Intrum AB (publ)

Good morning, everyone, from a sunny and seasonably warm Stockholm. As the operator said, this is Anders Rubio. I'm here with Johan Akerblom, our CFO. And thank you for joining us today to go through in a little bit more detail our results for Q2 2025. As usual, Johan and I will make comments based on the presentation, and then we will open it up for Q&A, which some have already lined up their questions. If we can turn to page three, please. Before I get into the specifics on the performance in the quarter that's outlined on this page, it is important, particularly for those of you who follow the company over the longer term, that we recognize that this quarter is the best ebit performance we've had since before we repositioned the company in 23 and actually since 22. it's important to note that back then our business had a very different configuration we then were primarily uh dependent upon our investing business and in fact our portfolio back then was approximately 40 billion today it's 23 billion So what we have over the last two to three years is really our repositioning is bearing fruit. Servicing has taken up the mantle and performed extremely strongly and replaced earnings from what was a business dependent upon borrowing and investing in assets. And we have reconfigured our investing as well to not only include our own investing, but also partnership capital. And so on all fronts, I think our repositioning is starting to really bear fruit. And this is a very important quarter demonstrating that. The other thing that happened, and I would not be I'd be remiss if I didn't mention it before we got into the details of the presentation. And many of you saw it is last night. I'm very happy to report that we closed the recapitalization. know looking back a year ago as to where we were from a delivery perspective where we were from a bond price perspective where we were from a shareholder price as well as uh ownership perspective we are in a much much better place uh today and it's incredibly personally gratifying and i think it's thanks to uh everyone at the company from the board to the management team to all the employees all our external stakeholders and the support you all demonstrated that we are in this much better place today than we were as recently as 12 to 15 months ago so let's jump into the quarter on page three overall numbers quite strong uh ebit increased nearly 30 percent driven by strong servicing, but also with improvement in EBIT across both businesses. More importantly, that EBIT is falling to the bottom line. $324 million SEC in the quarter is three times higher than what we produced in the first quarter of $100 million SEC. We expect that more and more of our EBIT improvement will fall to the bottom line and that net income will accelerate going forward. Our leverage ratio is structurally higher. That was expected as we flagged to the market, and many of the analysts have put into their reports. What we see now going forward is now that the comparability with disposed assets is out of the numbers, and we've closed our restructuring. We'll reflect that in next quarter's numbers. What you'll see is that 4.8 continuing to delever going forward as we dedicate our cash flow to two activities, investing and deleveraging. Going through the two businesses, servicing on the bottom left, income decreased 7%. We do have a picture on income overall that decreased 9% across the company. About 4% of that decrease is foreign exchange. Of the remaining 5% of the increase in aggregate or on a consolidated basis, roughly half come from servicing, half comes from investing. and really on the servicing side it comes down to a few markets in southern europe which have very large asset bases and that collect more than have new inflows so by definition their assets are declining until that stabilizes we manage them for cash flow of the remaining businesses i'm happy to report that we are growing but growing slightly and we'd like to improve that growth and i'll get into that a little bit later but we are growing in almost all of our other markets EBIT increased almost 50%, really driven by margin. We're at 24% compared to 17% a year ago. And I've been asked a number of times by both analysts and reporters, well, now that you're nearly 25%, are you going to be content and take your foot off the pedal? Absolutely not. We can deliver better results for our clients with a higher margin for our profitability and for our shareholders going forward. I'll get into a little bit more of that as we go through the presentation. On investing, we had a great quarter in collections, 106% of active forecast, 112% against our original forecast. Income was down 12% because our assets were down 12%, but our EBIT was actually up in the quarter. And our new investments were taking a very prudent approach, both because we were in the recapitalization, also because we don't see in some markets the risk or the return relative to the risk. We have been prudent. and discipline in our deployment. We deployed less than our target and less than last year, but at much higher IRRs. I think as you see us going forward and we continue to develop our partnership with servers in particular, you will see us invest at higher volumes and slightly more moderated IRRs going forward. And then the top right on strategic initiatives, I mentioned the recapitalization. I'll talk about it a little bit more, and then Johan will go through some details in his section. But this is an incredible milestone. We are turning the page on what was an important development, but it's one that now positions us to deliver on our business plan. We have a capital structure that's aligned with our business plan and that allows us to deliver on our business plan. We are, and I'll get into a little bit of this, engaging in active measures to improve our servicing top line in those markets, in all markets, but in particularly those markets which have more flow business and are not big asset business. And we continue to roll out technology. It's going to be a very important next leg in the improvement of our delivery, as well as the improvement of our margins. And we continue to roll out Ophelos, and I'll get into more details on that, but we dramatically increased the number of