Intrum Ab · OMXSTO:INTRUM
Intrum Ab — Intrum Justitia — Q2 2009 Earnings Presentation
39 slides from Intrum Ab's earnings presentation, Jul 20, 2009
Slide 1: Interim report January-June 2009
Interim report January-June 2009 July 20th 2009
Slide 2: Business update
Business update Macro economy still challenging Positive y-o-y adjusted EBIT development Region UK turnaround according to plan 2
Slide 3: Q2 financial summary
Q2 financial summary Sales increased: 18 percent EBIT decreased: 12 percent EBIT excl. revaluation & divestments increased: 5 percent Net result decreased: 6 percent Investments in purchased debt: 369 MSEK 3
Slide 4: Q2 short term focus deliverables
Q2 short term focus deliverables • Purchased Debt investments in line with guidance • New retail bank offering developed Encourage • Combined solid development in BeNeLux, Southern Europe, DACH & Finland • EBIT loss reduced with 50 % in Eastern Europe Adjust • Adjusted management team in place autum
Slide 5: Growth drivers
Growth drivers Service offering expansion Acquisitions - CMS companies - Clients CMS units Purchased debt - Own investments - Investment partnerships Information superiority & operational excellence 5
Slide 6: Intrum Justitia Group second quarter
Intrum Justitia Group second quarter SEK m Q2 Dev. Q2 Percentage Q2 Dev. Q2 Development, % 2009 % 2008 of revenues 2009 % 2008 Total revenues 1050.8 18.0% 890.8 EBIT margin 15.1% 20.2% Operating cost, total -892.3 25.4% -711.3 EBIT margin excl PD reval. 15.6% 20.1% Cost of sales -669.8 24.9% -536.2
Slide 7: Purchased debt – PD revaluations
Purchased debt – PD revaluations Q2 Q2 H1 FY PD revaluations, SEK m 2009 2008 2009 2008 Sweden, Norway & Denmark -0.3 -0.5 -0.3 -0.9 Netherlands & Belgium 0.0 0.0 0.0 0.0 Switzerland, Germany & Austria 0.0 0.0 2.4 -0.1 France, Spain Portugal & Italy -2.9 -6.8 -29.1 -14.8 Finland, Estonia, Latvia & L
Slide 8: Purchased Debt
Purchased Debt 22 per cent of total revenues Apr-Jun Apr-Jun Change • Q2 ROI is 16.5 per cent (15.8). Reported numbers 2009 2008 % • Rolling ROI is 16.1 per cent (17.2), including Revenues, SEKm 248.8 191.8 29.7% revaluation EBIT, SEKm 96.0 78.5 22.3% • Investments in Q2(09) were SEK 369.0 M EBIT ma
Slide 9: 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 -2% -4% -6% 9
Slide 10: Carrying Value PD - segmented in acquired year
Carrying Value PD - segmented in acquired year - 2008/2009 represents 43% of carrying 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 Q209 10
Slide 11: PD – Successful risk allocation although cherry picking
PD – Successful risk allocation although cherry picking Spain 2% Germany 1% Austria 2% 2009 June Finland 21 countries 14% 1999 47% UK 6 countries Others 34% Germany Switzerland 16% 14% Carrying value SEK 175 M Country 9 Finland 5% 12% Others Country 8 Sweden 7% Austria 8% 2% UK Country 7 8% 11% Aust
Slide 12: Purchased debt, investments – 2001–2009
Purchased debt, investments – 2001–2009 Guidance: Long term annual investments in small SEKm and medium size portfolios SEK 700 M. For 2009 > SEK 700 M. 1 200 870 822 996* 1 000 872 800 205 611 600 212 400 258 201 267 106 143 251 369 200 125 117 204 111 0 2001 2002 2003 2004 2005 2006 2007 2008 2009
Slide 13: PD ROI – rolling 12 months
PD ROI – rolling 12 months PD carrying value: SEK 2407 M ROI 12: 16.1%, including revaluation 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 2006 2007 2008 2009 13
