Intrum Ab · OMXSTO:INTRUM

Intrum Ab — Intrum Justitia — Q1 2009 Earnings Presentation

50 slides from Intrum Ab's earnings presentation, Apr 28, 2009

  1. Slide 1: Interim report January-March 2009

    Interim report January-March 2009 April 28th 2009

  2. Slide 2: Presented by Lars Wollung and Monika Elling

    Presented by Lars Wollung CEO and President Monika Elling CFO

  3. Slide 3: Intrum Justitia in brief

    Market position Intrum Justitia in brief Intrum Justitia’s market position Established 1923 Europe’s leading Credit Management Services (CMS) company with operations in 24 markets* Revenues: SEK 3.7 billion (2008) Number of employees: 3,400 (2009) Listed on Nasdaq OMX Stockholm since 2002 Market Cap

  4. Slide 4: Changes

    Changes ae intrum »D justitia

  5. Slide 5: Intrum Justitia Business Proposition

    Intrum Justitia Business Proposition Purpose Client result Value proposition Core values

  6. Slide 6: We are a catalyst for a sound economy

    We are a catalyst for a sound economy We are here to facilitate business and help create sound economies by making trade smooth, safe and fair. CORE PURPOSE WHAT WE DO & WHY – OUR REASON TO BE Better business for all

  7. Slide 7: Client result

    Client result • Increased profitability • Improved cash flow • Lower risk

  8. Slide 8: Client value drivers

    Client value drivers Sales to Payment

  9. Slide 9: Value proposition

    Value proposition Information Complete Close superiority

  10. Slide 10: Core values

    Core values Understanding people Seeking insight to feed innovation Committing to challenge Making a difference

  11. Slide 11: Four regions stand for 74 percent of Group Revenues

    Four regions stand for 74 percent of Group Revenues and 91 percent of Group EBIT with increased EBIT levels

  12. Slide 12: One region stands for 17 percent of Group revenues

    One region stands for 17 percent of Group revenues and 21 percent of Group EBIT with solid EBIT levels

  13. Slide 13: Two regions stand for 10 percent of Group revenues

    Two regions stand for 10 percent of Group revenues and are not profitable

  14. Slide 14: Cross border engagements increase substantially

    Cross border engagements increase substantially

  15. Slide 15: Short term focus

    Short term focus • Purchased Debt 2.0 Encourage • Sales to Payment offering • Development in four green regions • Operating Model in Central Europe Adjust • Leadership and Governance • Ensure profitability in UK Turn Around • Revitalize sales in Scandinavia

  16. Slide 16: Intrum Justitia Group first quarter

    Intrum Justitia Group first quarter SEK m Q1 Dev. Q1 Percentage Q1 Q1 Development, % 2009 % 2008 of revenues 2009 2008 Total revenues 1007,5 16,9% 861,5 EBIT margin 15.5% 19.3% Operating cost, total -851,1 22,5% -694,8 EBIT margin excl PD reval. 17.2% 18.8% Cost of sales -647,9 25,7% -515,4 Adjusted

  17. Slide 17: Purchased debt – an unusual write-down

    Purchased debt – an unusual write-down Q1 Q1 FY PD revaluations, SEK m 2009 2008 2008 Portfolio characteristic: Sweden, Norway & Denmark 0,0 0,0 -0,9 Bought at an IRR below 15% and Netherlands & Belgium 0,0 0,0 0,0 with needs to increase collection efficiency to reach forecasts Switzerland, Germany

  18. Slide 18: Purchased Debt

    Purchased Debt 19 per cent of total revenues • Q1 ROI is 11,4 per cent (15,3), excluding Jan-Mar Jan-Mar Change revaluations 15,0 per cent (14,1). Reported numbers 2009 2008 % • Rolling ROI is 16,1 per cent (17,8), excluding Revenues, SEKm 189,5 169,6 11,7% revaluations 17,2 per cent (17,3). EBIT, S

  19. Slide 19: Purchased Debt excluding revaluations

    Purchased Debt excluding revaluations Jan-Mar Jan-Mar Change • Q1 ROI is 11,4 per cent (15,3), excluding revaluations 15,0 per cent (14,1). Excluding revaluations 2009 2008 % • Rolling ROI is 16,1 per cent (17,8), excluding Revenues, SEK m 209,8 163,9 28,0% revaluations 17,2 per cent (17,3). EBIT, S

  20. Slide 20: Gross collections versus active forecast

    Gross collections versus active forecast 12% 10% 8% 6% 4% 2% 0,002% 0% Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 -2% -4% -6% 20

  21. Slide 21: Carrying Value PD segmented by acquired year

    Carrying Value PD - segmented in acquired year - 2008/2009 represents 36% of book value EUR Millions 250 200 2009 2008 150 100 2007 50 2006 2005 2004 0 <2004 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 21