cases that we migrated to that platform from 30 000 in april to more than 200 000 in june we expect that migration pace to continue into the year end and as it as it covers a greater and greater level of our activity to then start delivering uh real profitability impact the next page please just to give highlights um you know overall top left Servicing margin, dramatic increase. We expect this to continue. And that's both on a quarter on quarter and an RTM basis. Great collections. You know, the vast majority of our P&L from investing comes from collecting in our back book. And then it's supplemented slightly by new investments. collecting at 106 is a great performance and we could only do that by virtue of the fact that we're combining our industrial collections platform with an investing platform if we were separate we would not have this strong performance and the strong p l performance and despite the fact that our as i said earlier but it's worth emphasizing again despite the fact that our book is down 12 and our income is down 12 our ebit is up uh in that business of investing overall our cost income ratio is something we're very focused on it is much lower johan will show later on our absolute cost base coming down we expect that trend to continue and are taking measures to make sure we continue to be more efficient and very important milestone recapitalization so it's been a very busy last few months and it's a very important turning point for our development and our journey next page Taking a bit of a look at the market, the market continues to be supportive of demand for our services. And as CEO of this company, I speak to all the top banks. I speak to all our top industrial clients. Every single one says that their customers are under stress and that they need us more and more. That's not surprising given the environment. Consumer credit remains elevated. The cost of that consumer credit remains elevated. Consumer confidence is on a negative trend. and there's still inflation in some markets. And then when you look at the banks alone, and the banks are not our only clients because we have investors who own MPLs and we have industrial clients who need our services, but looking at the banks as an indication, despite the fact that everyone points to very low non-performing loan ratios, you're still talking about very large aggregate figures, 400 billion in stage three loans right now. So the environment continues to be supportive for our business and for our services, That being said, I think we do need to recognize that our journey over the last year and having gone through the recapitalization inevitably has probably muted our ability to expand our business. And I think with closing the recapitalization, we're turning the page on that. We should hopefully see some positive effects going forward. On servicing on page six, please. you see the trend uh dating back a few years our margin figures continue to improve The second quarter is a seasonally strong quarter, and we hit 24% in that margin. We have 23% on a trailing 12-month basis EBIT margin. Very strong performance. And it's broad-based. You see here the improvements in margins across regions, 11 percentage points in the north, 7 percentage points in the middle, southern Europe with 6 percentage point increase in margin. I think what that tells you is that we have a more diversified, stronger, higher quality of servicing earnings than we've ever had. When you do see the revenue picture here on organic growth basis, you see the drag in Southern Europe, which is principally driven by Spain, Greece, and to a lesser degree, the other Southern European countries. And then on the other ones, you see us basically flat on an RTM basis. In the quarter, we grew slightly. And that's where we want to really improve while stabilizing Southern Europe and managing that for cash flow until it stabilizes and then managing it for growth. So the picture in servicing is quite strong and quite broad-based. In terms of efforts on the next page, page seven, in terms of efforts to improve our top line development, it is something of prime focus for us. We are doing a number of things. We're strengthening our commercial teams. We are significantly expanding our sales force in all our markets. we want to do more for our existing clients we want to do new things for our existing clients we want to find new clients and we do that with more people on the ground delivering what we believe to be the best product in the marketplace we do have targeted growth initiatives in addition to just purely uh you know feet on the ground on sales we have this in our investing business with new asset classes we have it with new partners we have it also in our servicing business doing other things that can lead to higher conversion ratio on the same level of assets or greater New product sales are important. Our delivery is being transformed. It's going to be much more technological going forward. Technology delivery is fundamental to providing a solution to our clients. And as a result, we're not just adding salespeople, we're also adding product salespeople who have a more technical ability to liaise with our clients. And make sure that not just the sales process, but also the onboarding process, which typically takes three to six months. Hopefully with technology, we can shorten that and we can deliver more sooner for our clients. That means we have to be much more product oriented, as you've heard me say before. And we are doing that with not just the delivery of our product, but also the sales of our product. then the capital partnership it's a very important driver not just of our investing business in the first half of the year it's been a very important driver of our servicing business the performance on the asset on the deals we've done with service has been very good and that has then consequently led to an important contribution to what you already see here in terms of very good servicing numbers and as that capital partnership improves and scales up we're going to see that servicing benefit But we're also going to see investment management fees, which today are modest, but will become more meaningful going forward. And we're going to see our own investment, our own investment returns scale up. On the next