Intrum Ab · OMXSTO:INTRUM
Intrum Ab — Intrum Justitia — Q3 2009 Earnings Presentation
45 slides from Intrum Ab's earnings presentation, Oct 22, 2009
Slide 1: Interim report January-September 2009
Interim report January September 2009 January-September October 22nd 2009
Slide 2: Global overview
Global overview • Boosted credit market/credit expansion • Collapse of banking systems • Declining ability and/or willingness to pay • Increasing unemployment 2
Slide 3: Changes in average payment loss 2009 vs 2008
Changes in average payment loss 2009 vs 2008 3 EU average increased from 2.0% to 2.4%
Slide 4: Turnover by region
Turnover byy region* g PL, CZ, SK & HU 4% UK & IE SE, NO & DK 5% 18% FI EE, FI, EE LV & LT 15% NL & BE 15% FR, ES & IT 21% CH, DE & AT 22% 4 *Excluding PD revaluation
Slide 5: Organic growth
Organic g g growth -Percent Group excl. Region UK & Ireland 5
Slide 6: Our long term transformation journey remains unchanged
Our long g term transformation journey remains unchanged 1 CMS Concept Proactive Friendly 24 Debt Product Reactive Fierce Fi 6
Slide 7: Growth drivers
Growth drivers Service offering expansion Acquisitions - CMS companies i - Clients CMS units Purchased P h d debt d bt - Own investments - Investment partnerships Information superiority & operational p excellence 7
Slide 8: Q3 short term focus deliverables
Q3 short term focus deliverables • Continued market position expansion • Emphasized cost control • Focus on client activities and broader service offering Encourage • Operational excellence, i e updated scoring approach meaning increased efficiency in operations and investments • Prepare p p partner
Slide 9: Q3 short term focus deliverables
Q3 short term focus deliverables • Adjusted management team and governance structure established Adjust • Vitalize region Scandinavia • Develop legal procedures in more countries 9
Slide 10: Q3 short term focus deliverables
Q3 short term focus deliverables • Complete region UK restructuring Turn Around • Reduce loss level in CEE and adapt to new macro situation 10
Slide 11: Q3 financial summary
Q3 financial summaryy • Revenues growth: 13% • EBIT: SEK 147 M • EBIT margin: 14 14.4% 4% • EBIT excluding restructuring cost: SEK 201 M • EBIT margin excluding restructuring cost: 19.7% • Investments in Purchased Debt, Jan-Sep: p SEK 659 M • ROI in Purchased Debt: 15.9% 11
Slide 12: Intrum Justitia Group third quarter
Intrum Justitia Group p third q quarter SEK m Q3 Dev. Q3 Percentage Q3 Dev. Q3 Development, % 2009 % 2008 of revenues 2009 % 2008 Total revenues 1023.2 13.0% 905.4 EBIT margin 14.4% 23.0% Operating cost, total -876.0 25.6% -697.2 EBIT margin i excll PD reval.l 14 9% 14.9% 23 0% 23.0% Cost of sales -
Slide 13: Purchased Debt
Purchased Debt 22 percent of total revenues July-Sept July-Sept Change • Q3 ROI is 15.9 percent (17.2) Reported numbers 2009 2008 % • Rolling ROI is 16.0 percent (17.5) Revenues, SEKm 238.7 198.9 20.0% • Investments in Q3(09) were SEK 179 179.7 7M EBIT SEK EBIT, SEKm 93 4 93.4 89 8 89.8 4 0% 4.0% (2
Slide 14: 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 -2% -4% -6% 14
Slide 15: Purchased Debt – revaluations
Purchased Debt – revaluations Q3 Q3 9m FY PD revaluations, SEK M 2009 2008 2009 2008 Sweden Norway & Denmark Sweden, 00 0.0 06 0.6 -0 0.3 3 -0 0.9 9 Netherlands & Belgium 0.0 0.0 0.0 0.0 Switzerland, Germany & Austria 0.0 -0.1 2.4 -0.1 France,, Spain p Portugal g & Italy y -1.3 -3.6 -30.4 -14.8 Finl
Slide 16: Carrying Value PD – segmented in acquired year
Carrying y g Value PD – segmented g in acquired q yyear - 2008/2009 represents 47% of carrying value EUR Millions 250 200 2009 150 2008 100 2007 50 2006 2005 2004 0 <2004 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 16
Slide 17: PD – Successful risk allocation although cherry picking
