CEO Strategies and focus areas 13:15 Intensive sales effort and Rickard Westlund efficiency focus Regional Managing Director Sweden, Norway & Denmark 13:45 Continuing to drive Thomas
Slide 3: Regaining growth: Strategies and focus areas
Intrum Justitia Investor Day Stockholm, June 1st 2010 Regaining growth: Strategies and focus areas Lars Wollung President & CEO 3
Slide 4: Group Management Team
Intrum Justitia Group Management Team – Aug 1st, 2010 Lars Wollung - CEO Bengt Lejdström - CFO Kari Kyllönen - Vice President Per Christofferson – Director Credit Management Services Gijsbert Wassink – Director Financial Services Rickard Westlund Northern Europe Sweden, Denmark, Norway, Finland, Est
Slide 5: Strong services support clients' processes
Strong services support clients’ processes Credit Management and Financial Services Client Sales & Payment Collections Process Marketing Administration Credit Credit Information Payment Collection Management Services Services Services Services Financial Financing Payment Purchased Debt Services Serv
Slide 6: The market
The Intrum Intrum market position actions 6
Slide 7: Stabilization in market trends
Stabilization in market trends Written off debt 8% Average delay in paying invoices -6% Perception of payment risks Flat 7
Slide 8: The Intrum market position
The Intrum Intrum market position actions 8
Slide 9: What drives clients needs? Cash flow is vital
What drives clients needs? Increased credit risk More cash earlier Aggressive operational excellence implementation Cash flow is vital 9
Slide 10: Intrum actions
The Intrum Intrum market position actions 10
Slide 11: Strategy to reach business objectives
Strategy to reach business objectives Maintain people oriented & decentralized approach Be the leading credit management and financial services provider in Europe Reinforce Expand integration across company & utilize group strengths excellent market position Contribute Develop to healthy credit and
Slide 12: Better business for all
intrum (~\)) justitia Better business for all —O——eee
Slide 13: Intensive sales effort and efficiency focus
Intrum Justitia Investor Day Stockholm, June 1st 2010 Intensive sales effort and efficiency focus Rickard Westlund Regional Managing Director 13
Slide 14: Clear opportunities to take market share
Market Clear opportunities to take market share Top 5 position • Leading service offering – greater client confidence Market leader • Delivering growth for 2011 Top 2 Position • Significant opportunities within Bank & Finance • Strengthening of FS business • Client support for proactive & consultati
Slide 15: Integrated service offering
Services Integrated service offering Sales & Payment Marketing Administration Collections 15
Slide 16: Superior regional and product reach
Services Superior regional and product reach Credit decision Credit information services SLS & Collection Debt surveillance Purchased Debt Local Regional/multinational 16
Slide 17: Sales efforts
Actions Clear plan for delivering growth Sales efforts Sales efforts • Continue to take market shares within Bank & Finance • Intensified focus on strengthening FS position • Increase regional & multinational sales • Expand consultative approach • Launch of e-commerce offering EBIT growth Q1 2010 Q2
Slide 18: Efficiency actions
Actions Clear plan for delivering growth Efficiency actions Sales efforts EBIT growth Q1 2010 Q2 Q3 Q4 Q1 2011 +7% D e l i v e r y o f g r o w t h Efficiency focus • Substantial cost reduction • Organization strengthened within management and sales • Projects rolling to enhance efficiency in: - IT -
Slide 19: Improving growth through industry focus
Actions Improving growth through industry focus Industry Growing market share Utility Maintaining Telecom Growth Bank & Finance High Growth Export/multinationals Very High Growth e-commerce Start-up, Very High Growth Real estate Maintaining 19
Slide 20: Growth driven through innovation
Growth driven through innovation – Significant breakthrough within Bank & Finance Need Intrum Solution • Keep & improve customer • Intrum provides a strong platform within relations in the default process debt collection consisting of: • Improve financial results within – Systems the area of debt co
Slide 21: Growth driven through innovation – RBS
Actions Growth driven through innovation – Significant breakthrough within Bank & Finance Background RBS has been engaged in the unsecured consumer lending in Denmark through cooperation with Green Credit and Scandinavian Loan Factory. In December 2008 Intrum started the dialogue with RBS related to
