Intrum Ab · OMXSTO:INTRUM
Intrum Ab — Intrum Justitia — Investor Day (June 2015)
59 slides from Intrum Ab's investor day presentation, Jun 8, 2015
Slide 1: Intrum Justitia Investor Day
Intrum Justitia Investor Day June 8th, 2015
Slide 2: Agenda and section highlights
Agenda Section highlights • Market leading pan-European Credit • Introduction to Intrum Justitia Management company and the Group’s strategy • Experienced Management Team • Business Area CMS • Diversified and balanced business • Business Area Financial Services model • Full value chain service offer
Slide 3: An experienced management team
This is Intrum Justitia An experienced management team Annika Billberg Erik Forsberg IR & Communications Director CFO Johan Brodin Alessandro Pappalardo Chief Risk Officer Chief Investment Officer Per Christofferson Harry Vranjes Regional Managing Director – Central Europe Chief Information Officer,
Slide 4: This is Intrum Justitia
This is Intrum Justitia This is Intrum Justitia European market leader in an attractive growth market Proven integrated business model serving the full credit management value chain Delivering consistent, strong financial returns FY 2014 2013 Revenue 5 184 4 566 EBIT 1 430 1 207 Diversification of r
Slide 5: Our journey
This is Intrum Justitia Our journey Delivering solid growth for the past 10 years 8% 10% 18% 7% 24% 10% 2005 2009-2010 2014 CAGR Establishing a common brand Significant organizational and and company identity management changes Consolidation of IT operations Bank style governance, e.g. 3 and infrast
Slide 6: We are a catalyst for a sound economy
This is Intrum Justitia WE ARE A CATALYST FOR A SOUND ECOMOMY We are here to facilitate Our mission in society is to help business and help create sound ensure that payments flow as they economies by making trade should – to engender a sound smooth, safe and fair. business climate. 6 © Intrum Justit
Slide 7: Our value proposition
This is Intrum Justitia Our value proposition Clients High & stable Reduced risks Low costs for cash flows administration Better Easy & secure Solve financial Customers Business buying problems for all Growth through Well- Society carefully functioning managed credits trade 7 © Intrum Justitia AB 20
Slide 8: Full product offering through the full value chain
This is Intrum Justitia Full product offering through the full value chain Customer Sales and Payment process Collection Marketing Administration Credit Credit Debt Payment Management Optimization Collection Services Services Services Services Invoice Financial Invoice Purchase Invoice Purchase Purc
Slide 9: Our integrated business model
Our integrated business model CMS provides value for PD… … and PD provides value for CMS • Increased PD volume through access to • Increased understanding of debtors vast client base with known data through additional data from PD • Funding for PD from steady CMS cash • Volumes, contributing to grea
Slide 10: Our Operating Principles are embedded in our organisation
This is Intrum Justitia Our Operating Principles are embedded in our organisation Organisation Modus operandi P&L Decentralisation Business units through Balance formalisation People Leadership Analytical Team spirit Humble Playing coach Action oriented Result 10 © Intrum Justitia AB 2015. All right
Slide 11: Clear competitive advantages and high barriers to entry
This is Intrum Justitia Clear competitive advantages and high barriers to entry Sustainable Competitive Advantages… Creating High Barriers to Entry Industry-leading Data Management Long-lasting client relationships Strong, Embedded Brand Local Market Leadership Scale advantages Extensive Geographica
Slide 12: Favourable position in the competitive landscape
The Market Intrum Justitia has a favourable position in the competitive landscape Competitive advantage Key Competitor Groups Emerging client demands for Intrum Justitia Portfolio Investors • International investors • Typically short term investment horizon Regulatory compliance is becoming a key fa
Slide 13: Global market trends
The Market Global market trends Market trend Intrum Justitia positioning and opportunities Superior debtor knowledge through a large database Technology combined with advanced analytics We are well positioned to be a driver for consolidation in Globalization European markets Our industry-leading cos
Slide 14: Intrum Way
Intrum Way INTRUM WAY Our strategy towards realizing our vision… … based on a solid platform consisting of our core values, operating principles, and our integrated business model 14 © Intrum Justitia AB 2015. All rights reserved.
