Intrum — Interim / Quarterly Report 2022

Oct 27, 2022

Interim report Third quarter, 2022

Third quarter 2022 highlights

• Strong, resilient underlying performance in seasonally slower quarter
• All segments contributing to growth, with cash revenues up 9 per cent and cash EBITDA up 4 per cent from Q3 '21 and RTM cash EPS >SEK 30
• Continued strong performance in Portfolio Investments and Strategic Markets with some notable client wins in Italy and for CMS in Switzerland
• Leverage ratio stable at 4.0x due to continued adverse currency movements, at constant Q2 '22 currency leverage ratio reduces to 3.9x
• Expect a seasonally strong fourth quarter despite more challenging macroeconomic backdrop and in coming quarters increasing demand for our services and solutions, in particular servicing
• EBIT of SEK -1,576 (1,341) M for Q3 '22 includes negative adjustments following revaluations of specific investment portfolios totalling SEK 3,153 M. Adjusted EBIT increased to SEK 1,564 M (1,533). Negative adjustments includes SEK 2 665 M revaluation, SEK 393 M client relationship impairment and SEK 95 M derivative loss
• In the third quarter cash EBIT increased to SEK 1,396 M (1,394), cash RoIC decreased to 7.3 per cent (7.8) and cash earnings per share (cash EPS) decreased to SEK 2.48 (3.68). Net earnings for the period amounted to SEK -2,159 M (541)

							Rolling
		Third quarter			9 months		12 months	Full year
	July–Sep	July–Sep	Change	Jan–Sep	Jan–Sep	Change	Oct 2021–
SEK M, unless otherwise indicated	2022	2021	%	2022	2021	%	Sep 2022	2021
Revenues	4,570	4,294	6	13,928	12,919	8	18,797	17,789
Adjusted revenues	4,530	4,183	8	13,826	12,803	8	18,679	17,656
Operating earnings (EBIT)	-1,576	1,341	-218	1,307	4,435	-71	3,348	6,475
Adjusted operating earnings (EBIT)	1,564	1,533	2	4,736	4,659	2	7,090	7,014
Net earnings for the period	-2,159	541	-499	-803	2,141	-139	448	3,391
Earnings per share, SEK	-17.05	4.33	-494	-6.95	16.90	-141	2.04	25.88
Adjusted earnings per share, SEK	6.31	5.41	17	17.93	18.18	-1	28.63	28.86
Cash revenues	5,810	5,322	9	17,868	16,162	11	23,921	22,215
Cash EBITDA	3,009	2,906	4	9,452	8,583	10	13,179	12,310
Cash EBIT	1,396	1,394	0	4,401	4,172	5	6,572	6,343
Cash EPS, SEK	2.48	3.68	-33	16.19	15.03	8	30.16	28.98
Cash RoIC, %	7.3	7.8	-0.6 ppt	7.8	7.8	0.0 ppt	8.8	8.9
Net debt/RTM cash EBITDA, x							4.0	3.9
Cash EBIT: Credit Management Services	346	396	-13	1,002	1,202	-17	1,439	1,640
Cash EBIT: Strategic Markets	699	482	45	2,262	1,699	33	3,571	3,009
Cash EBIT: Portfolio Investments	999	907	10	3,006	2,662	13	3,907	3,561
Total portfolio investments made	1,335	1,633	-18	6,260	5,423	15	8,943	8,106
Carrying value of portfolio investments	39,693	36,179	10	39,693	36,179	10	39,693	38,231
Adjusted return on portfolio investments, (ROI), %	14	14	0 ppt	14	14	-0 ppt	14	14

Challenging economic environment drives increasing need for our services

First impressions

In my first couple of months as acting CEO, I have been incredibly impressed by the power of Intrum's platform, with c. 10,000 dedicated, highly capable team members serving c. 80,000 active clients across 25 countries. While Intrum is certainly the largest and, in my opinion, the best credit management platform in the world, I see significant potential for further improvements over time. Strengthening and accelerating the commercial development of the company is one of my main priorities, alongside an increased emphasis on transformational leadership across the entire Intrum organisation.

I have been privileged to witness first-hand the important work Intrum does in helping individuals and companies, that have fallen on difficult times, get back on track and regain control of their finances. This process is critical for the sustainability and viability of the economy as well as society as a whole. In 2022 we helped c. 2.5 M customers to fulfil their obligations and become debt free with Intrum. This singular and sustainable purpose - to help our clients recover on late payments while treating their customers fairly and respectfully - is core to the Intrum culture and our greatest motivating force.

I have also completed an initial review of all aspects of our operating model, including the ONE Intrum transformation program. This review has validated the expected recurring benefits of at least SEK 1 bn, but more importantly, I am confident that this program will allow us to be the most efficient and highly functioning credit management platform in our industry over time, balancing global scale and local market knowledge. I will provide a full update on ONE Intrum in the first quarter of 2023.

Macroeconomic environment drives demand for our services

As we approach winter, high inflation and in particular high and increasing energy prices are a major concern for European consumers and businesses. As of September, annualised CPI in the Euro area was 10%. As a response to this, central banks are sharply raising interest rates, significantly increasing the cost of credit after many years of low interest rates.

While high energy prices have already led to substantial new case inflows over the last 9 months, NPLs have not yet shown the same development. Feedback from our clients and increasing levels of Stage-2 loans lead us to expect more inflows across the board, particularly into 2023, increasing the demand for our services and solutions.

Seasonally slower quarter with growth across the board

In the third quarter Intrum continued to demonstrate financial strength and performance, growing cash revenues by 9 per cent and cash EBITDA by 4 per cent compared to the third quarter of 2021, with all three segments contributing positively. The quarter was again impacted by significant currency movements with SEK in particular depreciating by 6 per cent vs. EUR since the beginning of the year. While this has on average positively impacted the P&L as c. 70 per cent of our revenues are EUR denominated, our leverage ratio has been negatively affected due to a higher value of EUR denominated debt as of the balance sheet date. At constant Q2 '22 currency the leverage ratio reduces to 3.9 times. Liquidity remains very strong at SEK 17 bn.

Strategic Markets continued to perform strongly throughout the seasonally slower summer quarter. As we continue to build our market position, we had some notable client wins particularly in Italy with a multi-year servicing agreement with no upfront payment from Credit Agricole Italy covering granular UtP exposures as well as an exclusive servicing mandate from the UtP Italia fund which will be launched with assets contributed by four leading Italian banks. In CMS, the financial services new inflow picture remains challenging while non-financial services claims drive collections and associated costs. In Switzerland we agreed on entering a BNPL debt collection activities and credit information partnership with Cembra Money Bank AG. Investments continues to collect above the active forecast with an index of 106% in the quarter. As communicated since early 2022 the index is now starting to normalise, primarily driven by fewer and smaller settlements while sustainable payment plans remain stable. In addition, we are starting to see higher yields for new portfolio purchases reflecting in part an increasing cost of risk.

Strong fourth quarter ahead

We expect a seasonally strong fourth quarter despite the more challenging macroeconomic backdrop. Intrum has a resilient business model with Servicing in particular expected to benefit from increasing demand for our services in due course. For

"I have been privileged to witness the important work Intrum does in helping individuals and companies, that have fallen on difficult times, get back on track and regain control of their finances"

Portfolio Investments we expect a slower investment pace in the fourth quarter as we selectively deploy capital as investment returns adjust to the new environment.