Slide 22: Why RBS chose Intrum
Actions Why RBS chose Intrum 1. Trust and confidence in processes and people 2. Ability to build implementation/project team fast 3. “Proof of concept” - deliver in line with promises 4. Top management involvement – not only local 22
Slide 23: Client buy-in of our proactive approach
Growth driven through innovation – Client buy-in of our proactive approach Need Intrum Solution • Differentiate credit handling chains based on • Improve E.ON:s brand and customer customer behavior & financial ability satisfaction • NKI measurement • Free tied-up capital in receivables • Improved go
Slide 24: Clear timeframe for delivering growth
Deliverables Clear timeframe for delivering growth Q1 2010 Intensive sales efforts Continued positive +7% EBIT growth Efficiency focus EBIT growth 24
Slide 25: Better business for all
intrum (~\)) justitia Better business for all
Slide 26: Continuing to drive sustainable growth
Intrum Justitia Investor Day Stockholm, June 1st 2010 Continuing to drive sustainable growth Thomas Hutter Regional Managing Director 26
Slide 27: Key enablers for sustainable growth across DACH
Key enablers for sustainable growth across DACH Strong market position expanding to Germany Integrated service Organizational edge approach through regionalization 27
Slide 28: Largest CMS market in Europe
Market Largest CMS market in Europe Key market size indicators Mio. Germany Austria CH DACH Individuals 82.3 8.3 7.5 100 Hamburg, Bremen Households 39.8 3.2 3.1 57 Berlin Companies 3.3 0.3 0.3 4 Köln, Düsseldorf, Essen, Dortmund, Duisburg Frankfurt, Wiesbaden, Mainz Stuttgart München CMS Industry Pr
Slide 29: Market offers growth opportunities
Market Market offers growth opportunities • Outsourcing trends will increase market size Organic • Increased need for cross-border (pan-European) offering Growth • Players with effective and efficient IT-infrastructure and processes will grow faster • Consolidation and integration phase in coming ye
Slide 30: Regionalisation - optimising efficiencies and sales opportunities
Organization Regionalisation - optimising efficiencies and sales opportunities Shared service centres allowed to acquire business in remote locations (e.g. Bank Austria portfolio). Bundling of key resources is a cost efficient way to leverage skills and resources throughout the region. Success stori
Slide 31: Blueprint operating structure for Intrum
Organization Blueprint operating structure for Intrum Restructuring of organization started in August 2009, now completed. New management team on board. Main focus on sales growth and cost savings. Improvement program running. EUR 1.3 M EBIT growth between Q409 and Q110 Continuous focus on regionali
Slide 32: Focusing on integration and innovation across the service line
Services Focusing on integration and innovation across the service line Debt Credit Collection PD Info Innovative credit management solutions: • Payment Guarantee • eCommerce (real-time credit decision) • Factoring solutions • Forward-flow PD 32
Slide 33: Increasing value through integrated PD and CMS approach
Services Increasing value through an integrated PD and CMS approach PD value growth Additional value growth (vs. financial investor) Base case Portfolio Negotiation Contract Embedded Operational Credit IT Platform Valuation PD Know-how excellence Information PD value CMS value drivers within PD 33
Slide 34: Revenue boost for Swiss Railway Corp
Services Revenue boost for Swiss Railway Corp Need Intrum Solution Increase sales of annual travel Customers can buy annual travel passes passes into new customer but pay monthly installments. Partnership segments, not able to pay full guarantees payment of all invoices and annual fee in advance tak
Slide 35: Solution for Swiss Railway Corporation
Services Solution for Swiss Railway Corporation > 40 M CHF additional Revenue p.a. for Swiss Railway through service partnership IJ with Swiss Post Solutions (SPS) Hand-over to Intrum for collection M90 Intrum offering with SPS: M60 Data collection process Payment Guarantee, incl. Info flow: dB > 32
Slide 36: Innovative E-Commerce Solution for Swiss Retailer
Services Innovative E-Commerce Solution for Swiss Retailer Need Intrum Solution As a customer centric IJ implemented its standard eCommerce/ company,the retailer will offer payment guarantee solution. It offers customer friendly payment customer friendly invoice options for solution, but not sufferi
