Intrum Ab · OMXSTO:INTRUM
Intrum Ab — Investor Day (November 2020)
73 slides from Intrum Ab's investor day presentation, Nov 18, 2020
Slide 1: Capital Markets Day 18 November 2020
aa Leading the wa) toa sound econ Capital Markets Day 18 November 2020 “iii. intrum
Slide 2: Today's presenters
Today’s presenters Anders Engdahl Michael Ladurner Anette Willumsen Harry Vranjes President & Acting Chief Managing Director Chief Operating Officer Chief Executive Officer Financial Officer CMS Sales & Service Development and Markets intrum
Slide 3: Our medium term financial targets
Our medium term financial targets Cash RolC Cash EPS >10% >10% p.a. on average medium term medium term Net debt/Cash EBITDA Dividend per share 2.5-3.5x by end of 2022 Absolute annual increase intrum
Slide 4: Our key messages for the day
Our key messages for the day We have a resilient, sustainable and proven business model focused on client and customer service Megatrends and macro drivers strengthen our business case ONE Intrum transformation will create a new simple, digital and scalable operating model ONE Intrum will attract mo
Slide 5: Table of contents
Table of contents We have a resilient, sustainable and proven business model focused on client and customer service Megatrends and macro drivers strengthen our business case ONE Intrum transformation will create a new simple, digital and scalable operating model ONE Intrum will attract more clients
Slide 6: Intrum's simple business model
Intrum’s simple business model — we support our clients by caring for their customers M———— Client pays Intrum to collect from customers Client sells claims to Intrum Client Customer Collections (Collected on behalf of the client) Collections Simple, integrated business model with continuum Commissi
Slide 7: Critical role in a well-functioning financial ecosystem
We play a critical role in a well-functioning financial ecosystem and have a strong value proposition Credit origination Receivables management Debt collection Offering Value : proposition Credit Information Scorine & Clients "One-stop-shop” across the value chain Professionalism and quality across
Slide 8: Building our platform as the market leader in Europe
Following the merger, we have continued to build our platform as the undisputed market leader in Europe We cover 98% of the European NPL stock and are the leader, or at least top 5, in terms of revenues in all of our geographies 2017 Merger between Intrum Sale of antitrust assets Justitia and Lindor
Slide 9: Diversified capabilities in servicing and investing
We have successfully diversified our capabilities with strong servicing and investing competences External net revenue mix 2017 LTM Q3 2020 Servicing Portfolio Servicing Portfolio 62% Investments, 59% Investments 38% MN% Servicing revenue mix 2017 LTM Q3 2020 Servicing Servicing By Seamer Unsecured
Slide 10: Partner of choice for leading institutions across Europe
Today we are the partner of choice for leading institutions across Europe, with unmatched scale, footprint and product offering Leader in terms of size and reach Full coverage of the CMS value chain 9.0% Bubble size represents latest reported cash = 8.0% g OC stn "TS "Fame eva Pele ROL Goines 8 7.0%
Slide 11: Our growing and loyal client base
We are proud of our growing and loyal client base We have over 80,000 clients Our clients trust us and grow with us Including some of the largest European financial institutions... PIRAEUS BANK INTESA [n] SNNPAOLO = « Santander | DNB| Ss We have built long-standing relationships with our clients acr
Slide 12: Approach to regulation and operational standards
Our approach to regulation and commitment to the highest operational standards is essential to our clients High legal, regulatory and compliance obligations Trust from regulated clients Varying situations between jurisdictions Strict data compliance Customer treatment intrum Staying ahead of trends
Slide 13: Sustainability is core to everything we do
Sustainability is core to everything we do Enabling sustainable payments. * Ethical collection by treating customers fairly ¢ Responsible client and portfolio selection ¢ Increase financial knowledge in society intrum Being trusted and respected Data security and privacy Anti-corruption oversight Mi
Slide 14: Clear and defined sustainability targets
Clear and defined sustainability targets Focus areas 6 Ethical collection by treating customers fairly Sound economy for our clients nbs Reduced '@ environmental impact Ror Attract and retain talents 4 including wellbeing of employees Diversity an and inclusion intrum ONE Intrum A human and solution
Slide 15: Strong momentum and resilience amid Covid-19