  22. Slide 22: PD – Successful risk allocation although cherry picking

    PD – Successful risk allocation although cherry picking Spain 2% Germany 1% Austria 2% 2009 March Finland 21 countries 14% 1999 47% UK 6 countries Others 34% Finland Switzerland 16% 13% Carrying value SEK 175 M Country 9 Austria 5% 13% Others Country 8 5% Sweden 8% 2% UK 8% 11% Austria Country 7 Swe

  23. Slide 23: Purchased debt, investments 2001–2009

    Purchased debt, investments 2001–2009 Guidance: Annual investments in small and SEK m medium size portfolios SEK 700m 1 ,2 0 0 996* 1 ,0 0 0 822 870 872 800 205 611 600 212 212 400 267 258 251 251 201 143 200 106 125 204 117 111 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 * Incl acquisition of Au

  24. Slide 24: PD ROI – rolling 12 months

    PD ROI – rolling 12 months PD carrying value: SEK 2,246.6m ROI 12: 16.1% (17.2% excl revaluation PD carrying value in Q1) ROI 12 SEK M 20% 2 ,0 0 0 17.2% 1 ,6 0 0 15% 1 ,2 0 0 10% 800 5% 400 0 0% Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 2006 2007 2008 24

  25. Slide 25: Credit Management Services

    Credit Management Services 81 per cent of total revenues • Continuation to build complete CMS solutions. France is launching Flexipay, Jan-Mar Jan-Mar Change DACH has introduced a full CMS solution for the bank segment and The Reported numbers 2009 2008 % Netherlands are expanding on back of Revenue

  26. Slide 26: Sweden, Norway & Denmark

    Market share Regional development > 25% Sweden, Norway & Denmark 10–25% 18 per cent of total revenues Jan-Mar Jan-Mar Change • In Sweden a broader CMS concept offering is under packaging. Excl. PD Revaluation 2009 2008 % • Norway is heading in the right direction with Revenues, SEKm 176,1 168,7 4,4%

  27. Slide 27: Germany, Austria & Switzerland

    Market share Regional development > 25% Germany, Austria & Switzerland <10% 23 per cent of total revenues Jan-Mar Jan-Mar Change • Client interest for complete CMS contracts is Excl. PD Revaluation 2009 2008 % increasing. A full bank outsourcing concept is under implementation for a larger Austrian

  28. Slide 28: The Netherlands & Belgium

    Market share Regional development > 25% The Netherlands & Belgium < 10% 15 per cent of total revenues • Market shares are gained in both CMS and Jan-Mar Jan-Mar Change PD client. Excl. PD Revaluation 2009 2008 % • Current macro economic situation drives Revenues, SEKm 149,3 118,9 25,6% increased dem

  29. Slide 29: France, Spain, Portugal & Italy

    Regional development Market share France, Spain, Portugal & Italy 10–25% 19 per cent of total revenues • The integration of Cronos group and SSE Jan-Mar Jan-Mar Change contributed with 13% revenue growth. Integration is ahead of plan with expected Excl. PD Revaluation 2009 2008 % synergies already r

  30. Slide 30: Finland, Estonia, Latvia & Lithuania

    Market share Regional development > 25% Finland, Estonia, Latvia & Lithuania 10–25% 16 per cent of total revenues Jan-Mar Jan-Mar Change • Several new partnerships are under Excl. PD revaluations 2009 2008 % discussion. Growth continues with good Revenues, SEKm 155,9 116,5 33,8% outlook. EBIT, SEKm

  31. Slide 31: United Kingdom & Ireland

    Regional development Market share United Kingdom & Ireland < 10% 5 per cent of total revenues • Status: Profitable PD operation and loss making Jan-Mar Jan-Mar Change CMS. Current market conditions (pricing) for Excl. PD revaluation 2009 2008 % CMS is materially below the European average. Revenues,

  32. Slide 32: Poland, Czech Rep., Slovakia & Hungary

    Market share Regional development > 25% Poland, Czech Rep., Slovakia & Hungary 10–25% 4 per cent of total revenues Jan-Mar Jan-Mar Change • Hungary - approximately 95% of consumer debt has been taken in foreign currency. Excl. PD Revaluation 2009 2008 % • A new MD has been appointed for Poland. Reve

  33. Slide 33: Cash flow statement

    Cash flow statement Q1 2009 and Full year 2008 Q1 Q1 Dev Full year Full year Dev SEK m 2009 2008 % 2008 2007 % Operating earnings (EBIT) 156,4 166,7 -6% 758,0 667,8 14% Income tax paid -48,8 -37,2 31% -136,1 -153,6 -11% Changes in working capital -92,3 -100,4 -8% -48,2 -31,4 54% Cash flow from opera

  34. Slide 34: Cash flow statement – adjusted with revaluation

    Cash flow statement – adjusted with revaluation Q1 2009 Q1 Q1 Dev SEK m 2009 2008 % Operating earnings (EBIT)* 176,7 161,0 10% Income tax paid -48,8 -37,2 31% Changes in working capital -92,3 -100,4 -8% Cash flow from operating activities 32,7 21,4 53% Purchases of tangible and intangible -60,8 -53,