Slide 37: Intrum solution – driving cost benefits for Swiss retailer
Services Intrum solution – driving driving cost benefits for Swiss retailer Loss of business opportunities Intrum offering: Customer Payment Guarantee, incl. Retailer • Credit Decision Customer Save • Monitoring friendly payment payment • Debt Collection solution solution Invoice Credit Card Debit E
Slide 38: Continuing to drive sustainable growth across DACH
Deliverables Continuing to drive sustainable growth across DACH CMS Strong market position expanding to Germany Market Organization Organizational edge through regionalization IJ Services Integrated service approach DACH 38
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Slide 40: Break
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Slide 41: Financial Services: Sustainable growth driven by quality of earnings
Intrum Justitia Investor Day Stockholm, June 1st 2010 Financial Services: Sustainable growth driven by quality of earnings Gijsbert Wassink Director Financial Services 41
Slide 42: 3 key factors driving Intrum's growth in FS
3 key factors driving Intrum’s growth in FS Position Excellent track record in good and bad times Structure Competitive advantages through combined CMS/FS offering Trends Positive growth outlook driven by innovative products and stimulation of demand 42
Slide 43: Revenues and EBIT tripled since 2003
Position Revenues and EBIT tripled since 2003 1 000 900 800 700 Revenues CAGR of 27% for 600 EBIT since 2003 500 400 300 200 EBIT 100 0 2003 2004 2005 2006 2007 2008 2009 43
Slide 44: Succesful niche strategy
Position Succesful niche strategy 44
Slide 45: Purchased Debt, investments
Position Purchased Debt, investments 2001–2010 SEK M 1 200 996* 1 000 870 872 871 822 800 211 600 179 400 258 267 201 369 171 200 106 111 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 * Incl acquisition of Austrian portfolio of written-off receivables with an 45 aggregate outstanding principal
Slide 46: Strong performance of gross collections vs forecast
Position Strong performance of gross collections vs forecast 12 10 8 6 4 2 0 -2 -4 -6 2006 2007 2008 2009 2010 46
Slide 47: Co-operation at Central, Regional and local levels strengthens product control
Structure Co-operation at Central, Regional and local levels strengthens product control Investment CEO committee Group PD Director Regional / Local MD’s Central Local control control Regional / Local Regional / Local Legal pre-analysis sourcing Assistant Counsel Analysis from “IJ Central” Analyst S
Slide 48: State of the art pricing and forecasting technique
Structure State of the art pricing and forecasting technique Implementation of new Evaluation Model in 2010 with significantly improved software: • Detailed Action Network Pricing • Reconcilation with CMS operational expectations • Fully integrated with FS production system and financial reporting 4
Slide 49: Key indicators during and after evaluation process
Structure Key indicators during and after evaluation process Some of the Taking into account main indicators: both CMS and PD KPIs Views Operating Margin Investor IRR Servicer MIRR Consolidated Co-investor Repayment Time (if applicable) Sensitivity Investment Exposure 49
Slide 50: Combined FS/CMS offering provides competitive differentiation
Structure Combined FS/CMS offering provides competitive differentiation Why Intrum has a better platform vs competition: • Faster reaction to changes in the current market conditions • More internal sourcing – gives stability and predictability • Higher added value -> higher client retention 50
Slide 51: A strong FS organisation
Structure A strong FS organisation Embedded in service offering Sales & Marketing Payment Administration Collections Co-operation towards: • Clients (sellers are clients) • Service lines • Geographical regions 51
Slide 52: Shift towards lower risk forward flow
Trends Shift towards lower risk forward flow… % 100 90 80 70 Forward flows 60 50 40 30 20 One-offs 10 0 2006 2007 2008 2009 2010 52
Slide 53: ...also visible in sector trends
Trends ...also visible also in sector trends FY 2009 vs 2008 53
Slide 54: Adjusting to a changing market
Trends Adjusting to a changing market • Temporarily lower supply of one-off portfolios due to: – Insourcing – Banks priorities have changed – Too costly to write down • Intrum are stimulating supply of Financial Services: – Increased focus on strong cash flow – Run-off/Performing solutions 54
Slide 55: 3 key factors driving Intrum's growth in FS
