Intrum Ab · OMXSTO:INTRUM
Intrum Ab — Intrum Justitia — Investor Day (March 2013)
68 slides from Intrum Ab's investor day presentation, Mar 21, 2013
Slide 1: Investor Day
Investor Day March 21st, 2013 © Intrum Justitia AB 2013. All rights reserved.
Slide 2: Today’s Agenda
Today’s Agenda 08:30 Welcome & Introduction 08:45 Overview and Continued implementation of our strategic journey, Group Strategy ‘The Intrum Way’ 09:30 Purchased Debt Stable growth and cash-flow generation from a well diversified portfolio 10:30 Intrum Justitia Finance Completing the service offerin
Slide 3: Overview and Group Strategy
Overview and Group Strategy Continued implementation of our strategic journey, ‘The Intrum Way’ Investor Day, March 21st 2013 © Intrum Justitia AB 2013. All rights reserved.
Slide 4: Intrum Justitia – Better business for all
intrum (~))) justitia Better business for all
Slide 5: This is Intrum Justitia
This is Intrum Justitia Market leader One of top five Other • Intrum Justitia is a company offering credit management, risk reduction and financial services • Services include payment services, collection services and purchase of overdue receivables • A credit management market leader in Facts & Fig
Slide 6: Service offering based on client payment value chain
Service offering based on client payment value chain Client process Sales and Payment Collection marketing administration Credit Credit Optimization Payment services Debt collection management Services services services Financial Financing services Payment guarantee Purchasing of Services receivable
Slide 7: Market characteristics and positioning
Market characteristics and positioning Market trend highlights Intrum Justitia‟s positioning CMS • Strong hybrid model, based on solid synergies between PD and CMS • Success rate has become a key criteria for clients choosing their CMS partner, ahead of or equally important as price • Full service p
Slide 8: Client base – key characteristics
Client base – key characteristics • About 75 000 corporate clients ‒ From SMEs to large multinationals ‒ Low client dependence ‒ Vast majority with B2C focus • For Intrum Justitia‟s Credit Management business, key characteristics include: ‒ High loyalty/recurring revenues ‒ Key industries include te
Slide 9: Competitive advantages
Competitive advantages - Our CMS business implies four sustainable advantages Extensive information • Deep understanding of payment behavior - right action / right time database • Ability to price purchased debt portfolios efficiently • Client confidence - a trusted partner in providing CMS services
Slide 10: The Intrum Way Journey: from debt collection powerhouse to full service provider
The Intrum Way Journey: taking us from a debt collection powerhouse to a full service provider in credit management and financial services • Our aim: Establish Intrum Justitia as a Service expansion full service provider in credit management and financial services, Value-added CMS Pre-default Post-d
Slide 11: Intrum Way: a recap of 2008-2012
Intrum Way: a recap of 2008-2012 Improvement highlights 2008-2012 5 year performance • Broadened base for recurring PD investments • From 2008 to 2012: • Addressed many under-performing units, through • 47% EPS growth (adj for fx and PD divestments or transformation revaluations) • Cash flow from op
Slide 12: Intrum Way – looking ahead: Continuing our journey
Intrum Way – looking ahead: Continuing our journey, with an increased focus on an established strategy Focus strategies Service expansion Strengthen CMS collection productivity Value-added CMS Pre-default Post-default services, e.g. credit financing services, financing services, through group and re
Slide 13: Strengthen CMS collection productivity through group and regional efforts
Focus strategies Service expansion Strengthen CMS collection productivity Value-added CMS Pre-default Post-default services, e.g. credit financing services, financing services, through group and regional efforts decisions e.g. Factoring e.g. PD Continued PD investment growth Sustainable competitive
Slide 14: Accuracy in case treatment
Our strategy Strengthen operational efficiency through group and regional efforts We will further improve our capabilities in scoring across the entire client value chain - optimising what we do, and how we do it We will further improve our capabilities in scoring We will continue to increase our le
Slide 15: We will continue to increase our legal collection activities and investments
Our strategy Strengthen operational efficiency through group and regional efforts We will further improve our capabilities in scoring across the entire client value chain - optimising what we do, and how we do it We will continue to increase our legal collection We will continue to increase our lega
Slide 16: Continued PD investment growth
Focus strategies Service expansion Strengthen CMS collection productivity Value-added CMS Pre-default Post-default services, e.g. credit financing services, financing services, through group and regional efforts decisions e.g. Factoring e.g. PD Continued PD investment growth Sustainable competitive
Slide 17: Accelerate our launch of new Financial Services
Focus strategies Service expansion Strengthen CMS collection productivity Value-added CMS Pre-default Post-default services, e.g. credit financing services, financing services, through group and regional efforts decisions e.g. Factoring e.g. PD Continued PD investment growth Sustainable competitive
Slide 18: Reinforce Risk Management
Focus strategies Service expansion Strengthen CMS collection productivity Value-added CMS Pre-default Post-default services, e.g. credit financing services, financing services, through group and regional efforts decisions e.g. Factoring e.g. PD Continued PD investment growth Sustainable competitive
Slide 19: Reinforce healthy credit behavior in society
Focus strategies Service expansion Strengthen CMS collection productivity Value-added CMS Pre-default Post-default services, e.g. credit financing services, financing services, through group and regional efforts decisions e.g. Factoring e.g. PD Continued PD investment growth Sustainable competitive
Slide 20: In summary
In summary • We are continuing on our Intrum Way Journey, building and expanding on our market leading debt collection business • Our performance in the last five years show that we are on good track • Going forward, we have increased our focus in…: ‒ New financial services ‒ PD ‒ Risk ‒ CMS Operati
Slide 21: Q&A
Q&A 21(22) © Intrum Justitia AB 2013. All rights reserved.