We have demonstrated strong momentum in our performance and great resilience amid Covid-19 2018 2019 LTM Q3 2020 CAGR 2018-2020 Q3 LTM Cash EBIT, Cash ROIC: 65% 6.4% 75% SEK m 3,888 Ea 1618 La » 22% Consolidated Cash EPS, 23.7 ° SEKm . 14.8 » 26 Yo DPS CAGR 2006-2020 Return to 23 28 3.3 35 3.8 4l 45
Slide 16: Growth and cash generation through the cycles
We have proven our ability to grow and generate cash through the cycles Sustained growth, uncorrelated to macro environment Cash EBITDA (reported, SEK bn) 25% 12% 1% 1% 12% 72% 45% 15% 15% 14% 16% Merger Intrum. Justitia/Lindorff 33 37 2012 2013 2014 2015 2016 2017 2018 2019 RTM QI 2020 RTMQ22020 RT
Slide 17: Substantial cash generation gives strategic flexibility
Our substantial cash generation gives us strategic flexibility Strong cash flow generation post financing and tax Strong and resilient cash flow from segments SEK bn nS (53) FA Free cash flow to shareholders’ equity & 55 (1.8) (0.7) 3.0 Cash Replenishment Other Recurring Financing Tax Recurring Free
Slide 18: Leading the way in the industry's transformation
We will continue to lead the way in the industry's transformation Intrum today Transform to unlock... Intrum tomorrow #1 European platform ..further growth ONE global platform with a strong client franchise ww However, the current model has reached the it Hie SEA Seley Ay Simple limits of traditiona
Slide 19: Medium term financial targets
Our medium term financial targets highlight our focus on sustainably growing recurring free cash flow and shareholder remuneration and business growth materialise, generating recurring cash returns well in excess of our cost of capital The increasing returns, growth and leverage in our business will
Slide 20: Segments and footprint ready to transform
Our segments and footprint are ready to transform and deliver compelling returns on invested capital Pre-transformation RolC of 7.5% today with fragmented multi-local model instead of ONE integrated platform ONE Intrum will... 20% ~_... be ideally positioned to take o advantage of the strong market
Slide 21: Table of contents
Table of contents We have a resilient, sustainable and proven business model focused on client and customer service Megatrends and macro drivers strengthen our business case ONE Intrum transformation will create a new simple, digital and scalable operating model ONE Intrum will attract more clients
Slide 22: Long term megatrends and macro-drivers fuelling growth
We benefit from long term megatrends and macro-drivers fuelling growth Financial investors An Changing consumer behaviours 7 € | Companies looking to ensure strong liquidity f € | Regulation driving sales & externalisation of servicing fe] oO Incremental supply expected post pandemic rl Continuous N
Slide 23: Continuous NPL generation
Continuous NPL generation: c. €100bn of new NPLs created by European banks every year in a normalised environment European loan stock Ongoing provisioning by banks Gross loans, EURtn Cost of risk, bps c. €100bn of new NPLs created by European banks in a normalised environment per year 21.3 18.7 2018
Slide 24: Incremental supply expected post pandemic
Incremental supply expected post pandemic: —_s European NPL stock expected to double Pre Covid-19 total Post Covid-19 total Depression case total: @ Household poeeeeeee E URItn SME H Hl @ Corporate Base case total: EUR 1.0-1.2tn we Total: EUR 584bn CT —— NPL Volume, GBV, 2019YE, by customer type NPL
Slide 25: Regulation driving sales and externalisation of servicing
Regulation driving sales & externalisation of servicing: = several drivers at play Increasing pressure from regulators to reduce NPLs on banks’ balance sheets New regulatory framework for NPE provisioning (“Calendar Provisioning”) accelerates the timeframe for banks’ provisioning of defaulted loans,
Slide 26: Companies looking to ensure strong liquidity
Companies looking to ensure strong liquidity: demand =. for sustainable solutions to late payment burden is rising Late payments can have a significant impact on corporates’ liquidity and are seen as a threat to the viability of companies Respondents who say late payments have a high impact (on a sc
Slide 27: Changing consumer behaviours
Changing consumer behaviours: increasingly shopping online using credit Significant increase in e-commerce during Covid-19 — Partly boosted by “BNPL” players Digital Adoption Rate, by Industry % of Digital Users Banking Entertainment Social Media Telecoms Grocery Apparel Utilities Public Sector Trav
Slide 28: Financial investors: opportunities for servicing and co-investment
Financial investors: further opportunities for servicing —_s and co-investment deals ..who are looking for value-add services Top NPL buyers since 2014 (EUR bn) Pan-regional or global reach a Corer s cs cs Ml 103 Country-based data repository Blackstone (NS | 55 and high jurisdictional agility > wn