We continue to work towards achieving all our medium-term financial targets, including our leverage target, where we, given the challenging market conditions, aim to achieve a leverage ratio of 3.5 times as soon as possible. Our strategy remains unchanged as we focus on growth and commercial success as well as improving effectiveness and efficiency through ONE Intrum.

In an increasingly challenging macroeconomic environment, the need for our services becomes ever more acute. As Europe's leading credit management services company, we continue to play a central role in securing a more effective and efficient financial value chain, for our clients, customers and society at large.

Stockholm, October 2022 Andrés Rubio Acting President & CEO

Key financial metrics

Cash metrics

Cash metrics help us present a transparent view of performance for the business in which we operate. Our servicing business area is not capital intensive but in our investment business area we utilise capital in terms of our investments. These investments and our servicing activities generate cash revenues and require cash expenses. When adjusting for cash items like replenishment capex, other capex, cash net financials and cash tax, we have a performance measurement of cash return on invested capital (Cash RoIC) and cash earnings per share (Cash EPS) on a recurring basis.

Cash metrics are central to our financial targets set out at the Capital Markets Day in late 2020.

Financial targets

Returns: Cash RoIC >10% medium term Growth : Cash EPS > 10% p.a. on average medium term Leverage: Net debt/Cash EBITDA 2.5–3.5x by end of 2022 Shareholder remuneration: Absolute annual increase in dividend per share

Quarterly development

Q3 2022 was a seasonally slower quarter, with strong and resilient underlying performance. Strategic Markets continue to perform ahead of expectations, outperformance in Portfolio Investments, albeit strong, is starting to normalise and CMS again continues to be affected by lower new financial services inflows. The leverage ratio also continues to be adversely affected by currency movements.

In Q3 2022 cash revenues increased to SEK 5,810 M (5,322), cash EBITDA SEK 3,009 M (2,906) and cash EBIT to SEK 1,396 M (1,394). Cash EPS was SEK 2.48 (3.68), Cash RoIC stood at 7.3 (7.8) and leverage ratio at 4.0x (4.2x).

On a rolling 12-month basis cash revenues increased to SEK 23,921 M (21,763), cash EBITDA SEK 13,179 SEK (11,706) and cash EBIT to SEK 6,572 M (5,694). Cash EPS increased to SEK 30.16 (24.04), and cash RoIC increased to 8.8% (8.0).

Net Debt/RTM cash EBITDA 2,2 4,2 4.0x 4.2x Target: 2.5x–3.5x 3.9x 3.8x 4.0x Q 3 2021 Q 4 2021 Q 1 2022 Q 2 2022 Q 3 2022 Cash revenues, SEK M Cash revenues rolling 12 months, SEK M 5,810 5,322 6,053 5,792 6,266 Q 3 2021 Q 4 2021 Q 1 2022 Q 2 2022 Q 3 2022 21,763 22,215 22,758 23,433 23,921 Cash EBIT, SEK M Cash EBIT rolling 12 months, SEK M 6,572 5,694 6,343 6,387 6,569 Q 3 2021 Q 4 2021 Q 1 2022 Q 2 2022 Q 3 2022 1,394 2,171 1,409 1,595 1,396 Cash EPS, SEK M Cash EPS rolling 12 months, SEK M 24.04 28.98 27.89 31.34 30.16 Q 3 2021 Q 4 2021 Q 1 2022 Q 2 2022 Q 3 2022 3.68 13.93 4.58 9.12 2.48 Target: >10% p.a. Cash RoIC, % Cash RoIC rolling 12 months, % 7.3 7.8 12.0 7.7 8.4 Q 3 2021 Q 4 2021 Q 1 2022 Q 2 2022 Q 3 2022 8.0 8.9 8.9 9.0 8.8 Target: >10%

ONE Intrum

Transforming the operating model to reach full potential of scale and efficiency

Intrum has a solid foundation and proud heritage with over 80,000 clients across Europe, making us the market leader. However, the market we operate in is changing. To capture growth opportunities, we must act as ONE aligned company with modern IT infrastructure and a global operating model, adapting to current and future needs of our clients and customers. We will spend SEK 1 bn in the transformation to achieve SEK 1bn of net savings per annum.

As part of the transformation program, we are implementing ONE technology platform across all our markets and building a global operations footprint consisting of global front- and back-offices in Athens, Bucharest, Malaga, Mauritius, and Vilnius.

Through our ONE Intrum transformation program, we are establishing a simpler, more digital and scalable business model making us more agile, cost-efficient and data-driven. The ONE Intrum transformation program allows us not only to maintain our market leading position – but to further strengthen it.

ONE Intrum trajectory to deliver SEK 1 bn of recurring benefits in due course

The ONE Intrum transformation program is progressing well with volumes in the global footprint continuing to build. Our 4 global front offices now serve 18 Intrum markets and 20 per cent of all calls.

The new global operating platform is our largest collection system with 9.4 million cases, 25 per cent of all cases globally, across 7 markets. No new migrations took place during the third quarter of 2022 as we focus on ensuring stable performance for migrated cases and prepare for upcoming migrations. Our migration time plan is continuously reviewed and optimised to ensure that the system is fully ready for production as cases are migrated.

At the end of Q3 2022, our full year run-rate savings realised from the transformation program are at SEK 222 M, a few months ahead of plan and well on track toward our target of SEK 1 bn of recurring benefits. The benefit can be seen in our rolling twelve month FTE cost-to-collect ratio which decreased to 5.7 per cent for Q3 2022 vs. 6.3 per cent for Q3 2021.

Budget accumulated (RHS) Actuals accumulated (RHS)

Planned vs. realised program savings, run-rate SEK M

Segment overview

Credit Management Services, Strategic Markets and Portfolio Investments

Key figures, Q3 2022

	Credit Management	Strategic	Portfolio	Group
SEK M	Services	Markets	Investments	items	Group
Cash revenues	1,042	1,412	3,356	–	5,810
Reported segment earnings	295	23	-1,169	-725	-1,576
Depreciation and amortisation	44	627	2	72	745
Portfolio amortisation	–	–	1,206	–	1,206
Adjustment earnings from joint ventures	–	-15	2,482	–	2,467
Adjustment cash flow from joint ventures	–	7	67	–	74
Items affecting comparability	21	75	-55	52	93
Cash EBITDA	360	718	2,532	-601	3,009
Replenishment capex	–	–	-1,533	–	-1,533
Other capex	-14	-19	–	-47	-80
Cash EBIT	346	699	999	-648	1,396
Cash financial items					-728
Cash tax normalised					-368
Recurring consolidated cash earnings					300
Average number of shares outstanding					121
Cash EPS, SEK					2.48
Average invested capital	20,086	15,056	41,587	201	76,930
Cash RoIC, %	6.9	18.6	9.6	–	7.3
Revenues	1,586	1,516	2,124	-656	4,570
Items affecting comparability	–	–	-40	–	-40
Adjusted revenues	1,586	1,516	2,083	-656	4,530
Reported segment earnings	295	23	-1,169	-725	-1,576
Items affecting comparability	21	460	2,607	53	3,140
Adjusted segment earnings	316	483	1,438	-673	1,564

Credit Management Services, Strategic Markets and Portfolio Investments, cont.