Slide 22: Intrum Justitia – Better business for all
intrum (~))) justitia Better business for all
Slide 23: Purchased Debt
Purchased Debt Stable growth and cash-flow generation from a well diversified portfolio Investor Day, March 21st 2013
Slide 24: Agenda
Agenda • Introduction to Intrum Justitia’s PD business model • Strategy for further growth 2(12) © Intrum Justitia AB 2013. All rights reserved.
Slide 25: Purchased Debt- Our focus
Purchased Debt- Our focus Unsecured Consumer Debt Disciplined focus on the above characteristics is 3(12) the key driver behind Intrum Justitia’s solid PD business © Intrum Justitia AB 2013. All rights reserved.
Slide 26: Our PD Operations Set Up
Our PD Operations Set Up Local PD Central PD PD Sourcing PD Pricing Analysis and evaluation Valuation Analysis Negotiation Forecast Analysis Closing Sales Risk Rating Collections Reporting tools CMS State of the art amicable and legal collections capabilities Strong Scoring capabilities Access to po
Slide 27: Indicative Financial illustration
Indicative Financial illustration Invested amount: 100 SEK M Gross collection 2.05 x invested amount (SEK M) Y1 Y2 Y3 Y4 Y5 Y6-Y10 Y11-Y15 Y1-Y15 Cash-flow distribution 29% 18% 12% 9% 8% 20% 4% 100% Gross collection 60 38 25 19 15 40 8 205 Amortisation * -31 -17 -11 -9 -7 -20 -5 -100 Amortisation ra
Slide 28: Market Outlook
Market Outlook • Price, reputation, efficiency and certainty of execution are key value drivers for portfolio sellers Market size • Stable returns in major portfolios despite competitive pricing and growth • Three main factors influencing our investment decisions are portfolio type, geography and re
Slide 29: Healthy PD portfolio through diversification
Healthy PD portfolio through diversification Different industries Different countries Large number of Large recurring individual portfolios seller base Partnership Different portfolio strategy for major types portfolios • An overall steady cash flow and return 7(12) • Low total portfolio risk © Intr
Slide 30: Stable PD business with good growth
Stable PD business with good growth PD RoI and PD Book Value 2008-2012 PD Investments 2002-2012 SEK M SEK M 2 500 ROI RTM excl. reval PD book value 3 600 3 200 20% 2 000 2 800 CAGR 07-11: 13% 2 400 15% 1 500 2 000 1 600 10% 1 000 2014 1804 CAGR 02-06: 28% 1 200 500 996 1050 800 5% 822 870 872 871 40
Slide 31: Solid cash-flow generation and performance
Solid cash-flow generation and performance Indicative Net Cash Flow* on PD Portfolios MSEK 2000 1800 CAGR: 18% 1600 1400 1200 1000 Indicative Net Cash Flow on PD Portfolios 800 600 400 200 0 2008 2009 2010 2011 2012 * ) Indicative Net Cash Flow = PD Collections less PD Service Line Costs (mainly col
Slide 32: Our PD strategy: Increased sourcing and performance through segmentation
Our PD strategy: Increased sourcing and performance through segmentation, operational efficiency and organizational capabilities Focus Expected outcome • Build relationships with sellers at the Closeness to the right level 1 Increased volumes market • Ability to price more competitively due to highe
Slide 33: In summary
In summary • Solid track record: stable RoI and fast cash flow pay-back on investments • Healthy risk diversification: investments spread over many industries, geographies and portfolio-types • Positive growth outlook: recurring revenues from broad base of sellers coupled with positive market outloo
Slide 34: Intrum Justitia – Better business for all
intrum (~))) justitia Better business for all
Slide 35: Intrum Justitia Finance
Intrum Justitia Finance Completing the service offering value chain for long-term growth acceleration Investor Day, March 21st 2013 1
Slide 36: Agenda
Agenda • Introduction and description of Intrum Justitia Finance • Future outlook 2(15) © Intrum Justitia AB 2013. All rights reserved.
