Slide 1: Interim Report July - September 2018
Interim Report July - September 2018 26th of October 2018 Mikael Ericson, President and CEO Danko Maras, CFO
Slide 2: Observations about the market
Observations about the market January-September Significant period of intense activity on the horizon • Increased levels of credit at the same time as an expectation of increased interest rates in the Nordic region (Intrum Credit Management Report) • Steadily increasing emphasis on financial sustain
Slide 3: 2018 - Highlights from Q3 2018
2018 - Highlights from Q3 2018 January-September Solid Quarter – Continued progress • 3rd solid Quarter in a row demonstrating a consistent and sustainable model • Adjusted EBIT* up 10% yoy despite headwinds in Spain • Continued progress on CMS margins (27% in Q3) • Market leading scale starts to de
Slide 4: Third quarter review
Third quarter review As ‘. be intrum
Slide 5: Group financials - Summary
Group financials - Summary Proforma SEK M Q3 2018 Q3 2017 Change % YTD 2018 YTD 2017 Change % Revenues 3 180 2 986 6 9 925 9 118 9 EBIT 838 977 -14 2 975 2 683 11 Adjustments* -257 -22 -289 -199 EBIT Adjusted* 1 095 999 10 3 264 2 882 13 Net profit for the period 396 615 -36 1 461 876 67 Earnings pe
Slide 6: Cash flow statement
Cash flow statement SEK M Q3 2018 Q3 2017 YTD 2018 Operating earnings (EBIT) 838 977 2 975 Amortization/depreciation and impairment 154 163 684 Amortization and revaluation of portfolio investments 998 866 2 875 Net Interest -449 -55 -1 057 Other Financial Items -187 -70 -109 Tax -112 -70 -321 Chang
Slide 7: Iberian Peninsula & Latin America
Iberian Peninsula & Latin America Q3 Q3 Change FX Adjust YTD Proforma YTD Change FX Adjust SEK M 2018 2017 % % 2018 2017 % % Revenues Adjusted* 629 730 -14 -22 2 184 2 265 -4 -12 EBIT Adjusted* 204 255 -20 -28 748 763 -2 -8 EBIT Margin Adjusted* % 32 35 -3 ppt 34 34 +0 ppt Portfolio Investments Book
Slide 8: Western and Southern Europe
Western and Southern Europe Q3 Q3 Change FX Adjust YTD Proforma Change FX Adjust SEK M 2018 2017 % % 2018 YTD 2017 % % Revenues 632 492 28 22 1 893 1 464 29 22 EBIT Adjusted* 143 73 95 88 420 185 127 123 EBIT Margin Adjusted*, % 23 15 +8 ppt 22 13 +9 ppt Portfolio Investments Book Value 5 212 3 535
Slide 9: Northern Europe
Northern Europe Q3 Q3 Change FX Adjust YTD Proforma Change FX Adjust SEK M 2018 2017 % % 2018 YTD 2017 % % Revenues 983 984 0 -6 2 918 2 894 1 -3 EBIT Adjusted* 352 395 -11 -16 1040 1073 -3 -6 EBIT Margin Adjusted*, % 36 40 -4 ppt 36 37 -1 ppt Portfolio Investments Book Value 7 178 6 596 9 7 178 6 5
Slide 10: Central and Eastern Europe
Central and Eastern Europe Q3 Q3 Change FX Adjust YTD Proforma Change FX Adjust SEK M 2018 2017 % % 2018 YTD 2017 % % Revenues 936 779 20 14 2 695 2 389 13 6 EBIT Adjusted* 396 275 44 38 1 056 862 23 18 EBIT Margin Adjusted*, % 42 35 + 7ppt 39 36 +3 ppt Portfolio Investments Book Value 7 747 6 113 2
Slide 11: Credit Management Services
Credit Management Services Q3 Q3 Change FX Adjust YTD Proforma Change FX Adjust SEK M 2018 2017 % % 2018 YTD 2017 % % Revenues Adjusted* 2 217 2 155 3 -4 6 854 6 600 4 0 Service Line Earnings Adjusted* 597 596 0 -6 1 832 1 865 -2 -6 Service Line Earnings Margin Adjusted*, % 27 28 -1 ppt 27 28 -1 ppt
Slide 12: Financial Services
Financial Services Q3 Q3 Change FX Adjust YTD Proforma Change FX Adjust SEK M 2018 2017 % % 2018 YTD 2017 % % Revenues 1 557 1 358 15 8 4 653 4 100 13 8 Service Line Earnings Adjusted* 837 752 11 5 2 546 2 203 16 13 Service Line Earnings Margin Adjusted*, % 54 55 -1 ppt 55 54 +1 ppt Portfolio Invest