Slide 29: Favourable outlook for portfolio investment returns
Favourable outlook for portfolio investment returns Increasing return vs. funding cost Returns vs. funding costs 20% 18% 16% 14% 4.65x 12% 10% t : @ 6% iT 4% 2% 0% FY2017 PF FY2018 FY2019 2020 Q1 2020 Q2 2020 Q3 —Funding cost —ROI Covid-19 underwriting IRR intrum We are ideally positioned to capture
Slide 30: Table of contents
Table of contents We have a resilient, sustainable and proven business model focused on client and customer service Megatrends and macro drivers strengthen our business case ONE Intrum transformation will create a new simple, digital and scalable operating model ONE Intrum will attract more clients
Slide 31: ONE Intrum: our transformation program
ONE Intrum: our transformation program SNL K aA mxe) - - ON (eo) 50 ky = Ao & Simple Scalable Digital Relevant Growing intrum 5
Slide 32: Transforming the operating model for scale and efficiency
ONE Intrum: transforming the operating model to reach the full potential of scale and efficiency We are transforming to remain relevant * Digitalisation is changing the needs and expectations of our clients and society as a whole ° We offer a full range of services to all our client segments v For t
Slide 33: Setting ourselves apart through transformation
ONE Intrum: setting ourselves apart through transformation Industry legacy ONE Intrum Difficulties in benefiting from scale Bespoke processes Fragmented view of collections and data Critical mass to absorb required investments Access to vast data set wy ‘z_ Slow to adapt to 7 Wi new technology intru
Slide 34: Overhaul of the delivery model, multi-local to global
ONE Intrum: engaging in a fundamental overhaul of the delivery model, from multi-local to truly global 1. Newcore operating model ail SO ONE global end-to-end digital collection process Analytics based segmentation and routing of cases to most effective and efficient collection strategy Execution th
Slide 35: Towards a unique, global and efficient operating model
ONE Intrum: towards a unique, global and efficient operating model From local and fragmented operations... .. to ONE global operating model a0 8 ee 4 g 5 eg 83 we e J . .° % 58 e =, & ee @® @©& ©. ee & e & e @ {8} ciooa opeationscente @ Near shore customer service centres @ cca! operationscentres As
Slide 36: ONE Intrum: core capabilities
ONE Intrum: core capabilities Pe fe) foe) cA People and culture Scale * Vast data pool * Global reach * Financial resources intrum Global model * Local commercial ownership * ONE process framework * Global and local execution Collectors with deep subject matter expertise Highly skilled process and d
Slide 37: A phased implementation leveraging standardisation
ONE Intrum: a phased implementation leveraging standardisation ile Client centric 3. Transferring case solutions management from current to new model Oo : O° intrum Designing standardised operating processes . Building new global units and systems to support new processes
Slide 38: A three year transformation journey
ONE Intrum: a three year transformation journey 20 21 2022 3 Three years to reach ONE Intrum Defining standard + Allunsecured customer processes operating designed by end 2020. Client processes Unsecured collections processes by Q3 2021 * Global secured approach and Secured collections processes des
Slide 39: Landmark migration onto the new platform in Greece
Encouraging successes in the initial phase: we have achieved a landmark migration onto the new platform in Greece Implementation details Results Lessons learned gS Unsecured portfolio transaction signed in Q4 2019 Performing at over 100% of forecast collection expectations lisfcs}ics) Project manage
Slide 40: SMEs running the new model in 12 countries
Small and medium-sized enterprises: 40 currently running the new model in 12 countries... Implementation details Results Lessons learned [= = 40 small enterprises with low volumes up and running on new unsecured operations platform Clients spread over 12 countries © High client satisfaction Offering
Slide 41: Implementing the new model for large enterprises
Implementing the new model for large enterprises Implementation details Results Lessons learned Client in the media industry with volumes of 2 000 collection claims per month Implementation ongoing. To be live in February 2021 Has just completed internal digital journey and replaced ERP system Openi
Slide 42: Progress tracked closely with KPIs
ONE Intrum: progress is being tracked closely with a number of KPls to be disclosed going forward Rapid build-up in volumes on the new platform... .. leading to substantial margin improvement Case volume migration forecast (million cases) Forecasted FTE cost-to-collect reduction 1% ~30% ~80% >90% 6.
