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Intrum Interim / Quarterly Report 2011

Oct 26, 2011

2930_10-q_2011-10-26_ed0bbea6-79b6-4f22-bede-c78b5ec3783d.pdf

Interim / Quarterly Report

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  • Consolidated net revenues for the third quarter of 2011 amounted to SEK 998.1 M (922.9). Adjusted for currency effects, revenues rose by 8.5 percent, of which organic growth amounted to 2.9 percent (negative 2.2).
  • Operating earnings (EBIT) amounted to SEK 263.6 M (211.2). Adjusted for currency effects, this corresponds to an increase in operating earnings of 24.7 percent. The operating earnings include revaluations of purchased debt portfolios amounting to SEK 3.7 M (-0.8).
  • The operating margin was 26.4 percent (22.9).
  • Net earnings for the quarter amounted to SEK 170.5 M (144.9) and earnings per share were SEK 2.14 (1.82).
  • Disbursements for investments in purchased debt amounted to SEK 659.7 M (263.1), an increase of 150.7 percent.
  • Cash flow from operating activities remains strong, amounting to SEK 543.3 M (428.1).
SEK M
unless otherwise indicated
July-Sept
2011
July-Sept
2010
Jan-Sept
2011
Jan-Sept
2010
Revenues 998.1 922.9 2,907.4 2,800.6
Revenues exkluding revaluations 994.4 923.7 2,882.0 2,802.8
Organic growth, % 2.9 -2.2 1.5 -1.0
Operating earnings (EBIT) 263.6 211.2 639.9 548.8
Operating margin, % 26.4 22.9 22.0 19.6
Earnings before tax 227.5 193.3 559.2 478.0
Net earnings 170.5 144.9 390.0 330.6
Cash flow from operating activities 543.3 428.1 1,192.5 1,120.9
Earnings per share after dilution, SEK 2.14 1.82 4.88 4.15
Current collection cases, millions 19.8 17.8 19.8 17.8
Return on purchased debt, % 19.1 15.8 19.4 16.7

*Adjusted for currency effect.

Intrum Justitia is disclosing the information herein pursuant to the Securities Markets Act and/or the Financial Instruments Trading Act. The information was submitted for publication at 7:00 a.m. CET on Wednesday, October 26, 2011.

organic growth

change in operating earnings*

operating earnings

operating margin

earnings before tax

earnings per share

return on Purchased Debt

net debt/equity

For Intrum Justitia, 2011 is a good year, and development remained favorable in the third quarter. Adjusted for currency effects, operating earnings rose by 25 percent and the operating margin is strengthened with 3.5 percentage points compared to last year.

The ongoing European debt crisis is tangible in several of the countries in which Intrum Justitia operates, although we have yet to see any decline in recoverability of receivables in our operations. Thanks to rigorous market efforts and internal efficiency over the past year, we stand better equipped to cope with a continued deterioration in macroeconomic conditions, compared to the last financial crisis.

Our Credit Management service line continues its stable development and we are seeing favorable effects from our efficiency enhancement efforts of the past year. Our investments in taking more cases through the legal systems over the past year are giving the desired results and we are continuing to invest in Eastern Europe for example. At the same time, analyses are being carried out in additional countries where we operate, where such activities could benefit our business.

In the third quarter, we saw increased activity in purchased debt, both with regard to small and medium-sized portfolios, as well as larger portfolios. We are also seeing a continued positive trend with regard to integrated services that include so-called forward flow contracts. Investments made during the quarter amounted to SEK 660 M, and for the past 12 months, investments have totaled approximately SEK 1.7 billion. The return during the quarter was 19.1 percent. The opportunities to expand in purchased debt are favorable and a strong financial base is a prerequisite.

The Northern Europe region continues to develop well with an increase in currency-adjusted operating earnings by 29 percent and the margin strengthening to 31 percent. In the third quarter, we acquired Difko Inkasso in Denmark, further strengthening our position in the Danish market, particularly within Credit Management Services.

In the Central Europe region, currency-adjusted operating earnings rose by 14 percent in the third quarter, while the margin strengthened to 25 percent. The positive trend in the region is driven by strong development in purchased debt. The acquisition, for example, of a German purchased debt portfolio has been concluded and is contributing to positive development.

In the Western Europe region, currency-adjusted operating earnings rose by 18 percent and we can see that the trend from the first quarter with a strengthened operating margin is continuing, with the margin being 19 percent for the third quarter. Several of the countries in the region are affected by the European debt crisis, although there have yet to be any visible effects on our operations. Thanks to rigorous efforts on cost control and efficiency improvement, we are nonetheless seeing a positive trend in the region.

All indicators suggest that demand for services combining traditional credit management with purchased debt will continue to increase. As a market leader, with an integrated range of services in these areas, Intrum Justitia benefits by this trend. We see good opportunities to continue expanding our service offering, particularly early in the payment chain, in areas such as credit decision solutions and payment solutions.

Consolidated revenues during the quarter amounted to SEK 998.1 M (922.9). The increase in revenue amounted to 8.1 percent including organic growth of 2.9 percentage points, currency effects of -0.4 percentage points, effects from the revaluation of purchased debt of 0.5 percentage points, and acquisition effects of 5.1 percentage points. Operating earnings amounted to SEK 263.6 M (211.2). Revenues and operating earnings include net purchased debt revaluations of SEK 3.7 M (-0.8).

Consolidated revenues for the interim period January-September amounted to SEK 2,907.4 M (2,800.6). The increase in revenue amounted to 3.8 percent including organic growth of 1.5 percentage points, currency effects of -4.1 percentage points, effects from the revaluation of purchased debt of 1.0 percentage points, and acquisition effects of 5.4 percent. Operating earnings amounted to SEK 639.9 M (548.8). Revenues and operating earnings include net purchased debt revaluations of SEK 25.4 M (-2.2).

Operating earnings for the quarter were burdened with integration costs of SEK -3.4 M for the acquisitions made in the fourth quarter of 2010.

Earnings before tax for the quarter increased to SEK 227.5 M (193.3) and net earnings were SEK 170.5 M (144.9).