Slide 13: Common Costs
Common Costs Q3 Q3 Change FX Adjust YTD Proforma Change FX Adjust SEK M 2018 2017 % % 2018 YTD 2017 % % Common Costs Adjusted* -338 -349 -3 -11 -1 101 -1 080 2 -3 Q3 Highlights 360 349 -42 • Continued solid progress in the reduction of common costs as the large 27 338 majority of common cost related
Slide 14: From EBIT to Adjusted EBIT
From EBIT to Adjusted EBIT Q3 Q3 Change YTD Proforma YTD Change SEK M 2018 2017 % 2018 2017 % EBIT 838 977 -14 2 975 2 683 11 Non-Recurring items, NRI 257 61 519 343 Revaluations of Portfolio Investments 0 -1 -12 -105 Items Affecting Comparability, IAC 0 -38 -218 -38 EBIT adjusted 1 095 999 10 3 264
Slide 15: Integration Update
Integration Update Se ‘. be intrum
Slide 16: Synergy
Synergy • SEK 450m in run-rate synergies realized after Q3 2018 • P&L effect of synergies is SEK 80m in Q3 2018 and SEK 220m YTD 2018 Run-rate of achieved cost synergies (End of year estimate in MSEK) Actual 2017 / Forecast FY 2017 Q3 2018 FY 2018 FY 2019 2017 Capital Markets Day Forecast 190 440 58
Slide 17: Intesa Sanpaolo partnership
Intesa Sanpaolo partnership
Slide 18: Intrum – Intesa Sanpaolo
Intrum – Intesa Sanpaolo • In April 2018 Intrum announced a transformational partnership with Intesa Sanpaolo with the creation of a new major market leading CMS platform combined with the sale of a large NPL portfolio ( > €10billion) a Special Purpose Vehicle (SPV) • The partnership establishes the
Slide 19: Visualisation of deal structure
Visualisation of deal structure The combined business operations provides competitive strength in the market place whilst at the same time risk diversification through partnership collaborations Intrum’s share of CMS collection Intrum’s share of portfolio investments is equal to platform equal to 51
Slide 20: Intrum – Intesa Sanpaolo
Intrum – Intesa Sanpaolo The partnership supports the industrial logic of the Intrum business model and delivers strong financials that contributes to the 2020 Intrum targets Total Incremental Effects for Intrum In 2020 > €160m EBIT / > €100 Net Income / > €80m Cash Flow In 2022 > €250m Cash Flow CM
Slide 21: The consolidated P&L effect on Intrum
The consolidated P&L effect on Intrum A 2019 example illustrates the combined financial impact of both the portfolio and platform. Directional numbers (with rounding) CMS Platform € million € million % of consolidated total % of consolidated total Revenue √ √ -- Operational expenses √ √ -- EBIT pre-
Slide 22: Total combined income and cash flow from the Intesa partnership
Total combined income and cash flow from the Intesa partnership Intrum will add more than €80m of both Net Income and Cash in 2020, with cash delivery rising to >€250m in 2022 as a result of the partnership • The combined income and cash flow going forwards naturally reflects the dynamics of the 2 h
Slide 23: Intrum Group Implications
Intrum Group Implications SEK ~7 billion of capital deployment for Intrum’s interests in the platform and the portfolio Strong Capital Significantly contributes and de-risks 2018-2020 capital deployment plan to meet financial targets Deployment Provides a strong platform to grow and capture further
Slide 24: Near Term Priorities
Near Term Priorities
Slide 25: Another solid quarter and market leadership delivering value creation going forward
