Intrum Ab · OMXSTO:INTRUM
Intrum Ab — Intrum Justitia — Q1 2009 Earnings Presentation
50 slides from Intrum Ab's earnings presentation, Apr 28, 2009
Slide 1: Interim report January-March 2009
Interim report January-March 2009 April 28th 2009
Slide 2: Presented by Lars Wollung and Monika Elling
Presented by Lars Wollung CEO and President Monika Elling CFO
Slide 3: Intrum Justitia in brief
Market position Intrum Justitia in brief Intrum Justitia’s market position Established 1923 Europe’s leading Credit Management Services (CMS) company with operations in 24 markets* Revenues: SEK 3.7 billion (2008) Number of employees: 3,400 (2009) Listed on Nasdaq OMX Stockholm since 2002 Market Cap
Slide 4: Changes
Changes ae intrum »D justitia
Slide 5: Intrum Justitia Business Proposition
Intrum Justitia Business Proposition Purpose Client result Value proposition Core values
Slide 6: We are a catalyst for a sound economy
We are a catalyst for a sound economy We are here to facilitate business and help create sound economies by making trade smooth, safe and fair. CORE PURPOSE WHAT WE DO & WHY – OUR REASON TO BE Better business for all
Slide 7: Client result
Client result • Increased profitability • Improved cash flow • Lower risk
Slide 8: Client value drivers
Client value drivers Sales to Payment
Slide 9: Value proposition
Value proposition Information Complete Close superiority
Slide 10: Core values
Core values Understanding people Seeking insight to feed innovation Committing to challenge Making a difference
Slide 11: Four regions stand for 74 percent of Group Revenues
Four regions stand for 74 percent of Group Revenues and 91 percent of Group EBIT with increased EBIT levels
Slide 12: One region stands for 17 percent of Group revenues
One region stands for 17 percent of Group revenues and 21 percent of Group EBIT with solid EBIT levels
Slide 13: Two regions stand for 10 percent of Group revenues
Two regions stand for 10 percent of Group revenues and are not profitable
Slide 14: Cross border engagements increase substantially
Cross border engagements increase substantially
Slide 15: Short term focus
Short term focus • Purchased Debt 2.0 Encourage • Sales to Payment offering • Development in four green regions • Operating Model in Central Europe Adjust • Leadership and Governance • Ensure profitability in UK Turn Around • Revitalize sales in Scandinavia
Slide 16: Intrum Justitia Group first quarter
Intrum Justitia Group first quarter SEK m Q1 Dev. Q1 Percentage Q1 Q1 Development, % 2009 % 2008 of revenues 2009 2008 Total revenues 1007,5 16,9% 861,5 EBIT margin 15.5% 19.3% Operating cost, total -851,1 22,5% -694,8 EBIT margin excl PD reval. 17.2% 18.8% Cost of sales -647,9 25,7% -515,4 Adjusted
Slide 17: Purchased debt – an unusual write-down
Purchased debt – an unusual write-down Q1 Q1 FY PD revaluations, SEK m 2009 2008 2008 Portfolio characteristic: Sweden, Norway & Denmark 0,0 0,0 -0,9 Bought at an IRR below 15% and Netherlands & Belgium 0,0 0,0 0,0 with needs to increase collection efficiency to reach forecasts Switzerland, Germany
Slide 18: Purchased Debt
Purchased Debt 19 per cent of total revenues • Q1 ROI is 11,4 per cent (15,3), excluding Jan-Mar Jan-Mar Change revaluations 15,0 per cent (14,1). Reported numbers 2009 2008 % • Rolling ROI is 16,1 per cent (17,8), excluding Revenues, SEKm 189,5 169,6 11,7% revaluations 17,2 per cent (17,3). EBIT, S
Slide 19: Purchased Debt excluding revaluations
Purchased Debt excluding revaluations Jan-Mar Jan-Mar Change • Q1 ROI is 11,4 per cent (15,3), excluding revaluations 15,0 per cent (14,1). Excluding revaluations 2009 2008 % • Rolling ROI is 16,1 per cent (17,8), excluding Revenues, SEK m 209,8 163,9 28,0% revaluations 17,2 per cent (17,3). EBIT, S
Slide 20: Gross collections versus active forecast
Gross collections versus active forecast 12% 10% 8% 6% 4% 2% 0,002% 0% Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 -2% -4% -6% 20
Slide 21: Carrying Value PD segmented by acquired year