Charged against the quarter's operating earnings were a loss of SEK 8.7 M on the divestment of the Group's 33 percent holding in Icelandic associated company Motus ehf (formerly Intrum á Íslandi ehf) and integration costs of SEK 16.2 M for the acquisitions made in the fourth quarter of 2010.

Earnings before tax for the period increased to SEK 559.2 M (478.0) and net earnings were SEK 390.0 M (330.6).

Since the fourth quarter of 2010, revenues and earnings are reported divided between the three new

geographical markets introduced on October 1, 2010.

earnings The region consists of Denmark, Estonia, Finland, Latvia, Lithuania, Norway, Poland, Russia and Sweden.

Regional revenues excluding purchased debt revaluations amounted to SEK 446.7 M (369.9) during the quarter. In local currencies, revenues rose by 22.7 percent. Operating earnings excluding revaluations amounted to SEK 139.9 M (109.7), corresponding to a margin of 31.3 percent (29.7). In local currencies, operating earnings improved by 29.5 percent.

The region's earnings for the quarter were burdened with integration costs of SEK 3.4 M attributable to acquisitions implemented previously. The integration of the acquired companies is progressing according to plan.

The level of investment in purchased debt remains good and is contributing strongly to the positive trend. In Poland, investments in legal measures are giving favorable effects and additional investments are planned for the future. During the quarter, Difko Inkasso was acquired, strengthening the market position in Denmark, particularly in Credit Management Services.

earnings The region consists of Switzerland, Slovakia, the Czech Republic, Germany, Hungary and Austria.

Regional revenues excluding purchased debt revaluations amounted to SEK 234.2 M (218.4) during the quarter. In local currencies, revenues rose by 1.9 percent. Operating earnings excluding revaluations amounted to SEK 59.1 M (48.2), corresponding to a margin of 25.2 percent (22.1). In local currencies, operating earnings improved by 14.0 percent.

earnings The region consists of Belgium, France, Ireland, Italy, the Netherlands, Portugal, Spain and the UK.

Regional revenues excluding purchased debt revaluations amounted to SEK 313.5 M (335.4) during the quarter. In local currencies, revenues fell by 4.3 percent. Operating earnings excluding revaluations amounted to SEK 60.9 M (53.0), corresponding to a margin of 19.4 percent (15.8).

Operating earnings for the service line amounted to SEK 826.7 M (806.3). Adjusted for currency effects, revenues rose by 2.7 percent. Operating earnings amounted to SEK 152.5 M (145.7), corresponding to an operating margin of 18.4 percent (18.1).

Adjusted for currency effects, operating earnings rose by 3.1 percent. Development in the service line was good during the quarter with rising revenues and operating earnings.

The good level of activity in purchased debt during the quarter contributed to favorable development in the region. The acquisition of a German banking portfolio has been completed and is included in the quarter's earnings. The focus on internal in Credit Management Services is improving the outlook for that area too.

In local currencies, operating earnings improved by 18.0 percent.

The positive trend in the region has continued, with operating earnings increasing in the third quarter thanks to strong development in purchased debt portfolios and good cost control in the Credit Management service line.

The operational excellence program is developing well, generating favorable conditions for continued growth.

Our investments in legal measures over the past year are giving the desired results and we are continuing to invest in Eastern Europe for example. At the same time, analyses are being carried out in additional countries where operate and where such activities could benefit our business.

Share of revenues Share of

Operating earnings for the service line amounted to SEK 272.9 M (205.1). Operating earnings amounted to SEK 138.9 M (85.0), corresponding to an operating margin of 50.9 percent (41.4).

Disbursements for investments in purchased debt amounted to SEK 659.7 M (263.1) during the quarter. The return on purchased debt was 19.1 percent (15.8) for the quarter. At the end of the quarter, the Group's purchased debt portfolios had a carrying value of SEK 3,160.1 M, compared with SEK 2,373.4 M at the end of 2010.

The supply of debt portfolios remained very good with increased investment. Extensive needs for liquidity exert pressure on many players, which opens up good investment opportunities for Intrum Justitia.

In accordance with IFRS, Intrum Justitia applies an accounting model (the effective interest method) where the carrying amount of each debt portfolio, and thus quarterly earnings, is based on discounted future cash flows updated quarterly.

The quarter's operating earnings were charged with depreciation/amortization of SEK 43.2 M (43.1). Operating earnings before depreciation/amortization therefore amounted to SEK 306.8 M (254.3). The value of

Net financial items for the quarter amounted to SEK –36.1 M (–17.9), including translation differences of SEK +5.5 M (–0.4).

The deterioration of net financial items compared to last year, can be derived to an higher average net debt as well as to transaction The discount rate varies by portfolio based on the estimated effective interest rate at the time of acquisition. If estimated future cash flows change, the effective interest rate can be adjusted within the range 8–25 percent. In this way, the carrying amount is not affected by changes in cash flow projections as long as the effective interest rate falls within the stipulated range.

A portfolio is never carried at higher than cost. In other words, the portfolios are not marked to market. During the quarter the carrying amount of purchased debt was adjusted by a net of SEK 3.7 M (-0.8) due to changes in estimates of future cash flows). For a specification by region, see page 18. Adjustments are reported as part of quarterly amortization, as a result of which revenues and operating earnings are affected equally. This is because purchased debt revenues are reported as the net of the collected amount less amortization.

client relations carried in the Balance Sheet amounted to SEK 135.8 M compared 156.0 at year-end. These were amortized by SEK 4.3 M (3.6) during the quarter.

costs arising from the renegotiated credit facility in April 2011.

The average interest rate for the quarter amounted to SEK 2.7 M (2.9).

In the interim figures, consolidated earnings before tax were burdened by a tax expense corresponding to 25 percent of earnings before tax and, in addition, SEK 29.3 M attributable to the Group's earlier tax dispute in Finland in accordance with the description given in the interim report for the period January-June.

Following a tax audit of the Group's Swedish parent company for the 2009 financial year, the Swedish National Tax Board ruled to disallow the company deductions for Group-internal interest charged to the Belgian subsidiary and changed the calculation of the deduction for unrealized exchange rate losses on Group-internal loans. The National Tax Board also resolved to impose a tax surcharge of SEK 19.1 M.

