Intrum 2020 Capital markets day. Stockholm 7 th of December 2017

Transcription

1 Intrum 2020 Capital markets day Stockholm 7 th of December 2017

2 Disclaimer Important Information This presentation is being made available on a strictly confidential basis, and all materials and information contained herein and information presented, including any proposed terms and conditions, are for discussion purposes only in connection with preliminary discussions relating to the transactions set out in this presentation and may in particular not be used in making any investment decision or to buy or sell any securities of Intrum Justitia AB (publ) ( Intrum Justitia ) or Lock TopCo AS ( Lindorff ) (or any of their respective affiliates). This presentation may not be distributed to any other person, reproduced, published or used in whole or in part for any other purpose. This presentation is not and does not form a part of any offer for sale of securities in the United States or any other jurisdiction. 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International plc, Deutsche Bank AG, London Branch, UBS Limited, Danske Bank A/S, DNB Bank ASA, Nordea Bank AB (publ), Nykredit Bank A/S or Swedbank AB (publ) or any of their affiliates (together the Banks ), accept any liability whatsoever arising directly or indirectly from the use of this presentation, or its contents or otherwise arising in connection therewith. All information in this presentation is subject to verification, correction, completion and change without notice. In giving this presentation, none of the Intrum Justitia, Lindorff, Nordic Capital, the Banks or any of their respective affiliates, advisors or agents undertake any obligation to provide the recipient with access to any additional information or to update this Presentation or any information or to correct any inaccuracies in any such information. 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Forward-looking statements are statements that are not historical facts and may be identified by words such as believe, expect, anticipate, intend, estimate, wil l, may, continue, should and similar expressions. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions. These assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this presentation by such forward-looking statements. The information, opinions and forward-looking statements contained in this presentation speak only as at its date, and are subject to change without notice. In this presentation, we present, among other metrics, EBITDA, EBITDA margin, EBITDA (excl. NRIs) margin, Adjusted EBITDA, Adjusted EBITDA (excluding NRIs), Pro Forma Adjusted EBITDA and Pro Forma Further Adjusted EBITDA) as we believe they are helpful to investors as measures of Intrum Justitia s and Lindorff s operating performance. Some or all of these measures are not measures of financial performance under IFRS and should not be considered as alternatives to other indicators of Intrum Justitia s or Lindorff s operating performance, cash flows or any other measure of performance derived in accordance with IFRS, and they may not accurately reflect Intrum Justitia s or Lindorff s performance, liquidity or Intrum Justitia s or Lindorff s ability to incur debt. EBITDA, EBITDA margin, EBITDA (excl. NRIs) margin, Adjusted EBITDA, Adjusted EBITDA (excluding NRIs), Pro Forma Adjusted EBITDA and Pro Forma Further Adjusted EBITDA are used by management as indicators of operating performance. The non-ifrs financial measures presented herein are not recognised measures of financial performance under IFRS, but measures used by management to monitor the underlying performance of their business and operations. In particular, the non-ifrs financial measures should not be viewed as substitutes for revenue, other income, results from operating activities (EBIT), profit/(loss) for the period, cash flows from operating activities at period end or other income statement or cash flow items computed in accordance with IFRS. The non-ifrs financial measures do not necessarily indicate whether cash flow will be sufficient or available to meet Intrum Justitia s or Lindorff s cash requirements and may not be indicative of Intrum Justitia s or Lindorff s historica l operating results, nor are such measures meant to be predictive of Intrum Justitia s or Lindorff s future results. We have presented these non-ifrs measures in this presentation because we consider them to be important supplemental measures of Intrum Justitia s or Lindorff s performance and believe that they are widely used by investors comparing performance between companies. Since not all companies compute these or other non-ifrs financial measures in the same way, the manner in which Intrum Justitia s or Lindorff s management has chosen to compute the non-ifrs financial measures presented herein may not be comparable with similarly defined terms used by other companies. This presentation also includes certain pro forma financial information. The pro forma financial information has been included to describe a hypothetical situation and has been prepared for illustrative purposes only. The unaudited pro forma financial information does not include all of the information required for financial statements under IFRS and may not necessarily reflect the actual results of operations and/or financial condition of the post-merger Company. The unaudited combined financial information set out in this presentation is only an aggregation of financial information taken from each company's financial reporting in order to provide an indication of the new group's sales, earnings, etc. under the assumption that the activities had been included in the same group from the beginning of each period. The aggregation is based on a hypothetical situation and should not be viewed as pro forma since adjustments for the effects of future acquisitions analyses, various accounting standards and transaction costs have not yet been possible to make. This presentation includes certain estimated synergies from the transactions described herein. However, actual synergies and other cost savings, including the costs required to achieve these synergies and savings, may differ materially from the current expectations, and neither Intrum Justitia nor Lindorff can assure investors that they will achieve the full amount of these estimated synergies on schedule or at all. The financial information has not been audited or otherwise reviewed by the companies auditors. This presentation contains statistics, data and other information relating to markets, market sizes, market shares, market positions and other industry data pertaining to Intrum Justitia s or Lindorff s business and markets. Unless otherwise indicated, such information is based on Intrum Justitia s or Lindorff s analysis of multiple sources, including a market study (the Company Market Study ) Lindorff commissioned from a leading international third party consultancy firm (the Market Consultancy Firm ) and information otherwise obtained. Such information has been accurately reproduced, and, as far as we are aware from such information, no facts have been omitted which would render the information provided inaccurate or misleading. The Company Market Study is based on primary interviews and field visits conducted with industry experts and participants, secondary market research and internal financial and operational information supplied by, or on behalf of, Lindorff. The Company Market Study was prepared in October 2016 and has not been updated to reflect current market conditions. 2

3 Intrum s key messages for today Combination with Lindorff creates a European champion and delivers strong benefits Very large target market with many opportunities to grow Unique and sustainable competitive advantages Trusted preferred partner to our clients Strong financial profile augmented by synergy realisation Committed to deliver strong long-term shareholder value 3

4 An experienced group management team Mikael Ericson Chief Executive Officer & President Group functions Regional managers Erik Forsberg Chief Financial Officer Anders Engdahl Chief Investment Officer Cathrine Klouman Chief Operating Officer Johan Brodin Chief Risk Officer Anne Louise Eberhard Chief Commercial Officer Anette Willumsen Managing Director Northern Europe Per Christofferson Managing Director Central & Eastern Europe Harry Vranjes Head of Project Management Office Annika Billberg Chief Brand & Communications Officer Jean-Luc Ferraton Chief Human Resources Officer Niklas Lundquist Chief Legal Officer Marc Knothe Managing Director Western & Southern Europe Alejandro Zurbano Managing Director Spain 4

5 Today s agenda Time Topic Speaker 09:30 10:00 Registration 10:00 10:15 Welcome and introduction Mikael Ericson, CEO 10:15 10:45 Market outlook Anders Engdahl, CIO; Johan Brodin, CRO 10:45 11:15 Positioning and strategy Mikael Ericson, CEO 11:15-11:30 Coffee break 11:30 12:10 Growing Portfolio Investments Anders Engdahl, CIO 12:10 12:45 Growing Credit Management Services Anne Louise Eberhard, CCO 12:45 13:30 Lunch break 13:30 14:15 Leading the way in digitalisation and data analytics; driving operational excellence Cathrine Klouman, COO 14:15 14:45 Delivering merger benefits Harry Vranjes, Head of Project Management Office 14:45 15:00 Coffee break 15:00 16:00 Regional perspectives Anette Willumsen, MD Northern Europe Per Christofferson, MD Central & Eastern Europe Marc Knothe, MD Western & Southern Europe Alejandro Zurbano, MD Spain 16:00 16:30 Financial review Erik Forsberg, CFO 16:30 Concluding remarks Mikael Ericson, CEO 5