Key figures, Q3 2021

	Credit Management	Strategic	Portfolio	Group
SEK M	Services	Markets	Investments	items	Group
Cash revenues	996	1,160	3,166	–	5,322
Reported segment earnings	356	265	1,198	-479	1,341
Depreciation and amortisation	60	223	2	46	330
Portfolio amortisation	–	–	1,072	–	1,072
Adjustment earnings from joint ventures	–	–	121	–	121
Adjustment cash flow from joint ventures	–	–	67	–	67
Items affecting comparability	–	6	-111	79	-27
Cash EBITDA	416	494	2,350	-354	2,906
Replenishment capex	–	–	-1,443	–	-1,443
Other capex	-21	-12	–	-36	-69
Cash EBIT	396	482	907	-390	1,394
Cash financial items					-630
Cash tax normalised					-320
Recurring consolidated cash earnings					445
Average number of shares outstanding					121
Cash EPS, SEK					3.68
Average invested capital	19,174	15,526	36,478	227	71,405
Cash RoIC, %	8.3	12.4	9.9	–	7.8
Revenues	1,541	1,257	2,138	-642	4,294
Items affecting comparability	–	–	-112	–	-112
Adjusted revenues	1,541	1,257	2,027	-642	4,183
Reported segment earnings	356	265	1,198	-479	1,341
Items affecting comparability	–	6	107	79	192
Adjusted segment earnings	356	271	1,305	-400	1,533

Credit Management Services

Credit management with a focus on late payments and collections. This segment includes 21 of the 24 European countries in which Intrum maintains credit management operations.

		Third quarter			9 months
	July–Sep	July–Sep	Change	Jan–Sep	Jan–Sep	Change
SEK M	2022	2021	%	2022	2021	%	2021
Cash revenues	1,042	996	5	3,115	3,046	2	4,102
Cash EBITDA	360	416	-13	1,032	1,256	-18	1,701
Other capex	-14	-21	-33	-29	-54	-46	-61
Cash EBIT	346	396	-13	1,002	1,202	-17	1,640
External revenues	1,042	996	5	3,115	3,046	2	4,102
Internal revenues	544	545	0	1,625	1,651	-2	2,197
Total revenues	1,586	1,541	3	4,740	4,697	1	6,299
Items affecting comparability	–	–	–	–	–	–	–
Adjusted revenues	1,586	1,541	3	4,740	4,697	1	6,299
Segment earnings	295	356	-17	831	1,075	-23	1,430
Items affecting comparability	21	0	n.m.	63	-1	n.m.	17
Adjusted segment earnings	316	356	-11	894	1,073	-17	1,447
KPI's
Average invested capital	20,086	19,174	5	19,538	19,107	2	19,103
Segment cash RoIC, %	6.9	8.3	-1.4 ppt	6.8	8.4	-1.6 ppt	8.6
Cash revenues change, %	5	-9		2	-7		-6
– thereof organic change, %	-1	-8		-2	-5		-4
– thereof exchange rates, %	6	-1		5	-2		-2
– thereof acquired growth, %	–	–		–	–		–
Operating margin, %	19	23	-5 ppt	18	23	-5 ppt	23
Adjusted operating margin, %	20	23	-3 ppt	19	23	-4 ppt	23

Credit Management Services, adjusted operating margin, % and segment cash RoIC, %

Credit Management Services, Cash EBIT, SEK M Cash EBIT rolling 12 months, SEK M

During Q3 2022, we continued to see increases in lower balance, lower commission invoice claims with associated increasing collections also driving costs. However, in revenue terms this underlying growth has been mostly offset by lower inflows of higher value, higher commission financial services claims relative to pre-pandemic volumes. We expect to see increased inflows of financial services claims largely into 2023 based on the current challenging macroeconomic environment and associated increases in consumer credit in general and Stage-2 loans in particular.

During the quarter we entered into an agreement to sell our

wholly owned subsidiaries Byjuno and Intrum Finance Services AG to Cembra Money Bank AG, allowing us to focus on and grow our core business in Switzerland. As part of the agreement, Cembra and Intrum also agreed on entering a BNPL debt collection activities and credit information partnership. The transaction is expected to close in the fourth quarter of 2022.

Cash revenues increased by 5 per cent to SEK 1,042 M compared to Q3 2021, while cash EBITDA and EBIT each decreased by 13 per cent due to higher operating expenses in the segment. Cash return on invested capital was 6.9 per cent (8.3) for the quarter.

Strategic Markets

Credit management focusing on late payments and collections in Greece, Italy and Spain.

		Third quarter			9 months
	July–Sep	July–Sep	Change	Jan–Sep	Jan–Sep	Change	Full year
SEK M	2022	2021	%	2022	2021	%	2021
Cash revenues	1,412	1,160	22	4,387	3,822	15	5,624
Cash EBITDA	718	494	45	2,307	1,740	33	3,080
– thereof joint ventures	7	–	–	7	–	–	–
Other capex	-19	-12	55	-46	-41	12	-72
Cash EBIT	699	482	45	2,262	1,699	33	3,009
External revenues	1,405	1,160	21	4,380	3,822	15	5,624
Internal revenues	112	97	15	337	287	17	387
Total revenues	1,516	1,257	21	4,717	4,108	15	6,011
Items affecting comparability	–	–	–	–	–	–	–
Adjusted revenues	1,516	1,257	21	4,717	4,108	15	6,011
Segment earnings	23	265	-91	1,006	1,074	-6	1,974
– thereof joint ventures	15	–	–	15	–	–	–
Items affecting comparability	460	6	n.m.	556	9	n.m.	251
Adjusted segment earnings	483	271	78	1,561	1,083	44	2,225
KPI's
Average invested capital	15,056	15,526	-3	14,873	15,633	-5	15,504
Segment cash RoIC, %	18.6	12.4	6.2 ppt	20.3	14.5	5.8 ppt	19.4
Cash revenues change, %	22	-29		15	-3		4
– thereof organic change, %	17	-28		11	1		8
– thereof exchange rates, %	5	-1		4	-4		-4
– thereof acquired growth, %	–	–		–	–		–
Operating margin, %	2	21	-20 ppt	21	26	-5 ppt	33
Adjusted operating margin, %	32	22	10 ppt	33	26	7 ppt	37

Strategic Markets, adjusted operating margin, % and segment cash RoIC, %

Strategic Markets, Cash EBIT, SEK M Cash EBIT rolling 12 months, SEK M

Strategic Markets continued its strong performance trajectory in the third quarter with significant improvements across all cash metrics compared to Q3 '21. Despite the more challenging macroeconomic backdrop and seasonally slower quarter Strategic Markets continues to deliver across all three geographies.

We have seen notable client wins particularly in Italy with a multi-year servicing agreement with no upfront payment from Credit Agricole Italy covering granular UtP exposures as well as an exclusive servicing mandate from the UtP Italia fund which will be launched with assets contributed by four leading Italian banks. In Spain, SAREB volumes have now been fully offboarded with no meaningful impact on segment earnings.