The company has appealed the ruling concerning the right to deduct interest and the full tax surcharge and has not made any provision for these amounts in the closing financial statements for the quarter.

If the National Tax Board prevails in this matter, the Group's tax-loss carryforwards attributable to Sweden could be reduced by about SEK 856 M, although the effect on the Group's reported tax expense for the year can, as a maximum, equal the amount of the tax surcharge.

Cash flow from operating activities improved over the interim period to SEK 1,192.5 M (1,120.9). Cash flow from operating activities includes a reversal of the quarter's amortization of purchased debt.

Net debt as of September 30, 2011 amounted to SEK 2,801.2 M, compared with SEK 2,193.3 M on December 31, 2010. Shareholders' equity, including holdings lacking a decisive influence, amounted to SEK 2,703.9 M, compared with SEK 2,576.6 M at the end of 2010. As of September 30, 2011 the Group had liquid assets of SEK 419.9 M, compared with SEK 507.1 M at the beginning of the year. Unutilized credit facilities amounted to SEK 1,054.7 M, compared with SEK 233.7 M at the end of 2010.

Consolidated goodwill amounted to SEK 2,245.0 M, compared with SEK 2,152.5 M as of December 31, 2010.

As a whole, the determination for 2011 and beyond continues to be that the tax expense will be around 25 percent of earnings before tax excluding tax adjustments attributable to tax disputes and similar non-recurring items.

The average tax expense depends on factors including the Group's capacity to achieve positive earnings in those countries where its earnings before tax are negative. In certain cases, it is possible to utilize tax-loss carryforwards from previous years against future earnings. At the close of 2010, prior to the effects of the tax audit in Sweden, these tax-loss carryforwards totaled SEK 2,289.2 M, of which SEK 1,623.6 M were in Sweden and SEK 326.7 M were in the UK. Deferred tax receivables associated with tax-loss carryforwards amounted to SEK 39.1 M and were for countries other than Sweden and the UK.

Disbursements during the period for purchased debt investments amounted to SEK 1,306.1 M (632.2).

The Group's syndicated loan facility of EUR 310 M, maturing in March 2013, was renegotiated in April as a new syndicated loan facility of SEK 4 billion with the same banks and maturing in March 2016. The new facility enables ancillary financing of as much as about SEK 2 billion. At the end of the quarter, Intrum Justitia had issued commercial papers for approximately SEK 200 M.

The change was attributable to the SEK 11.4 M adjustment of the acquisition analyses for acquisitions made in 2010, SEK 29.6 in new goodwill attributable to Difko Inkasso and exchange rate differences of SEK 51.5 M.

The average number of employees during the quarter was 3,282 (3,064). The increase can mainly be derived to acquisitions.

The publicly listed Parent Company, Intrum Justitia AB (publ), owns the subsidiaries, provides the Group's head office functions and handles certain Group-wide development work, services and marketing.

The Parent Company reported net revenues of SEK 53.7 M (50.9) for

At the end of September, Intrum Justitia acquired the Danish credit management company Difko Inkasso A/S for a cash consideration of SEK 46.1 M. The acquired company conducts credit management operations and acts as an investor in purchased debt. The company has about 20 employees and is expected to generate revenues of about DKK 21 M in 2011.

This interim report has been prepared in accordance with the Annual Accounts Act and IAS 34 Interim Financial Reporting for the Group and in accordance with Chapter 9 of the Annual Accounts Act for the Parent Company.

Risks to the Group and Parent Company include strategic risks related to economic developments and acquisitions as well as operational risks related to, among other things, possible errors and omissions as well as operations in different countries. Moreover, there are risks related to the regulatory environment and financial risks such as

the interim period and earnings before tax of SEK 53.8 M (-59.9), including share dividends from subsidiaries of SEK 128.1 M (0.0). During the interim period, the Parent Company invested SEK 0.5 M (0.3) in fixed assets and had, at the end of the period, liquid assets of 50.4 M (138.9). The average number of employees was 31 (24).

The acquisition strengthens Intrum Justitia's market position in Denmark. The acquired company was consolidated into the Group effective from September 30, 2011. It has not contributed to Consolidated revenues or earnings during the year. As a result of the acquisition, SEK 29.6 M of goodwill is recognized in the consolidated balance sheet.

The same accounting principles and calculation methods have been applied as in the most recent Annual Report.

market risk, financing risk, credit risk, risks inherent in purchased debt and guarantees in conjunction with the screening of charge card applications. The risks are described in more detail in the Board of Directors' report in Intrum Justitia's Annual Report for 2010. No significant risks are considered to have arisen besides those described in the annual report.

Europe is characterized by considerable regional differences and, following the summer, uncertainty regarding the macroeconomic outlook as a result of the debt crisis in several European countries. For Intrum Justitia's part, there are, despite this, as yet no signs of impaired collectibility among the company's customers (debtors).

We see increasing demand for integrated credit management and financial services. Clients' need to establish stronger and more predictable cash flow is increasing. The need to create further alternatives for the financing of working capital is also increasing.

In our assessment, Intrum Justitia's strategic focus is well attuned to the market trend, with a broadening of credit management services and a link to risk reduction and financing services based on strong, market-leading collection operations. We foresee good demand for services of this kind over the next few years.

Early in the second half of the year, we saw players, particularly in the bank sector, increasingly seeking to sell off large debt portfolios in order to strengthen liquidity. In our assessment, Intrum Justitia enjoys good opportunities to assume an active role as an investor – even in larger portfolios.

In the long term, the Group's acquisitions of small and medium-sized purchased debt portfolios are estimated to amount to more than SEK 1,000 M per year. In addition to this, there will be individual acquisitions of larger portfolios. Intrum Justitia maintains a long-term investment strategy with a low risk profile.

We foresee a slow macroeconomic recovery in Europe with considerable differences between regions. The opportunities to resolve Intrum Justitia's customers' (debtors) financial problems are better than they were in the midst of the global financial crisis. However, collectibility has not yet returned to the levels that existed from 2006 until the first half of 2008. The situation has nonetheless stabilized.