6 This is Intrum Europe s leading credit management company Balanced business model with a holistic client service offering Diversification with local presence in 24 markets Strong operational performance and consistent financial returns Market leader Top five Other Intrum Key Metrics LTM Sep 17 (SEKm) Net revenue 12,146 EBITDA (excl. NRIs 1 ) 4,753 Employees >8,000 1 Non-recurring items. 6

7 A sound economy Leading the way to a sound economy Creating value for our clients, our customers, our owners and for society at large Helping companies of all sizes increase liquidity and minimise risk 7

8 Intrum benefits from clear competitive advantages Scale Greater relevance and operational efficiencies Diversification Access to multiple asset classes and industry verticals across 24 markets Capabilities Full service offering across debt servicing and purchasing Risk culture Embedded principles and robust processes Trusted preferred partner to clients Significant financial flexibility Attractive risk profile Capital structure Ample liquidity and low cost of debt 8

9 Strong business momentum 2017 development to date Portfolio Investments strong capital deployment at good returns Investment growth of +90% YTD, with good mix across geographies and asset classes Record-strong pipeline Market entry in Romania Combined group portfolio investments (SEKm) 4,986 2,880 2,629 Credit Management Services growth across all segments Strong M&A pipeline Positive organic growth 9M M 2017 Combined group Credit Management Services Revenues (SEKm) 5,404 1,307 Internal 6,600 1,581 4,097 External 5,019 9M M

10 Strong business momentum Significant Q4 developments to date Portfolio Investments Agreements to acquire a number of large debt portfolios for a total investment of EUR 200 million Agreements to acquire debt portfolios with a forward flow structure for a total investment of about EUR 50 million Acquisitions Agreement to acquire CAF in Italy, to establish Intrum with a balanced business model as one of the market leaders in Italy Two additional acquisitions of smaller but complementary debt collection service businesses in Germany and Italy 10

11 Integration on track Detailed synergy implementation plans with clear ownership and tracking report Key integration deliverables to date Already realised significant synergies Rebranding process well underway Joint IT infrastructure for Intrum Organisational model being implemented 11

12 Intrum 2020 Committed to delivering strong shareholder value Financial targets for EPS Growth 75% growth, 2020 vs 2016 EPS of SEK 35 in 2020 Portfolio ROI 13% p.a. Leverage Net Debt/Cash EBITDA 2.5x 3.5x Dividend 50% pay-out ratio over time Note: See Appendix for detailed definitions. 12

13 Table of contents Welcome and introduction Market outlook Positioning and strategy Strategic priorities: Growing Portfolio Investments and Credit Management Services Strategic priorities: Leading the way in digitalisation, driving operational excellence and delivering merger benefits Strategic priorities: Regional perspectives Financial review Concluding remarks 13

14 Market Outlook Strong market outlook and opportunity set Anders Engdahl, CIO

15 Strong market outlook and opportunity set 1 Expansion of our addressable market 2 Continued growth in credit and defaults 3 Mounting accounting and regulatory pressures 4 Widening of the sophistication and efficiency gap 5 Increasing outsourcing and debt sale levels 15

16 1 Expansion of our addressable market Addressable segments represent ~6x Intrum s historical core market Growth from large untapped market segments European stock of NPLs ( bn, % of total) 2016E with Intrum s strengthened capabilities Current footprint 640 1,047 B2C unsecured Historical core focus of Intrum represents ~12% of market All 24 markets Strong expertise through Aktua 123 B2C unsecured 12% 284 B2C secured 27% 323 B2B SME & Corporate 31% 730 Total Europe B2C secured and B2B SME Investment and servicing experience in various markets Very large opportunity Rapidly growing experience in some countries 8 markets and growing B2C & SME Corporate 16

17 2 Continued growth in credit and defaults NPL and OTR stocks remain at record levels despite increase in debt sales Current stock in excess of 1 trillion Loan book of selected Nordic speciality finance lenders 1 ( bn) Strong growth in consumer finance lending, particularly in the Nordics New market entrants have yet to experience a down-cycle, which will further increase NPL volumes and outsourcing Defaults are a structural and sustainable feature of the credit industry Intrum is set to benefit from a potential economic downturn and an increase in NPL levels Source: Capital IQ, company market study. 1 Collector, Resurs, Nordax, TF Bank, Bank Norwegian. 17

18 3 Mounting accounting and regulatory pressures NPL sale volumes expected to grow materially in the next few years The total NPL stock in Europe is >2x higher than pre-crisis levels at ~ 1trn vs 420bn Collection outsourcing and debt sale levels are expected to increase further IFRS 9 driving earlier credit losses recognition - ~15-30% expected increase in banks provisioning levels NPL Sale Two scenarios: Constant NPL ratio vs. return to pre-crisis NPL ratio European NPL sale scenarios ( bn) Mounting regulatory pressure on Financial Institutions to deal with NPL balances Recent ECB NPL guidance 2 : deliberate and determined action on NPLs is required Ongoing consultations for new ECB regulation in 2018 on NPLs likely to drive higher impairments and greater levels of debt sale Additional benefits to Intrum from ECB s proposed creation of a secondary market for NPLs, increasing transparency and structure Clients confirming expected effects from new regulation E 2017E 2018E 2019E Base Case Deleveraging Scenario¹ Source: Company market study, EBA 1 Southern European FI work through their outstanding NPL stock rapidly, bringing overall NPL ratio s down to pre-crisis levels across Europe. 2 Source: ECB press release, ECB publishes guidance to banks on tackling non-performing loans, 20 March

19 4 Widening of the sophistication and efficiency gap Intrum creates significant value to credit originators Operational setup Non-core / cost center Mission critical / profit center Investments People Focus on front-end digitalisation for new origination Limited specialised training Collection systems and operations as a business priority Digitalisation and automation Skilled staff Regular training Analytical tools Limited strategic approach to data analytics Legacy systems with limited flexibility Data centric New systems and process flows Flexibility Little flexibility to restructure loans Constrained by heavy operational processes Able to offer discounts / alternative instalment plans that improve collection effectiveness Significantly higher solution rates Up to 2x higher Sophistication gap drives outsourcing and is the #1 driver for our industry s long-term growth 19

20 5 Increasing outsourcing and debt sale levels CMS outsourcing growth will mostly be captured by collection specialists like Intrum Continued growth in credit and defaults 70-80% of banks and experts surveyed expect an increase in outsourcing and debt levels Expert survey % of participants expecting an increase Mounting regulatory and accounting pressures ~70% ~80% We will increase our sales volumes in the coming years. A new wave of regulation is hitting many of our big countries ( ) and we see more and more highly capable international debt collecting agencies Widening of sophistication and efficiency gap Head of NPL department of leading European Bank Debt Sales Increase Outsourcing Source: Company market survey conducted in Q Survey among leading European banks and debt collection experts. 20

21 Market outlook Portfolio Investments return dynamics Johan Brodin, CRO

22 Intrum operates in a healthy market Returns remain highly attractive Stable returns over the cycle Supported by robust ongoing backbook performance Key return trends supporting continued attractive risk-adjusted net returns Combined group 180m GMM over life cycle 2.6x 2.6x 2.3x 2.3x 2.3x 2.1x 2.2x 2.1x 2.2x 1.9x Lower risk from greater data and expertise Improved cost and collection efficiency Lower cost of capital M2017 Combined group ROI on portfolio investments 19% 17% 18% 16% 16% 17% 15% Q1'16 Q2'16 Q3'16 Q4'17 Q1'17 Q2'17 Q3'17 22

