interim report april - june 2014 - intrum.com · interim report april - june 2014 july 17th 2014...
TRANSCRIPT
Interim report
April - June 2014
July 17th 2014
Lars Wollung, CEO
Erik Forsberg, CFO
© Intrum Justitia AB 2014. All rights reserved.
Quarterly highlights
2(25)
MSEK investments in purchased debt 537
EBIT growth (adjusted for currency and debt
portfolio revaluations) 14%
Return on purchased debt 21%
Growth in operating cash flow 8%
RTM EPS growth 28%
© Intrum Justitia AB 2014. All rights reserved.
Financial summary
3(25)
* EBITDA = operating result before interest, taxes, depreciation on tangible and
intangible fixed assets as well as amortization and revaluation of purchased debt
Apr-Jun Apr-Jun Change
%
Jan-Jun Jan-Jun Change
% 2014 2013 2014 2013
Revenues, MSEK: 1 301 1 152 13 2 505 2 200 14
EBIT, MSEK: 372 301 24 655 537 22
EBIT margin, %: 29 26 n/a 26 24 n/a
EPS growth, %: 26 45 n/a 24 54 n/a
Cash flow from operations, MSEK: 570 530 8 1 100 994 11
Investments in purchased debt, MSEK: 537 597 -10 1 225 1 517 -19
Return on purchased debt, % 21 22 n/a 20 21 n/a
Net debt to RTM EBITDA*: 1.90 1.76 1.90 1.76
© Intrum Justitia AB 2014. All rights reserved.
Revenues and operating margin, rolling 12 months
4(25)
10
15
20
25
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Revenues
EBIT
EBIT margin
%
Revenues: SEK 4 871 M
Operating margin: 27%
EBIT and margin excludes UK costs for goodwill write down in 2008 and downsizing
costs in 2009, as well as non-recurring costs in Spain and Germany in 2012.
SEK M
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
© Intrum Justitia AB 2014. All rights reserved.
Regional development
Northern Europe 50 percent of total revenues
Market leader
Top 5
Market position
Revenues and earnings for the quarter exclude a net revaluation of purchased
portfolios of SEK 12 M in Q2 2014 (-3 in Q2 2013).
• Growth in EBIT excluding revaluations due to improved CMS growth and cost efficiency improvements
• Issues related to the Polish legal system improving during the second quarter
• Previously separate unit for financing of receivables before or at due date integrated mainly into the Northern Europe organization
Q2 Highlights
5(25)
Apr-Jun Apr-Jun Change Fx Adj
Excl. PD Revaluations 2014 2013 % %
Revenues, SEKm 636 642 -1% -4%
EBIT, SEKm 200 189 6% 3%
EBIT margin % 31% 29% 2 ppt
Jan-Jun Jan-Jun Change Fx Adj
Excl. PD Revaluations 2014 2013 % %
Revenues, SEKm 1226 1223 0% -2%
EBIT, SEKm 344 330 4% 2%
EBIT margin % 28% 27% 1 ppt
© Intrum Justitia AB 2014. All rights reserved.
Market position
• Growth in PD investments during prior periods drives improved EBIT growth
• Continued year-on-year increase in costs for legal collections
• Integration of major PD unit acquired in Q1-14 in Czech Republic progressing according to plan
Market leader
Top 5
Other
Revenues and earnings for the quarter exclude a net revaluation of purchased
portfolios of SEK 8 M in Q2 2014 (7 in Q2 2013).
Q2 Highlights
6(25)
Apr-Jun Apr-Jun Change Fx Adj
Excl. PD Revaluations 2014 2013 % %
Revenues, SEKm 337 248 36% 30%
EBIT, SEKm 87 56 55% 49%
EBIT margin % 26% 23% 3 ppt
Jan-Jun Jan-Jun Change Fx Adj
Excl. PD Revaluations 2014 2013 % %
Revenues, SEKm 674 500 35% 30%
EBIT, SEKm 182 124 47% 41%
EBIT margin % 27% 25% 2 ppt
Regional development
Central Europe 26 percent of total revenues
© Intrum Justitia AB 2014. All rights reserved.
Regional development
Western Europe 24 percent of total revenues
Market position
Market leader
Top 5
Other
• Good year-on-year EBIT development, mainly from improved CMS earnings
• French acquisition from 2013 progressing according to plan and contributing to year-on-year revenue and EBIT growth
• Good increase in PD investments for several markets in the region
Q2 Highlights
Revenues and earnings for the quarter exclude a net revaluation of purchased
portfolios of SEK 3 M in Q2 2014 (2 in Q2 2013).
7(25)
Apr-Jun Apr-Jun Change Fx Adj
Excl. PD Revaluations 2014 2013 % %
Revenues, SEKm 305 256 19% 13%
EBIT, SEKm 62 50 24% 17%
EBIT margin % 20% 20% 0 ppt
Jan-Jun Jan-Jun Change Fx Adj
Excl. PD Revaluations 2014 2013 % %
Revenues, SEKm 592 475 25% 19%
EBIT, SEKm 116 81 43% 36%
EBIT margin % 20% 17% 3 ppt
© Intrum Justitia AB 2014. All rights reserved.