Deliverables 3 key factors driving Intrum’s growth in FS Position Excellent track record in good and bad times Structure Competitive advantages through combined CMS/FS offering Trends Positive growth outlook driven by innovative products and stimulation of demand The journey has only started 55
Slide 56: Better business for all
intrum (~\)) justitia Better business for all —O——eee
Slide 57: Performing in a challenging market environment, trends and activities
Intrum Justitia Investor Day Stockholm, June 1st 2010 Performing in a challenging market environment, trends and activities Per Christofferson Director Credit Management Services 57
Slide 58: Performing in a challenging market environment
Performing in a challenging market environment CMS – Credit Management Services Our integrated CMS and FS business model is key going forward Positive market outlook but short term challenging macro Revenue and efficiency improvements are under way 58
Slide 59: CMS and PD business integrated
Introduction CMS and PD business integrated Competitive advantages Already serviced portfolios External clients CMS New portfolios PD Large one-off portfolios 59
Slide 60: Positive market outlook but short term challenging macro
Market Positive market outlook but short term challenging macro Client Sales & Payment Collections Process Marketing Administration Credit Credit Information Payment Collection Management Services Services Services Services Further Increased Time lag in growth outsourcing collections trend 60
Slide 61: Performing in a challenging market environment
Performing in a challenging market environment CMS – Credit Management Services Our integrated CMS and FS business model is key going forward Positive market outlook but short term challenging macro Revenue and efficiency improvements are under way 61
Slide 62: Increased interest for cross border services
Revenue actions Increased interest for cross border services Strengthened International Service Line • Improving international service delivery • Enhancing international service offering 39% revenue growth 2009! 62
Slide 63: Providing services on a global level
Revenue actions Providing services on a global level Why Volvo Group chose Intrum… Volvo Intrum Group Justitia Intrum WEB Intrum Justitia service the Volvo Group with collection services globally One common service solution 63
Slide 64: Driving sales towards multinational clients
Revenue actions Driving sales towards multinational clients Group Sales Regions • Support clients’ cross – border needs Group Sales • Generate additional sales • Attract new clients • Drive sales excellence across the group 64
Slide 65: Roll out of legal collection services
Revenue actions Roll out of legal collection services Legal Collection team • Improve collectability • Legal outlay investment converting into additional revenue • Positive effects later in 2010 65
Slide 66: Legal collection outlay investment example
Revenue actions Legal collection outlay investment example Collections cover expensed legal investment after short time % 100 2009-11-16 2009-12-07 80 2010-01-04 60 2010-01-18 2010-01-25 40 20 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Weeks • Legal outlays are expensed • Additi
Slide 67: Strengthened scoring capabilities
Revenue actions Strengthened scoring capabilities Scoring team • Improve collectability • Manage collection case activities • Analyze purchased debt cases • Provide top of the line credit information and decision services 67
Slide 68: Rollout credit information services
Revenue actions Rollout credit information services • Up to date credit information is key • Improve and align services • Launch of services in more countries 68
Slide 69: Improved service delivery efficiency
Effiency actions Improved service delivery efficiency Best practice delivery models • Revitalized operations excellence community • Best practice assessment model • Knowledge sharing 69
Slide 70: Improved coordination of initiatives
Effiency actions Improved coordination of initiatives Project portfolio management • Alignment of initiatives • Business case realization • Learn from experiences • Balance concurrent projects 70
Slide 71: Better IT effectiveness and efficiency
Effiency actions Better IT effectiveness and efficiency • IDC implementation very successful • Next step common application centre 71
Slide 72: Well positioned to meet new business opportunities