Adjusted segment earnings increased 78 per cent to SEK 483 M compared to Q3 2021 after adjustments to remove items affecting comparability of SEK 460 M mainly related to an impairment loss on customer relationships as a direct consequence of lowered collection expectations on Italian secured portfolios invested via joint venture arrangements, for more information see page 20.

Cash revenues at SEK 1,412 M were 22 per cent above the third quarter of 2021, while cash EBITDA and cash EBIT both increased by 45 per cent to SEK 718 M and SEK 699 M respectively. Cash RoIC was 18.6 per cent (12.4) for the quarter.

Portfolio Investments

Intrum invests in portfolios of overdue receivables and similar claims, after which Intrum's servicing operations collect on the claims acquired.

	Third quarter 2022				Third quarter 2021
	Overdue		Financial	Joint	Segment	Overdue		Financial	Joint	Segment
SEK M	receivables	REO	services	ventures	total	receivables	REO	services	ventures	total
Cash revenues	3,181	35	73	67	3,356	2,980	58	61	67	3,166
Cash EBITDA	2,438	7	20	67	2,532	2,236	7	41	67	2,350
Replenishment capex	-1,533	–	–	–	-1,533	-1,443	–	–	–	-1,443
Cash EBIT	905	7	20	67	999	793	7	41	67	907
Total revenues	2,016	35	73	–	2,124	2,019	58	61	–	2,138
Items affecting comparability	-40	–	–	–	-40	-112	–	–	–	-112
Adjusted segment revenues	1,975	35	73	–	2,083	1,908	58	61	–	2,027
Segment earnings	1,272	6	35	-2,482	-1,169	1,273	7	40	-121	1,198
Items affecting comparability	-40	–	-15	2,662	2,607	-112	0	–	219	107
Adjusted segment earnings	1,231	6	20	180	1,438	1,161	7	40	97	1,305
KPI's
Average invested capital	34,994	303	806	5,484	41,587	29,570	336	575	5,998	36,478
Segment cash RoIC, %	10.3	9.0	10.2	4.9	9.6	10.7	8.3	28.5	4.5	9.9
Total portfolio investments made	1,326	9	–	–	1,335	1,420	24	–	189	1,633
Money-on-money multiple (RTM)	2.07	–	–	–	2.07	2.05	–	–	–	2.05
Book value	35,161	296	–	4,236	39,693	29,840	326	–	6,013	36,179
ERC	74,704	362	–	7,767	82,832	62,603	411	–	7,308	70,322
Cost to collect, paid %	23	82	–	–	24	25	89	–	–	26
Amortisation ratio, %	38	–	–	–	38	36	–	–	–	36
Operating margin, %	63	18	48	–	-55	63	11	67	–	56
Adjusted operating margin, %	62	18	27	–	69	61	11	67	–	64
Return on portfolio	15	8	–	-181	-12	17	8	–	-8	13
investments, ROI, %
Adjusted return on portfolio investments, ROI, %	14	8	–	13	14	16	7	–	6	14

Portfolio Investments, Adjusted return, %, Cash RoIC, %

Portfolio Investments, Cash EBIT, SEK M Cash EBIT rolling 12 months, SEK M

In the third quarter we saw collection performance at 6 per cent above active forecast with a cash return on invested capital of 9.6 per cent (9.9). This is consistent with the eventual gradual normalisation in outperformance compared to active forecast that we have communicated since early 2022.

In the context of an increasingly challenging macroeconomic backdrop we are starting to see higher yields for new portfolio purchases, also reflecting an increasing cost of risk. As such, in Q3 '22 we saw new portfolio investments of SEK 1,335 M (1,633) at a money on money multiple of 2.30 and IRR of c. 15 per cent for the quarter. This more moderate investment pace is expected to continue into the last quarter of 2022.

Adjusted segment earnings increased 10 per cent to SEK 1,438 M vs. Q3 2021 after adjustments to remove items affecting comparability of SEK 2,607 M mainly related to collection expectations on Italian secured portfolios invested via joint venture arrangements, for more information see page 20. The factors driving these adjustments are specific to principally one portfolio with no read across to our wider business. This is also evidenced by the continued outperformance of our overdue receivables vs. active forecast and the positive revaluation of SEK 40 M.

During the quarter cash revenues increased to SEK 3,356 M, up 6 per cent compared to the same quarter last year. Cash EBITDA for the segment was SEK 2,532 M and cash EBIT was SEK 999 M, up 8 per cent and 10 per cent, respectively, compared to the third quarter 2021.

	9 months 2022					9 months 2021
	Overdue		Financial	Joint	Segment	Overdue		Financial	Joint	Segment
SEK M	receivables	REO	services	ventures	total	receivables	REO	services	ventures	total
Cash revenues	9,776	127	197	266	10,366	8,831	160	143	160	9,295
Cash EBITDA	7,465	16	88	266	7,835	6,580	15	85	160	6,840
Replenishment capex	-4,828	–	–	–	-4,828	-4,179	–	–	–	-4,179
Cash EBIT	2,637	16	88	266	3,006	2,401	15	85	160	2,662
Total revenues	6,109	127	197	–	6,433	5,748	160	143	–	6,052
Items affecting comparability	-101	–	–	–	-101	-116	–	–	–	-116
Adjusted segment revenues	6,008	127	197	–	6,332	5,632	160	143	–	5,935
Segment earnings	3,794	10	85	-2,267	1,622	3,495	-15	83	169	3,731
Items affecting comparability	-101	5	2	2,666	2,571	-116	28	–	248	160
Adjusted segment earnings	3,693	15	87	399	4,193	3,379	13	83	417	3,891
KPI's
Average invested capital	33,469	315	709	6,196	40,690	29,011	365	521	5,783	35,680
Segment cash RoIC, %	10.5	6.9	16.7	5.7	9.8	11.0	5.5	21.8	3.7	9.9
Total portfolio investments made	6,146	115	–	–	6,260	4,661	92	–	670	5,423
Money-on-money multiple (RTM)	2.07	–	–	–	2.07	2.05	–	–	–	2.05
Book value	35,161	296	–	4,236	39,693	29,840	326	–	6,013	36,179
ERC	74,704	362	–	7,767	82,832	62,603	411	–	7,308	70,322
Cost to collect, paid %	24	92	–	–	25	26	109	–	–	27
Amortisation ratio, %	39	–	–	–	39	36	–	–	–	36
Operating margin, %	62	8	43	–	25	59	-9	58	–	62
Adjusted operating margin, %	61	12	44	–	66	60	8	58	–	66
Return on portfolio investments, ROI, %	15	4	–	-49	5	16	-6	–	4	14
Adjusted return on portfolio investments, ROI, %	15	6	–	9	14	16	5	–	10	14