We see increasing demand for integrated credit management and financial services. Clients' need to establish stronger and more predictable cash flow is increasing. The need to create further alternatives for the financing of working capital is also increasing.

In our assessment, Intrum Justitia's strategic focus is well attuned to the market trend, with a broadening of credit management services and a link to risk reduction and financing services based on strong, market-leading collection operations. We foresee good demand for services of this kind over the next few years.

In the long term, the Group's acquisitions of small and medium-sized purchased debt portfolios are estimated to amount to more than SEK 800 M per year. During the current year, however, investments are expected to exceed SEK 1,000 M. In addition to this, there will be individual acquisitions of larger portfolios. Intrum Justitia maintains a long-term investment strategy with a low risk profile, the stability of which was demonstrated during the financial crisis.

A Nominating Committee has been appointed in advance of Intrum Justitia's Annual General Meeting, which will be held on April 25, 2012, in Stockholm. The Nominating Committee consists of Hans Hedström appointed

by Carnegie, Conny Karlsson appointed by Cap Man Oyj, Anders Rydin appointed by SEB Funds, Mats Gustafsson appointed by Lannebo Funds and Pia Axelsson appointed by the Fourth AP Fund.

Combined the members of the Nominating Committee represent companies holding about 21.5 percent of the capital and shares in the company.

The Nominating Committee will be led by one of its members. The matters to be addressed by the Nominating Committee and the guidelines on how members are appointed are detailed on the company's website, www.intrum.com.

Shareholders are welcome to submit proposals and comments to the Nominating Committee by December 9, 2011 at the latest, via e-mail to [email protected].

The Nominating Committee's proposals will be presented in the notification for the 2012 Annual General Meeting and on the company's website.

On September 30, 2011, Intrum Justitia's market capitalization amounted to SEK 6,758 M, compared with SEK 8,254 M at the beginning of the year. Over the nine-month period, the share price fell from SEK 103.50 to SEK 84.75 per share, which, adjusted for the dividend of SEK 4.10 per share,

corresponded to a fall in price of 14.2 percent. During the corresponding period, the returnadjusted index (according to the SIX Return Index) fell by 20.3 percent. At the end of the nine-month period, there were a total of 7,715 shareholders.

The interim report and presentation material are available at www.intrum.com > Investor relations. President & CEO Lars Wollung and Chief Financial Officer Bengt Lejdström will comment on the report at a teleconference

today, starting at 9:00 a.m. CET. The presentation can be followed at www.intrum.com and/or www.financialhearings.com. To participate by phone, call +46 (0)8 505 598 75 (SE) or +44 (0)20 715 391 56 (UK).

Lars Wollung, President and CEO, Tel.: +46 (0)8 546 10 202 Bengt Lejdström, Chief Financial Officer, Tel.: +46 (0)8 546 10 237, mobile: +46 (0)70 274 2200 Annika Billberg, IR & Communications Director, Tel: +46 (0)8 545 10 203, mobile: +46 (0)70 267 9791 Intrum Justitia AB (publ) SE-105 24 Stockholm Tel: +46 (0)8 546 10 200, fax: +46 (0)8 546 10 211 Website: www.intrum.com E-mail: [email protected] Swedish corporate identity no.: 556607-7581

The year-end report for 2011 will be published February 8, 2012.

The 2012 Annual General Meeting of BE Group will be held on Wednesday, April 25, at 4.00 p.m. at Berns Salonger, Stockholm, Sweden.

This interim report has been reviewed by the company's auditors.

The year-end report and other financial information are available at Intrum Justitia's website: www.intrum.com

Denna delårsrapport finns även på svenska.

Stockholm, October 26, 2011

Lars Wollung President and CEO

Intrum Justitia is Europe's leading Credit Management Services (CMS) group, offering comprehensive credit management services, including purchased debt, designed to measurably improve clients' cash flows and long-term profitability. Founded in 1923, Intrum Justitia has some 3,300 employees in 22 markets. Consolidated revenues amounted to SEK 3.8 billion in 2010. Intrum Justitia AB is listed on NASDAQ OMX Stockholm since 2002. For further information, please visit www.intrum.com

To the Board of Directors of Intrum Justitia AB (publ), corporate identity number 556607-7581.

Introduction

We have performed a general review of the interim financial report for Intrum Justitia AB (publ) for the period January-September 2011. The Board of Directors and the CEO are responsible for the preparation and presentation of this interim financial information in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Focus and scope of the review

We conducted our review in accordance with the Standard on Review Engagements (SÖG) 2410, Review of Interim Financial Information Performed by the Company's Elected Auditor. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has another focus and is substantially less in scope than an audit conducted in accordance with RS auditing standards in Sweden and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying Interim Report is not prepared, in all material respects, for the Group in accordance with IAS 34 and the Annual Accounts Act and for the Parent Company in accordance with the Annual Accounts Act.