  35. Slide 35: Balance sheet – Highlights

    Balance sheet – Highlights 31 Mar 31 Mar Dev SEK m 2009 2008 % Total assets 6 796,4 5 705,3 19% Goodwill 1 913,8 1 750,7 9% Total financial fixed assets 2 508,5 2 058,3 22% -whereof Purchased Debt 2 246,6 1 913,8 17% Shareholders' equity 2 509,4 1 916,3 31% Net debt/equity ratio, % 91,0 92,5 -1,5 35

  36. Slide 36: Revenues and operating margin, rolling 12 months

    Revenues and operating margin, rolling 12 months Revenues: SEK 3,329m Revenues: SEK 3,824.0m Margin: 20.5 % Margin: 19.6% SEK m R evenues E B IT m a r g in 4 000 % 20 3 500 15 3 000 2 500 10 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 2005 2006 2007 2008 36

  37. Slide 37: Financial objectives

    Financial objectives • Organic growth of 10 per cent 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 per cent • Maintain a

  38. Slide 38: Intrum Justitia

    38 intrum oD justitia

  39. Slide 39: Intrum Justitia in brief

    Intrum Justitia in brief Europe’s leading provider of credit management services, with operations in 24 markets* Revenue 2008 FY: SEK 3.7 billion 3,370 employees Listed on Nordic Exchange, Mid-Cap Market capitalization, March 31, 2009: SEK 4.3 billion CEO & President: Lars Wollung Intrum Justitia's

  40. Slide 40: Low outsourcing rate and high risk index

    Low outsourcing rate and high risk index 120–129 >25% 130–139 10–25% 140–149 <10% 150–159 All figures are 160–169 Intrum Justitia's estimates over 170 40

  41. Slide 41: High outsourcing rate and low risk index

    High outsourcing rate and low risk index 120–129 >25% 130–139 10–25% 140–149 <10% 150–159 All figures are 160–169 Intrum Justitia's estimates over 170 41

  42. Slide 42: Accounting for purchased portfolios

    Accounting for purchased portfolios Q1 Q1 Full year SEK m 2009 2008 2008 Gross collection 382,5 298,9 1410,2 Amortization -205,3 -135,6 -653,8 Reported revenues* 189,5 169,6 783,6 Commission + service line costs 124,0 97,0 434,3 Operating earnings (EBIT) 65,5 72,6 349,3 EBIT margin, % 34,6% 42,8% 44

  43. Slide 43: A broad indication going forward

    A broad indication going forward Carrying value 31 Mar 2009: SEK 2,247 m +17% y-o-y (SEK 1 913 M) Gross collection: Carrying value x 2 Cash flow distribution 31 Mar of Gross collection 2009 2008 Y1 24% 24% Y2 18% 17% Y3 14% 15% Y4 11% 11% Y5 9% 8% Y6 7% 6% Y7 5% 5% Y8 4% 4% Y9 3% 3% Amortization: 48

  44. Slide 44: Mix of Forward flows and one-offs

    Mix of Forward flows and one-offs. 100% 8% 8% 90% 16% 28% 37% 33% 38% 80% 44% 42% 51% 48% 46% 70% 72% 60% 50% 92% 92% 40% 84% 72% 63% 67% 62% 30% 56% 58% 49% 52% 54% 20% 28% 10% Forward flows One-offs 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2006 2007 2008 2009 44

  45. Slide 45: Purchased debt, carrying value

    Purchased debt, carrying value SEK m -3,6% y-o-y 2 400 2 200 2 000 1 800 1 600 1 400 1 200 1 000 800 600 400 200 0 2003 2004 2005 2006 2007 2008 2009 45

  46. Slide 46: PD portfolio prices are on their way down

    PD portfolio prices are on their way down – Market imperfections: Our pricing model is less competitive on the top PD price/quality PD collection performance Time/ Economic Cycle Now: Portfolio prices As on top an imperfect market: are on their way down We acquire more than an average year 46 on lar

  47. Slide 47: Q1 write-down was the largest negative adjustment since 2005

    Q1 write-down was the largest negative adjustment since 2005. The net revaluations since 2006 add up to EUR 0.4 m 2,000 1,500 1,000 500 0 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 -500 -1,000 -1,500 -2,000 47

  48. Slide 48: Central costs have decreased

    Regional development Central costs have decreased Q1 relative y-o-y: SEK 20.7m (25.6) • Generally a lower cost level • Lower costs for data center in Amsterdam of SEK 2.9 m 48

  49. Slide 49: Organic growth 2003-2009

    Organic growth 2003-2009 Organic growth in Q1(09): 4.8% % 15 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 Q2 Q3 Q4 2003 2004 2005 2006 2007 2008 49

  50. Slide 50: EBIT Margin Y-o-Y

    EBIT* Margin Y-o-Y Ppt 6 5 4 3 2 1 0 -1 -2 -3 -4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 2005 2006 2007 2008 50 *Excluding Goodwill write-downs

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