Financial overview

Alternative P&L

		Third quarter		9 months	Rolling 12 months	Full year
	July–Sep	July–Sep	Jan–Sep	Jan–Sep	Oct 2021–
SEK M	2022	2021	2022	2021	Sep 2022	2021	2020	2019
External revenues	2,566	2,294	7,820	7,192	10,776	10,148	10,082	9,191
– thereof Credit Management Services	1,042	996	3,115	3,046	4,171	4,102	4,375	4,736
– thereof Strategic Markets	1,405	1,160	4,380	3,822	6,182	5,624	5,409	4,180
– thereof Others	119	138	325	325	423	422	298	275
Gross cash collections	3,170	2,961	9,774	8,810	12,783	11,818	10,957	10,772
Cash flow from joint ventures	74	67	274	160	362	248	338	197
Cash revenues	5,810	5,322	17,868	16,162	23,921	22,215	21,377	20,160
Cash expenses	-2,800	-2,417	-8,415	-7,579	-10,741	-9,905	-9,770	-9,504
– thereof personnel	-1,504	-1,326	-4,516	-4,144	-5,955	-5,584	-5,434	-5,215
– thereof non-personnel	-1,296	-1,091	-3,902	-3,435	-4,788	-4,321	-4,336	-4,289
Cash EBITDA	3,009	2,906	9,452	8,583	13,179	12,310	11,607	10,656
Replenishment capex	-1,533	-1,443	-4,829	-4,179	-6,303	-5,654	-5,355	-5,339
Other capex	-80	-69	-223	-232	-304	-314	-672	-699
Cash EBIT	1,396	1,394	4,401	4,172	6,572	6,343	5,580	4,618
Cash financial items	-728	-630	-1,765	-1,596	-2,182	-2,013	-1,974	-1,875
Cash tax normalised	-368	-320	-681	-760	-749	-828	-474	-802
Recurring consolidated cash earnings	300	445	1,955	1,816	3,640	3,502	3,133	1,941
Average number of shares outstanding	121	121	121	121	121	121	124	131
Cash EPS, SEK	2.48	3.68	16.19	15.03	30.16	28.98	25.28	14.81

Key balance sheet items

		Third quarter		9 months	Rolling 12 months		Full year
	July–Sep	July–Sep	Jan–Sep	Jan–Sep	Oct 2021–
SEK M	2022	2021	2022	2021	Sep 2022	2021	2020	2019
Total portfolio investments made	1,335	1,633	6,260	5,423	8,943	8,106	5,129	7,556
Carrying value of portfolio investments	39,693	36,179	39,693	36,179	36,693	38,231	33,305	35,429
ERC	82,832	70,322	82,832	70,322	82,832	74,337	65,457	64,995
– thereof overdue receivables	74,704	62,603	74,704	62,603	74,704	64,901	58,490	55,311
– thereof joint ventures	7,767	7,308	7,767	7,308	7,767	9,047	6,288	6,539
– thereof REO	362	411	362	411	362	389	689	382
Net debt
Liabilities to credit institutions	8,735	2,568	8,735	2,568	8,735	4,060	2,081	6,186
Bond loans	46,098	45,229	46,098	45,229	46,098	44,443	43,706	41,644
Provisions for pensions	367	384	367	384	367	329	381	387
Commercial paper	1,829	3,882	1,829	3,882	1,829	3,998	2,916	2,794
Cash and cash equivalents	-4,541	-3,371	-4,541	-3,371	-4,541	-4,553	-2,134	-1,906
Net debt at end of period	52,488	48,693	52,488	48,693	52,488	48,277	46,951	49,105
Net debt/RTM cash EBITDA					4.0	3.9	4.0	4.3

Adjusted Group figures

					Rolling 12
		Third quarter		9 months		months Full year
	July–Sep	July–Sep	Jan–Sep	Jan–Sep	Oct 2021–
SEK M	2022	2021	2022	2021	Sep 2022	2021
Items affecting comparability by earnings
statement line
Positive revaluations of portfolio investments	571	683	1,250	1,468	1,421	1,789
Negative revaluations of portfolio investments	-532	-571	-1,149	-1,352	-1,303	-1,656
Cost of sales	-499	-6	-658	-36	-921	-299
Sales, marketing and administration costs	-20	-79	-205	-56	-234	-84
Items affecting comparability joint ventures	-2,662	-219	-2,666	-248	-2,706	-288
Total items affecting comparability in	-3,140	-192	-3,428	-224	-3,743	-538
operating earnings
Other items affecting comparability by
segment
Credit Management Services	-21	0	-63	1	-82	-17
Strategic Markets	-460	-6	-556	-9	-798	-251
Portfolio Investments	-2,607	-107	-2,571	-160	-2,597	-185
Common costs	-53	-79	-238	-56	-266	-85
Total other items affecting comparability	-3,140	-192	-3,428	-224	-3,743	-538
Adjusted revenues
Revenues	4,570	4,294	13,928	12,919	18,797	17,789
Items affecting comparability	-40	-112	-101	-116	-118	-133
Adjusted revenues	4,530	4,183	13,826	12,803	18,679	17,656
Adjusted EBIT
EBIT	-1,576	1,341	1,307	4,435	3,348	6,475
Items affecting comparability	3,140	192	3,428	224	3,743	538
Total adjusted EBIT	1,564	1,533	4,736	4,659	7,090	7,014
Adjusted earnings per share
Net earnings for the period attributable to	-2,055	524	-839	2,042	246	3,127
parent company's shareholders
Items affecting comparability attributable to the	2,815	130	3,004	154	3,210	361
parent company's shareholders adjusted for tax
Average number of outstanding shares	121	121	121	121	121	121
Adjusted earnings per share, SEK	6.31	5.41	17.93	18.18	28.63	28.86

	Third quarter			9 months	Rolling 12	months Full year
	July–Sep	July–Sep	Jan–Sep	Jan–Sep	Oct 2021–
SEK M	2022	2021	2022	2021	Sep 2022	2021
Portfolio Investments segment earnings
excluding items affecting comparability
Portfolio Investments segment earnings	-1,204	1,158	1,536	3,648	2,825	4,938
Items affecting comparability for investments	2,622	107	2,569	160	2,594	185
Portfolio Investments segment earnings	1,418	1,265	4,105	3,808	5,419	5,122
excluding items affecting comparability
Average carrying value
Average carrying value receivables	34,994	29,570	33,469	29,011	32,767	29,423
Average carrying value joint ventures	5,484	5,998	6,196	5,783	6,204	5,893
Average carrying value real estate	303	337	315	365	317	353
Total average carrying value	40,781	35,905	39,981	35,158	39,287	35,670
Return including items affecting comparability	-12	13	5	14	7	14
Return excluding items affecting	14	14	14	14	14	14
comparability
Cash EBITDA
EBIT	-1,576	1,341	1,307	4,435	3,347	6,475
Depreciation and amortisation	745	330	1,485	982	2,003	1,500
Portfolio amortisation	1,206	1,072	3,768	3,199	4,879	4,310
Portfolio revaluations	-40	-112	-101	-116	-118	-133
Adjustments according to loan covenants:
Adjustment earnings from joint ventures	2,467	121	2,254	-169	2,130	-293
Adjustment cash flow from joint ventures	74	67	273	160	362	248
Items affecting comparability excluding	2,796	305	3,133	341	3,281	489
portfolio revaluations
Items affecting comparability joint ventures	-2,662	-219	-2,666	-248	-2,706	-288