23 1 Return trend #1: Lower risk Greater data and expertise generate less volatile returns >20 years of experience >4,500 portfolios >SEK 40bn in capital deployed since 2006 >24m customer accounts Continuous improvement Data analytics Valuation models Collections strategies and technology Reduction in return volatility over time B2C unsecured portfolios volatility in gross actual collections vs business case SEKm 40,000 35,000 30,000 25,000 20,000 Return Volatility Trendline Rolling LTM Standard Deviation Lower risk evidenced by lower return volatility Risk-adjusted returns have remained broadly stable at very attractive levels 15,000 10,000 5, Cumulative Acquired Face Value Linear (Rolling LTM STDEV Collections vs Business Case) 23

24 2 Return trend #2: Improved cost and collection efficiency Culture of continuous improvement Improvement in Collection Efficiency Over Time 12.5% Resulting in greater cash flow and earnings Targeted effort to improve efficiency Economies of scale Smarter segmentation and collection Automation and robotics Digitalisation 8.7% 4.6% 5.0% 2.4% 3.2% Gross actual collections vs active forecast Rolling 12m gross actual collections vs active forecast Common Overhead Costs 1 as % of Collections Intrum s strengthened capabilities will further enhance collection capabilities 24% 19% 18% 20% 18% 16% Q3'17 1 Shared expenses for sales, marketing and administration. 24

25 3 Return trend #3: Lower cost of capital Reduction in cost of capital in recent years More sophisticated industry Opening of international capital markets with increasing understanding of the sector Diversification of funding sources New financing raised at ~3% with a duration of ~5 years Reduction in cost of capital WACD 1 and risk-free rate 0.3% Risk-free rate 3 WACD ~5% 2.6% ~3% Intrum Peer average Capital structure optimisation Leverage ~ 3.5x 2 ~3.6x 1.4x Peer average Intrum estimates that its WACC has decreased by about 4%-points since 2011, driven by a more efficient capital structure and lower interest rates 1 Pre-tax. 2 Pro-forma for RemCo disposal. 3 Source: ECB s Statistical Data Warehouse, average 10-year German treasury yield 25

26 Our risk adjusted returns remain very attractive Input Frontbook GMM Frontbook Return Volatility Backbook Performance Operating Costs % Cost of Capital Trend over the last 3 years Stronger risk-adjusted ROI and return to shareholders Outcome Lower gross return Reduced risk Excess return over bussiness case Supporting net returns and ROI Greater excess equity return 26

27 Generating sustainable high risk-adjusted returns Intrum is well positioned to compete and grow profitably Local and Pan-European scale Long-standing, reliable and trusted partner Relevance to small and large clients More data, more experience Greater capital deployment optionality Economies of scale Ability to invest and innovate Stronger liquidity Improved cost and collection efficiency Lower risk Lower cost of capital Cheaper cost of funding 27

28 Table of contents Welcome and introduction Market outlook Positioning and strategy Strategic priorities: Growing Portfolio Investments and Credit Management Services Strategic priorities: Leading the way in digitalisation, driving operational excellence and delivering merger benefits Strategic priorities: Regional perspectives Financial review Concluding remarks 28

29 Positioning and strategy Strong competitive position Mikael Ericson, CEO

30 A uniquely balanced and integrated business model Strong complementarity and benefits Complementarity between Portfolio Investments and CMS resulting in clear synergies and tangible benefits Flexibility Full service offering to meet clients evolving needs Collection scalability Analytical capabilities Collection strategies Standardised processes Origination synergies Data analytics Operational synergies Financial synergies Preferred access to serviced portfolios Further improved collection efficiency and decreased costs Greater scale supporting investments, innovation and fixed costs absorption Capital light earnings from CMS for portfolio investments and deleveraging Higher debt capacity at lower cost 30

31 % of Non-portfolio investments revenues Size and business model provide for a unique position for Intrum The largest player in Europe The greatest geographical reach The most balanced business model Geographic reach (# of markets) Note: Bubble size represents Sep-17 LTM revenues. 31

32 Intrum benefits from clear competitive advantages Scale Greater relevance and operational efficiencies Diversification Access to multiple asset classes and industry verticals across 24 markets Capabilities Full service offering across debt servicing and purchasing Risk culture Embedded principles and robust processes Preferred partner to clients Significant financial flexibility Attractive risk profile Capital structure Ample liquidity and low cost of debt 32

33 Competitive strengths Scale Market leader in Europe Uniquely relevant to clients with scale benefits Revenues LTM Sep-17 (SEKbn) Largest European CMS Companies Cost efficiencies ,2 Product and innovation investment capacity ~SEK 15bn in available liquidity 3 Lower cost of capital Acquisition and retention of talent Ongoing strengthening of our competitive advantage Source: company reports 1 Pro forma for the remedy business transaction, using the announced Sep-17 LTM revenues of 190m. 2 Excluding lawyer service revenues. 3 Defined as the sum of cash and cash equivalents and unutilised capacity on revolving credit facilities, and pro forma for 700m of cash proceeds from remedy business disposal. 4 European revenues from purchased debt only. (~90% of total revenues). 33

34 Competitive strengths Diversification Europe s most diversified credit management company 2016 YTD Q Vintage mix Industry mix Geographical mix across 24 countries Financial services CMS (External clients only) ERC contribution (%) ERC contribution (%) 2010 < Other 12% 6% 8% 10% Retail % % % % External CMS net revenue contribution (%) Other 70% Client mix % % Client 1 9% Client 2 8% Client 3 7% Client 4 4% Client 5 3% 2% Telecom 9% External CMS net revenue contribution (%) Other 41% Telecom 6% Industry mix Utilities 6% Financial institutions 78% Financial institutions 46% Group Net revenue contribution (%) Western & Southern Europe 19% Spain 22% Northern Europe 32% Central & Eastern Europe 27% Unmatched diversification and granularity at both segment and group level 34

35 Competitive strengths Capabilities Unique breadth of services and capabilities built over time Value add services Product expertise Solutions Information services Invoice and payment services Debt purchase Debt collection¹ Real estate services BPO²/ Carve-outs Co-investments Pan-European³ Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 The only true one-stop-shop integrated business in Europe ¹ Defined as contributing more than 30% of revenues. ² Business process outsourcing. ³ Defined as present in more than 5 markets with integrated offering throughout the credit management value chain. 35

36 Risk management Risk appetite Competitive strengths Robust risk management Strong governance and risk controls embedded in culture and processes A well-established best practice model with clear roles and responsibilities regarding governance and risk management Board of directors CEO Audit committee External audit Three lines of defence Regulatory framework for financial services companies reflected in the governance structure of Intrum 1 2 Operations risk ownership Risk and compliance control 3 Group internal audit Intrum is the European reference for quality and compliance for all clients 36

37 Available liquidity 2 (SEbn) Competitive strengths Capital structure Intrum best placed to capture the market opportunity As of Sep-17 Leverage ~3.5x 3 3.3x 1.9x 2.9x 4.8x 4.2x 4.5x WACD 1 ~3% ~2% ~5% ~8% ~7% ~6% ~4% ~15.0bn 3 ~5.7bn ~3.5bn ~3.4bn ~2.6bn ~2.5bn ~1.3bn Intrum Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Intrum s diversification, size and hybrid model enable a more efficient capital structure than peers Note: All metrics computed and estimated based on latest disclosure and announcements related to financing and M&A (including synergies). 1 Estimated weighted average cost of debt. 2) Defined as the sum of cash and cash equivalents and unutilised capacity on revolving credit facilities. 3 Q3-17 proforma including Remco proceeds 37

