Intrum — Earnings Release 2013

May 13, 2013

Stockholm May 13, 2013 (page 1 of 3)

PRESS RELEASE

Intrum Justitia AB (publ) Corporate identity no.:556607-7581

European Payment Index 2013:

EUR 350 billion in bad debt written off by European businesses

Highest level of bad debt losses to date and bleak forecast

• Well over half of the European surveyed countries show increased payment risks and as much as a third of countries are seen as having an emergency risk profile.
• The level of receivables having to be written off due to default on payment rose by 7 percent and corresponded to 3.0 percent of all outstanding receivables among European businesses. In total, receivables for EUR 350 billion were written off.
• Only four out of 31 countries surveyed showed decreasing bad debt losses – Denmark, Finland, Iceland and Sweden. Germany showed zero growth in written off receivables, although perceived future risk among businesses increased sharply.
• In the United Kingdom, the percentage of receivables that were written off continued to rise from an already high level and in France the perception of future risk continues to be high.
• Countries in southern and eastern Europe are struggling with long maturities, high levels of default on payment and widespread pessimism regarding their ability to rise from the current slump.
• Companies are increasingly seeing effects from the recession on sales, liquidity and their ability to grow and find resources to invest in the future.

More than ever, it is apparent that the European economies are running at different paces, with a small group of countries acting as leaders and a large group as laggards. This is confirmed by the payment and credit statistics presented in Intrum Justitia's ninth annual EPI survey (European Payment Index), in which almost 10,000 businesses responded to questions about payment patterns. Only four out of the 31 countries surveyed have seen their share of bad debt losses decrease – all of them Nordic countries.

Greece is the country where the EPI Risk Index has reached an extreme 195 out of possible 200 whereas Finland shows the lowest risk with 125. The index reaches from 100-200 and is presented in full in the appendix to this press release.

"The North is still holding on but Europe's dependence on Germany is more evident than ever. The sharp rise in the perception of future risk among German businesses is really alarming and should send a chill down the spines of politicians all over our continent. There is an evident danger of bad turning worse in Europe," says Lars Wollung, President and CEO of Intrum Justitia.

The inability among consumers, businesses and authorities to settle their bills on time has resulted in an increase from 2.8 percent to 3.0 percent of all outstanding receivables having to be written-off as bad debt. This represents a 7 percent increase in the amount of debt being written off, or a total of EUR 350 billion in the countries embraced by the survey. When looking at individual countries, the situation is worst in Greece (9.9%), Bulgaria (7.0%), Romania (6.1%) and Slovenia (5.7%).

The larger European economies show a mixed picture. The UK has large and increasing levels of bad debt losses, whereas Spain and Italy have huge payment delays and very long duration (i.e days to payment). Although France is in a better position, it can still be considered shaky due to its large share of businesses that perceive their risks from debtors increasing over the next 12 months.

One positive sign in the report is that the awareness of the danger of payment default seems to have increased among businesses. The time that it takes for a company to get paid decreased for the second year in a row. At the same time, the survey reveals a strong sense of dissatisfaction with governments, who are not perceived as doing enough to protect businesses against late payments. Overall, 70 percent of the respondents said they did not believe that their government was doing all it could to help.

Despite the ongoing implementation of the Late Payment Directive across the EU, delayed payments are still a major threat to the growth and survival of European businesses. The EPI survey reveals that out of the 9,800 businesses that responded to the survey, 61 percent say they experience lost sales as a consequence of bills not being paid, 57 percent say that their liquidity has been impacted by the tough economic conditions and 48 percent say that they have decreased their investments in innovation as a consequence of the tighter financial situation.

"If this downward spiral continues, we will soon have a situation where businesses are unable to grow, where innovation is hindered and where the survival of businesses is threatened. All stakeholders involved, businesses as well as governments, have to do everything in their power to turn this development around. The long-term stability and prosperity of the European countries presuppose that businesses get paid on time," Lars Wollung concludes.

Here are some suggestions on what businesses can do right now to improve their situation and get paid on time:

1. Create, continuously develop and implement a balanced and solid credit policy to manage your risks and growth.

2. Measure and follow up on the capital employed in your credit management process to reduce cost of capital.

3. Make sure you identified the customer you are doing business with.

4. Make a clear agreement with your customer stating all conditions for your business.

5. Integrate sales, marketing and financial department, and ensure an efficient invoicing process to avoid defaults.

6. Implement customer address checks regularly.

7. Monitor economic and industry information, as well as the solvency of key customers.

8. Reduce your loss of customers and strengthen your customer relations by customizing your credit process based on payment behavior and ability to pay.

9. Implement swift reminders and charge default interest when possible.

10. Balance your customer structure based on risk and growth potential.

11. Always take immediate action to get paid.

Click here to access the full report, with detailed statistics and a video with the CEO's comments >> Social media release

To request the full report, please visit our webpage at http://www.intrum.com

About Intrum Justitia

Intrum Justitia is Europe's leading Credit Management Services (CMS) group and offers services designed to measurably improve clients' cash flows and long-term profitability, including purchase of receivables. Founded in 1923, Intrum Justitia has some 3,500 employees in 20 countries. Consolidated revenues amounted to around SEK 4.1 billion in 2012. Intrum Justitia AB has been listed on NASDAQ OMX Stockholm since 2002. For further information, please visit www.intrum.com

About the European Payment Index

The Intrum Justitia European Payment Index (EPI) has measured the risk of doing business in the European economies, by surveying businesses, since 1998. The survey was conducted simultaneously in 29 European countries plus Turkey and Russia between January and March 2013. The survey was conducted in written form and more than 9,800 companies responded. The Index is based on 21 different variables, including payment duration, payment loss, consequences of late payments and forecast on risk development, as well as technical financial data.