Revenues by type

		Third quarter			Full year
	July–Sep	July–Sep	Change	Jan–Sep	Jan–Sep	Change
SEK M	2022	2021	%	2022	2021	%	2021
External servicing revenues	2,447	2,156	13	7,495	6,867	9	9,726
Gross cash collections	3,170	2,961	7	9,774	8,810	11	11,818
Other Portfolio Investments segment	119	138	-14	325	325	0	423
revenues
Cash flow from joint ventures	74	67	10	273	160	71	248
Cash revenues	5,810	5,322	9	17,868	16,162	11	22,215
Portfolio amortisation	-1,206	-1,072	12	-3,768	-3,199	18	-4,311
Portfolio revaluations	40	112	-64	101	116	-13	133
Adjustment cash flow from joint	-74	-67	10	-273	-160	71	-248
ventures
Total revenues	4,570	4,294	6	13,928	12,919	8	17,789

Items affecting comparability in operating earnings

	Third quarter		9 months	Full year
	July–Sep	July–Sep	Jan–Sep	Jan–Sep
SEK M	2022	2021	2022	2021	2021
Positive revaluations of portfolio investments	571	683	1,250	1,468	1,789
Negative revaluations of portfolio investments	-532	-571	-1,149	-1,352	-1,656
Items affecting comparability joint ventures	-2,662	-219	-2,666	-248	-288
Items affecting comparability depreciation and amortisations	-385	–	-397	–	-179
Transformation program	-113	-85	-350	-93	-73
Other items affecting comparability	-21	–	-117	–	-132
Total items affecting comparability in operating earnings	-3,140	-192	-3,428	-224	-538

Change in revenues

		Third quarter	9 months	Full year
	July–Sep	July–Sep	Jan–Sep	Jan–Sep
Change in revenues, %	2022	2021	2022	2021	2021
Organic growth	4	-6	4	8	8
Acquired growth	–	0	–	–	–
Portfolio revaluations	-2	2	-0	6	1
Exchange rates	4	-1	4	-4	-3
Total	6	-5	8	10	6

Net financial items specification

	Third quarter				9 months	Full year
	July–Sep	July–Sep	Change	Jan–Sep	Jan–Sep	Change
SEK M	2022	2021	%	2022	2021	%	2021
Interest earnings	26	6	328	53	17	207	22
Interest costs	-607	-474	28	-1,630	-1,365	19	-1,832
Interest cost on leasing liability according to IFRS 16	-8	-9	-12	-25	-28	-13	-37
Exchange rate differences	13	-15	-187	-1	-11	-86	-11
Amortisation of borrowing costs	-23	-29	-22	-72	-78	-9	-103
Commitment fee	-27	-39	-31	-95	-115	-18	-153
Other financial items	129	-19	-783	127	-29	-539	-60
Total net financial items	-497	-579	-14	-1,643	-1,610	2	-2,174

Group overview

Yearly overview, Group

SEK M	2021	2020	2019	2018	2017
Revenues	17,789	16,848	15,985	13,442	9,434
Adjusted revenues	17,656	16,731	15,780	13,131	9,437
EBIT	6,475	4,695	2,060	3,978	2,728
Adjusted EBIT	7,014	5,738	6,208	4,500	3,128
Net earnings	3,391	2,078	–285	1,943	1,503
Earnings per share, SEK	25.88	15.18	–2.76	14.18	14.62
Return on equity, %	15	9	–2	8	11
Equity per share, SEK	183.33	154.28	168.12	195.16	170.59
Cash flow from operating activities per share, SEK	83.11	68.64	48.77	48.10	–
Average number of employees (FTEs)	9,694	9,379	8,766	7,910	6,293

Quarterly overview, Group

	Quarter 3	Quarter 2	Quarter 1	Quarter 4	Quarter 3	Quarter 2	Quarter 1	Quarter 4
SEK M	2022	2022	2022	2021	2021	2021	2021	2020
Cash revenues	5,810	6,266	5,792	6,053	5,322	5,591	5,249	5,601
Cash EBITDA	3,009	3,408	3,035	3,726	2,906	2,966	2,712	3,124
Cash EBIT	1,396	1,595	1,409	2,171	1,394	1,413	1,365	1,523
Cash EPS, SEK	2.48	9.12	4.58	13.93	3.68	5.67	5.68	9.00
Revenues	4,570	4,879	4,478	4,870	4,294	4,424	4,200	5,109
Adjusted revenues	4,530	4,825	4,471	4,853	4,183	4,422	4,198	4,359
Operating earnings (EBIT)	-1,576	1,561	1,323	2,040	1,341	1,563	1,531	1,200
Adjusted EBIT	1,564	1,701	1,471	2,355	1,533	1,594	1,532	1,611
Net earnings	-2,158	734	622	1,251	541	810	787	576
Earnings per share, SEK	-17.05	5.50	4.57	8.98	4.33	6.48	6.06	3.40
Return on equity, %	-39	12	10	20	11	16	15	8
Equity per share, SEK	172.39	186.20	188.25	183.38	168.72	162.54	171.12	158.05
Cash flow from operating activities per share, SEK	10.11	18.27	16.30	26.54	24.08	17.40	14.88	11.75
Average invested capital	76,930	75,695	73,299	72,224	71,405	70,971	69,578	70,057
Cash RoIC , %	7.3	8.4	7.7	12.0	7.8	8.0	7.8	8.7
Number of employees (FTEs)	10,054	9,920	9,750	9,664	9,733	9,786	9,626	9,458

Segment overview

Credit Management Services

	Quarter 3	Quarter 2	Quarter 1	Quarter 4	Quarter 3	Quarter 2	Quarter 1	Quarter 4
SEK M	2022	2022	2022	2021	2021	2021	2021	2020
Cash revenues	1,042	1,019	1,054	1,056	996	1,012	1,038	1,099
Cash EBIT	346	342	314	437	396	411	396	281
Revenues	1,586	1,579	1,574	1,602	1,541	1,572	1,585	1,664
– thereof external clients	1,042	1,019	1,054	1,056	996	1,012	1,038	1,099
– thereof intercompany	544	561	520	546	545	560	546	565
revenues
Adjusted revenues	1,586	1,579	1,574	1,602	1,541	1,572	1,585	1,664
Segment earnings	295	272	264	355	356	367	352	328
Adjusted segment earnings	316	302	276	374	356	367	350	328
Items affecting comparability	21	30	12	19	–	-1	–2	–
Adjusted operating margin, %	20	19	18	23	23	23	22	20
Average invested capital	20,086	19,449	19,078	19,089	19,174	19,176	18,970	19,093
Segment cash RoIC, %	6.9	7.0	6.6	9.2	8.3	8.6	8.4	5.9

Strategic Markets

							Quarter 4
2022	2022	2022	2021	2021	2021	2021	2020
1,412	1,557	1,418	1,802	1,160	1,315	1,346	1,461
699	834	728	1,310	482	572	645	875
1,516	1,683	1,517	1,903	1,257	1,416	1,434	1,558
1,405	1,557	1,418	1,802	1,160	1,315	1,346	1,461
112	126	99	101	97	101	88	97
1,516	1,683	1,517	1,903	1,257	1,416	1,434	1,558
23	556	427	901	265	370	439	585
483	597	482	1,142	271	373	439	691
460	41	55	242	-6	-3	–	106
32	35	32	60	22	26	31	44
15,056	14,845	14,719				15,699	16,126
18.6	22.5	19.8	34.7	12.4	14.6	16.4	21.7
				Quarter 3 Quarter 2 Quarter 1 Quarter 4	15,118	Quarter 3 Quarter 2 15,526	Quarter 1 15,674

