Slide 1: Intrum
Intrum “Leading the way to a sound economy” Mikael Ericson, President and CEO Danko Maras, CFO
Slide 2: This is Intrum
This is Intrum Europe’s leading credit management company • Balanced business model with a holistic client service offering • Diversification with local presence in 24 European markets - market leader in the majority • Strong operational performance and consistent financial returns Intrum Key Metric
Slide 3: A uniquely balanced and integrated business model
A uniquely balanced and integrated business model Strong complementarity and benefits Complementarity between Portfolio Investments and CMS… …resulting in clear synergies and tangible benefits • Full service offering to meet clients’ Flexibility evolving needs Origination • Preferred access to servi
Slide 4: Intrum benefits from clear competitive advantages
Intrum benefits from clear competitive advantages Scale Greater relevance and operational efficiencies Diversification • Preferred partner Access to multiple asset classes and industry verticals across 24 markets to clients Capabilities Full service offering across debt servicing and purchasing • Si
Slide 5: Highlights from Q3 2018
Highlights from Q3 2018 Continued progress • 3rd solid quarter in a row demonstrating a consistent and sustainable model Adjusted EBIT* up 10% year on year despite headwinds in Spain • Continued progress on CMS margins (27% in Q3) Market leading scale starts to deliver the synergies and production t
Slide 6: Managing leverage whilst continuing to grow
Managing leverage whilst continuing to grow High cash flow generating business model 1 Q3’18 Leverage ~3.8x Indicative cash-flow profile based on adjusted Q3-18 LTM data (SEKbn) 9.2 (1.1) ~0.3x impact on (0.5) (0.2) ~(4.6) Net Debt/Cash Strong cash flow EBITDA generation from balanced 2 business mod
Slide 7: Funding and Liquidity
Funding and Liquidity Funding sources Maturity profile ‒ Revolving Credit Facility (total size EUR 1.1bn) 25 000 EUR 20 m utilized per 30 Sep 2018 ‒ Public Bonds SEK 32.780 m issued in both EUR and SEK 20 000 ‒ Private Placements EUR 160 m 7 year issued June 2016 ‒ Commercial Paper (up to SEK 4bn) S
Slide 8: Strong market outlook and opportunity set
Strong market outlook and opportunity set 1 Expansion of our addressable market 2 Continued growth in credit and defaults 3 Accounting and regulatory pressures 4 Widening of the sophistication and efficiency gap 8 © Intrum AB (publ) 2019 All rights reserved.
Slide 9: Resilience to business cycle
Resilience to business cycle Macro environment has a limited effect on Intrum – Positive and Negative effects balance on each side of the cycle Positive Macro Negative Macro • Increased volumes of new debt created Positive • High employment levels – high • Lower cost of funding Effects on Intrum col
Slide 10: Regulatory developments and discussions
Regulatory developments and discussions Regulatory proposals should support the development of the NPL market • Intrum is not a bank and has no intention of becoming one ‒ Intrum is a servicer of and investor in NPLs • New legislation amends existing banking regulation ‒ Protect depositors ‒ Implies
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Slide 12: Recent Events
Recent Events
Slide 13: Visualisation of the Intesa Sanpaolo deal structure
Visualisation of the Intesa Sanpaolo 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
Slide 14: Highlights from Solvia transaction
Highlights from Solvia transaction Adding new Spanish servicing volume Creating leading position in the Spanish REO servicing market • Solvia is a leading player in the Spanish REO servicing market: − Servicing unit, very capital light, like our Aktua business in Spain − Entreprise Value of €300mn −
Slide 15: Back-Up Materials
Back-Up Materials
Slide 16: A balanced business model with two legs
A balanced business model with two legs Clients Clients are providers of services, product and loans Intrum Collects Debt for Client Receives Sale Commission 1 Credit Management Services CMS 2 Portfolio Investment Collect debt on behalf of client Intrum acquires debt Receives All Proceeds Collection
Slide 17: Leading the way to a sound economy
Leading the way to a sound economy Individuals get rid of their debts and feel better. Employees Leading Companies get the chance the way can grow, to grow and to a sound invest, employ do good economy. and prosper … which in turn is positive for the whole economy. 17 © Intrum AB (publ) 2019 All rig
Slide 18: Intrum 2020 – Committed to deliver strong shareholder value
Intrum 2020 – Committed to deliver strong shareholder value Financial targets for 2018-2020 Financial targets Getting there ≥75% growth • Portfolio investment book has grown to SEK 23.9bn (as of Q3 ’18) EPS growth 2020 vs 2016 • Merger synergies of SEK 450mn in run-rate realized after Q3 ’18 EPS of
Slide 19: How Intrum creates value for our stakeholder
How Intrum creates value for our stakeholder Stakeholder commitment Client: Customer: Employee: Shareholder: Society: Increased A better life Growing by The share to own Providing profitability making a difference expertise Vision To be trusted and respected by everyone that provides and receives cr
Slide 20: 2020 strategic plan
2020 strategic plan Strategic priorities Status today Ambition 2020 • SEK 23.9bn (as of Q3 -18) Portfolio Investments book with • At least SEK 30bn Portfolio Investments book with sizable Growing Portfolio vast majority from consumer unsecured contribution from SME and mortgages Investments • Presen
Slide 21: Solid progress - market leadership delivering value creation going forwards
Solid progress - market leadership delivering value creation going forwards 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 in 2019
Slide 22: Interim Report July - September 2018
Interim Report July - September 2018 26th of October 2018 Mikael Ericson, President and CEO Danko Maras, CFO
Slide 23: 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 24: 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 25: Third quarter review
Third quarter review As ‘. be intrum
Slide 26: 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 27: 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 28: 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 29: 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 30: 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 31: 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 32: 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 33: 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 34: 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 35: 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 36: Integration Update
Integration Update Se ‘. be intrum
Slide 37: 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 38: Intesa Sanpaolo partnership
Intesa Sanpaolo partnership
Slide 39: 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 40: 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 41: 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 42: 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 43: 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 44: 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 45: Near Term Priorities
Near Term Priorities
Slide 46: 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 47: Q&A
Q&A
Slide 48: Appendix
Appendix | | a = == 5 ja. eins (ce | RT,
Slide 49: 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 50: 1. NRI, revaluations and IAC by profit and loss segment
1. NRI, revaluations and IAC by profit and loss segment 50 © Intrum AB (publ) 2019 All rights reserved.
Slide 51: 2. 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 52: 3. 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 53: 4. 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 54: 5. ERC
5. ERC Cash Multiple (ERC/Current BV) ERC (SEK, billions) as of 30th September 2018 = 2.00 54 © Intrum AB (publ) 2019 All rights reserved.
Slide 55: 6. 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 56: 7. 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 57: 8. 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, Friday, April 26th , 2019 Paris, Tuesday, October 30th Interim report Jan-March 2019, Friday,
Slide 58: 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 59: Leading the way to a sound economy
Leading the way to a sound economy