Credit Management Services 64 percent of total revenues
Q2 Highlights
• Revenue growth mainly from acquired units and increased volumes from servicing of own PD portfolios
• Service line margins improving during the quarter with YTD margins now approximately in line with last year
• Continued focus on improving collection performance and growing revenues from external clients
8(25)
Apr-Jun Apr-Jun Change Fx Adj
Reported numbers 2014 2013 % %
Revenues, SEKm 957 871 10% 6%
Service line earnings, SEKm 235 207 14% 10%
Service line earnings margin % 25% 24% 1 ppt
Jan-Jun Jan-Jun Change Fx Adj
Reported numbers 2014 2013 % %
Revenues, SEKm 1865 1685 11% 7%
Service line earnings, SEKm 413 387 7% 3%
Service line earnings margin % 22% 23% -1 ppt
© Intrum Justitia AB 2014. All rights reserved.
Financial Services 36 percent of total revenues
Revaluations amounted to SEK 23 M in Q2 2014 (SEK 6 M in Q2 2013) .
• Revenue and earnings growth due to uptake in PD investments in recent years
• Good collection performance and positive revaluations confirm underlying strength of the PD Book
• PD investments during the 1H of 2014 down 19% YoY, but compared to a very strong 1H of 2013
Q2 Highlights
9(25)
Apr-Jun Apr-Jun Change Fx Adj
Reported numbers 2014 2013 % %
Revenues, SEKm 554 458 21% 16%
Service line earnings, SEKm 312 254 23% 18%
Service line earnings margin % 56% 55% 1 ppt
Investments in PD, SEKm 537 597 -10%
ROI 21% 22% -1 ppt
Jan-Jun Jan-Jun Change Fx Adj
Reported numbers 2014 2013 % %
Revenues, SEKm 1039 846 23% 19%
Service line earnings, SEKm 576 461 25% 21%
Service line earnings margin % 55% 54% 1 ppt
Investments in PD, SEKm 1 225 1 517 -19%
ROI 20% 21% -1 ppt
© Intrum Justitia AB 2014. All rights reserved.
PD ROI – rolling 12 months
10(25)
0%
5%
10%
15%
20%
0400800
1 2001 6002 0002 4002 8003 2003 6004 0004 4004 8005 2005 6006 000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
SEK M
PD carrying value:
SEK 6 030 M
ROI RTM, excl. reval: 20%
PD carrying value ROI RTM
2008 2009 2010 2011
ROI RTM excl. reval
2012 2013 2014
© Intrum Justitia AB 2014. All rights reserved.
258 201 267
822 870 996 872 871 1050
1804
295
920 688
667
597
537 299
692
753
266
0
500
1 000
1 500
2 000
2 500
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
266
Purchased debt, investments 2002–2014
11(25)
SEK M
2 014
Q1
Q2
Q3
Q4
FY
2 475
1 225
© Intrum Justitia AB 2014. All rights reserved.
Purchased debt - revaluations
12(25)
Q2 YTD Q2 YTD
PD revaluations, SEK m 2014 2014 2013 2013
Northern Europe 12 0 -3 -6
Central Europe 8 10 7 5
Western Europe 3 3 2 3
Total 23 13 6 2
© Intrum Justitia AB 2014. All rights reserved.
Balance sheet – Highlights
13(25) * EBITDA = operating result before interest, taxes, depreciation on
material and immaterial assets as well as amortization and revaluation
of purchased debt
30 Jun 30 Jun Dev
SEK m 2014 2013 %
Total assets 10 969 9 605 14
Goodwill 2 608 2 420 8
Total financial fixed assets 6 122 5 044 21
- whereof purchased debt 6 030 4 970 21
Shareholders' equity 2 982 2 945 1
Net debt/ R12 EBITDA* 1.90 1.76
© Intrum Justitia AB 2014. All rights reserved.
Cash flow statement
14(25)
Apr-Jun Apr-Jun Dev Jan-Jun Jan-Jun Dev
SEK m 2014 2013 % 2014 2013 %
Operating earnings (EBIT) 372 301 24 655 537 22
Depreciation 40 40 0 78 79 -1
Amortization and revaluation of purchased debt 337 321 5 697 639 9
Income tax paid -56 -28 100 -101 -65 55
Changes in factoring receivables -24 -83 n/a -25 -91 n/a
Other changes in working capital -63 11 -673 -104 -29 259
Financial net & other non-cash items -36 -32 13 -100 -76 32
Cash flow from operating activities 570 530 8 1 100 994 11
Purchases of tangible and intangible fixed assets
(CAPEX) -32 -31 3 -60 -59 2
Purchases of debt -537 -597 -10 -1225 -1517 -19
Other -7 -18 n/a 17 -22 n/a
Cash flow from investing activities -576 -646 -11 -1 268 -1 598 -21
© Intrum Justitia AB 2014. All rights reserved.