38 Positioning and strategy Unique client value proposition Mikael Ericson, CEO

39 Intrum provides unique benefits to clients One-stop-shop across the value chain Solution-oriented and flexible partner Ability to act cross-border Capacity to take on large strategic projects (portfolios, BPOs) Trusted and respected preferred partner Track record in structuring complex deals and creating value Financial strength to innovate and provide better service 39

40 How Intrum adds value to TelCos Case study #1 Significant value for clients Intrum s role with the client Intrum s positive impact on the client Intrum creates value through debt collection, purchased debt and customer service for a major Nordic telecom operator in all of its Scandinavian markets Intrum have added significant value to the client through: Increased revenue and reduced DSO 1 Reduced credit exposure Reduction in usage of customer service resources Total economic benefit for client in excess of SEK 100m Intrum, through our unique data capabilities and experience, is the preferred CMS partner to the Telecom industry in the Nordics 1 Days Sales Outstanding 40

41 How Intrum adds value to banks Case study #2 Intrum s unique BPO solutions allow clients to focus on core operations What we can do in a BPO Clear client benefits Intrum s industry-leading track record Long term partnership / contract for CMS Example Relationship Bank Bank s collection business outsourced to Intrum Take over of IT, collection and other systems On-boarding of FTEs / entire collection organisation Purchase portfolios Improved collections Cost savings Excellent customer experience IT efficiencies Intrum realised efficiencies on behalf of the client and on-boarded FTEs Increased employee satisfaction Complex system environment taken over asis by Intrum Long-term relationship and partnership for process improvements Enables clients to focus on core business Places people and systems in the right environment Intrum s partnership solutions can streamline collection processes, increase income and reduce costs Significant value-add for the bank through increased cost efficiency, reduced fixed cost base and lower future capital expenditures 41

42 How Intrum adds value to customers Case study #3 Sustainable collection performance and customer satisfaction 35% 30% Default rate by months since purchase in Country X 25% 20% 15% 10% 5% Increasing focus on affordable payment plans Resulting in lower default rates and greater cash flow stability 0% Vintage 2015 Vintage Case study: Complaints received in Country X Reducing customer complaints 184 Creating an overall increase in customer satisfaction (YTD) 42

43 Positioning and strategy A clear strategic plan Mikael Ericson, CEO

44 Our strategy: To be the most innovative and profitable CMS company Vision Core purpose Mission Values To be trusted and respected by everyone that provides and receives credit Leading the way to a sound economy Help companies prosper by caring for their customers Empathy Ethics Dedication Solutions Stakeholder commitment Client: Increased profitability Customer: A better life Employee: The place to be Shareholder: The share to own Opinion makers: Providing expertise Core assets Culture People Capital Data Build global leadership and scale Core strategies Lead in all markets where we operate Create superior value for clients Achieve operational excellence in everything we do 2020 strategic priorities Growing Portfolio Investments Growing Credit Management Services Digitalisation and data analytics Operational excellence Merger synergies 44

45 2020 strategic plan Strategic priorities Status today Ambition Growing Portfolio Investments SEK 19bn (as of Q3-17) Portfolio Investments book with vast majority from consumer unsecured Presence in 24 markets At least SEK 30bn Portfolio Investments book with sizable contribution from SME and mortgages Additional new markets entered in Europe 2 Growing CMS SEK 8.8bn 1 annual revenues Subdued growth in traditional unsecured and trade CMS Positive organic growth >SEK 2bn in revenue increase from M&A and BPOs 3 Digitalisation and data analytics Next generation digital platforms launched in most countries Level of automation varies between countries Data integration initiatives post combination >30% of customers using digital channels 10-20% of key processes leveraging robotics Advanced analytics contribute to continued best-in-class collection performance 4 Operational excellence Incremental IT harmonisation Shared Services established, and growing Track record of operational continuous improvement Significant cost and collection efficiency achieved through Shared Services and optimisation of IT Advanced use of Best Practice/Operational Performance Management 5 Merger synergies SEK 580m/year in cost synergies announced Detailed integration and implementation plan SEK 580m/year in cost synergies realised Strengthened market positions and growth contribution from revenue synergies 1 Total CMS revenues including servicing of own portfolios, as of Q3-17 LTM 45

46 Table of contents Welcome and introduction Market outlook Positioning and strategy Strategic priorities: Growing Portfolio Investments and Credit Management Services Strategic priorities: Leading the way in digitalisation, driving operational excellence and delivering merger benefits Strategic priorities: Regional perspectives Financial review Concluding remarks 46

47 Strategic priorities Growing Portfolio Investments Anders Engdahl, CIO

48 A world class Portfolio Investments business Better capabilities and data Continued growth for combined group in Portfolio Investments book value Book value of purchased debt (SEKbn) Capital deployment opportunities in 24 markets Diversified portfolio across vintages, geographies and industries Integrated business model facilitating sourcing of portfolio investment opportunities through CMS client relationships Unique access for growth through B2C unsecured and B2B SME segments A track record of profitable growth built on strong relationships and debt purchasing expertise 1 As of Q

49 No. of Deals Record-strong pipeline across geographies and asset classes Continued capabilities allow Intrum to address larger market Value of transactions by loan type (Face value, bn, % of total) Thereby growing pipeline and Capex ( bn) Supporting capital deployment at attractive returns across asset classes 26% CRE 24bn Unsecured retail 31bn Specialised 20bn Secured retail 20bn SME / Corporate 24bn 63% bn 1.2bn 1.2bn Nov bn 0.4bn 1.6bn 1.2bn Nov-17 B2C B2B Unsecured Consumer unsecured SMEs Secured Mortgages B2B secured SMEs Mortgages Consumer unsecured Potential transaction volume increased from 31.0bn to 74.5bn 0.8bn of additional pipeline on a like-for-like basis IRR levels dependent on risk profile of portfolios in the various asset classes and competition Attractive returns in B2C secured and SME (secured and unsecured) Source: PwC Portfolio Advisory Group Market Update Q4 2016, Intrum transaction pipeline data 49

50 Significant room to expand within the consumer unsecured segment 1 Strong tailwinds 2 Gain scale in markets 3 Grow through 4 Enter new from market growth where not a leader transactions markets Growth in consumer lending including in nascent markets such as the Nordic region Pick-up in defaults on growing credit balances IFRS 9 ECB regulation on NPLs Increasing trend of non-performing debt outsourcing and sale as sophistication gap widens Scope for significant market share gains in most markets (e.g. Italy, UK, Germany) Ongoing sector consolidation brings M&A opportunities Scope to improve operating performance and reinforce competitive strengths in some markets Buy-out of backbook with continued servicing Intrum uniquely positioned to partner with banks on these large, complex and sensitive transactions Bilateral discussions Large volumes Strong historical track record of new geographical market entry A number of attractive target markets identified Post-merger scale and relevance to clients driving pipeline Intrum now the preferred partner 50

51 Expanding in B2C secured and SME Intrum s capabilities Intrum has access to supply in the market and has the platform and capabilities to acquire profitably Present in B2C secured and B2C SME in 8 markets About SEK 2.5bn in B2C secured and B2B SME book value EUR 2bn B2C secured and B2B SME pipeline Flexibility Access to volumes Strong liquidity and investment capacity Ability to invest across several markets Relevance with banks Trusted and respected preferred partner status Early lessons learned and supporting measured growth Cost efficiency Pricing advantage Operational excellence Industrialisation of systems and processes for consistent, stronger performance 51