Stockholm, October 26, 2011 KPMG AB

Carl Lindgren Authorized Public Accountant

SEK M July-Sept July-Sept Jan-Sept Jan-Sept F
ull Year
2011 2010 2011 2010 2010
Revenues 998.1 922.9 2,907.4 2,800.6 3,766.0
Cost of sales -577.2 -549.6 -1,735.3 -1,725.0 -2,322.6
Gro
ss earnings
420.9 373.3 1,172.1 1,075.6 1,443.4
Sales and marketing expenses -53.0 -63.3 -180.7 -226.3 -303.8
General and administrative expenses -104.9 -101.0 -344.2 -302.2 -410.7
Disposal of shares in associated company 0.0 0.0 -8.7 0.0 0.0
Participation in associated companies 0.6 2.2 1.4 1.7 1.7
Operating earnings (EB
IT
)
263.6 211.2 639.9 548.8 730.6
Net financial items -36.1 -17.9 -80.7 -70.8 -91.3
Earnings befo
re tax
227.5 193.3 559.2 478.0 639.3
Tax -57.0 -48.4 -169.2 -147.4 -187.3
N
et earnings fo
r the perio
d
170.5 144.9 390.0 330.6 452.0
Of which attributable to
:
Parent company's shareholders 170.5 144.9 389.0 330.6 452.0
Non-controlling interest 0.0 0.0 1.0 0.0 0.0
N
et earnings fo
r the perio
d
170.5 144.9 390.0 330.6 452.0
Earnings per share before dilution 2.14 1.82 4.88 4.15 5.67
Earnings per share after dilution 2.14 1.82 4.88 4.15 5.67
SEK M July-Sept July-Sept Jan-Sept Jan-Sept F
ull Year
2011 2010 2011 2010 2010
Net earnings for the period 170.5 144.9 390.0 330.6 452.0
Currency translation difference 0.5 -35.2 65.8 -83.9 -122.7
C
o
mprehensive inco
me fo
r the perio
d
171.0 109.7 455.8 246.7 329.3
Of which attributable to
:
Parent company's shareholders 171.0 109.7 454.5 246.7 329.3
Non-controlling interest 0.0 0.0 1.3 0.0 0.0
C
o
mprehensive inco
me fo
r the perio
d
171.0 109.7 455.8 246.7 329.3
SEK July-Sept July-Sept Jan-Sept Jan-Sept F
ull Year
2011 2010 2011 2010 2010
Share price at end of period 84.75 77.25 84.75 77.25 103.50
Earnings per share before dilution 2.14 1.82 4.88 4.15 5.67
Earnings per share after dilution 2.14 1.82 4.88 4.15 5.67
Shareholders' equity (net asset value) before dilution 33.91 31.31 33.91 31.31 32.21
Average number of shares before dilution, '000 79,745 79,745 79,745 79,745 79,745
Average number of shares after dilution, '000 79,745 79,745 79,745 79,745 79,745
Number of shares at end of period, '000 79,745 79,995 79,745 79,995 79,995

Earnings per share before dilutation, SEK

Revaluation of Purchased Debt, SEK M

Investments in Purchased Debt, SEK M

SEK M 30 Sep 30 Sep 31 D
ec
2011 2010 2010
ASSETS
Intangible fixed assets
Capitalized expenditure for IT development and other 308.5 318.3 332.0
intangibles
Client relationships
135.8 58.6 156.0
Goodwill 2,245.0 1,697.0 2,152.5
T
o
tal intangible fixed assets
2,689.3 2,073.9 2,640.5
T
angible fixed assets
67.0 73.5 83.9
Other fixed assets
Shares and participations in associated companies and 11.9 21.5 21.2
other companies
Purchased debt 3,160.1 2,138.5 2,373.4
Deferred tax assets 96.0 111.5 75.9
Other long-term receivables 42.8 46.6 48.4
T
o
tal o
ther fixed assets
3,310.8 2,318.1 2,518.9
T
o
tal fixed assets
6,067.1 4,465.5 5,243.3
Current Assets
Accounts receivable 257.6 240.5 268.3
Client funds 603.6 561.1 599.4
Tax assets
Other receivables
52.9
299.5
39.8
348.3
33.1
325.1
Prepaid expenses and accrued income 126.4 147.8 138.7
Cash and cash equivalents 419.9 493.6 507.1
T
o
tal current assets
1,759.9 1,831.1 1,871.7
TOTAL ASSETS 7,827.0 6,296.6 7,115.0
SHAREHOLDERS' EQUITY AND LIABILITIES
Attributable to parent company's shareholders
Attributable to non-controlling interest
2,703.9
1.5
2,496.7
0.2
2,576.4
0.2
T
o
tal shareho
lders' equity
2,705.4 2,496.9 2,576.6
Long-term liabilities
Liabilities to credit institutions 2,904.4 2,154.3 2,588.6
Other long-term liabilities 62.2 2.7 78.9
Provisions for pensions 40.7 37.2 32.1
Other long-term provisions 11.9 17.7 15.1
Deferred tax liabilities 90.2 28.0 79.3
T
o
tal lo
ng-term liabilities
3,109.4 2,239.9 2,794.0
Current liabilities
Liabilities to credit institutions 5.0 4.4 0.4
Commercial paper 208.3 0.0 0.0
Client funds payable 603.6 561.1 599.4
Accounts payable 118.4 110.7 141.4
Income tax liabilities 249.3 206.3 201.6
Advances from clients 26.8 28.4 27.2
Other current liabilities 286.7 189.1 260.5
Accrued expenses and prepaid income 506.0 447.5 502.6
Other short-term provisions 8.1 12.3 11.3
T
o
tal current liabilities
2,012.2 1,559.8 1,744.4
TOTAL SHAREHOLDERS' EQUITY AND 7,827.0 6,296.6 7,115.0
SEK M Jan-Sept Jan-Sept F
ull Year
2011 2010 2010
Operating activities
Operating earnings (EBIT) 639.9 548.8 730.6
Depreciation/amortization 128.4 129.6 171.4
Amortization of Purchased Debt 633.2 598.8 800.1
Adjustment for expenses not included in cash flow 3.6 -5.3 -14.3
Interest received 13.7 7.5 11.1
Interest paid and other financial expenses -75.3 -60.4 -68.4
Income tax paid -153.6 -109.7 -105.0
C
ash flo
w fro
m o
perating activities befo
re
changes in wo
rking capital
1,189.9 1,109.3 1,525.5
Changes in working capital 2.6 11.6 104.3
C
ash flo
w fro
m o
perating activities
1,192.5 1,120.9 1,629.8
Investing activities
Purchases of tangible and intangible fixed assets -86.9 -110.9 -145.5
Debt purchases -1,306.1 -632.2 -1,049.6
Purchases of shares in subsidiaries and other companies -32.4 -10.2 -460.9
Disposals of shares in subsidiaries and associated
companies
3.1 0.0 0.0
Other cash flow from investing activities 12.8 13.2 10.5
C
ash flo
w fro
m investing activities
-1,409.5 -740.1 -1,645.5
Financing activities
Borrowings and amortization 455.3 -51.4 337.5
Share dividend to Parent Company's shareholders -327.0 -299.0 -299.0
C
ash flo
w fro
m financing activities
128.3 -350.4 38.5
C
hange in liquid assets
-88.7 30.4 22.8
Opening balance o
f liquid assets
507.1 491.4 491.4
Exchange rate differences in liquid assets 1.5 -28.2 -7.1
C
lo
sing balance o
f liquid assets
419.9 493.6 507.1

Debt purchases during January-September 2011 include SEK 24.4 M included in the acquisition of Difko Inkasso A/S.