Slide 15: Objectives, Strategies and Capabilities
Intrum Way Objectives, Strategies and Capabilities Stakeholder Objectives Share- Citizen Client Customer Employee holder Better Increased A better The place business The share profitability life to be for all to own Core strategies Establish Ensure Contribute to a Ensure market superior credit opera
Slide 16: Core assets driving strategy implementation - People
Intrum Way Core assets driving strategy implementation - PEOPLE examples 87% of our staff have individual performance Performance Management management plans and follow-up Employee development Customized IJ leadership program run 2 x per year with > 150 participants Employee engagement Annual employ
Slide 17: Core assets driving strategy implementation - Capital
Intrum Way Core assets driving strategy implementation - CAPITAL examples Significant financial flexibility About SEK 3 bn of committed facilities available Diversified funding structure Combination of bank loans, bonds and commercial paper Investment Grade Rating Improved financial flexibility and
Slide 18: Core assets driving strategy implementation - Data
Intrum Way Core assets driving strategy implementation - DATA examples ’Catalyst’ Data from +20 production systems in one place Shared Service Center >110 engineers in one place, developing and maintaining our core systems and applications Intrum Data Center Data mirrored in two locations ensures no
Slide 19: Execution of Intrum Way
Intrum Way Execution of Intrum Way We have a structured, traceable approach to strategy execution and follow-up… +20 business plans Delivery of the +150 Intrum Way sets the define concrete priorities are followed scene priorities up on a monthly basis … allowing us to see and act on +150 priorities
Slide 20: Intrum Way – our view on growth
Intrum Way Intrum Way – our view on growth Organically Focused, market-driven approach, utilizing the scale and presence of Intrum Justitia Bolt-on Acquisitions We have a proactive and structured approach to M&A Other growth Other growth opportunities are pursued opportunities opportunistically Our
Slide 21: In summary
In summary • Market leading pan-European Credit • Full value chain service offering Management company in an attractive growth market • Sustainable competitive advantages • Experienced Management Team • A proven strategy, with a clear track- record of delivery • Diversified and balanced business mod
Slide 22: Agenda Section highlights
Agenda Section highlights • Introduction to Intrum Justitia and • The CMS industry, and Intrum Justitia, plays an important role in society the Group’s strategy • The CMS industry is evolving and • Business Area CMS becoming more sophisticated • Business Area Financial Services • We are a data-drive
Slide 23: CMS place in society
Overview CMS place in society Credit levels Having effects in society where Intrum Justitia are increasing provides value for both businesses and consumers • Expected yearly • Late payments pose a threat • Intrum Justitia provides increase of 2-3% in to economic recovery for expert knowledge in day-
Slide 24: CMS value chain – the services
Overview CMS value chain – the services Credit Management Services Credit Optimisation Payment Services Debt Collection Services Services Credit Information Invoicing Debs Collection Credit Decisions Reminders Debt Surveillance International Credit Monitoring Sales Ledger Collections Financial Servi
Slide 25: The CMS industry
The Market The CMS industry Past, present and future Key Success Factors Historically Today The emerging trend for CMS companies • The CMS • Moved up the value • More and more • Brand, scale and flexibility industry was chain in most industries will about debtors, Historically industries, and … beco
Slide 26: Cost-efficient analytics is key
Overview Cost-efficient analytics is key Historically, performing collections was done in a ’one size fits all’ manner… … to where we today apply heavy analytics to ensure we live up to the expected end-customer experience Intrum Justitia differentiators – driving client satisfaction, growth and pro
Slide 27: Our CMS strategy
CMS strategy Our CMS strategy A combination of organic and acquired growth Group Core Strategies CMS strategic focus Grow high-potential segments Ensure market leading position Proactive approach to bolt-on M&A and BPOs Establish superior credit management Expand service offering to continue meeting
Slide 28: Client Case Study 1
Strategy realization example Client Case Study 1 BPO with major bank Client need Challenges Solutions and benefits Outsource the full business Seen as mission impossible, • Agree on a common vision process, with the goal to: from both sides… • Establish an environment of • Drive towards higher toler
Slide 29: Client Case Study 2
Strategy realization example Client Case Study 2 An integrated CMS and PD solution with telco Credit Customer Additional Request Receive Marketing control Service Sales payment payment SCOPE OF DEBT RECOVERY GUARANTEE SOLUTION The DRG solution offers through… Utilization of end-to-end information in
Slide 30: In summary
In summary • The CMS industry is evolving and becoming more sophisticated • Intrum Justitia’s CMS operations has a competitive edge: o Industry-leading brand, scale and flexibility o Solid ability to comply with increased regulatory demands o Sophisticated data modeling and analytical capabilities •