52 Expanding in B2C secured and SME Roll-out plan Existing experience and capabilities Priority markets for measured entry Systematic expansion Continue to develop operational capabilities Pro-active entry into segment via greenfield operations or opportunistic M&A Measured approach to portfolio investment Test and Build 2020 Sizable contribution to the group s Portfolio Investments growth 52

53 Collection Intrum Investors Acquisition Expanding within secured and SME Case study - Co-investment in mixed portfolio Transaction in brief Q4-15 Intrum s involvement in the process Intrum, together with three co-investors, successfully closed a ~ 370m face value mixed portfolio acquisition Intrum acquired a 20% share of the investment Participating in such transactions allows Intrum to Participate in large deals Improve risk and liquidity management Boost investment IRRs and optimise local platform utilisation Process stages Parties Comments NBO BO & Closing Amicable Legal Asset Mgmt. Intrum working together with main investor in acquisition process including, due diligence formalisation of business plan, valuation and negotiation Intrum responsible for the entire recovery process, including real estate mgmt. Optimisation of local platform utilisation and higher deal IRRs through fee income Mixed portfolio characteristics Investment performance 14% 5% ~ 370m +34% 100% 81% Corporate/SME secured Individual secured Individual unsecured Original Business Case Actual Performance 53

54 Strategic priorities Growing Credit Management Services Anne Louise Eberhard, CCO

55 Multiple sources of CMS growth in a changing market Combined group growth track record (SEKbn) Intrum 2020 growth ambitions Organic growth through Xpand programme (0.2) ~50% 2 Broad products and services focus with BPOs and Portfolio Investments to match clients needs 2014 CMS Revenues Internal Collections Organic Growth M&A / BPO / Carve-outs LTM 2017 CMS Revenues 3 Targeted M&A effort to accelerate growth and create value 55

56 1 Organic growth Xpand: Our commercial excellence programme Xpand programme Last years effort paying off Annual CMS organic growth More integrated and sales-driven approach, driving organic growth ~1-2% Holistic client service offering across all products Build a new common sales and performance culture YTD YTD 2017 Introduce one new CRM system for all countries Ongoing review and activities to address non-profitable contracts ~(2)% ~(2)% 56

57 One-Off/ 1 Organic growth Servicing, BPOs and investments go hand-in-hand in the client dialogue Example of a bank client s strategic review of NPL management The Client s priorities and value creating KPIs Balance sheet management and NPL provisioning Cost efficiency Cash flow The strategic client dialogue NPL review and segmentation Criteria for selection of optimal NPL strategy to satisfy client needs NPL s impact on balance sheet In-House collection Integration Information services Quality in decisions Low High Low FF 1 Outsourcing/ BPO High Cost/complexity of collection/admin Outsourced collection Optimise efficiency Carve out Focus on core One-off sales Build for sale Forward flow Manage balance sheet 1 Forward flow 57

58 2 BPO contracts Our track record Strong market opportunity driven by client benefits Clear strategic benefits for Intrum Allows client to focus on core activities Stronger solution rates and retained control Positive financial debtor impact Better customer experience Lock-in long-term client relationship and contracts as well as a stable and capital light income stream Increased access to cross sales opportunities, including Information Services and Portfolio Investments Build additional scale Intrum has an unparalleled BPO track record >12 BPOs completed across several geographies with >1,300 FTEs integrated 58

59 2 BPO contracts Case study Long term value creation of a successful BPO solution Background Clear transaction benefits for Intrum A subsidiary of a major European bank Responsible for late collection of retail, mortgage and corporate / SME receivables 155 FTEs Intrum value-add to client Recovery performance: +15% increase in collections in the first 12M New asset classes Cost efficiencies Broaden asset classes to secured, real estate services and SME Build economies of scale Integration of work force IT system improved Data analytics advantage Data analytics advantage improves customer experience 70% of customers already known 5% of non-payers were payers at Intrum Operational excellence Campaign management Surveillance Monitoring and reporting Clear KPIs and follow-up with outsourcer HR positive, training, low churn Growth Customer compliance Build client partnership Long term contract Cross sales opportunities Better use of data for faster recovery and improved customer experience 59

60 Market maturity New/immature markets Mature markets 3 Targeted M&A to increase our relevance with clients Build value proposition Build partnerships Support customer journey Drive specialisation Expand core competencies Increase scale Build scale Expand geographic footprint Develop geographic footprint Standardised/core Product offerings Specialised 60

61 3 M&A Strong track record and solid pipeline of opportunities Characteristics of the CMS market Fragmented market >350 companies in the sector Attractive target valuations Ongoing consolidation Continuous regulatory pressure Required ability to service across borders Clients moving towards working with fewer partners Intrum is uniquely positioned to create value from M&A Develop competence, knowledge and technology, faster and at lower cost Enter new markets quicker Reach optimal size and scale rapidly across countries Extract cost and revenue synergies Significant experience in acquiring and integrating companies with an efficient M&A organisation Intrum has a stable and diversified M&A track-record Intrum has acquired 12 companies in the past 2 years with EVs 1 ranging from SEK 50m to >SEK 3bn Significant pipeline of additional value accretive acquisitions 1 Enterprise Value. 61

62 3 M&A Case study Successful integration and value creation Acquisition of a company with strong expertise in B2B collection services Strong integration benefits Considered non-core by the seller High IT running costs due to under-investments Key rationale for Intrum Drive consolidation in the fragmented and profitable B2B segment. Gain further B2B and B2C/SME capacity in local market Grow EBIT by leveraging scale, streamlining cost base, gain access to new clients and cross-selling existing services Smooth and successful integration No client attrition Cost synergies realised EV/EBIT acquisition multiple pre-synergies EV/EBIT acquisition multiple based on earnings 2 years after acquisition 18% of cost base 6x 4x 62

63 Table of contents Welcome and introduction Market outlook Positioning and strategy Strategic priorities: Growing Portfolio Investments and Credit Management Services Strategic priorities: Leading the way in digitalisation, driving operational excellence and delivering merger benefits Strategic priorities: Regional perspectives Financial review Concluding remarks 63

64 Strategic priorities Leading the way in digitalisation & data analytics Cathrine Klouman, COO

65 Digitalisation and data analytics enable performance enhancement New revenue streams and efficiency improvements Size creates scale advantage Efficient and effective operation source for increased competitiveness Effectiveness & efficiency Growth Core enabler for improvements in the day-to-day business Digitalisation & data analytics Transforming the business for growth New innovative business models to provide competitive advantage Digital products & services generate new revenue streams 65

66 Four key areas, changing Intrum s day-to-day business 1 Digital user experience New products and services Automated business processes Data & analytics driven collections Today Self-service portals for customers and clients SMS, chat, mobile customer service and online payments in some countries Traditional business models for delivering new services Value-added information and invoicing services Automation levels vary between countries Early adopter of robotics Centralised information management platform Automated decision models in pricing and collections Example: Simplified SMS payment service Example: Robotics process automation Launching digital payment services: Automating rules-based back-office 100,000 SMS sent with payment link and support processes Conversion rate of 15% for on-line Time-savings of: 35-90% payment services Level of automation: % 66

67 We are investing in digitalisation, automation & data analytics Strengthening our competitive advantages Key initiatives Ambition 2020 Investments Digital user experience New products and services Improve client and customer channels, with self-service & API s Implement digital payments as global service Automated group SME service platform Launch additional client information services >30% of customers and clients to use digital channels SEK 100 million annually Automated business processes Roll-out of Robotics & Virtual Assistants Pilot and launch data-driven AI solutions 10-20% of key processes leveraging robotics Reprioritisation of current resources Data & analytics driven collections Roll-out automated decision-making Improve analytics automation for collection and portfolio mgmt. Implement analytical services across CMS value chain Significant contribution to improved future collection performance 67