SEK M 2011
Attributable to
Parent
Company's
shareholders
Non-controlling
interest
T
o
tal
Attributable to
Parent
Company's
shareholders
Non-controlling
interest
T
o
tal
Opening B
alance, January 1
2,576.4 0.2 2,576.6 2,548.7 0.2 2,548.9
Comprehensive income for the period 454.5 1.3 455.8 246.7 0.0 246.7
Effect of employee stock option 0.0 0.0 0.3 0.3
program
Dividend
-327.0 -327.0 -299.0 -299.0
C
lo
sing B
alance, September 30
2,703.9 1.5 2,705.4 2,496.7 0.2 2,496.9
Quarter 3 Quarter 2 Quarter 1 Quarter 4 Quarter 3
2011 2011 2011 2010 2010
Revenues excluding revaluations, SEK M
994.4
961.6 926.0 960.0 923.7
Operating earnings (EBIT) excl revaluations, SEK M
259.9
194.7 159.9 176.4 212.0
Organic growth, %
2.9
2.7 1.4 -0.2 -2.2
Collection cases in stock, M
illion
19.8
20.2 20.0 19.2 17.8
Total collection value, SEK Billion
154.3
148.8 142.6 123.3 113.1
2010 2009 2008 2007 2006
F
ull Year
Full Year Full Year Full Year Full Year
Revenues, SEK M 3,766.0 4,127.8 3,677.7 3,225.2 2,939.6
Revenues excluding revaluations, SEK M 3,762.8 4,163.5 3,675.5 3,213.7 2,932.4
Organic growth, % -0.8 3.9 9.3 10.4 4.3
Operating earnings (EBIT), SEK M 730.6 668.2 697.3 667.8 586.7
Operating earnings (EBIT) excl revaluations, SEK M 727.4 703.9 695.1 656.3 579.5
Operating margin excl revaluations, % 19.3 16.9 18.9 20.4 19.8
Earnings before tax, SEK M 639.3 588.4 569.7 595.7 527.1
Net earnings, SEK M 452.0 440.6 441.7 462.0 407.5
Earnings per share before dilution, SEK 5.67 5.53 5.58 5.86 5.09
Interest coverage ratio, multiple 7.2 7.6 4.6 7.5 8.1
Return on total capital, % 10.7 10.0 12.0 13.9 14.0
Return on capital employed, % 14.4 13.4 16.8 20.2 20.5
Return on operating capital, % 15.7 14.3 17.2 21.1 21.5
Return on shareholders' equity, % 17.6 17.8 20.8 27.8 28.9
Return on purchased debt, % 16.3 15.6 16.6 17.0 14.4
Equity/assets ratio, % 36.2 37.5 35.5 34.2 33.5
Dividend, SEK 4.10 3.75 3.50 3.25 2.75
Average number of employees 3,099 3,372 3,318 3,093 2,954
2011 2010 2009 2008 2007
July-Sept July-Sept July-Sept July-Sept July-Sept
Revenues, SEK M 998.1 922.9 1,023.2 905.4 792.5
Revenues excluding revaluations, SEK M 994.4 923.7 1,029.7 905.0 795.0
Organic growth, % 2.9 -2.2 5.2 10.3 10.6
Operating earnings (EBIT), SEK M 263.6 211.2 147.2 208.2 172.6
Operating earnings (EBIT) excl revaluations, SEK M 259.9 212.0 153.7 207.8 175.1
Operating margin excl revaluations, % 26.1 23.0 14.9 23.0 22.0
Earnings before tax, SEK M 227.5 193.3 131.7 168.8 153.8
Net earnings, SEK M 170.5 144.9 98.7 126.6 115.4
Earnings per share before dilution, SEK 2.14 1.82 1.24 1.60 1.46
Interest coverage ratio, multiple 6.6 5.8 8.8 4.8 7.9
Return on total capital, % 14.3 13.7 8.5 14.3 15.0
Return on capital employed, % 19.1 18.4 11.1 19.4 20.8
Return on operating capital, % 20.1 19.9 12.0 20.0 21.9
Return on shareholders equity, % 26.0 23.7 16.1 27.1 29.4
Return on purchased debt, % 19.1 15.8 15.9 17.2 17.1
Equity/assets ratio, % 34.6 39.7 35.3 32.7 35.3
Average number of employees 3,282 3,064 3,277 3,211 3,005
SEK M July-Sept July-Sept Change Jan-Sept Jan-Sept Change F
ull Year
2011 2010 % 2011 2010 % 2010
Northern Europe 449.6 374.1 20.2 1,297.9 1,066.4 21.7 1,445.1
Central Europe 234.0 216.4 8.1 655.5 689.1 -4.9 924.3
Western Europe 314.5 332.4 -5.4 954.0 1,045.1 -8.7 1,396.6
T
o
tal revenues fro
m external clients
998.1 922.9 8.1 2,907.4 2,800.6 3.8 3,766.0
SEK M July-Sept July-Sept Change Jan-Sept Jan-Sept Change F
ull Year
2011 2010 % 2011 2010 % 2010
Northern Europe 29.3 22.2 32.0 83.1 67.3 23.5 93.2
Central Europe 43.2 39.5 9.4 125.7 130.3 -3.5 173.4
Western Europe 22.6 22.3 1.3 69.6 73.2 -4.9 98.2
Eliminations -95.1 -84.0 13.2 -278.4 -270.8 2.8 -364.8
T
o
tal interco
mpany revenues
0.0 0.0 0.0 0.0 0.0
SEK M July-Sept July-Sept Change Jan-Sept Jan-Sept Change F
ull Year
2011 2010 % 2011 2010 % 2010
Northern Europe 142.8 113.9 25.4 344.7 250.7 37.5 332.6
Central Europe 58.9 46.2 27.5 132.0 137.1 -3.7 196.3
Western Europe 61.9 50.0 23.8 172.6 162.5 6.2 202.6
Loss on disposal of shares in asscciated
company
0.0 - - -8.7 - - -
Participation in Iceland 0.0 1.1 - -0.7 -1.5 - -0.9
T
o
tal o
perating earnings (EB
IT
)
263.6 211.2 24.8 639.9 548.8 16.6 730.6