Slide 31: Agenda Section highlights
Agenda Section highlights • Highly diversifed, niche-oriented PD • Introduction to Intrum Justitia and the approach and portfolio Group’s strategy • Significant opportunities embedded in • Business Area CMS the market • Business Area Financial Services • Consistent, high returns from a growing PD bo
Slide 32: Intrum Justitia Financial Services Value Chain
IJ Financial Services Intrum Justitia Financial Services Value Chain Credit Management Services Credit Optimisation Payment Services Debt Collection Services Services Financial Services Invoice Purchase Invoice Purchase Invoice Purchase at Sales at Default After Default Factoring Payment Guarantee F
Slide 33: Purchased debt
PD Business Model Purchased debt Diversified risk and close integration with CMS A history of growth Focus on Unsecured Debt • Started acquiring portfolios in 2002 to Purchased Debt Market serve existing clients • Focus on acquiring portfolios from With Security Without Lower Security known clients
Slide 34: Granular and diversified portfolio
PD Portfolio Granular and diversified portfolio Our PD Book Is Diversified Portfolio Breakdown in Several Aspects: (distributions by Book Value) Breakdown by vintage Breakdown by industry Millions of individual debtor client 2015 Mail Order 3% Pre-2011 Other 4%4% Credit 11% 2014 26% Card 27% Max sha
Slide 35: Stable PD business with good growth
PD Portfolio Stable PD business with good growth PD ROI and PD Book Value 2010 – Q1 2015 PD Investments and Book Value RTM Q1 2010 – Q4 2014 SEK M SEK M PD Investments PD BV carrying value Financial Service SL earnings excl reval PD ROI RTM excl revaluation 1000 7000 1400 25% 900 1165 6000 1200 1124
Slide 36: Segmented approach for PD
PD Portfolio Intrum Justitia applies a segmented approach for PD Portfolio Small Medium Large segments 0-1 MEUR 1-10 MEUR >10 MEUR ’Difficult to find, easy to ’Easy to find, difficult Sourcing ’Middle ground’ buy’ to buy’ Existing CMS business Existing CMS business Primary source Auctions (many segm
Slide 37: Client case study
PD Portfolio Client case study Conversion of CMS revenue to PD investment The client Offering and delivery The result • Established mid-tier financial • Activation of Central Intrum • Transaction awarded to Intrum in Southern Europe Justitia team Justitia, € 10 M investment • Decade-long business •
Slide 38: PD market trends
PD Market PD market trends Unsecured Consumer Unsecured Consumer NPL Stock in Europe past 5 years1 NPL Stock in Europe coming 5 years1 • Large NPL stock accumulated in recent • Expected to grow by 10-15% per year years on average • Transacted levels saw a spike in 2013, primarily driven by increased
Slide 39: Our PD strategy
PD Strategy Our PD strategy Success in, PD sourcing and performance Group Core Strategies PD strategic focus Healthy investment levels through a segmented, prioritized Ensure market approach to sourcing leading position Improve strategic position on the back of increased importance Establish superio
Slide 40: Our view of the current market for consumer unsecured NPLs
PD Strategy Our view of the current market for consumer unsecured NPLs • For the bank and finance segment: ‒ Good supply side conditions – in particular for large European markets with an exposed financial sector ‒ Increasingly competitive pricing • For the trade segment: ‒ Stable supply conditions
Slide 41: Intrum Justitia Finance
Intrum Justitia Finance Completes our financial services value chain offering Services Market Needs and Opportunities Current markets Factoring • Improved liquidity, reduced risk and outsourcing of Services administration Offering for • American Factoring market expected to grow at double- B2B marke
Slide 42: Our Intrum Justitia Finance strategy
IJ Finance Our Intrum Justitia Finance strategy A focused, client-driven approach Group Core Strategies Strategic focus Ensure market leading position Focus our efforts where 1) we have a strong brand presence, 2) we see market volume potential and 3) we have good internal capabilities Establish sup
Slide 43: Avarda
Avarda Offering Market opportunity Solid target market with est. 15-20% growth ahead Nordic focus – offices in Stockholm/Sickla • E-com growth ~20% last 10 years in Sweden1 • Solution with Nordic focus • Swedish e-com revenue ’14 reached 43 BSEK1 • Initial main focus on SE + FI Ambition to be a ke
Slide 44: Byjuno
Byjuno Market opportunity Solid target market with est. 15% growth ahead Offering • Swiss e-com revenue ’14 reached 12 BEUR A new, simple and fast payment solution for Solid demand for invoice as payment method consumers • 64% of consumers prefer to pay by invoice if offered • Byjuno offers a new pa
Slide 45: In summary
In summary • Highly diversified, niche-oriented PD approach and portfolio • Significant opportunities embedded in the market • Consistent, high returns from a growing PD book • PD going forward – good growth outlook through selective and prioritized investment approach • Intrum Justitia Finance – co
Slide 46: Agenda
Agenda • Introduction to Intrum Justitia and the Group’s strategy • Business Area CMS • Business Area Financial Services • Regional Perspectives: Round-table • Financial Review • Recap and summary 46 © Intrum Justitia AB 2015. All rights reserved.