68 Significant user experience and process improvements Case study Artificial Intelligence Case study: AI / Virtual assistant Benefits Automating customer service (invoice) White-label solution built in collaboration with a Norwegian client Results after first month in operation: 3,500 unique chats 11,000 questions asked 89% of questions answered Improved customer experience: One contact point for the customer 24/7 availability Ease of use Improved price and performance: Reduction in cost per transaction High quality of service 68

69 Significant user experience and process improvements Chatbot demonstration Excerpt from client website Wondering about something? Ask our new chatbot about your invoice 69

70 Persona-based customer segmentation bringing tangible benefits Case study - Personas The Occasional 39% The Calculator 3% The Low Salary 17% The Occasional 39% The One-Timer 17% The Rich 3% The Rescue 4% The Young 4% A detailed database of historical case data taking GDPR requirements into account Advanced analytics applied to segment cases Actions tailored to each segment to improve collection efficiency 70

71 Roll-out strategy: centralised approach with local ownership Transforming the business for growth Dedicated core team Speedy piloting Global roll-out Group product ownership Cross-functional teams Pilot in high-potential countries Trial & error culture Strong leadership to drive change Local implementation and benefit realisation The undisputed leader in the CMS industry 71

72 Strategic priorities Driving operational excellence Cathrine Klouman, COO

73 Operational excellence Doing the right things and doing things right 1 Effectiveness Doing the right activity at the right time for the right customer High Operational excellence in our core Focus on doing the right things, but business they are costly to execute Poor processes/ results and no investments to fix it Operational excellence in our core business Investments are made that accelerate bad performance Low 2 Efficiency Doing the right activity in the most resource efficient way possible High The combination of superior effectiveness and efficiency provides best-in-class operational excellence 73

74 Four key operational levers maximising business value 1 Exploit shared services and scale opportunities 2 IT effectiveness and efficiency 3 Sourcing and procurement 4 Best practice and operational performance management Today Multi-location SSC in IT and operations, delivering cost reductions Ongoing transitions Dual IT infrastructure & Operations delivery models Fragmented IT portfolio Mainly local sourcing (excluding IT) Historically not part of the corporate agenda Variation in performance between countries Inadequate crossborder comparability Intrum 2020 Group-wide process harmonisation and centers of excellence providing expertise across all markets Stable, secure, and cost-efficient IT platform and provider of flexible solutions, enabling revenue growth Professional vendor and sourcing capabilities, securing best-in-class terms and access A 360 degree insight into operational performance, driving local competitive edge with group-wide benefits 74

75 Well-defined activity-based agenda and clear operational improvement targets Key initiatives Ambition Shared Service Center (SSC) Scale up current services in more countries Transition new areas with scale potential Further develop centers of excellence >10% of group employees in SSC 2 IT effectiveness and efficiency Execute on the IT integration program, including one infrastructure platform Build harmonisation of solutions and systems >20% reduction in IT costs (partially included in merger cost synergies) 3 Sourcing and procurement Utilise scale to merge and renegotiate contracts Establish partnerships with group-wide leverage >5% reduction in addressable spend (partially included in merger cost synergies) 4 Best practice and operational performance mgmt Drive best practice across CMS value chain Establish operational performance insight Measure through common KPIs, driving value Significant contribution to improved future collection performance Operational improvement targets to be achieved largely through current resources and cost structure 1 Estimated impact for every 1% in cost reduction 75

76 Collections Best practice: Operational improvements with significant financial impact Case study Bank Portfolio X in Country Y 1 Mid 15: Approximate time where performance improvements were initiated Early 16: Point in time where effects were starting to show YTD: Improvement to date 2 3 Total Collections R12 Original Forecast Simulated Collections Collection improvements A number of effectiveness and efficiency initiatives were run, resulting in: Speedier process at lower cost Right actions at the right time Average monthly decay reduced to ~0% in 18 months: Increase in gross collections by 11% Improvements expected to continue, moving into positive decay Improved competitiveness in sourcing investments 76

77 Best-in-class operational excellence In summary Drive group-wide efforts to identify and capitalise on opportunities for scale and efficiency Drive best practice sharing to improve business performance Ensure stable and secure operations in a fast-paced market 77

78 Strategic priorities Delivering merger benefits Harry Vranjes, Head of Project Management Office

79 Integration update Progress according to plan Key integration deliverables to date Detailed synergy implementation plans with clear ownership and tracking report Already taken out significant synergies Rebranding process well underway Joint IT infrastructure for Intrum Organisational model being implemented Key focus areas going forward IT applications / systems landscape harmonisation Office location consolidation (plans in place and process initiated in several countries) Efficiency gains realisation by migrating services to Intrum s shared service center Procurement optimisation Integration of operation centers post merger 79

80 Focus on securing synergy realisation Clear ownership, accountability and detailed tracking tool Clear integration ownership and governance structure Rigorous tracking and follow-up routines Dedicated Program Management Officer Weekly updates with the CEO 1 Progress tracking through detailed milestone plans Monthly updates with the Board of Directors Local project leaders responsible for initiative execution 2 Synergy realisation tracking per initiative 80

81 Targeted cost synergies have been identified in detail Savings realisation is well underway Sources of cost synergies (run rate) Timeline for cost synergy realisation and associated one-off costs Other 14% SEK 80m Group functions 22% SEK 125m Annualised (SEKm) FC Q4 '17 FC Q4 '18 FC Q4 '19 End of year annualised run rate cost synergies IT 25% SEK 145m Countries with overlapping operations 39% SEK 230m Expected cost synergies of SEK 580m Full-year Full-year Estimate (SEKm) Estimate (SEKm) One-off costs to realise synergies FC FY '18 '17 FC FY '18 FC FY '19 Total Note: Largest share of cost synergies and one-off costs to realise synergies are in EUR. Figures per above have been translated to SEK at a SEK/EUR rate of

82 Cost synergy implementation in one of our countries Case study Reducing office footprint Adapting the organisation Leveraging best practices 40% reduction in premises cost base by decreasing number of offices to half Significant reduction in staff costs from removing overlapping positions and increasing efficiency in operations in larger locations Cost reductions from increased scale in procurement and improved performance from best practice sharing Targeted lease contracts have been exited, currently planning office move Negotiated with landlord to increase office space in remaining premises Detailed to-be organisation developed Work council negotiations in progress, focus on facilitating a fair and timely process around employee reductions Initiated negotiation with service providers to achieve best possible procurement deals Aligned processes based on shared best practices Consolidate IT setup Cost savings on licenses, service desks, data lines, etc. by merging systems and optimising IT setup Decision on future collection systems and setup has been taken Migration will happen during

83 Upside from identified revenue synergies Larger data det Complementary products and services Geographical expansion with existing clients Greater access to data Improved collections and pricing of portfolios More effective collection strategies Adding / expanding certain of Intrum Justitia s services to previous Lindorff clients and vice versa Introduce clients to services in new countries Significant mid-term potential from revenue synergies Base for extracting revenue synergies at least SEK 10bn in annual CMS revenues and portfolio collections 83

84 Table of contents Welcome and introduction Market outlook Positioning and strategy Strategic priorities: Growing Portfolio Investments and Credit Management Services Strategic priorities: Leading the way in digitalisation, driving operational excellence and delivering merger benefits Strategic priorities: Regional perspectives Financial review Concluding remarks 84

85 Strategic priorities Regional perspectives Anette Willumsen, MD Northern Europe Per Christofferson, MD Central & Eastern Europe Marc Knothe, MD Western & Southern Europe Alejandro Zurbano, MD Spain