Carrying Value PD - segmented in acquired year - 2008/2009 represents 36% of book 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 21
Slide 22: PD – Successful risk allocation although cherry picking
PD – Successful risk allocation although cherry picking Spain 2% Germany 1% Austria 2% 2009 March Finland 21 countries 14% 1999 47% UK 6 countries Others 34% Finland Switzerland 16% 13% Carrying value SEK 175 M Country 9 Austria 5% 13% Others Country 8 5% Sweden 8% 2% UK 8% 11% Austria Country 7 Swe
Slide 23: Purchased debt, investments 2001–2009
Purchased debt, investments 2001–2009 Guidance: Annual investments in small and SEK m medium size portfolios SEK 700m 1 ,2 0 0 996* 1 ,0 0 0 822 870 872 800 205 611 600 212 212 400 267 258 251 251 201 143 200 106 125 204 117 111 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 * Incl acquisition of Au
Slide 24: PD ROI – rolling 12 months
PD ROI – rolling 12 months PD carrying value: SEK 2,246.6m ROI 12: 16.1% (17.2% excl revaluation PD carrying value in Q1) ROI 12 SEK M 20% 2 ,0 0 0 17.2% 1 ,6 0 0 15% 1 ,2 0 0 10% 800 5% 400 0 0% Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 2006 2007 2008 24
Slide 25: Credit Management Services
Credit Management Services 81 per cent of total revenues • Continuation to build complete CMS solutions. France is launching Flexipay, Jan-Mar Jan-Mar Change DACH has introduced a full CMS solution for the bank segment and The Reported numbers 2009 2008 % Netherlands are expanding on back of Revenue
Slide 26: Sweden, Norway & Denmark
Market share Regional development > 25% Sweden, Norway & Denmark 10–25% 18 per cent of total revenues Jan-Mar Jan-Mar Change • In Sweden a broader CMS concept offering is under packaging. Excl. PD Revaluation 2009 2008 % • Norway is heading in the right direction with Revenues, SEKm 176,1 168,7 4,4%
Slide 27: Germany, Austria & Switzerland
Market share Regional development > 25% Germany, Austria & Switzerland <10% 23 per cent of total revenues Jan-Mar Jan-Mar Change • Client interest for complete CMS contracts is Excl. PD Revaluation 2009 2008 % increasing. A full bank outsourcing concept is under implementation for a larger Austrian
Slide 28: The Netherlands & Belgium
Market share Regional development > 25% The Netherlands & Belgium < 10% 15 per cent of total revenues • Market shares are gained in both CMS and Jan-Mar Jan-Mar Change PD client. Excl. PD Revaluation 2009 2008 % • Current macro economic situation drives Revenues, SEKm 149,3 118,9 25,6% increased dem
Slide 29: France, Spain, Portugal & Italy
Regional development Market share France, Spain, Portugal & Italy 10–25% 19 per cent of total revenues • The integration of Cronos group and SSE Jan-Mar Jan-Mar Change contributed with 13% revenue growth. Integration is ahead of plan with expected Excl. PD Revaluation 2009 2008 % synergies already r
Slide 30: Finland, Estonia, Latvia & Lithuania
Market share Regional development > 25% Finland, Estonia, Latvia & Lithuania 10–25% 16 per cent of total revenues Jan-Mar Jan-Mar Change • Several new partnerships are under Excl. PD revaluations 2009 2008 % discussion. Growth continues with good Revenues, SEKm 155,9 116,5 33,8% outlook. EBIT, SEKm
Slide 31: United Kingdom & Ireland
Regional development Market share United Kingdom & Ireland < 10% 5 per cent of total revenues • Status: Profitable PD operation and loss making Jan-Mar Jan-Mar Change CMS. Current market conditions (pricing) for Excl. PD revaluation 2009 2008 % CMS is materially below the European average. Revenues,
Slide 32: Poland, Czech Rep., Slovakia & Hungary
Market share Regional development > 25% Poland, Czech Rep., Slovakia & Hungary 10–25% 4 per cent of total revenues Jan-Mar Jan-Mar Change • Hungary - approximately 95% of consumer debt has been taken in foreign currency. Excl. PD Revaluation 2009 2008 % • A new MD has been appointed for Poland. Reve
Slide 33: Cash flow statement