page, on page eight, we look at a familiar graph which looks at our history. I mean, our business, our investing business is incredibly strong over the long term and in the latest quarter. Over the long term, we've been at 105 of active or current forecast, 107 of original forecast. During this past quarter, we're at 106 of current forecast and 112 of original forecast. And what this tells you is that the fact that we're combining an industrial capability that deals with $200 billion of assets on behalf of clients in 20 markets, 75,000 clients, and we're putting an investing business alongside it means we can drive growth. positive returns. We can look at returns on granular assets across all these markets in large scale with a high degree of certainty on our forecast, and therefore we can put money behind it, our own and our partners money behind it. That is, in my opinion, and I've been in this business a long time, even before I was at Interim, I've always said that long term, Those players, like interim, who have an industrial capability and capital alongside of their own and partnership capital, are going to, over the long term, do much better than purely opportunistic capital sources, as an example. Page nine is one of my favorite slides. As you've heard me say already before, we continue to deliver for society. We help four and a half million people in the last 12 months become debt free. These are individuals who are excluded from our financial system and can reintegrate as a result of dealing with these issues. We do so, and we deal with people at very delicate times, yet they give us a very good customer satisfaction rating. And it's important to point out that that customer satisfaction rating of 4.0 out of 5 is overall. When we employ technology, interestingly enough, we collect more and have lower costs, but we also have a higher customer satisfaction score. So we expect that as technology becomes a more important part of our interaction with customers to improve. And we deliver in large scale. We collected $121 billion in the last 12 months, of which eight is on our own portfolios. The remaining $113 approximately is for our clients. So we continue to deliver for clients while giving customers a good experience and helping them get out of what is a very difficult situation. The last page before I hand it over to Johan is page 10. It's about our technological rollout. During the quarter, we rolled out Ofelos to two additional markets, Portugal and Italy. Early results in both of them, in particular Portugal, are very positive. Higher collections, lower cost, higher customer satisfaction. um we will we are in eight markets now and by the end of the year we'll be in 11 or 12 markets that will cover the you know the majority majority being 60 plus percent of our revenue so what you will see is that ofellos will cover a big part of our industrial activity by the end of the year but to fully capture that value we need to migrate cases to it and we've made a big step during the last quarter in april we migrated 30 000 cases to the platform in june we migrated more than 200 000 cases that migration pace will continue to accelerate into the end of the year such that we have an increasing percentage of our total caseload that's on that platform and as that happens through the end of the year what we'll see going into next year is that those anecdotal impacts in specific markets of higher collections and lower cost are going to be bigger in scale and across more markets and produce a tangible profit impact for us going into next year and beyond genesis cloud is also a very important way that we're transforming our contact centers it's in 13 markets it's a state-of-the-art process that allows and gives our call center or contact center employees greater tools to be to deal with customers in a more efficient and effective basis and we continue to roll that out alongside our fellows and continue to make our collections process both more effective and efficient with that i'll turn it over for the financials to johan

okay thank you andres so um if we move to page 12 um one of the key things that has it hasn't happened in the quarter but it happened yesterday is that we closed the transaction the recapitalization i think with that we've been asked many many times what's the cost of this process so i think here finally we are now showing uh the numbers these are not final because they're still a bit of moving parts, fairly minor, I would say. But all of this will go into our Q3 results. But just to give you sort of the high level, there's a debt derecognition. This is related to the haircut of 10%. That's roughly three and a half billion SEK. Again, these are all affected by FX fluctuations. Then we have a fair value gain debt recognition. This is related to the issuance of the new bonds. this one will be finalized once we have the prices on where the new bonds trade that's why it's a tbd then we have the cost for the equity issued which is 10 of the shares that is based on yesterday's market cap and then finally we have the transaction cost which is 2.1 billion it's a big number but i think we need to remember that there's basically three components in this The first one is that we have paid fees to the banks for basically supporting us with the reconstruction. We have then paid our advisors. And then finally, we have paid all the advisors to the creditors. So those are the three components. Net-net, this will all lead to a gain in the P&L that you will see when we publish the Q3 numbers. And I think it's also important here to mention that, I mean, first of all, now the new bonds have been exchanged uh they are uh should be uh tradable as of today the equity has been issued should be tradable as of today uh there is also a new rating that has just been released by standard and poor on the company and on the new money notes and on the exchange notes uh the corporate uh israel is rated at triple c plus the exchanges are they are rated at triple c plus and the new money nodes are rated b standard poor is sorry standard poor has released moody's are in progress of releasing ratings um and um i mean one thing that is just anecdotal i mean when we started this transaction which was probably know you can debate when it started but let's assume