86 Northern Europe Overview Denmark, Estonia, Finland, Latvia, Lithuania, Norway, Sweden Northern Europe Key figures (excl revaluations, NRIs) SEKm Jan-Sep 17 Jan-Sep 16 Change% Revenues 2,894 2,756 +5% 32% of Group revenues 1 EBIT 1,102 1,085 +2% EBIT margin 38% 39% -1ppt Key trends and growth drivers Mature, sophisticated and competitive market with healthy dynamics Attractive return profile with solid legal frameworks and cost efficient collection Clients increasingly demanding cross-border partnerships Clients increasingly focusing on their core and outsourcing earlier Innovation and digital solutions are an important diversification factor Strong growth opportunities within the banking and consumer finance segment Market leader Top five Other 1 Based on January-September 2017 pro forma revenues. 86

87 Northern Europe Priorities for growth Denmark, Estonia, Finland, Latvia, Lithuania, Norway, Sweden Strategic priorities Status today Ambition Growing Portfolio Investments Strong position in mature and sophisticated market Preferred partner to banks Sustain and grow current high investment levels Prudent expansion to new asset classes 2 Growing CMS Leading position in all Nordic markets Solid growth levels despite flat organic market development The Nordic cross-border CMS provider Sustained organic growth through cross-border deals and BPOs 3 Digitalisation and data analytics Analytics key part of CMS offering and portfolio valuation Front runner with multiple client pilots on digital concepts Front runner in all markets within digital concepts New business through innovative solutions 4 Operational excellence Strong local operational insights and performance Sharing best practices across borders Analytical driven collection improving performance Increased profitability through focus on data & analytics 5 Merger synergies No overlapping businesses limited integration effort required Focus on finalising separation activities from RemCo units Reduced cost from group synergies and centralised functions Reduced cost from shared service centers in operations and IT 87

88 Central & Eastern Europe Overview Austria, Czech Republic, Germany, Greece, Hungary, Poland, Romania, Slovakia and Switzerland Central & Eastern Europe Key figures 27% (excl revaluations, NRIs) SEKm Jan-Sep 17 Jan-Sep 16 Change% of Group revenues 1 Revenues 2,389 1, % EBIT % EBIT margin 36% 35% +1ppt Key trends and growth drivers Regulatory trend positive for Intrum Strong focus on lowering banks NPL ratios in many markets driving supply Increased demand for more sophisticated services Consolidation trend in several Eastern markets, also in Germany Market leader Top five Other 1 Based on January-September 2017 pro forma revenues. 88

89 Central & Eastern Europe Priorities for growth Austria, Czech Republic, Germany, Greece, Hungary, Poland, Romania, Slovakia and Switzerland Strategic priorities Status today Ambition Growing Portfolio Investments #1 in many markets, not in all industries B2C secured in some markets #1 in more markets and industries B2C secured & SME/Corp significant share 2 Growing CMS Service enhancements initiatives ongoing Proactive M&A agenda Wider service offering Additional new markets entered 3 Digitalisation and data analytics Analytics capability accelerating Several digitalisation initiatives being client piloted Higher utilisation, more granular decision engines Stronger client integration, easier customer interaction 4 Operational excellence Strong focus on client and portfolio profitability Legal collection effectiveness and efficiency Further improved collection performance Increased process automation and cost efficiency 5 Merger synergies Cost synergies ongoing, best practice leverage Combined units have enlarged data universe Realised cost synergies, stronger business units Larger Portfolio Investments market share 89

90 Western & Southern Europe Overview Belgium, France, Ireland, Italy, the Netherlands, Portugal, United Kingdom Western & Southern Europe Key figures 19% (excl revaluations, NRIs) SEKm Jan-Sep 17 Jan-Sep 16 Change% of Group revenues 1 Revenues 1,713 1, % EBIT % EBIT margin 19% 20% -1ppt Key trends and growth drivers Good market momentum Healthy supply of (un)secured investment opportunities Growing number of BPO opportunities Good number of M&A opportunities as DCA field is consolidating Regulatory environment becoming stricter, clearly in our favor Clients increasingly focusing on best in class customer service and digital solutions Demand for support with international solutions increasing Market leader Top five Other 1 Based on January-September 2017 pro forma revenues. 90

91 Western & Southern Europe Priorities for growth Belgium, France, Ireland, Italy, the Netherlands, Portugal, United Kingdom Strategic priorities Status today Ambition Growing Portfolio Investments Strong position in unsecured in all markets Successfully managing secured portfolios in several markets Grow annual investments in (un)secured portfolios while maintaining attractive IRRs Further strengthen secured capabilities across all markets 2 Growing CMS Successfully attracting new CMS business and BPOs Strong Intrum platforms and solid positioning Capture BPO opportunities to fuel further growth Roll out best practice in customer service to other countries 3 Digitalisation and data analytics Dedicated analytics teams as key part of the process Implemented various digitalisation and analytics initiatives Broaden offering with digital products and processes Improve analytics to further sharpen pricing and increase operational efficiency & effectiveness 4 Operational excellence Continuous improvement of processes across countries Ongoing transfer of processes to Shared Service Centers Institutionalise best practice sharing across all countries Further leverage Shared Service Centers Substantially reduce (IT) cost by harmonising core systems 5 Merger synergies Well defined plan in place to lift integration synergies Several integration initiatives already delivered Integration cost synergies fully realised Fully integrate businesses (organisations, entities, sites, IT) Broaden product suite by using best of both companies 91

92 Spain Overview Spain Key figures 22% (excl revaluations, NRIs) SEKm Jan-Sep 17 Jan-Sep 16 Change% of Group revenues 2 Revenues 2,016 1, % EBIT % EBIT margin 31% 8% +23ppt Key trends and growth drivers Availability of large volumes of NPL and REO 3 The economic recovery is boosting the results of our portfolios Higher bank provisioning leading to larger NPL sale volumes Consolidation of banking sector and servicing activities Market leader Top five Other 1 Items affecting comparability (IAC) of SEK -285m in Q3 16. EBIT excluding IAC and NRIs for YTD (Jan-Sep) 2016 therefore amounted to SEK 393m. 2 Based on January-September 2017 pro forma revenues. 3 Real estate owned. 92

93 Spain Priorities for growth Strategic priorities Status today Ambition Growing Portfolio Investments Leading player in unsecured NPL market First portfolio acquired in the secured NPL market Maintain position in unsecured NPL market Increased contribution from SMEs in portfolio sales Top 5 player in the secured NPL REO market 2 Growing CMS / real estate Unique solution: secured and unsecured NPL, real estate property management, and assets commercialisation To leverage on our Follow the Asset Strategy 3 Digitalisation and data analytics Customer starting to use digital means. Consumer segmentation and collateral rating To consolidate digital multi-channel approach and analytics to improve the customer experience and performance 4 Operational excellence Completed one year of offshoring in SSC First administrative processes solved through robotics Increase use of SSC by 4x Increase use of robotics by 10x 5 Merger synergies Significant share of the synergy plan has been achieved Cost synergies target fully realised 93

94 Table of contents Welcome and introduction Market outlook Positioning and strategy Strategic priorities: Growing Portfolio Investments and Credit Management Services Strategic priorities: Leading the way in digitalisation, driving operational excellence and delivering merger benefits Strategic priorities: Regional perspectives Financial review Concluding remarks 94

95 Financial review Erik Forsberg, CFO

96 Strong momentum in group performance (pro forma) Revenue (SEKm) Credit Management Financial Services 7,475 3,379 4,097 9,118 4,100 5, % YoY growth in combined group revenues 9M M ,025 EBIT excl. NRIs (SEKm) 2, % YoY growth in combined group EBIT 9M M Excluding NRIs. 96