Portfolio Investments

	Quarter 3	Quarter 2	Quarter 1	Quarter 4	Quarter 3	Quarter 2	Quarter 1	Quarter 4
SEK M	2022	2022	2022	2021	2021	2021	2021	2020
Cash revenues	3,356	3,690	3,320	3,195	3,166	3,265	2,864	3,041
Cash EBITDA	2,532	2,816	2,486	2,375	2,350	2,402	2,089	2,243
Cash EBIT	999	1,065	942	901	907	925	830	834
Gross cash collections	3,170	3,459	3,145	3,008	2,961	3,108	2,740	2,937
Portfolio amortisation	-1,206	-1,329	-1,233	-1,111	-1,072	-1,120	-1,007	-1,063
Portfolio revaluation	40	54	7	17	112	3	2	599
Other Portfolio Investments	119	119	87	98	138	107	80	76
segment revenues
Revenues	2,124	2,303	2,006	2,012	2,138	2,098	1,816	2,549
Segment earnings	-1,169	1,497	1,293	1,312	1,198	1,303	1,231	751
Adjusted segment earnings	1,438	1,465	1,290	1,337	1,305	1,353	1,234	1,063
Portfolio investments	1,326	3,131	1,689	2,342	1,420	1,739	1,503	1,258
Total carrying value of portfolio investments	39,693	41,869	39,113	38,231	36,179	35,629	35,104	33,305
– thereof purchased receivables	35,161	34,827	32,262	31,478	29,840	29,300	28,984	27,658
– thereof joint ventures	4,236	6,732	6,520	6,438	6,013	5,983	5,726	5,266
– thereof real estate	296	310	331	315	326	347	394	381
Adjusted return on portfolio investments, ROI, %	14	14	13	14	14	15	14	12
Amortisation ratio, %	38	38	39	37	36	36	37	36
ERC	82,832	81,976	76,092	74,337	70,322	69,107	68,263	65,467
Replenishment capex	-1,533	-1,751	-1,545	-1,474	-1,443	-1,477	-1,259	-1,409
Money-on-money multiple (RTM)	2.07	1.98	2.04	2.04	2.05	2.10	2.18	2.08
Average invested capital	41,587	41,194	39,289	37,798	36,478	35,888	34,673	34,602
Segment cash RoIC ,%	9.6	10.3	9.6	9.5	9.9	10.3	9.6	9.6

Money-on-money multiple

	Quarter 3	Quarter 2	Quarter 1	Quarter 4	Quarter 3	Quarter 2	Quarter 1	Quarter 4
	2022	2022	2022	2021	2021	2021	2021	2020
Purchase price of portfolios	1,347	3,120	1,675	2,133	1,445	1,680	1,443	1,256
acquired in quarter
ERC 180 months of portfolios	3,096	5,589	3,667	4,239	2,794	3,414	3,190	2,554
acquired in quarter
Quarterly MoM	2.30	1.79	2.19	1.99	1.93	2.03	2.21	2.03
RTM MoM (average of quarterly MoM)	2.07	1.98	2.04	2.04	2.05	2.10	2.18	2.08
In quarter collections	3,170	3,459	3,145	3,008	2,961	3,108	2,740	2,937
RTM MoM (average of quarterly	2.07	1.98	2.04	2.04	2.05	2.10	2.18	2.08
MoM)
Replenishment capex	-1,533	-1,751	-1,545	-1,474	-1,443	-1,477	-1,259	-1,409
				Full year				Full year
				2021				2020
Replenishment capex				-5,654				-5,355

Financial report

Condensed consolidated income statement

				Full year
2022	2021	2022	2021	2021
				10,149
				7,507
571	683	1,250	1,468	1,789
-532	-571	-1,149	-1,352	-1,656
4,570	4,294	13,928	12,919	17,789
-3,013	-2,317	-8,384	-7,127	-9,555
1,558	1,977	5,543	5,792	8,233
				-2,051
				293
-1,576	1,341	1,307	4,435	6,475
				-2,174
-2,073	762	-335	2,825	4,301
				-910
-2,159	541	-803	2,141	3,391
				3,127
				265
-2,159	541	-803	2,141	3,391
				120,828
120,537	120,797	120,670	120,839	120,830
				25.88
				25.88
				25.88
	July–Sep 2,566 1,964 -667 -2,467 -497 -85 -2,055 -104 120,537 -17.05 -17.05 -17.05	Third quarter July–Sep 2,294 1,889 -515 -121 -579 -221 524 18 120,797 4.33 4.33 4.33	Jan–Sep 7,820 6,006 -1,983 -2,253 -1,643 -467 -839 36 120,670 -6.95 -6.95	9 months Jan–Sep 7,192 5,610 -1,526 169 -1,610 -685 2,042 99 120,839 16.90 16.90 -6.95 16.90

Condensed consolidated statement of comprehensive income

	Third quarter		9 months	Full year
	July–Sep	July–Sep	Jan–Sep	Jan–Sep
SEK M	2022	2021	2022	2021	2021
Net earnings for the period	-2,159	541	-803	2,141	3,391
Other comprehensive earnings, items that
will be reclassified to profit and loss:
Currency translation difference	635	530	2,747	1,037	1,753
Comprehensive income for the year attributable to	-241	-334	-955	-334	-411
hedging of currency and other
Other comprehensive earnings, items that
will not be reclassified to profit and loss:
Remeasurement of pension liability	–		-3	1	51
Comprehensive income for the period	-1,764	738	986	2,845	4,785
Of which attributable to:
Parent company's shareholders	-1,708	687	758	2,708	4,446
Non-controlling interest	-57	52	228	137	338
Comprehensive income for the period	-1,764	738	986	2,845	4,785

Condensed consolidated balance sheet

	30 Sep	30 Sep	31 Dec
SEK M	2022	2021	2021	SEK M
ASSETS
Intangible fixed assets
Goodwill	34,501	32,304	32,758	LIABILITIES
Capitalised expenditure for IT development	890	932	917
and other intangibles				shareholders
Client relationships	3,342	4,444	4,136
Total intangible fixed assets	38,733	37,680	37,811
Tangible fixed assets
Right-of-use assets	683	772	756
Other tangible fixed assets	217	211	218
Total tangible fixed assets	900	983	974
Other fixed assets
Shares in joint ventures	4,243	6,014	6,438
Portfolio investments	35,161	29,840	31,478
Deferred tax assets	1,672	1,418	1,748
Long-term interest-bearing receivables	–	–	10
Other long-term receivables	131	76	79
Total other fixed assets	41,208	37,348	39,754
Total fixed assets	80,841	76,011	78,539
Current assets
Accounts receivable	1,078	1,323	1,299
Inventory of real estate	296	326	315
Client funds	1,000	1,068	1,063
Tax assets	252	206	170
Other receivables	1,885	1,568	1,578
Prepaid expenses and accrued earnings	1,862	1,081	1,366
Cash and cash equivalents	4,541	3,371	4,553
Total current assets	10,914	8,943	10,334	LIABILITIES
TOTAL ASSETS	91,755	84,954	88,883