Another solid quarter and market leadership delivering value creation going forward Integration approaching finalisation Internal focus on leveraging our scale to transform our production capabilities Market opportunities from large volumes and stabilising IRRs Significant step up from Intesa coming
Slide 26: Q&A
Q&A
Slide 27: Appendix
Appendix “oh nad ~ intrum
Slide 28: Table of content
Table of content 1. NRI, revaluations and IACs by profit and loss segment 2. Funding base 3. Pro forma portfolio investments and ROI 4. Portfolio investments collections vs active forecast 5. Portfolio investments ERC 6. Portfolio investments gross Cash-on-Cash multiple 7. Cash flow and balance shee
Slide 29: NRI, revaluations and IAC by profit and loss segment
1. NRI, revaluations and IAC by profit and loss segment 29
Slide 30: Funding base
2. Funding base Syndicated revolving credit facility EUR 1.1bn Maturity profile ‒ EUR 20m utilized per 30 Sep 2018 25 000 Swedish MTN program ‒ SEK 1 bn, 5Y, issued May 2014 (margin of 1.60%) ‒ SEK 1 bn, 2Y, issued Jun 2018 (margin of 1.90%) 20 000 • Funds received 20180706 Senior bonds issued June
Slide 31: Pro forma portfolio investments and ROI
3. Pro forma portfolio investments and ROI SEK M 7 770 8 000 20% 266 7 000 2 784 6 000 15% 5 036 4 679 4 685 FY 5 000 1 177 Q4 927 4 000 10% Q3 3 150 2 350 1 287 Q2 3 000 2 385 Q1 2 000 3 867 828 5% 3 431 537 2522* 1 000 671 934 1373 678 567 0 0% 2013 2014 2015 2016 2017 2018 Portfolio ROI ex NRI an
Slide 32: Proforma portfolio investment collections vs. active forecast
4. Proforma portfolio investment collections vs. active forecast 18,0% 16,0% 14,0% 12,0% 10,0% Collections vs Active Forcast per Quarter 8,0% 6,0% Collections vs Active Forcast R12 4,0% 2,0% 0,0% Q1 16 Q2 16 Q3 16* Q4 16* Q1 17* Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 *The R12 numbers for these quarters
Slide 33: ERC
5. ERC Cash Multiple (ERC/Current BV) ERC (SEK, billions) as of 30th September 2018 = 2.00 33
Slide 34: Pro forma gross cash-on-cash multiple
6. Pro forma gross cash-on-cash multiple Vintage Purchase Price, SEK M Gross Cash-on-Cash Multiple 2008 and before 8 619 2.59 2009 1 355 2.31 2010 1 906 2.60 2011 2 648 2.33 2012 3 785 2.27 2013 3 431 2.13 2014 3 867 2.26 2015 5 036 2.00 2016 4 979 2.07 2017 7 804 1.89 2018 4 685 2.09 Gross Cash-on-
Slide 35: Balance sheet highlights
7. Balance sheet highlights Dev SEK M 30 Sep 2018 30 Sep 2017 % Intangible fixed assets 33 631 29 267 - whereof goodwill 31 430 25 597 Tangible fixed assets 246 236 Financial fixed assets 26 298 19 755 - whereof portfolio investments 23 914 19 054 - whereof shares in joint ventures 1 703 18 Current
Slide 36: Upcoming IR activities
8. Upcoming IR activities Q3 Roadshow Financial calendar London, Friday, October 26th Full-year report 2018, Wednesday, January 30th, 2019 Frankfurt, Monday, October 29th Annual general meeting, April 26th , 2019 Paris, Tuesday, October 30th Interim report Jan-March 2019, April 26th, 201
Slide 37: Disclaimer
Disclaimer The material in this presentation has been prepared by Intrum Justitia AB (publ( (“Intrum”). This information is given in summary form and does not purport to be complete. Information in this presentation, including forecast financial information, should not be considered as advice or a r
Slide 38: Leading the way to a sound economy
Leading the way to a sound economy