Funding base
• Syndicated bank loan facility (up to SEK 5bn)
‒ About SEK 2 bn utilized per June 2014
‒ Loan facility allows a total financing of up to SEK 10 bn
• Corporate bonds (up to SEK 5 bn under MTN program)
‒ SEK 1 bn, 5Y note, issued in March 2012 (margin of 3,10%)
‒ SEK 1 bn, 5Y note, issued in June 2013 (margin of 2,22%)
‒ SEK 1 bn, 5Y note, issued in May 2014 (margin of 1,60%)
• Commercial Paper (up to SEK 1,5bn)
‒ SEK 0,6 bn outstanding per June 2014
• Co-Investors – for large portfolios of receivables
‒ Past investors have included e.g. Goldman Sachs
‒ Typically participate by 50-75% of total investment
15(25)
0
500
1000
1500
2000
2500
3000
3500
2014 2015 2016 2017 2018 2019
Debt Maturity Schedule (SEK million)
Commercial Paper Bank Loan Bonds
© Intrum Justitia AB 2014. All rights reserved.
Financial targets
16(25)
Financial targets Q2 14 Q2 14 RTM FY 2013
1. EPS growth to exceed 10% per year 26% 28% 41%
2. Return on PD investments to exceed 15% per year 21% 20% 21%
3. Net Debt/EBITDA should be between 2.0 and 3.0 1.90 1.90 1.61
© Intrum Justitia AB 2014. All rights reserved.
17(25)
Q&A
© Intrum Justitia AB 2014. All rights reserved.
18(25)
Appendix
© Intrum Justitia AB 2014. All rights reserved.
Market leader
One of top five
Intrum Justitia's market position
Intrum Justitia in brief
19(25)
Europe’s leading provider of credit
management services, with
operations in 20 countries
Revenue 2013: SEK 4.6 billion
Avrg nr of employees in Q2 2014: 3 815
Listed on NASDAQ OMX, Stockholm,
Large-Cap
Market capitalization, June 30, 2014: SEK
15.3 billion
Other
© Intrum Justitia AB 2014. All rights reserved.
Indicative Financial illustration
20(25)
Invested amount: 100 SEK M
Gross collection 2.05 x invested amount
(SEK M) Y1 Y2 Y3 Y4 Y5 Y6-Y10 Y11-Y15 Y1-Y15
Cash-flow distribution 29% 18% 12% 9% 8% 20% 4% 100%
Gross collection 60 38 25 19 15 40 8 205
Amortisation * -31 -17 -11 -9 -7 -20 -5 -100
Amortisation rate (Amortisation/Gross Collection) 52% 44% 45% 46% 48% 50% 59% 49%
Revenues (Gross Collection less Amortisation) 28 21 14 10 8 20 3 105
Costs ** (mainly Collection Costs) -14 -11 -6 -4 -3 -9 -2 -48
Service Line Profit 15 10 8 6 5 11 2 57
Service Line Margin 52% 49% 57% 59% 60% 57% 52% 54%
Book Value, Average Balance 84 60 47 37 29 15 2
RoI, defined as Service Line Profit/ (Average Book Value) 18% 17% 17% 17% 17% 77% 75%
*) The PD amortization equals the change in carrying value in each year. The change in carrying value in turn is a function of the change of the estimated present value of
future collections of the portfolio, estimated as the cash-flow from Gross Collections less Collection Costs, discounted at an estimated Effective Interest Rate (IRR)
**) Collection Costs are mainly commission charged from Intrum's CMS service line at arms-length prices
© Intrum Justitia AB 2014. All rights reserved.
0 250 500 750
1 0001 2501 5001 7502 0002 2502 5002 7503 0003 2503 5003 7504 0004 2504 5004 7505 0005 2505 5005 7506 0006 250
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Purchased debt, carrying value
21(25)
SEK M
© Intrum Justitia AB 2014. All rights reserved.
Gross Collections vs. Active Forecast - R12
22(25)
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214
© Intrum Justitia AB 2014. All rights reserved.
One-offs vs Forward Flow, as a % of PD Investments
23(25)
© Intrum Justitia AB 2014. All rights reserved.
A broad indication going forward
Carrying value 30 Jun 2014: SEK 6,030 M
+21% y-o-y (SEK 4,970 M)
24(25)
Gross collection: Carrying value x 2.1
Cash flow distribution 30 Jun
of Gross collection 2014 2013
Y1 22% 23%
Y2 17% 17%
Y3 13% 14%
Y4 11% 11%
Y5 9% 9%
Y6 7% 7%
Y7 6% 6%
Y8 5% 4%
Y9 4% 3%