Effiency actions Well positioned to meet new business opportunities Future payment flow analysis • Traditional players meet new players • EU directives and regulations • New technology solutions – mobile payments • Changing consumer purchasing behavior – e-commerce booming on national level 72
Slide 73: Performing in a challenging market environment
Performing in a challenging market environment CMS – Credit Management Services Our integrated CMS and FS business model is key going forward Positive market outlook but short term challenging macro Revenue and efficiency improvements are under way 73
Slide 74: To summarize …
Deliverables To summarize … … our focus is on regaining EBIT and revenue growth in the CMS business! 74
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Slide 76: Break
intrum (~*)) justitia
Slide 77: Focusing on regaining growth
Intrum Justitia Investor Day Stockholm, June 1st 2010 Focusing on regaining growth Bengt Lejdström Chief Financial Officer 77
Slide 78: Focusing on regaining growth
Focusing on regaining growth • Strong financial platform gives flexibility • Positive EBIT growth… • …supports financial objectives 78
Slide 79: Strong balance sheet
Financial platform Strong balance sheet SEK M SEK M Total assets Net debt to equity 120 8 000 7 000 100 6 000 80 5 000 60 4 000 3 000 40 2 000 20 1 000 0 0 2005 2006 2007 2008 2009 79
Slide 80: Strong increase in operating cash flow since 2005
Financial platform Strong increase in operating cash flow since 2005 SEK M 2009 2008 % 2007 2006 2005 0 200 400 600 800 1 000 1 200 1 400 1 600 80
Slide 81: Financial platform gives flexibility to…
Financial platform Financial platform gives flexibility to… • …invest in PD • …as well as CMS M&A • …and maintain distribution policy 81
Slide 82: The balance between CMS and FS
EBIT growth The balance between CMS and FS • Positive EBIT growth through hybrid model • Benefit from the interdependance between CMS and FS • 1/3 of the portfolios are purchased from existing CMS stock 82
Slide 83: Purchased Debt, investments
EBIT growth Purchased Debt, investments 2001 2002 2003 2004 2005 2006 2007 2008 2009 83
Slide 84: Purchased Debt, investments incl. partners
EBIT growth Purchased Debt, investments incl. partners 2001 2002 2003 2004 2005 2006 2007 2008 2009 84
Slide 85: Strong EBIT growth (fx adj)
EBIT growth Strong EBIT growth (fx adj) 20% 15% 10% 5% 0% -5% -10% 2005 2006 2007 2008 2009 Q1 10 Mean 05- 09 85 FX adjusted EBIT growth is excluding goodwill write-down in Scottland and restructuring charges in UK but including PD revaluations
Slide 86: PD – stable profitability and return on investment
EBIT growth PD – stable profitability and return on investment PD margin R12M ROI 50% 18% 45% 15% 40% 12% 35% 9% 30% 6% 25% 3% 20% 0% 2005 2006 2007 2008 2009 86
Slide 87: Stabilization in CMS margin
EBIT growth Stabilization in CMS margin 25% Margin R12 margin 20% 15% 10% 5% 0% 87
Slide 88: Regional update
Regional update Positive Trends Emerging 88
Slide 89: UK & Ireland – proof of successful turnaround
Regional UK & Ireland – proof of successful turnaround SEK M Revenues EBIT 300 70% 250 60% 200 50% 40% 150 30% 100 20% 50 10% 0 0% -50 -10% -20% -100 -30% -150 EBIT margin -40% -200 -50% -250 -60% 2006 2007 2008 2009 Q1 2010 -70% 89
Slide 90: Poland, Czech Rep., Slovakia & Hungary
Regional Poland, Czech Rep., Slovakia & Hungary Gas and brake at the same time Cash • Macro still a challenge • Cost cutting in all countries, e.g. – 25% employee reduction in Hungary • Investments in legal process will continue Legal revenue Legal costs Time 90
Slide 91: France, Italy, Portugal and Spain
Regional France, Italy, Portugal and Spain Successful growth & efficiency programs SEK M SEK M Sales R12 EBIT R12 Sales R12 Employees 900 180 900 1 100 800 160 800 1 000 700 140 700 600 120 600 900 500 100 500 800 400 80 400 300 60 300 700 200 40 200 600 100 20 100 0 0 0 500 91
Slide 92: Finland & Baltics
Regional Finland & Baltics CMS growth and lower PD risk • Great CMS journey... • ... backed-up by PD • Fresher PD –> lower risk 92
Slide 93: Benelux
Regional Benelux Successful M&A in mature markets SEK M SEK M Sales R12 EBIT R12 Sales R12 Employees 700 120 700 550 600 100 600 500 500 500 80 400 400 450 60 300 300 400 40 200 200 20 350 100 100 0 0 0 300 93
Slide 94: Focusing on regaining growth
Deliverables Focusing on regaining growth • Strong financial platform gives flexibility • Positive EBIT growth… • …supports financial objectives 94
Slide 95: Q&A and closing remarks
Q&A and closing remarks 95
Slide 96: Better business for all
intrum (~\)) justitia Better business for all —O——eee