Slide 43: Meaningful financial benefits
ONE Intrum: meaningful financial benefits EK 1bn investments in the transformati Breakdown of cost of implementation Breakdown of annual net savings for ~SEK 1bn net savings pel num Unsecured Operations Global Operations Secured Systems and Data i 7 ems Oe SEK 1bn Operations SEK 1bn Local Operations
Slide 44: Table of contents
Table of contents We have a resilient, sustainable and proven business model focused on client and customer service Megatrends and macro drivers strengthen our business case ONE Intrum transformation will create a new simple, digital and scalable operating model ONE Intrum will attract more clients
Slide 45: Globally unified portfolio of offerings
Driving client value through a globally unified portfolio oo of offerings with industry modularisation Eas Integrated solutions Early services Servicing Investments Select Strategic Clients Customised Utilities B2B Corporates Driving standardisation volume solution intrum 4s
Slide 46: Future e-commerce client journey
Future E-commerce client journey will be global and simple 5a Clients Becoming Commercial Onboarding Delivery Servicing aware of Intrum process relationship ® Relevant Simple & Relevant Simple & growing Digital & simple Simple & growing + “the global e- + Single point * Single point of + One system
Slide 47: Future SME client journey
Future SME client journey will be digital and simple 5a Clients Becoming Commercial Onboarding Delivery Servi aware of Intrum process relationship Digital, relevant & growing Digital & simple Digital & simple Digital & simple Relevant & simple + Digital marketing + Shopping-cart experience + Self on
Slide 48: Banking & Financial Services at Intrum's core
Banking & Financial Services at Intrum’s core — transformation to further enable growt Servicing revenues CAGR ('19-'23) 20% hin other segments co oOo CO Clients Estimated servicing market in key countries* 20% y B2B corporates Growth via increasing Consolidated 2% | 15% é" share of wallet with Bank
Slide 49: Growth potential in servicing within Banking & Financial Services
Significant growth potential in servicing within Banking & Financial Services Servicing NPL CAGR '19-’23 Emerging France potential in Attractive growth opportunities immature DC in markets where Intrum doesn’t markets have yet fair share 30% UK @ Greece 15% 7 . Still attractive Nordics, Strategic ma
Slide 50: Continuation of our ethical approach
Continuation of our ethical approach, ce helping individuals and businesses in their financial * Daily conversations with 250,000 customers + Led by our values Ethics, Empathy, Dedication and Solutions * Help people understand their financial situation, get back in control, make their payments and m
Slide 51: Employees
Ss Employees ‘ * Ajoint plat ym will facilitate tighter communication, better sharing of expertise and best practices * The aim i: fully unlock the potential of our employees * To work for | technologi¢ally advanced market leader with Opportunities to grow and develop globally
Slide 52: Table of contents
Table of contents We have a resilient, sustainable and proven business model focused on client and customer service Megatrends and macro drivers strengthen our business case ONE Intrum transformation will create a new simple, digital and scalable operating model ONE Intrum will attract more clients
Slide 53: Underpinning the financial trajectory and targets
ONE Intrum: underpins the financial trajectory and medium term targets Cash RolC improving over time as benefits from transformation and business growth materialise, generating recurring cash returns well in excess of our cost of capital The increasing returns, growth and leverage in our business wi
Slide 54: Journey towards meeting the new financial targets
ONE Intrum: journey towards meeting the new financial targets = is supported by several building blocks Investors Scalability in combination with efficiency gains enables organic G) Business Growth growth at attractive returns Efficiency gains from transformation drive margin improvement @) Transfor
Slide 55: Increasing returns through transformation and growth
ONE Intrum: increases returns through transformation = ¢ ° benefits and business growth Investors Building blocks Business segments Normalisation Transformation Business CMS Strategic PI growth Markets >50 bps >85 bps >10% >10% 100-150 bps a >esbps 50-100 bps || i | 2020 Q3 LTM Medium term 2020 Q3 L
Slide 56: Supporting material organic growth over the medium term
ONE Intrum: supports material organic growth over the = medium term, complemented by selective capital deployment Investors Building blocks Business segments Normalisation Transformation Business CMS Strategic PI growth Markets ~55% ~40% CAGR CAGR >10% >10% Cash EPS ~15% Cash EPS SEK 23.7 SEK 23.7 2
