Slide 1: Interim Report January-March 2018
Interim Report January-March 2018 27th of April 2018 Mikael Ericson, President and CEO Thomas Moss, Acting CFO
Slide 2: Agenda
Agenda 1. Highlights for the first quarter 2018 2. First quarter review 3. Explicit initiatives to reach longterm targets 4. Synergy update 5. Outlook & near-term priorities 6. Q&A 7. Appendix
Slide 3: 2018 - Highlights from Q1 2018
2018 - Highlights from Q1 2018 January-September Solid start to the year • EBIT excl. NRI and excl. Revaluations up 10% year on year • Continued good progress on integration – SEK 280 million cost synergies realized so far, well in line to reach the target for 2018 • Completion of RemCo transaction
Slide 4: First quarter review
First quarter review - Group financials - Regional review - Service line review - Synergy update 4
Slide 5: Group financials - Summary
Group financials- Summary Pro forma SEK M, unless otherwise indicated Q1 2018 Change % Q1 2017 Revenues 3 115 2 928 6 EBIT excl NRIs excl Revaluations 973 888 10 Net profit for the period 364 278 31 Earnings per share 2.77 n/a n/a CMS Revenue Growth, % 3% n/a n/a CMS Service Line Margins excl NRI's,
Slide 6: Northern Europe
Northern Europe Pro forma Excl Portfolio Revaluations and NRIs, Q1 Q1 Change FX Adjust SEK M 2018 2017 % % Revenues 915 927 -1 -2 EBIT 288 298 -3 -4 EBIT Margin, % 31 32 Portfolio Investments Book Value 6 969 6 154 13 Market leader Top five Q1 Highlights Other • Revenues and EBIT behind last year –
Slide 7: Western and Southern Europe
Western and Southern Europe Pro forma Excl Portfolio Revaluations and NRIs, Q1 Q1 Change FX Adjust SEK M 2018 2017 % % Revenues 688 522 32 28 EBIT 186 103 81 77 EBIT Margin, % 27 20 Portfolio Investments Book Value 5 666 3 989 42 Q1 Highlights Market leader Top five • Good revenue and EBIT growth dr
Slide 8: Central and Eastern Europe
Central and Eastern Europe Pro forma Excl Portfolio Revaluations and NRIs, Q1 Change FX Adjust Q1 SEK M 2018 % % 2017 Revenues 856 774 11 7 EBIT 299 265 13 9 EBIT Margin, % 35 34 Portfolio Investments Book Value 7 026 6 158 14 Market leader Q1 Highlights Top five • Solid revenue and EBIT growth comi
Slide 9: Spain
Spain Pro forma Excl Portfolio Revaluations and NRIs, Q1 Change FX Adjust Q1 SEK M 2018 % % 2017 Revenues 643 664 -3 -8 EBIT 200 223 -10 -15 EBIT Margin, % 31 34 Portfolio Investments Book Value 2 939 1 884 56 Q1 Highlights Market leader • EBIT declines of >10% year on year result from reduced volum
Slide 10: Credit Management Services
Credit Management Services Pro forma Q1 Change FX Adjust Excl NRIs, SEK M Q1 2018 % % 2017 Revenues 2 209 2 153 3 0 Service Line Earnings 548 585 -6 -9 Service Line Earnings Margin, % 25 27 -2 ppt Q1 Highlights • Limited top-line growth and margin declines driven by Spain, which represents 25% of th
Slide 11: Financial Services
Financial Services Pro forma Excl NRIs, SEK M Q1 Change FX Adjust Q1 2018 % % 2017 Revenues 1 508 1 280 18 14 Service Line Earnings 827 696 19 16 Service Line Earnings Margin, % 55 54 1 ppt Portfolio Investments 1 373 2 522 -46 ROI, % 15 16 -1 ppt Carrying Value 22 599 18 185 24 ERC 46 929 38 895 21
Slide 12: Common Costs
Common Costs Pro forma Q1 Change FX Adjust Excluding NRIs, SEK M Q1 2018 % % 2017 Common Costs -389 -352 11 8 Q1 Highlights • Common costs increase year on year partly due to acquired units and amortization of intangibles from Lindorff merger • Common costs in line with Q4 2017 (SEK390m) • Merger sy
Slide 13: Explicit initiatives to reach longterm targets
Explicit initiatives to reach longterm targets 13
Slide 14: Spain
Spain Already implemented Integrated office • Reduction of around 400 FTEs in Spain – union negotiations completed Closed site Coruña Santander • Around 50 FTEs transferred to low cost service centers Santiago Vigo • 18 office locations closed – reducing costs significantly and unites existing Valla
Slide 15: Netherlands
Netherlands New consolidated site • Reduction of approximately 50 FTEs Existing site to be closed • New premises in Amsterdam, close the two existing • New location is closer to key clients and prospects Amsterdam Amersfoort • Consolidation of core IT platforms The Hague 15
Slide 16: Poland
Poland • Integration delivering a performance step in Poland ‒ Legacy of 2 sub-scale units ‒ Overly diversified and overlapping operational footprints • Identified and partly implemented actions ‒ Staff reductions supported by positively received voluntary program ‒ Review of client focus and profit