Slide 37: Intrum Justitia Finance – a new business unit
Intrum Justitia Finance – a new business unit • Managing Director – Jan Haglund ‒ 10+ years experience from Financial Services ‒ Previous positions include Country Manager for Santander Consumer Finance & Nordic Business Area Manager for Entercard ‒ 2 years with Intrum Justitia, previously Finance D
Slide 38: Responsibility of Intrum Justitia Finance from a value chain perspective
Responsibility of Intrum Justitia Finance from a value chain perspective – Before or at the point when an invoice falls due PAYMENT Client Process SALES PROCESS COLLECTIONS ADMINISTRATION Credit Credit Optimization Payment Collection Management Services Services Services Services Financing Payment P
Slide 39: Intrum Justitia Finance service offerings
Intrum Justitia Finance service offerings Invoice purchase solution targeted at SME’s • Includes administration/outsourcing and invoice purchase with and Factoring without recourse B2B Services • For Factoring, our target market is invoice purchase and not invoice lending • Delivered with high quali
Slide 40: Market fit
Market fit Services Market Opportunity Client Needs • Invoice Purchase expected to grow at • Focus on improved liquidity, reduced double-digit levels on an annual basis risk and outsourcing of Factoring administration • Starting point is the highly attractive Nordic Services markets • Getting paid q
Slide 41: Competitive Strengths / Synergies with the Group
Competitive Strengths / Synergies with the Group • Strong European leader Market Access • Significant base of existing clients • Strong brand for B2B client acquisition Brand Name/Trust • Building new consumer brand • Cross-selling along the credit mgmt value chain Group Synergies • Utilization of r
Slide 42: Current Geographical Focus
Current Geographical Focus - Factoring launched and operational in Sweden in 2012 - In 2013, we have launched Factoring in Finland and e-Com Finance Services in The Netherlands - Ambition for a strong European presence over the next 5 years 11(15) © Intrum Justitia AB 2013. All rights reserved.
Slide 43: Regulations and prerequisites
Regulations and prerequisites • Regulatory environment differ from country to country • We have the required permits for Sweden/Finland/The Netherlands/Switzerland, for the services operational as of today • We have submitted an application to the Swedish FSA to receive a permit as a ”kreditmarknads
Slide 44: Future outlook
Future outlook • In 2013, we will: ‒ Launch and expand offering in Sweden, Finland and The Netherlands ‒ Continue to build our business and organizational capacity as a separate unit ‒ Guidance for 2013 P&L impact: • EBIT of about -40 MSEK, due to start-up losses in new markets and build-up of centr
Slide 45: In summary
In summary • Intrum Justitia Finance completes our offering along the payment value chain • Strong synergies with current CMS and PD business • Early stage launch during 2013, but with a complete set of competitive services already up and running in four countries • Long-term, significant contributo
Slide 46: www.intrum.com
intrum (~))) justitia Better business for all www.intrum.com
Slide 47: Regional Perspectives
Regional Perspectives Roundtable discussion with Regional Managing Directors Investor Day, March 21st 2013
Slide 48: Northern Europe
Market position Northern Europe Market leader 49 percent of total revenues Top 5 Denmark, Finland, Norway, Poland, Sweden Highlights 2012 • Solid growth in PD investments • Increasingly positive returns from legal collections strategy • Acquisition of large bank portfolio in Poland Jan-Dec Jan-Dec C
Slide 49: Central Europe
Market position Central Europe Market leader 24 percent of total revenues Top 5 Austria, Germany, Hungary, Czech Rep., Slovakia, Switzerland Other Highlights 2012 • Stable performance in most markets, excluding Germany • Strong focus on growing Legal Collections practice with very encouraging result
Slide 50: Western Europe
Market position Western Europe Market leader 27 percent of total revenues Top 5 Belgium, France, Ireland, Italy, Netherlands, Spain, Portugal, UK Other Highlights 2012 • Top-line impacted by weak macro development • Strong focus on CMS cost efficiency – significant savings programs implemented • Acq
Slide 51: Intrum Justitia – Better business for all
intrum (~))) justitia Better business for all
Slide 52: Risk Management
Risk Management Industrializing industry-leading risk management practices Investor Day, March 21st 2013
Slide 53: We are industrializing our risk management framework
