Intrum AB (publ)

one major shareholder that has gone from plus 30% to maybe 10% or 11%. And then we don't really have much institutional ownership. So, of course, we would welcome a long-term investor or a couple of long-term investors that shares our view on what we can create in the future.

When we think about it, when you say, okay, this one has cash flow two or three years out, your funding costs, I guess, on the margin at least today is high single digits. I mean, should we interpret that as you would be maybe not very willing, but at least willing to consider selling things at a book loss? Because it would allow you to deleverage faster. I mean, you haven't sold any meaningful loss in the past. I just wondered if there's a change in how you view these things now.

I mean, I think we are going to be very sensitive to selling anything below book value. I think the recent transaction just shows what kind of appetite we have. So, I mean, I think there's a strong hurdle before we actually go ahead and do something opportunistic, and that is we can clearly show there's a value for Indrum and its shareholders, and it helps us on the deleveraging. And I think that's where we're going to leave it. But there are... There's a lot of people out there who looks into this space and what might be less value to us might be much more value to them. And I think that's the kind of the type of combinations we're trying to find.

Thank you very much.

Thank you. Okay, and I'm going to transform myself from a CFO to a moderator because we have a few questions coming in in writing format as well. I'll ask you one. So the first one is, what are your major considerations when assessing the advantages and disadvantages between owning 100% and minority stake in an SDR?

I mean, that's a very interesting question because owning a majority of an SDR comes with a lot of benefits. I mean, first of all, we would control the investment decisions. We would control the definitions of how much capital should be spent, how much dividends should be paid out. Of course, we would deregulate it, but in line with all the regulatory requirements, we would still be the driver of that agenda. The downside of owning an SDR is that it creates regulatory complexity. It puts another pressure on how we run the group. And there's also a question around consolidation. So if we flip that into minority, being a minority, we need to have a very high comfort that whoever we own this with and whatever shareholder agreement we have, we have a lot of input when it comes to CapEx and dividend distribution. And also we are probably then maybe an outsource provider of some underwriting advice. So I think those are the things. And then also having a minority stake, I think our partner needs to be someone where we feel that there's a natural flow. Either there's a natural flow of business that can go into the SDR or it's an investor that needs our support to basically build their book in this area. I don't know if you want to add something.

No, that's very good. I'll ask myself a question. So we have a question here on what the leverage ratio would have been had FX not moved in the quarter. And there's the same person who's asking a question about what targets we have in terms of servicing revenue. On the leverage ratio, generally, if the krona weakens, we benefit because income is greater than cost. So if you have a long period of weakening krona, we make more money, and that has a positive impact on leverage. In a single quarter, that could differ. It depends on what the FX ended that quarter at versus the average during that quarter. In Q4, I would say the effect was very marginal from FX on the actual outcome of the leverage ratio. On the revenue target on servicing, it is by design. We have three financial targets, and none of them are related to revenues. I mean, obviously, margins in combination with cost, that is to some extent related to revenues, but we don't have an actual income target because it's something we can't fully dictate. We've presented... the data we have, which is that the market should grow by 3%. We presented data on pockets we think we can penetrate, which is up and above the 3%. So obviously the goal for us is to grow faster than the market by improving our servicing performance and penetrating portions of the potential we've seen, we see in financial services, non-financial services and SMEs. That's the ambition, but we don't set a target because it's very difficult to know exactly at what pace how quickly we can execute on the things we see in the market. So one more question to you then. Can future partnerships be different type of investors than private equity like Cerberus and with different or better fee structures?

I think the future partnerships, if I understand the question, can it be different than Cerberus? Than private equity? Yeah, okay, the like. So basically, yes, definitely. I mean, I think that future partnerships, as I think I said earlier, could also be more of a passive investor that actually wants to have... the experience and the capacity and also the servicing aspect of working with someone who's been in the industry for a long time that could be one type of partner it could also be an industrial partner i mean today we see the dynamics in the industry changing and a lot of the players are moving into either a pure servicing direction or a pure investing direction. We have both channels. We're obviously focusing more on the servicing because we're changing the franchise model. But to work with someone who's in the pure play on the investing side, I don't necessarily think that that's ruled out either. I think there's many opportunities. We just need to be treading carefully to always keep our credibility and our professionalism in every time we work with someone who's sometimes in conflict in business with us, sometimes in conflict in business with other partners we have.

Good answer. OK, there's one more question. I'll take that myself. We've mentioned Norway as a leading example. Could you provide some colour on how the EBIT margin in Norway compares to other geographies? The margin in Norway is higher than the average we show for the group of 25%. And this is despite the fact that in Norway you've had a regulation in place since 2018 where you haven't been allowed to adjust servicing fees. So basically with the exact same servicing fee for... Eight, nine years, we've been able to improve the margin quite significantly only by reducing costs through operational efficiency. So that shows you the force in being able to do that across all the traditional markets that we have.

The debtor fees has been locked, but now they are getting unlocked in 2026. and there will be an adjustment to partly compensate for the historical non-adjustments, and that hopefully will make the Norwegian market even more interesting going forward.

Okay, we have one more question from the telephone, so let's go to that.

The next question comes from Jacob Hesselvik from SEB. Please go ahead.

Yeah, hi. Just one more question on slide 31. You state that you plan to redeem 10 to 15 billion until 2030. Does that mean your net deficit is expected to be 29 to 34 billion, where you aim to have a three times leverage? Was that too simple to look at it? I'm just trying to see if I can backtrack the target for servicing going forward.

Yeah, no, that's the right way of looking at it. What you also need to make an assumption for is how large our investment book is at that point in time, because that will consume some of the remaining debt we will have at that point. And we're not guiding on that, but you can make your own assumptions. based on the guidance we have, which is more limited investments in the short term, ramping up later on and hopefully contributing to income growth later in this period, 26 to 2030. But sure, I mean, you can start with the current net debt, reduce that with that amount, and you get an understanding of where the debt will be and then assume something on the investment book and what is required from EBITDA in servicing to get to the three times.

Great. And is it possible to state anything what your replacement CapEx level is currently on your portfolio investment?

It's slightly below 3 billion, around 3 billion.

Two and a half to three. Thank you. So I think with that, we are concluding today's session. I think we have basically shown you where Intram is heading. In 2030, the company will be a completely different franchise. We have taken a more ambitious approach when it comes to our targets. We have also said that it will take slightly longer. But in the end, we want to focus on the leverage. We want to deleverage. We want to create a much more stable franchise. We are continuing to take out the cost and be more efficient and basically make ourselves ready to compete where we work today, but also with outside and new verticals and new value-adding services, we will increase our margin. And with that, we basically create a much more stable business model. I would like to thank you all for listening. Thank you for many good questions. It's always great that Jacob is the first and now he was also the last question. And yeah, I guess we will have some bilaterals with some of you going forward. Thank you very much and have a nice afternoon. Thank you. Thank you.