Cash flow statement Q1 2009 and Full year 2008 Q1 Q1 Dev Full year Full year Dev SEK m 2009 2008 % 2008 2007 % Operating earnings (EBIT) 156,4 166,7 -6% 758,0 667,8 14% Income tax paid -48,8 -37,2 31% -136,1 -153,6 -11% Changes in working capital -92,3 -100,4 -8% -48,2 -31,4 54% Cash flow from opera
Slide 34: Cash flow statement – adjusted with revaluation
Cash flow statement – adjusted with revaluation Q1 2009 Q1 Q1 Dev SEK m 2009 2008 % Operating earnings (EBIT)* 176,7 161,0 10% Income tax paid -48,8 -37,2 31% Changes in working capital -92,3 -100,4 -8% Cash flow from operating activities 32,7 21,4 53% Purchases of tangible and intangible -60,8 -53,
Slide 35: Balance sheet – Highlights
Balance sheet – Highlights 31 Mar 31 Mar Dev SEK m 2009 2008 % Total assets 6 796,4 5 705,3 19% Goodwill 1 913,8 1 750,7 9% Total financial fixed assets 2 508,5 2 058,3 22% -whereof Purchased Debt 2 246,6 1 913,8 17% Shareholders' equity 2 509,4 1 916,3 31% Net debt/equity ratio, % 91,0 92,5 -1,5 35
Slide 36: Revenues and operating margin, rolling 12 months
Revenues and operating margin, rolling 12 months Revenues: SEK 3,329m Revenues: SEK 3,824.0m Margin: 20.5 % Margin: 19.6% SEK m R evenues E B IT m a r g in 4 000 % 20 3 500 15 3 000 2 500 10 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 2005 2006 2007 2008 36
Slide 37: 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 a
Slide 38: Intrum Justitia
38 intrum oD justitia
Slide 39: Intrum Justitia in brief
Intrum Justitia in brief Europe’s leading provider of credit management services, with operations in 24 markets* Revenue 2008 FY: SEK 3.7 billion 3,370 employees Listed on Nordic Exchange, Mid-Cap Market capitalization, March 31, 2009: SEK 4.3 billion CEO & President: Lars Wollung Intrum Justitia's
Slide 40: 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 40
Slide 41: 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 41
Slide 42: Accounting for purchased portfolios
Accounting for purchased portfolios Q1 Q1 Full year SEK m 2009 2008 2008 Gross collection 382,5 298,9 1410,2 Amortization -205,3 -135,6 -653,8 Reported revenues* 189,5 169,6 783,6 Commission + service line costs 124,0 97,0 434,3 Operating earnings (EBIT) 65,5 72,6 349,3 EBIT margin, % 34,6% 42,8% 44
Slide 43: A broad indication going forward
A broad indication going forward Carrying value 31 Mar 2009: SEK 2,247 m +17% y-o-y (SEK 1 913 M) Gross collection: Carrying value x 2 Cash flow distribution 31 Mar of Gross collection 2009 2008 Y1 24% 24% Y2 18% 17% Y3 14% 15% Y4 11% 11% Y5 9% 8% Y6 7% 6% Y7 5% 5% Y8 4% 4% Y9 3% 3% Amortization: 48
Slide 44: Mix of Forward flows and one-offs
Mix of Forward flows and one-offs. 100% 8% 8% 90% 16% 28% 37% 33% 38% 80% 44% 42% 51% 48% 46% 70% 72% 60% 50% 92% 92% 40% 84% 72% 63% 67% 62% 30% 56% 58% 49% 52% 54% 20% 28% 10% Forward flows One-offs 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2006 2007 2008 2009 44
Slide 45: Purchased debt, carrying value
Purchased debt, carrying value SEK m -3,6% y-o-y 2 400 2 200 2 000 1 800 1 600 1 400 1 200 1 000 800 600 400 200 0 2003 2004 2005 2006 2007 2008 2009 45
Slide 46: 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 an imperfect market: are on their way down We acquire more than an average year 46 on lar
Slide 47: Q1 write-down was the largest negative adjustment since 2005
Q1 write-down was the largest negative adjustment since 2005. The net revaluations since 2006 add up to EUR 0.4 m 2,000 1,500 1,000 500 0 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 -500 -1,000 -1,500 -2,000 47
Slide 48: Central costs have decreased
Regional development Central costs have decreased Q1 relative y-o-y: SEK 20.7m (25.6) • Generally a lower cost level • Lower costs for data center in Amsterdam of SEK 2.9 m 48
Slide 49: Organic growth 2003-2009
Organic growth 2003-2009 Organic growth in Q1(09): 4.8% % 15 Trend 10 Financial target 5 0 -5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2003 2004 2005 2006 2007 2008 49
Slide 50: EBIT Margin Y-o-Y
EBIT* Margin Y-o-Y Ppt 6 5 4 3 2 1 0 -1 -2 -3 -4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 2005 2006 2007 2008 50 *Excluding Goodwill write-downs