We are industrializing our risk management framework Our risk framework is built around three key components. Our strategic focus is to industrialize this framework across the Intrum group Risk management Goals and strategic objectives of mission risk management Functional All key risk management ca
Slide 54: Functional capabilities in practice
Functional capabilities in practice Risk taxonomy Risk assessment tool Executive summary of overall risk assessment Risk taxonomy of purchased debt transactions TBA Local overal risk 3 PD deal level risks assessment Concluding remarks on overall risk assessment * Overall this PD transaction should b
Slide 55: Three lines of defence framework
Three lines of defence framework is the very starting point for all instruction and governance from Risk 1st line of defence 2nd -i line of defence 2nd -ii line of defence 3rd line of defence Risk taking Credit and PD- Risk control Risk audit High-level Investments description Conduct the business
Slide 56: Credit organization for Intrum Justitia Finance with central analytics
For Intrum Justia Finance we have established a traditional credit organization combined with strong central analytics resources • Traditional credit Board of directors Overall responsibility for prudent governance and control of the business organization External Managing Director 3 Audit Internal
Slide 57: In summary
In summary • Strengthened risk management practice will drive improved risk-return profile for the Intrum Justitia Group • Current focus is to industrialize our risk management practices, particularly for PD portfolio assessments • Framework is built according to industry best practice • Well positi
Slide 58: www.intrum.com
intrum (~))) justitia Better business for all www.intrum.com
Slide 59: Financial review
Financial review New financial targets reflecting strategy and outlook Investor Day, March 21st 2013
Slide 60: Financial review – past five years
Financial review – past five years Growth recovery Operating margin expansion MSEK MSEK 4500 10% 1000 25% 4000 900 8% 3500 800 20% 700 3000 6% 600 15% 2500 4% 500 2000 400 10% 1500 2% 300 1000 0% 200 5% 500 100 0 -2% 0 0% 2008 2009 2010* 2011 2012 2008 2009 2010 2011 2012 Revenues Organic Growth(%)
Slide 61: Financial review – past five years
Financial review – past five years Solid cash flow generation Strong balance sheet MSEK MSEK 3500 1,80 2500 1,60 CAGR: 12 % 3000 2000 1,40 2500 1,20 1500 2000 1,00 1500 0,80 1000 0,60 1000 500 0,40 500 0,20 0 0 0,00 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Cash flow from operations (MSEK) N
Slide 62: Financial review – past five years
Financial review – past five years Healthy EPS development Solid dividend growth SEK SEK 8 6 CAGR: 7 % 7 CAGR: 9% 5 6 5 4 4 3 3 2 2 1 1 0 0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 EPS(SEK/Share) Dividends/Share Good shareholder value growth - despite largely challenging macro 4(10) © Intru
Slide 63: Financial outlook – next five years
Financial outlook – next five years Delivering our strategy… … will drive financial value creation… … allowing us to meet our objectives Service Line perspective 1. PD: investment and top line growth from good market conditions and stable return profile 2. CMS: gradual margin expansion from operatio
Slide 64: New financial targets
New financial targets Financial target New Same as today 1. EPS growth to exceed 10% per year ‒ Defines shareholder value creation 2. Return on PD investments to exceed 15% ‒ Remains highly relevant due to the PD expansion 3. Net Debt/EBITDA should be between 2,0 and 3,0 ‒ Net debt / cash-flow is th
Slide 65: Solid, stable growth through service expansion
Solid, stable growth through service expansion EPS (SEK) 11,00 Target: 10% per year 9,00 CAGR: 6% 7,00 5,00 CAGR: 24% 3,00 1,00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -1,00 -3,00 2002-2005 2006-2012 2013-2017 - CMS growth. - PD main driver for net - PD continues to be a growth profit
Slide 66: New financial targets: EPS, return on PD, net debt/EBITDA
25% New financial targets 20% 15% EPS (SEK/share) 10+%/year 10% 5% 7% CAGR EPS growth 0% 2008 2009 2010 2011 2012 2013 2014 2015 -5% -10% Definition: Growth in net profit per share in relation to average outstanding nr of shares 25% Return on PD investment 20% Over 15% 15% Return on PD investment 10
Slide 67: In summary
In summary • We have a healthy financial track record for the past five years - evidence that we are delivering on our strategy • The continued implementation of the Intrum Way strategy over the next five years provides a solid foundation for further financial value creation • Our new financial targ
Slide 68: www.intrum.com
intrum (~))) justitia Better business for all www.intrum.com