PD – Successful risk allocation although g cherry yppicking g Spain 2% Germany 1% Austria 2% 2009 September Finland 21 countries 14% 1999 47% UK 6 countries Others 34% Germanyy Switzerland 15% 13% Carrying value SEK 175 M Country 9 5% Sweden 13% Others Country 8 6% Sweden 8% 2% UK 8% 13% Austria Cou
Slide 18: Purchased debt, investments
Purchased debt, investments 2001–2009 Guidance: Long term annual investments in small and medium size portfolios SEK 700 M. SEK m 996* 822 870 872 659 258 267 201 106 * Incl acquisition of Austrian portfolio of written written-off off receivables with an aggregate 18 outstanding principal of EUR 640
Slide 19: PD ROI – rolling 12 months
PD ROI – rolling g 12 months PD carrying value: SEK 2,287 M ROI 12: 16 16.0% 0% PD carrying value ROI 12 SEK M 20% 2,400 2,000 15% 1 600 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 2006 2007 2008 2009 19
Slide 20: Credit Management Services
Credit Management g Services 78 percent of total revenues • Organic growth is 2.3% July-Sept July-Sept Change Reported numbers 2009 2008 % • Sales contract with Pohjola was established in Q3 Revenues, SEKm 874.8 791.7 10.5% EBIT SEK EBIT, SEKm 72 7 72.7 134 1 134.1 -45.8% 45 8% • Strong growth in In
Slide 21: Credit Management Services – excl UK costs
Credit Management Services – excl UK costs 78 percent of total revenues • Organic growth is 2.3% (4% excl UK & Ireland) July-Sept July-Sept Change Adjusted numbers 2009 2008 % • Sales contract with Pohjola was established in Q3 Revenues, SEKm 874.8 791.7 10.5% EBIT SEK EBIT, SEKm 126 8 126.8 134 1 1
Slide 22: Sweden, Norway & Denmark
Market share Regional development > 25% Sweden Norway & Denmark Sweden, 10–25% 18 percent of total revenues July-Sept July-Sept Change • The sales pipeline has been strengthened and Excl. PD Revaluations 2009 2008 % important client wins have been achieved Revenues, SEKm 185.2 185.5 -0.2% • In Norwa
Slide 23: The Netherlands & Belgium
Market share Regional development > 25% The Netherlands & Belgium < 10% 15 percent of total revenues July-Sept July-Sept Change • Solid CMS growth in both countries means market shares have been gained Excl. PD Revaluations 2009 2008 % Revenues SEKm Revenues, 156 9 156.9 135 1 135.1 16 1% 16.1% • Im
Slide 24: Germany, Austria & Switzerland
Market share Regional development > 25% Germany, Austria & Switzerland <10% 23 percent of total revenues • Reorganization of the regional structure July-Sept July-Sept Change implemented to strengthen sales pipeline will Excl. PD Revaluations 2009 2008 % mean investments in the short term Revenues,
Slide 25: France, Spain, Portugal & Italy
Regional development Market share France Spain France, Spain, Portugal & Italy 10 25% 10–25% 21 percent of total revenues July-Sept July-Sept Change Excl. PD Revaluations 2009 2008 % • Continued strong organic growth driven by Revenues, SEKm 218.5 158.9 37.5% concept development and new client wins
Slide 26: Finland, Estonia, Latvia & Lithuania
Market share Regional development > 25% Finland Estonia, Finland, Estonia Latvia & Lithuania 10–25% 15 percent of total revenues • Double digit growth in CMS supported by July-Sept July-Sept Change new client wins Excl. PD revaluations 2009 2008 % Revenues, SEKm 157.4 125.8 25.1% • Important long te
Slide 27: United Kingdom & Ireland
Regional development Market share United Kingdom & Ireland <10% 3 percent of total revenues July-Sept July-Sept Change • Consultation period finalized 1/9 in England, 247 Excl. PD Revaluations 2009 2008 % employees left in Q3. Focus is now on profitable Revenues, SEKm 33.7 53.6 -37.1% client relatio
Slide 28: Poland, Czech Rep., Slovakia & Hungary
Market share Regional development > 25% Poland Czech Rep Poland, Rep., Slovakia & Hungary 10–25% 5 percent of total revenues • Improved financial result in Poland, Hungary is July-Sept July-Sept Change still struggling with challenging macro but Excl. PD Revaluations 2009 2008 % situation is stabili
Slide 29: Cash flow statement