Slide 57: Profitable growth and expansion of RoIC to >10%
ONE Intrum: profitable growth and expansion of RolC to >10% in medium term Expansion from current RolC of 7.5% to >10% in medium term supported by growth across all business segments Strategic r Markets C) 10% O) RolC Bubble size represents allocated capital Group Total Cash EBIT SEK m intrum 57
Slide 58: Near term growth and transformation will be self funded
ONE Intrum: near term business growth as well as the transformation will be self funded Net debt Cash generated Transformation Replenishment Growth Shareholder Net debt capex capex remuneration CAGR: + 3% > 2020 Q3 LTM YE 2023 Over the next 3 years we expect to self fund the transformation, business
Slide 59: Driving leverage to target range
ONE Intrum: drives leverage to target range through = Cash EBITDA growth in excess of net debt development Investors Cash EBITDA development Cash EBITDA development Ee 7 4.2x |_| — 3.5 -2.5x 2020 Q3 LTM YE 2022 Net debt development 2020 Q3 LTM YE 2022 2020 Q3 LTM YE 2021 YE 2022 Cash EBITDA Net Debt
Slide 60: Enabling shareholder remuneration
ONE Intrum: enables shareholder remuneration = as also evidenced by our 15 year track record Investors 2.25 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Growth New policy Underlying strong growth in cash flow generation has allowed for increasing Our updated dividend po
Slide 61: Expected trajectory and medium term targets
ONE Intrum: expected trajectory and associated medium = term targets form a fully coherent picture Investors Returns Leverage Growth Shareholder remuneration 7.5% > > 10% 4.2x > < 3.5x by YE ‘22 >10% Cash EBIT growth with Cash EBITDA growth Net financials in line with Dividend per share expected CAG
Slide 62: Our key messages for today
Our key messages for today We have a resilient, sustainable and proven business model focused on client and customer service Megatrends and macro drivers strengthen our business case ONE Intrum transformation will create a new simple, digital and scalable operating model ONE Intrum will attract more
Slide 63: Q&A
Q&A
Slide 64: Appendix
Appendix
Slide 65: Transformation costs and benefits phase-in
Transformation costs and benefits phase-in SEK m 2020 2021 2022 2023 2024 1,000 4 800 4 600 4 o fe) is) Hl Net Recurring Savings [JJ Redundancy Costs (IACs) _ Program Opex Program Capex intrum 6s
Slide 66: Tying the targets together from an operational perspective
Tying the targets together from an operational perspective intrum Collections, servicing revenues and operating costs reduced by replenishment and other capex needs Deducting interest and taxes and dividing by number of shares outstanding derives the cash flow generated to shareholders Basis for sha
Slide 67: Trajectory of our financial target metrics
Trajectory of our financial target metrics Cash RolC Leverage >10.0% 4.3x 4.3x 4.2x 2.5-3.5x 75% by YE 2022 6.5% 6.4% L] L | LJ LL : 7 2018 2019 2020 Q3 LTM Target 2018 2019 2020 Q3 LTM Target Recurring consolidated cash EPS Dividend per share 23.7 ~ = Oo ~ 2018 2019 2020 Q3 LTM Target CAGR (%) intr
Slide 68: Calculation of replenishment capex
Calculation and historical evolution of replenishment capex Definition Calculations Intrum Unit __Q1'19_Q2'19_Q3'19_Q4'19_Q1'20_Q2'20_Q3'20 Life time ERC Purchase price Gross collections SEKm 2,594 2,671 2679 2826 2,784 2,536 2,700 of portfolios acquired in quarter of portfolios acquired in quarter
Slide 69: Calculation of cash RoIC
Calculation and historical evolution of cash RolC Definition Calculations Intrum Unit __QV19_Q2'19_@3'19_Q4'19._Q1'20_Q2'20_Q3'20 Cash Replenishment Other Cash EBIT SEKm 828 1,70 1,200 1419 1105 1,294 1,659 EBITDA capex capex Gash ESTIPA seKm 2314 2670 2609 3063 2638 2709 3142 Replenishment sex m 4,
Slide 70: Calculation of cash EPS
Calculation and historical evolution of cash EPS Definition Calculations* Intrum Units _Q1'19_Q2'19_Q3'19_@4'19_Q1'20_Q2'20_@3'20 Cash EBIT — Cashnetfinancials — Tax Cashearnings SEKm 161 903 101 775 378 1,162 647 Cash EBIT SEKm 828 1,170 1,200 1419 1105 1,294 1,659 Gash net SEKm -554 -167 -832 -322
Slide 71: Reference list
Reference list Slide # Footnote, Comments 10 ~ Source: Company data -As of latest available public data 16 - Norway and Switzerland included despite non-EU membership - 201219: GDP growth for annually reported Intrum geographical revenue split among Finland, Sweden, Switzerland, France, Netherlands,
Slide 72: Legal disclaimer
Legal disclaimer THIS PRESENTATION IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL SECURITIES. IT IS SOLELY FOR USE AT A CAPITAL MARKETS EVENT AND IS PROVIDED AS INFORMATION ONLY. THIS PRESENTATION DOES NOT CONTAIN ALL OF THE INFORMATION THAT IS MATERIAL TO AN INVESTOR. THIS PRESENTATION
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