Slide 14: Credit Management Services
Credit Management Services 78 per cent of total revenues • Organic growth is 1% Apr-Jun Apr-Jun Change • Strong growth in International, Southern Reported numbers 2009 2008 % Region and Belgium Revenues, SEKm 900.8 782.2 15.2% • Weaker development in CEE EBIT, SEKm 101.3 126.9 -20.2% • In Q2: two fe
Slide 15: Sweden, Norway & Denmark
Market share Regional development > 25% Sweden, Norway & Denmark 10–25% 17 per cent of total revenues Apr-Jun Apr-Jun Change • The broadening of the CMS concepts with “Intrum Score” has been well received. The Excl. PD Revaluations 2009 2008 % revenue trend shift is expected towards the Revenues, SE
Slide 16: The Netherlands & Belgium
Market share Regional development > 25% The Netherlands & Belgium < 10% 16 per cent of total revenues Apr-Jun Apr-Jun Change • Enjoying a solid and broad platform of CMS Excl. PD Revaluations 2009 2008 % services Revenues, SEKm 170.2 136.5 24.7% • Continued good momentum, especially in EBIT, SEKm 28
Slide 17: Germany, Austria & Switzerland
Market share Regional development > 25% Germany, Austria & Switzerland <10% 21 per cent of total revenues Apr-Jun Apr-Jun Change • A positive start for the “extended bank Excl. PD Revaluations 2009 2008 % solutions” with benchmark against the in- Revenues, SEKm 222.3 175.8 26.5% house operation EBIT
Slide 18: France, Spain, Portugal & Italy
Regional development Market share France, Spain, Portugal & Italy 10–25% 21 per cent of total revenues Apr-Jun Apr-Jun Change • CMS continues to have double digit organic Excl. PD Revaluations 2009 2008 % growth momentum Revenues, SEKm 225.2 153.9 46.3% • Market share growth in France. The French EB
Slide 19: Finland, Estonia, Latvia & Lithuania
Market share Regional development > 25% Finland, Estonia, Latvia & Lithuania 10–25% 15 per cent of total revenues Apr-Jun Apr-Jun Change • Market shares are gained on back of Excl. PD revaluations 2009 2008 % strong quality Revenues, SEKm 155.9 128.4 21.4% • Operational costs, especially in legal EB
Slide 20: Increase in court orders - Finland
Increase in court orders - Finland 600000 90000 80000 500000 70000 400000 60000 50000 300000 40000 200000 30000 Rolling nr of normal cases Rolling nr of court orders 20000 100000 10000 0 0 Dec‐ Jan‐ Feb‐ Mar‐ Apr‐ May‐ Jun‐ Jul‐08 Aug‐ Sep‐ Oct‐ Nov‐ Dec‐ Jan‐ Feb‐ Mar‐ Apr‐ May‐ Jun‐ 07 08 08 08 08
Slide 21: United Kingdom & Ireland
Regional development Market share United Kingdom & Ireland < 10% 5 per cent of total revenues • In England the consultation period with staff will Apr-Jun Apr-Jun Change continue until September; 75-80% of workforce Excl. PD Revaluations 2009 2008 % are at risk of being made redundant. Rent for Reve
Slide 22: Poland, Czech Rep., Slovakia & Hungary
Market share Regional development > 25% Poland, Czech Rep., Slovakia & Hungary 10–25% 5 per cent of total revenues Apr-Jun Apr-Jun Change • Czech and Slovakia in positive territories Excl. PD Revaluations 2009 2008 % Revenues, SEKm 49.5 54.7 -9.5% • PD turned from loss making in Q1 to break- even in
Slide 23: Cash flow statement
Cash flow statement Q2 and H1 Q2 Q2 Dev Jan-June Jan-June Dev SEK m 2009 2008 % 2009 2008 % Operating earnings (EBIT) 158.5 179.5 -12% 314.9 346.2 -9% Income tax paid -81.9 -16.9 385% -130.7 -54.1 142% Changes in working capital 47.8 75.0 -36% -44.5 -25.4 75% Cash flow from operating activities 120.