Slide 47: Northern Europe
Northern Europe Denmark, Finland, Norway, Netherlands, Poland, Sweden Highlights 2014 • Underlying EBIT growth and solid EBIT 50% margins, adjusted for negative impact of 35 MSEK from items affecting comparability • Improved CMS growth and profitability but negative impact from lower PD investments
Slide 48: Central Europe
Central Europe Austria, Germany, Hungary, Czech Rep., Slovakia, Switzerland Highlights 2014 • Continued strong trend for revenues, EBIT 28% and margins, mainly driven by growth in PD • Strengthened market position in Czech Republic through acquisition of the PD market leader of total revenues • Good
Slide 49: Western Europe
Western Europe Belgium, France, Ireland, Italy, Spain, Portugal, UK Highlights 2014 • Good year on year revenue and EBIT growth 22% of total revenues • Improvement in CMS growth and margins, from organic improvements as well as successful launch of a French joint venture to create the market leader
Slide 50: Agenda Section highlights
Agenda Section highlights • Intrum Justitia has executed on the • Introduction to Intrum Justitia and the financial outlook from the May 2013 Group’s strategy Investor Day • Business Area CMS • Our platform for continued delivery on our financial targets remains strong • Business Area Financial Serv
Slide 51: What we said we would do
Recap of 2013-2015 Development What we said we would do Message from the May 2013 Investor Day Delivering our strategy… will drive financial value creation… allowing us to meet our financial targets Service Line 1. PD: investment and topline growth from good market conditions and stable return profi
Slide 52: 2013-2015 Track Record to Date
Recap of 2013-2015 Development 2013-2015 Track Record to Date Operational Development Value driver Key Development 2013-2015 Credit Management • Good topline growth Services • Opex program protecting service line margins • Strong return on investment Purchased Debt • Stable growth in PD Book Value •
Slide 53: 2013-2015 Track Record to Date: financial development
Recap of 2013-2015 Development 2013-2015 Track Record to Date Financial development Financial Targets 2013 2014 Q1-15 EPS growth to exceed 10% per year 41% 31% 39% Return on PD investments to exceed 15% per year 21% 20% 19% Net Debt/EBITDAA should be 1.61 1.88 1.89 between 2.0 and 3.0 A dividend
Slide 54: Future Development: Strategic Platform
Our Platform for Continued Value Creation Future Development Strategic Platform Stakeholder Objectives Share- Citizen Client Customer Employee holder Better Increased A better The place business The share profitability life to be for all to own Core strategies Establish Ensure Contribute to a Ensure
Slide 55: Future Development: Financing Platform
Our Platform for Continued Value Creation Future Development Financing Platform Debt Maturity Schedule (SEK million) • Significant financial flexibility: 3500 About SEK 3 bn of unutilized facilities 3000 2500 • Diversified funding structure: 2000 Combination of bank loans, bonds and commercial paper
Slide 56: Key Financial Drivers to Meet/Exceed our Targets
Our Platform for Continued Value Creation Future Development Key Financial Drivers to Meet/Exceed our Targets Financial Target Key Financial Drivers for Meeting / Exceeding Targets • Growth in PD Book Value through investment growth over time EPS growth • Stable/improving CMS growth, through opex im
Slide 57: In Summary
Summary of Key Messages In Summary We have largely met or exceeded the operational and financial outlook we set out at the last Investor Day in early 2013 We believe the continued implementation of the Intrum Way strategy coupled with our strong financing structure provides a solid foundation for me
Slide 58: Agenda
Agenda • Introduction to Intrum Justitia and the Group’s strategy • Business Area CMS • Business Area Financial Services • Regional Perspectives: Round-table • Financial Review • Recap and summary 58 © Intrum Justitia AB 2015. All rights reserved.
Slide 59: Intrum Justitia investment case
Intrum Justitia investment case Market leader in an attractive market • Top 3 position in most European markets • Good future growth trends from purchased debt and financing services Proven integrated business model • Strong non-capital binding cash flow generation for continued investments • Indust