97 Solid growth across business lines CMS revenue growth YoY Growth External CMS Internal CMS +32% +26% +10% 2,153 2,292 2, ,648 1,743 1,628 On track to deliver solid internal and external CMS growth Q1'17 Q2'17 Q3'17 Rolling 12M portfolio investments (SEKm) 6,634 6,987 7,336 +5% growth in LTM investments since Q1 17 Q1'17 Q2'17 Q3'17 97

98 Track record of delivery on historical financial targets Pre-merger Intrum Justitia financial targets (May 2013) History of achieving financial targets EPS growth 10% p.a. ROI 15% p.a. Leverage x Dividend 50% pay-out ratio over time Pay-out ratio DPS 56% 52% 52% 45% Measured as net debt over RTM operating earnings before depreciation and amortisation. 98

99 Successful disposal of business units Divestment agreement in line with commitments made to the European Commission Divestment of Lindorff s businesses in Denmark, Estonia, Finland and Sweden as well as Intrum Justitia s business in Norway Use of sale proceeds Priorities 1 Portfolio investments Definitive agreement to sell to Lowell 2 Bolt-on acquisitions Enterprise value of 730m and expected cash proceeds of approximately 700m to be received by Intrum 3 Debt repayment EV/EBITDA multiple of approximately 13x achieved for the divested business Given Intrum s strong pipeline and opportunity set, management will prioritise reinvesting the sale proceeds in growth opportunities at attractive returns 99

100 Intrum 2020 Committed to deliver strong shareholder value Financial targets for Financial targets EPS growth Portfolio ROI Leverage (Net Debt/Cash EBITDA) 75% growth 2020 vs 2016 EPS of SEK 35 in % p.a. 2.5x 3.5x Key rationale for selection of target Central driver for shareholder value creation highly correlated with total shareholder returns Implied average annual EPS CAGR of 15% Key profit growth driver, applicable on an LTM basis 13% unlevered returns imply strong risk-adjusted shareholder value creation Reflects portfolio mix post combination and current market pricing Target range reflects Intrum s strong cash flow, low risk profile and strong investment outlook and pipeline Leverage may temporarily deviate from target as a result of strategic acquisitions or otherwise Dividend 50% pay-out ratio over time Strong commitment to shareholder friendly dividend policy Balanced between (i) ambition to deleverage and (ii) strong investment outlook Note: See appendix for detailed definitions. 100

101 Financial targets for Key drivers for achieving our EPS growth target Portfolio Investments Credit Management Services Common costs Book value to grow to at least SEK 30bn by 2020 Main growth driver will be new asset classes, supported by new market entries Positive organic growth Revenues from servicing of own portfolios to grow approximately in line with change in portfolio book value Acquisitions and BPOs to generate additional revenues of >SEK 2bn in 2020 Meaningful CMS service line margin increase from merger cost synergies, acquisitions and impact from initiatives in digitalisation, data analytics and operational excellence Cost increase from normal cost inflation and future acquisitions Significant impact from merger cost synergies Financial Net and Tax Interest cost levels largely fixed at around 3% Expected P&L tax rate of 20 25% 101

102 Financial targets for Key drivers for achieving our portfolio ROI target Backbook ROI Robust ongoing performance Continued benefits from cash collections beyond our initial forecast horizon Frontbook ROI Stabilising pricing environment with returns reflecting competitive but healthy markets, as well as lower risk and cost of capital Good ROI from new asset classes Collection performance Solid track record of overperformance Positive impact from digitalisation, data analytics as well as operational excellence programs 102

103 Financial targets for Key drivers for achieving our leverage target 1 Q3 17 PF Leverage (incl. RemCo proceeds) ~3.5x Indicative cash-flow profile based on adjusted Q3-17 LTM data (SEKbn) 2 Strong cash flow generation from balanced business model provides deleveraging optionality 7.9 (0.8) (0.5) (0.2) ~(4.0) ~0.3x impact on Net Debt/Cash EBITDA 2.3 Cash EBITDA ex. NRIs Interest expense (debt adjusted for RemCo proceeds) Tax expense Capex Portfolio and BPO replacement capex (based on approx. run-rate for amortisations in Q3-17) Free cash flow 3 Leverage target x Increase in Cash EBITDA outpacing increase in net debt 103

104 Dividend policy Dividend policy Intrum s Board of Directors intends to annually propose a dividend or its equivalent to shareholders that over time averages at least half of the net earnings for the year after tax. Decisions relating to dividend proposals will take into account estimates of future revenue growth, financial position, capital requirements and the business status in general. Strong commitment to shareholder friendly dividend policy Future dividends will be balanced between (i) ambition to deleverage and (ii) strong investment outlook 104

105 Additional financial information

106 New disclosures Text/Values in italics represent new disclosures to be provided on quarterly basis Intrum Pro-forma excluding RemCo units 2017 Q1 Q2 Q3 Total depreciation and amortisation (excl. PD Amortisation), SEKm of which, amortisation on client relationships from BPOs and acquisitions Group FX distribution Share of revenues in EUR 59% 58% 58% Estimated share of EBIT in EUR 60% 50% 54% PD book value, SEKm 18,325 18,748 19,053 of which Northern Europe 6,236 6,326 6,596 of which Central & Eastern Europe 6,105 6,366 6,212 of which Western & Southern Europe 3,990 3,950 4,211 of which Spain 1,995 2,105 2,

107 Accounting Amortisation policy and historic development Amortisation policy The amortisation amount for a portfolio is the difference in the asset value of the portfolio between the start and end of any given period. The asset value is calculated as the discounted net cash flow. The discount rate is fixed at the calculated unlevered net IRR when the portfolio was purchased Amortisation levels are fixed in advance for portfolios based on the forecast collection curves therefore actual under/ over performance of a portfolio does not affect future absolute amortisation amounts (unless the portfolio is revalued and the forecast collection curve changed) For a given portfolio, the cash-on-cash multiple equals the lifetime gross collections divided by lifetime amortisation. For example for gross collections of 200 and cash-on-cash multiple 2x = Amortisation of 100. In this example, the average amortisation rate is 50% (100/200) over the lifetime of the portfolio. If over time, the portfolio overperforms (with no revaluations), the absolute amount of amortisation will remain the same and the amortisation rate will go down driven by the increase in gross collections Depending on the shape of the collection curve which varies portfolio to portfolio, the amortisation rate can vary through the life of the portfolio with the average lifetime rate being in line with the above methodology Portfolio amortisation as a % of portfolio collections 1 47% 46% 44% 41% 40% 37% 38% H1'17 Based on the amortisation policy described, three factors have driven a gradual decline in the amortisation rate: 1. Overperformance (versus forecasts) levels have consistently increased hence Intrum collects more than the forecast that were used to set the amortisation for a given period 2. The portfolio mix has gradually altered to include a greater proportion of bank and finance portfolios that have longer (extended) cash collection curves which have consequently lower proportions of amortisation in the early years 3. The rapid increase in the PD book value has consistently increased the proportion of the portfolios at the early stages of their collection curves (where amortisations rates are typically below the long term average) 1 Figures represent Intrum Justitia. 107

108 Table of contents Welcome and introduction Market outlook Positioning and strategy Strategic priorities: Growing Portfolio Investments and Credit Management Services Strategic priorities: Leading the way in digitalisation, driving operational excellence and delivering merger benefits Strategic priorities: Regional perspectives Financial review Concluding remarks 108

109 Concluding remarks Mikael Ericson, CEO