Slide 17: Synergy update
Synergy update Run-rate of achieved cost synergies (End of year estimate in MSEK) Actual 2017 / Forecast FY 2017 Q1 2018 FY 2018 FY 2019 2017 Capital Markets Day Forecast 190 440 580 Estimated actuals + updated forecast 200 280 440 +100 (Poland) 580 +100 (Poland) Deviation +10 - +100 +100 • 280 MSEK
Slide 18: Outlook & near-term priorities
Outlook & near-term priorities 18
Slide 19: Landmark Long-term Strategic Partnership in Italy
Landmark Long-term Strategic Partnership in Italy • A landmark partnership between Intrum, Europe's largest credit management services company, and Intesa, one of the largest and strongest banks in Europe • Establishes Intrum as a leading CMS company and NPL servicer in Italy – a large and strategic
Slide 20: Intrum ideally positioned to capture market opportunities
Intrum ideally positioned to capture market opportunities • More than EUR 800 billion of NPLs on the balance sheets of European Banks • Regulatory changes and pressure from ECB, EU and national regulators on banks drives increased activity • Harmonised regulation further strengthens Intrum’s positio
Slide 21: Near-term priorities
Near-term priorities Continue to select and invest in the most attractive deals taking advantage of strong pipeline Proactively drive the pipeline for larger CMS acquisitions and BPO-opportunities Improve margin trend for CMS GMT member Harry Vranjes appointed Head of CMS for the Group Continue to r
Slide 22: Q&A
Q&A intrum
Slide 23: Appendix
Appendix
Slide 24: Table of content
Table of content 1. NRI and revaluations 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 sheet high
Slide 25: NRIs and revaluations by profit and loss segment
1. NRIs and revaluations by profit and loss segment Q1 2018 NRIs distribution Regions Service lines SEK M, excl discontinued operations NOE CEE WSE Spain Group CMS FS Common Group EBIT incl NRIs 278 293 144 182 897 526 826 -455 897 Lindorff integration NRIs -15 -23 -21 -6 -65 -21 0 -43 -65 Other NRI
Slide 26: Funding base
2. Funding base Syndicated revolving credit facility EUR 1.1bn Maturity profile ‒ Unutilized per 31 Mar 2018 25 000 Swedish MTN program ‒ SEK 1 bn, 5Y, issued June 2013 (margin of 2.22%) ‒ SEK 1 bn, 5Y, issued May 2014 (margin of 1.60%) 20 000 Senior bonds issued June 2017 ‒ SEK 3.0bn, 5Y (3m Stibor
Slide 27: Pro forma portfolio investments and ROI
3. Pro forma portfolio investments and ROI SEK M 8 000 20% 266 7 000 2784 6 000 15% 5 000 FY 1177 Q4 4 000 10% Q3 3 150 2350 1287 Q2 3 000 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 and Revaluations RTM * 1st Credit Portfo
Slide 28: 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 *The R12 numbers for these quarters have been a
Slide 29: ERC
5. ERC Cash Multiple (ERC/Current BV) ERC (SEK, billions) as of 31th March 2017 = 2,08 50 47,0 45 40 38,3 35 31,3 30 25,4 25 20,4 20 16,1 15 12,8 10,1 10 7,8 6,0 4,5 5 3,2 2,1 1,1 0,4 0 29
Slide 30: 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 2,08 2009 1 355 1,98 2010 1 906 2,08 2011 2 648 2,23 2012 3 785 2,11 2013 3 431 2,13 2014 3 867 2,30 2015 5 036 2,01 2016 4 979 2,19 2017 7 804 1,91 2018 1 373 1,93 Gross Cash-on-
Slide 31: Cash flow statement
7. Cash flow statement IJ reported SEK M, unless otherwise indicated Q1 2018 Q1 2017 Operating earnings (EBIT) 897 467 Amortization/depreciation and impairment 177 41 Amortization and revaluation of portfolio investments 874 502 Other -549 -315 Cash flow from operating activities (CFFO) 1 399 695 Po
Slide 32: Balance sheet highlights
7. Balance sheet highlights 31 Mar Pro Forma Dev SEK M 2018 31 Mar 2017 % Intangible fixed assets 34 273 34 805 - whereof goodwill 31 099 30 735 Tangible fixed assets 247 253 Financial fixed assets 23 465 22 629 - whereof portfolio investments 22 598 18 185 Current assets 6 487 4 677 Non-current ass
Slide 33: Upcoming IR activities 2018
8. Upcoming IR activities 2018 Additional events* Financial calendar ‒ Goldman Sachs - European Small and Mid cap ‒ Interim report Jan-June 2018, Tuesday, July 24th London, Thursday, May 3rd ‒ Interim report Jan-Sept 2018, Thursday, October 26th ‒ SEB & Nasdaq - Nordic markets day New York, Tuesday,
Slide 34: 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 35: Leading the way to a sound economy
”Leading the way to a sound economy”
Slide 36: Slide 36