Cash flow statement Q3 and Jan-Sept 2009 Jan-Sept p Jan-Sept p Dev Q3 Q3 Dev SEK m 2009 2008 % 2009 2008 % Operating earnings (EBIT) 462.1 554.4 -17% 147.2 208.2 -29% Income tax paid -169.7 -68.4 148% -39.0 -14.3 173% Changes in working capital -21.4 -33.9 -37% 23.1 -8.5 n.a Other 91.7 -6.7 n.a 98.5
Slide 30: Balance sheet – Highlights
Balance sheet – Highlights g g 30 Sept 30 Sept Dev SEK m 2009 2008 % Total assets 6,680.8 6,048.5 10% Goodwill , 1,803.4 1,804.9 , 0% Total financial fixed assets 2,561.1 2,314.0 11% -whereof Purchased Debt 2,286.9 2,120.3 8% Shareholders' equity 2,409.8 1,975.9 22% Net debt/equity ratio, % 94.4 114
Slide 31: Revenues and operating margin, rolling months
Revenues and operating p g margin, g rolling g 12 months Revenues: SEK 3,329m Revenues: SEK 4,102 M Margin: 20.5 % Margin: 18 18.2% 2% SEKm Revenues EBIT margin % 4,000 20 3 500 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 2005 2006 2007 2008 2009 31 Excl. disposa
Slide 32: Financial objectives
Financial objectives j • 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
Slide 33: Q&A
Q&A 33
Slide 34: Appendix
Appendix 34
Slide 35: Intrum Justitia in brief
Intrum Justitia in brief Europe s leading provider of credit Europe’s management services, with operations in 23 markets* R Revenue 2008 FY FY: SEK 3.7 3 7 billion billi 3,370 employees Listed Li t d on NASDAQ OMX OMX, St Stockholm, kh l Mid-Cap Market capitalization, September 30, 2009: SEK 6.2 bil
Slide 36: Low outsourcing rate and high risk index
Low outsourcing g rate and high g 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 36
Slide 37: High outsourcing rate and low risk index
High g outsourcing g 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 37
Slide 38: Accounting for purchased portfolios
Accounting g for p purchased p portfolios Q3 Q3 Full year SEK m 2009 2008 2008 Gross collection 424 2 424.2 362 9 362.9 1410 2 1410.2 Amortization -197.1 -172.0 -653.8 Reported revenues* 238.7 198.9 783.6 Commission + service line costs -145.3 145.3 -109.1 109.1 -434.3 434.3 Operating earnings (EBIT
Slide 39: A broad indication going forward
A broad indication g going g forward Carrying value 30 Sept 2009: SEK 2,287 M +12% y-o-y (SEK 2,051 M) Gross collection: Carrying value x 2.25 Cash flow distribution 30 Sept of Gross collection 2009 2008 Y1 24% 25% Y2 18% 18% Y3 15% 14% Y4 11% 10% Y5 9% 8% Y6 7% 7% Y7 5% 5% Y8 4% 4% Y9 2% 3% Amortiz
Slide 40: Mix of forward flows and one-offs
Mix of forward flows and one-offs 100% 8% 8% 90% 16% 28% 31% 37% 33% 38% 80% 44% 42% 51% 48% 46% 50% 48% 70% 60% 50% 92% 92% 40% 84% 72% 69% 63% 67% 62% 30% 56% 58% 49% 52% 54% 50% 52% 20% 10% Forward f lows One of f s One-of 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2006 2007 2008 2009 40
Slide 41: Purchased Debt, carrying value
Purchased Debt, carrying y g value SEK m -1.8% vs FY 2008 2,500 2,300 2,100 1,900 1,700 1,500 1 300 1,300 1,100 900 700 500 300 100 -100 2003 2004 2005 2006 2007 2008 2009 41
Slide 42: PD portfolio prices
PD p portfolio p prices Market imperfections: Our pricing model d l iis lless competitive titi on th the ttop PD price/quality PD collection performance Time/ Economic Cycle As on top of an imperfect market: Now: Portfolio prices We acquire more than an average year have bottomed 42 on larger portfo
Slide 43: The net revaluations since 2006 add up to EUR -0.7 M
The net revaluations since 2006 add up to EUR -0.7 0.7 M 2,000 1,500 1,000 500 0 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 ‐500 ‐1,000 ‐1,500 ‐2,000 43
Slide 44: Organic growth 2003-2009
Organic g g growth 2003-2009 Organic O i growthth % in Q3(09): 5.2% 15 Financial 10 target 5 0 ‐5 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 2007 2008 2009 44
Slide 45: EBIT Margin Y-o-Y
EBIT* Margin g Y-o-Y Ppt 6 5 4 3 2 1 0 -1 -2 2 -3 -4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 2007 2008 2009 45 *Excluding Goodwill write-downs, restructuring disposals