Net financial items -36.1 -17.9 101.7 -80.7 -70.8 14.0 -91.3
Earnings befo
re tax
227.5 193.3 17.7 559.2 478.0 17.0 639.3
SEK M July-Sept July-Sept Jan-Sept Jan-Sept F
ull Year
2011 2010 2011 2010 2010
Northern Europe 2.9 4.2 17.4 6.1 11.0
Central Europe -0.2 -2.0 7.3 -5.0 -1.9
Western Europe 1.0 -3.0 0.7 -3.3 -5.9
T
o
tal revaluatio
n
3.7 -0.8 25.4 -2.2 3.2
SEK M July-Sept July-Sept Jan-Sept Jan-Sept F
ull Year
2011 2010 2011 2010 2010
Northern Europe -1.1 0.0 -3.1 -0.2 -0.6
Central Europe 0.0 -0.3 0.0 -1.1 -1.5
Western Europe -3.2 -3.3 -9.4 -10.2 -13.4
T
o
tal amo
rtizatio
n and impairment
-4.3 -3.6 -12.5 -11.5 -15.5
SEK M July-Sept July-Sept Change Jan-Sept Jan-Sept Change F
ull Year
2011 2010 % 2011 2010 % 2010
Northern Europe 446.7 369.9 20.8 1,280.5 1,060.3 20.8 1,434.1
Central Europe 234.2 218.4 7.2 648.2 694.1 -6.6 926.2
Western Europe 313.5 335.4 -6.5 953.3 1,048.4 -9.1 1,402.5
T
o
tal revenues excluding revaluatio
ns
994.4 923.7 7.7 2,882.0 2,802.8 2.8 3,762.8
SEK M July-Sept July-Sept Change Jan-Sept Jan-Sept Change F
ull Year
2011 2010 % 2011 2010 % 2010
Northern Europe 139.9 109.7 27.5 327.3 244.6 33.8 321.6
Central Europe 59.1 48.2 22.6 124.7 142.1 -12.2 198.2
Western Europe 60.9 53.0 14.9 171.9 165.8 3.7 208.5
Loss on disposal of shares in asscciated
company
0.0 - - -8.7 - - -
Participation in Iceland 0.0 1.1 - -0.7 -1.5 - -0.9
T
o
tal o
perating earnings excluding
revaluatio
ns
259.9 212.0 22.6 614.5 551.0 11.5 727.4
% July-Sept July-Sept Jan-Sept Jan-Sept F
ull Year
2011 2010 2011 2010 2010
Northern Europe 31.3 29.7 25.6 23.1 22.4
Central Europe 25.2 22.1 19.2 20.5 21.4
Western Europe 19.4 15.8 18.0 15.8 14.9
Operating margin fo
r the Gro
up
26.1 23.0 21.3 19.7 19.3
F
ull Year
2011 2010 % 2011 2010 % 2010
826.7 806.3 2.5 2,425.2 2,444.8 -0.8 3,274.3
272.9 205.1 33.1 790.2 624.0 26.6 860.5
-101.5 -88.5 14.7 -308.0 -268.2 14.8 -368.8
998.1 922.9 8.1 2,907.4 2,800.6 3.8 3,766.0
July-Sept July-Sept Change Jan-Sept Jan-Sept Change
SEK M July-Sept July-Sept Change Jan-Sept Jan-Sept Change F
ull Year
2011 2010 % 2011 2010 % 2010
External Credit M
anagement revenues
725.2 717.8 1.0 2,117.2 2,176.6 -2.7 2,905.5
Collections on purchased debt 491.7 393.5 25.0 1,388.3 1,188.9 16.8 1,614.9
Amortisation of purchased debt -237.1 -202.4 17.1 -658.6 -596.7 10.4 -803.3
Revaluation of purchased debt 3.7 -0.8 - 25.4 -2.2 - 3.2
Other revenues from financial services 14.6 14.8 -1.4 35.1 34.0 3.2 45.7
T
o
tal revenues
998.1 922.9 8.1 2,907.4 2,800.6 3.8 3,766.0
SEK M July-Sept July-Sept Change Jan-Sept Jan-Sept Change F
ull Year
2011 2010 % 2011 2010 % 2010
Credit M
anagement
152.5 145.7 4.7 355.0 350.8 1.2 471.9
Purchased Debt 138.9 85.0 63.4 402.6 277.9 44.9 382.6
Loss on disposal of shares in asscciated
company
0.0 0.0 - -8.7 0.0 - -
Participation in Iceland 0.0 1.1 - -0.7 -1.5 - -0.9
Central costs * -27.8 -20.6 35.0 -108.3 -78.4 38.1 -123.0
T
o
tal o
perating earnings
263.6 211.2 24.8 639.9 548.8 16.6 730.6
% July-Sept July-Sept Jan-Sept Jan-Sept F
ull Year
2011 2010 2011 2010 2010
Credit M
anagement
18.4 18.1 14.6 14.3 14.4
Purchased Debt 50.9 41.4 50.9 44.5 44.5
Gro
up to
tal
26.4 22.9 22.0 19.6 19.4
Key F
igures
July-Sept July-Sept Jan-Sept Jan-Sept Full Year
2011 2010 2011 2010 2010
Revenue growth, % 8.1 -9.8 3.8 -9.1 -8.8
Organic growth, % 2.9 -2.2 1.5 -1.0 -0.8
Growth in operating earnings, % 24.8 43.5 16.6 18.8 9.3
Growth in earnings before tax, % 17.7 46.8 17.0 18.8 8.7
Operating margin excluding revaluations, % 26.1 23.0 21.3 19.7 19.3
Return on total capital, % 14.3 13.7 11.7 11.3 10.7
Return on operating assets employed, % 19.1 18.4 15.8 15.1 14.4
Return on operating capital, % 20.1 19.9 16.8 16.6 15.7
Return on shareholders' equity, % 26.0 23.7 19.6 17.5 17.6
Return on purchased debt, % 19.1 15.8 19.4 16.7 16.3
Net debt, SEK M 2,801.2 1,703.3 2,801.2 1,703.3 2,193.3
Net debt/Equity ratio, % 103.5 68.2 103.5 68.2 85.1
Equity/Assets ratio, % 34.6 39.7 34.6 39.7 36.2
Interest coverage ratio, multiple 6.6 7.1 6.9 9.6 7.2
Collection cases in stock, M
illion
19.8 17.8 19.8 17.8 19.2
Total collection value, SEK Billion 154.3 113.1 154.3 113.1 123.3
Average number of employees 3,282 3,064 3,213 3,117 3,099