it's sort of end of q1 beginning of q2 last year i think our market cap was fundamentally lower than it is today um and if we look at sort of how all stakeholders are coming out i think it's a very balanced transaction and as we said from the beginning it's a proactive transaction has been very amicable and and now we finally are out and we can move on and we turn the chapter we turn into the next chapter uh moving on with um the financials for this quarter uh i think the way we phrase this it's another solid quarter um a few things that i think we like to highlight i mean cost income ratio is improving even though the income has decreased mainly driven by the fx So cost income has improved not only very via the last year, it has also improved via the last quarter. I think the EBIT increase is significant. And as Anders mentioned, this is the highest EBIT since, highest Q2 EBIT since 2022. And I think here again, the investment book was much, much higher and the company has fundamentally changed since then. And I mean, net income of 324 million in this quarter, that's three times what we had in Q1. It's also I think, again, a testament to that we're really focusing now on delivering profit. And the leverage ratio, this is just an effect of the discontinued business rolling out. And that's the increase. Otherwise, there's basically no change on the leverage ratio. But again, this is one of the key focus areas we will have and we've had going forward that the leverage ratio needs to continue to, it needs to start going down on a like for like basis. Moving to the next page, page 14. On the cost side, I mean, the trend continues. We're now on a Q2 run rate of 12 billion if we just extrapolate Q2 isolated. The rolling 12 months is at 12.9. FDs are down 14%. We're now at 8,855. And yeah, there's no sort of change in focus. Cost will be one of the key levers going forward. And we will continue to find new measures and continue with the existing measures to be more efficient and still deliver what our clients and our customers needs. On page 15, going into servicing, I think again, the EBIT margin, not only the adjusted EBIT margin, but also the EBIT margin is increasing and improving. When do we get to sort of a sustainable level on this? I think 25 is our target. I think we're getting very close to achieving that. Then the question is how far can we go? I think this comes back to our operational efficiency and how well we can run this and how automated we can make our platforms. So I think that's something we will explore going forward. Other than that, I think if you look at the external income, there's a decrease of 7%. I mean, a lot of that is actually on the back of FX. And what's interesting is I look at, we have basically main, some growth issues in three markets. If we just remove those markets, we are having growth, external growth in the rest of the markets combined. Let's move to investing. I think a lot of has already been said. I think again, highlighting that the income moves along with how the portfolio moves. The EBIT is, however, up on a year-on-year basis. We've seen good progress on our JV side. In particular, it's the front book and it's orange that has been delivering better than expected. Whereas the back book, the old JVs are delivering as expected, but not overperforming. And I think coming back to the investments, I mean, we have the discipline. But I also must say we have a promising pipeline. So we expect that the Q3 number will be higher than what we had in Q2. On the net depth on page 17, I mean, it's fairly flattish. There's a small decrease. I think on the underwriting side, we have slightly higher, again, displaying the discipline we have in our underwriting. And on the cost of funding, I mean, this is now increasing as per today. And we expect that the new cost of funds will be roughly 7%, depending, of course, where the reference rate sits. Some of it is still floating. And we don't expect that we will sort of make any major adjustments on our IRR levels for the new investments. We want to keep discipline. We want to invest high. but we also are carefully thinking about how we can increase the volumes. Page 18, I think we've shown this before. Just a reminder, this is the new maturity profile. We basically have pushed to depth B27 and beyond. and we have fairly equal maturities across the buckets, slightly higher in 27, 28. Then it comes down. The new money nodes is still there. We have some flexibility. It depends on how we see the bonds trading and what we can use them, make the best use out of them for. Cash and cash equivalents in the quarters stays at 3 billion flat versus Q1. And yeah, the sensitivity is pretty much the same. And then moving to the last page, which is the financial targets. So I think we have and will continue to emphasize we need to find new ways, better ways to address the income growth. That's definitely on the agenda. We are very confident around the 25% target on the margin. The question is how, if we can go beyond and what that would be. On the investing side, I mean, we rather see the book increase now than decrease further, but we also discipline in our investing. And we have said that 2 billion is the target to invest every year. That's not enough to do replenishing capital, but we do to get the leverage while we invest with our capital partner. And then lastly, in the leverage ratio,

focus there's a big focus on this this is where we have to see the leveraging going forward quarter by quarter that's it and then handing over to andres for final closing excellent thank you johan and thank you everyone uh on page 21 just some recap um starting with the recapitization recapitization completed The highest second quarter EBIT since 22, really showing that our repositioning is bearing fruit. We continue to accelerate technology to deliver more and more efficiently at a better margin for our clients. And as a result of that positive servicing margin development for the fifth quarter in a row, we expect that to continue. and investing collections continue to be our forecast, which all means we will continue to deliver not just for our clients, but also for our shareholders and for our creditors. So with that, we can wrap up the presentation and immediately go to the Q&A operator.