Slide 24: Balance sheet – Highlights
Balance sheet – Highlights 30 Jun 30 Jun Dev SEKm 2009 2008 % Total assets 7,008.1 5,895.2 19% Goodwill 1,899.4 1,757.6 8% Total financial fixed assets 2,682.3 2,230.8 20% -whereof Purchased Debt 2,406.6 2,048.9 17% Shareholders' equity 2,357.9 1,766.6 33% Net debt/equity ratio, % 111.5 130.8 -19.3
Slide 25: Revenues and operating margin, rolling 12 months
Revenues and operating margin, rolling 12 months Revenues: SEK 3,329m Revenues: SEK 3.400 M Margin: 20.5 % Margin: 18.6% SEKm 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 2005 2006 2007 2008 2009 25 Excl. disposals and GW writedown
Slide 26: 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
Slide 27: Q&A
Q&A 27
Slide 28: Intrum Justitia in brief
Intrum Justitia in brief Europe’s leading provider of credit management services, with operations in 23 markets* Revenue 2008 FY: SEK 3.7 billion 3,370 employees Listed on Nordic Exchange, Mid-Cap Market capitalization, June 30, 2009: SEK 5.9 billion CEO & President: Lars Wollung CFO: Monika Elling
Slide 29: 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 29
Slide 30: 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 30
Slide 31: Accounting for purchased portfolios
Accounting for purchased portfolios Q2 Q2 Full year SEKm 2009 2008 2008 Gross collection 451.5 357.8 1410.2 Amortization -210.3 -172 -653.8 Reported revenues* 248.8 191.8 783.6 Commission + service line costs -152.8 -113.3 -432.1 Operating earnings (EBIT) 96.0 78.5 349.3 EBIT margin, % 38.6% 40.9% 4
Slide 32: A broad indication going forward
A broad indication going forward Carrying value 30 Jun 2009: SEK 2 407 M +18% y-o-y (SEK 2 044 M) Gross collection: Carrying value x 2.3 Cash flow distribution 30 Jun of Gross collection 2009 2008 Y1 25% 25% Y2 18% 18% Y3 15% 14% Y4 11% 10% Y5 9% 8% Y6 7% 7% Y7 5% 5% Y8 3% 4% Y9 2% 3% Amortization:
Slide 33: Mix of forward flows and one-offs
Mix of forward flows and one-offs 100% 8% 8% 90% 16% 28% 26% 37% 33% 38% 80% 42% 44% 48% 46% 51% 70% 72% 60% 50% 92% 92% 40% 84% 72% 74% 63% 67% 30% 58% 62% 56% 52% 54% 49% 20% 28% 10% Forward flows One-offs 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2006 2007 2008 2009 33
Slide 34: Purchased debt, carrying value
Purchased debt, carrying value SEK m +3.3% FY 2008 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 34
Slide 35: 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 of an imperfect market: are on their way down We acquire more than an average year 35 on
Slide 36: The net revaluations since 2006 adds up to EUR -0.1 M
The net revaluations since 2006 adds up to EUR -0.1 M 2,000 1,500 1,000 500 0 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 ‐500 ‐1,000 ‐1,500 ‐2,000 36
Slide 37: Central costs have decreased
Regional development Central costs have decreased Q2 relative y-o-y: SEK 27.5 M (38.6) • Generally a lower cost level • Lower costs for data center in Amsterdam 37
Slide 38: Organic growth 2003-2009
Organic growth 2003-2009 Organic growth in Q2(09): 4.0% % Financial target Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2005 2006 2007 2008 2009 38
Slide 39: 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 2005 2006 2007 2008 2009 39 *Excluding Goodwill write-downs and disposals