Definitions

Increases in revenues, operating earnings and earnings before tax refer to the percentage increase in each income statement item year-over-year.

Organic growth refers to the average increase in revenues in local currency, adjusted for revaluations of Purchased Debt portfolios and the effects of acquisitions and divestments of Group companies.

Consolidated revenues include variable collection commissions, fixed collection fees, debtor fees, guarantee commissions, subscription revenue and income from Purchased Debt operations. Income from Purchased Debt consists of collected amounts less amortization, i.e., the decrease in the portfolios' book value for the period.

Operating margin is operating earnings as a percentage of revenues.

Return on total capital is operating earnings plus financial income, recalculated on a full-year basis, divided by average total assets.

Return on capital employed is operating earnings plus financial income, recalculated on a full-year basis, divided by average operating capital employed. Capital employed is the sum of shareholders' equity including minority shares, interest-bearing liabilities and pension provisions.

Return on operating capital is operating earnings, recalculated on a full-year basis, divided by average operating capital. Operating capital consists of the sum of shareholders' equity including minority interests, interest-bearing liabilities and pension provisions less liquid assets and interest-bearing receivables.

Return on shareholders' equity is net earnings for the period attributable to the Parent Company's shareholders, recalculated on a full-year basis, as a percentage of average equity attributable to the Parent Company's shareholders.

Return on Purchased Debt is the service line's operating earnings for the period, recalculated on a full-year basis, as a percentage of the average carrying amount of the balance-sheet item Purchased Debt.

Net debt is interest-bearing liabilities and pension provisions less liquid assets and interest-bearing receivables.

Equity/assets ratio is shareholders' equity including minority interests as a percentage of total assets.

Interest coverage ratio is earnings after financial items plus financial expenses divided by financial expenses.

Intrum Justitia Group - Ownership Structure
---------------------------------------------
N
o
o
f
30 September 2011 shares C apital and
Vo
tes, %
Carnegie Funds 5,523,000 6.9
Fidelity Investment M
anagement
4,011,055 5.0
Lannebo Funds 3,660,102 4.6
CapM
an Oyj
3,607,550 4.5
SEB Funds 2,685,170 3.4
State of New Jersey Pension Fund 2,500,000 3.1
SHB Funds 2,441,646 3.1
Fourth Swedish National Pension Fund 2,417,631 3.0
Swedbank Robur Funds 2,336,925 2.9
First Swedish National Pension Fund 2,316,939 2.9
Confederation of Swedish Enterprise 1,600,000 2.0
Horn Fjarfestingarfelag 1,529,784 1.9
Odin Funds 1,217,981 1.5
Second Swedish National Pension Fund 967,808 1.2
State of Norway 909,369 1.1
T
o
tal, fifteen largest shareho
lders
37,724,960 47.1
T
o
tal number o
f shares:
79,744,651

Swedish ownership accounted for 54.5 percent (institutions 20.5 percentage points, mutual funds 26.3 percentage points, retail 7.8 percentage points) Source: SIS Aktieägarservice

SEK M Jan-Sept Jan-Sept Full Year
2011 2010 2010
Revenues 53.7 50.9 61.9
Gro
ss earnings
53.7 50.9 61.9
Sales and marketing expenses -9.9 -9.4 -13.4
General and administrative expenses -97.5 -76.6 -106.3
Operating earnings (EB
IT
)
-53.7 -35.1 -57.8
Income from subsidiaries 128.1 0.0 -250.8
Net financial items -20.6 -24.8 -31.2
Earnings befo
re tax
53.8 -59.9 -339.8
Tax 0.0 0.0 16.0
N
et earnings fo
r the perio
d
53.8 -59.9 -323.8
SEK M Jan-Sept Jan-Sept Full Year
2011 2010 2010
Net earnings for the period 53.8 -59.9 -323.8
Other comprehensive income: Change of translation
reserve
-54.9 255.5 250.7
T
o
tal co
mprehensive inco
me
-1.1 195.6 -73.1
SEK M 30 Sep 30 Sep 31 Dec
2011 2010 2010
A
SSET
S
F
ixed assets
Intangible fixed assets 0.5 0.5 0.9
Tangible fixed assets 0.6 0.3 0.4
Financial fixed assets 7,613.0 7,508.9 7,478.6
T
o
tal fixed assets
7,614.1 7,509.7 7,479.9
C
urrent assets
Current receivables 2,270.9 1,731.2 1,863.3
Cash and bank balances 50.4 138.9 138.3
T
o
tal current assets
2,321.3 1,870.1 2,001.6
T
OT
A
L A
SSET
S
9,935.4 9,379.8 9,481.5
SH
A
R
EH
OLD
ER
S' EQUIT
Y A
N
D
LIA
B
ILIT
IES
Restricted equity
284.1 284.1 284.1
Unrestricted equity 4,573.4 5,128.2 4,901.4
T
o
tal shareho
lders' equity
4,857.5 5,412.3 5,185.5
Provisions 5.0 2.3 5.0
Long-term liabilities 3,947.5 3,035.6 3,620.6
Current liabilities 1,125.4 929.6 670.4
T
OT
A
L SH
A
R
EH
OLD
ER
S* EQUIT
Y A
N
D
LIA
B
ILIT
IES
9,935.4 9,379.8 9,481.5
Pledged assets None None None
Contingent liabilities None None None