The questionnaire was translated into the respective national languages. The questionnaires were dispatched and returned on a decentralized basis by the national operations in the countries concerned, whereas the analysis was carried out centrally in accordance with predetermined guidelines. All information has been verified and uncertainties were not included in the evaluation. Furthermore, not all anonymously submitted questionnaires were taken into account in the evaluation. Companies in England, Wales, Scotland and Ireland were questioned online by a specialized company (BING Research). Bulgaria, Slovenia and Romania were researched by the national operations in those countries and double checked against a separate on-line survey by a specialized company (BING Research).

For further information, please contact:

Madeleine Bosch, Head of EPI Research, Intrum Justitia Tel: +31 70 452 7323 Mobile: +31 64 6212 579 Email: m.bosch@intrum.com

Annika Billberg, IR & Communications Director Direct: + 46 8 546 102 03 Mobile: + 46 702 67 97 91 E-mail: a.billberg@intrum.com

Country	Risk Index	Increase/ decrease 2011-2012
Finland	125	-1
Norway	128	-2
Sweden	128	-1
Denmark	135	-2
Iceland	137	0
Switzerland	137	-5
Germany	144	-3
France	150	+1
Austria	151	-4
Estonia	153	0
Netherlands	154	+1
Belgium	158	+1
Ireland	158	+4
UK	162	+1
Lithuania	163	+4
Slovakia	164	+2
Latvia	165	+5
Poland	166	+2
Italy	168	+4
Spain	173	+3
Hungary	175	+5
Czech Republic	176	+2
Cyprus	180	+5
Slovenia	185	+3
Romania	187	+2
Bulgaria	190	+2
Portugal	190	0
Croatia	191	na

Table 1. Risk Index.

The Intrum Justitia Risk Index

The payment index is used to compare different economies, regions or sectors. Alongside technical financial figures, the index is based on assessments from the companies surveyed.

The Payment Index is calculated from eight differently weighted sub-indices, which are based on a total of 21 individual values.

The data include: Contractual payment term (in days, Effective payment duration (in days), Age structure of receivables (DSO), Payment loss (in %), Estimate of risk trends, Characteristics of the consequences of late payment, Causes of late payment.

.

Greece	195	+5
Country	Written off (%)	Change 2011-2012 (%)	Amount written of (€ Million)	Total payment duration (B2C)	Total payment duration (B2B)	Total payment duration (Pubic sector)	Businesse s seeing increased risks (%)

Risk index	Explanation of values
100	No payment risk
101-129	Low risk profile
130-139	Low to medium risk profile
140-149	Medium risk profile
150-159	Medium to high risk profile
160-169	High risk profile
170+	Emergency risk profile

Austria	2,1	0	5708	27	35	42	27 (22)
Belgium	2,8	4	9167	34	48	69	52 (52)
Bulgaria	7,0	8	1909	22	38	52	57 (61)
Croatia	9,9	na	3613	45	50	60	41 (na)
Cyprus	3,6	9	541	57	90	85	79 (70)
Czech Republic	3,3	10	3965	30	44	45	58 (33)
Denmark	2,2	-15	4579	24	35	35	31 (36)
Estonia	3,0	0	378	17	34	25	17 (20)
Finland	1,5	-6	2525	15	26	24	34 (35)
France	2,0	0	36020	41	55	60	51 (50)
Germany	2,0	0	49355	24	34	36	30 (21)
Greece	9,9	68	16683	50	78	159	75 (73)
Hungary	4,0	14	3516	29	43	55	35 (38)
Iceland	2,4	-8	331	25	35	33	35 (25)
Ireland	3,5	25	5947	35	60	45	53 (57)
Italy	2,7	4	37529	74	96	170	65 (65)
Latvia	5,0	25	691	29	37	37	50 (27)
Lithuania	3,2	7	775	34	47	51	32 (37)
Netherlands	2,6	4	14309	31	42	43	44 (41)
Norway	2,0	0	5305	22	33	34	13 (23)
Poland	4,0	25	13102	39	40	38	46 (41)
Portugal	3,9	8	5894	60	85	133	85 (87)
Romania	6,1	11	5673	24	33	45	72 (65)
Slovakia	3,9	8	1986	27	44	57	47 (46)
Slovenia	5,7	12	1757	44	60	49	66 (65)
Spain	2,7	0	25350	58	85	155	57 (59)
Sweden	2,0	-5	6763	26	35	34	16 (13)
Switzerland	1,8	0	6376	35	39	42	23 (27)
UK	3,7	6	71090	33	41	41	24 (21)
Turkey	5,8	na	29725	57	110	71	15 (na)
Russia	2,3	na	35562	25	40	55	16 (na)
EU Average*	3,0	7	351594	36	49	61	45 (44)

Table 2. Written off receivables, payment duration and forecast

* Excluding Bulgaria, Romania, Slovenia