	30 Sep	30 Sep	31 Dec
SEK M	2022	2021	2021
SHAREHOLDERS' EQUITY AND
LIABILITIES
Attributable to parent company's	20,780	19,939	21,698
shareholders
Attributable to non-controlling interest	2,833	2,851	2,989
Total shareholders' equity	23,614	22,791	24,687
Long-term liabilities
Liabilities to credit institutions	8,735	2,568	4,060
Bond loans	41,454	43,379	43,693
Long-term leasing liabilities	507	598	582
Other long-term liabilities	498	541	478
Provisions for pensions	367	384	329
Other long-term provisions	59	59	42
Deferred tax liabilities	995	1,074	1,103
Total long-term liabilities	52,614		48,604 50,288
Current liabilities
Bond loans	4,644	1,850	750
Commercial paper	1,829	3,882	3,998
Client funds payable	1,000	1,068	1,063
Accounts payable	405	421	504
Earnings tax liabilities	604	844	1,198
Advances from clients	35	50	29
Short-term leasing liabilities	235	220	223
Other current liabilities	2,596	1,731	1,908
Accrued expenses and prepaid earnings	4,168	3,480	4,225
Other short-term provisions	10	14	10
Total current liabilities	15,527	13,560	13,908
TOTAL SHAREHOLDERS' EQUITY AND	91,755	84,954	88,883
LIABILITIES

Condensed consolidated statement of changes in shareholders' equity

		2022			2021
	Attributable to			Attributable to
	Parent	Non		Parent	Non
	Company's	controlling		Company's	controlling
SEK M	shareholder	interest	Total	shareholder	interest	Total
Opening balance, January 1	21,698	2,989	24,688	18,676	2,915	21,591
Dividends paid	-1,632	-383	-2,015	-1,451	-181	-1,633
Treasury shares	-72		-72	-41		-41
Share base payment	27		27	48		48
Comprehensive earnings	758	228	986	2,708	118	2,826
for the period
Closing balance,	20,780	2,833	23,614	19,939	2,851	22,791
September 30

Condensed consolidated cash flow statement

	Third quarter		9 months		Full year
	July–Sep	July–Sep	Jan–Sep	Jan–Sep
	2022	2021	2022	2021	2021
Operating activities
EBIT	-1,576	1,341	1,307	4,435	6,475
Depreciation/amortisation and impairment	745	330	1,485	982	1,500
Amortisation/revaluation of portfolio investments	1,165	961	3,667	3,083	4,178
Other adjustment for items not included in cash	2,568	133	2,319	-179	-263
flow
Interest received	26	6	53	17	22
Interest paid	-713	-578	-1,699	-1,467	-1,822
Other financial expenses paid	-40	-55	-118	-144	-213
Earnings tax paid	-886	-320	-1,199	-825	-893
Cash flow from operating activities before	1,287	1,819	5,814	5,902	8,985
changes in working capital
Changes in factoring receivables	-56	-36	-180	-144	-115
Other changes in working capital	-13	1,151	-243	1,076	1,172
Cash flow from operating activities	1,218	2,933	5,391	6,835	10,042
Investing activities
Purchases of intangible fixed assets	-61	-45	-187	-177	-262
Purchases of tangible fixed assets	-22	-20	-44	-49	-72
Sale of tangible and intangible fixed assets	0	0	1	1	3
Portfolio investments in receivables	-568	-1,572	-5,307	-4,705	-7,038
Property holdings	12	20	22	60	70
Other cash flow from investing activities	36	-387	232	-458	-710
Cash flow from investing activities	-603	-2,005	-5,282	-5,329	-8,009
Financing activities
Borrowings and repayment of loans	-310	-335	1,828	1,242	2,139
Repurchase of shares	-72	0	-72	-41	-41
Share dividend to parent company's shareholders	0	2	-1,632	-1,451	-1,451
Dividend to non-controlling shareholders	-180	-1	-370	-181	-244
Cash flow from financing activities	-562	-334	-245	-432	401
Total change in liquid assets	53	595	-135	1,074	2,434
Opening balance of liquid assets	4,903	2,672	4,553	2,134	2,134
Exchange rate differences in liquid assets	-415	104	124	163	-15
Closing balance of liquid assets	4,541	3,371	4,541	3,371	4,553
Group total
Cash flow from operating activities	1,218	2,933	5,391	6,835	10,042
Cash flow from investing activities	-603	-2,005	-5,282	-5,329	-8,009
Cash flow from financing activities	-562	-334	-245	-432	401

Condensed income statement – parent company

	9 months		Full year
	Jan–Sep	Jan–Sep
SEK M	2022	2021	2021
Revenues	534	454	690
Gross earnings	534	454	690
Sales and marketing expenses	-28	-21	-33
Administrative expenses	-1,228	-697	-1,037
EBIT	-722	-264	-380
Earnings from subsidiaries	0	935	0
Exchange rate differences on monetary items classified as	-412	-224	-316
expanded investment and hedging activities
Net financial items	-459	-717	912
Earnings before tax	-1,593	-270	216
Tax	-9	0	0
Net earnings for the period	-1,602	-270	216

Net earnings for the period corresponds to comprehensive earnings for the period.

Condensed balance sheet – parent company

	30 Sep	30 Sep	31 Dec
SEK M	2022	2021	2021
ASSETS
Fixed assets
Intangible fixed assets	542	393	507
Tangible fixed assets	8	11	10
Financial fixed assets	78,173	73,447	73,991
Total fixed assets	78,723	73,851	74,508
Current assets
Current receivables	1,231	491	1,930
Cash and cash equivalents	439	505	602
Total current assets	1,670	996	2,532
TOTAL ASSETS	80,393	74,847	77,040
SHAREHOLDERS' EQUITY AND LIABILITIES
Restricted equity	824	670	786
Unrestricted equity	6,888	9,782	10,212
Total shareholders' equity	7,712	10,452	10,998
Long-term liabilities	60,990	52,788	55,498
Current liabilities	11,691	11,607	10,544
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	80,393	74,847	77,040

Notes

Accounting principles

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. In addition to appearing in the financial statements, disclosures in accordance with IAS 34 also appear in other parts of the interim report.

The accounting principles applied by the Group and the Parent Company are essentially unchanged compared with the 2021 Annual Report.

Parent Company

The Group's publicly listed Parent Company, Intrum 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 revenues of SEK 534 M (454) for the third quarter and earnings before tax of SEK -1,593 M (-270). The Parent Company invested SEK 42 M (30) in fixed assets for the quarter and at the end of the quarter held SEK 439 M (505) in cash and cash equivalents. The average number of employees was 77 (60).

Development in the period

Total assets in the first nine months of the year increased by SEK 2,872 M to SEK 91,755 M at the end of September 2022 from SEK 88,883 M at the end of 2021. The increase was mainly due to the additional investments in Portfolio Investments of SEK 3,683 M (see also Portfolio Investment section within this report for further details) partially offset by negative adjustments mainly caused by lowered collection expectations on specific portfolios invested via joint venture arrangements, principally the Italian SPVs as identified as part of the regular revaluation process. The book value of the italian joint ventures reduced by SEK 2,665 M to SEK 3,879 M, the movement was recognised in Participation in associated companies and joint ventures in the profit and loss. As a direct consequence client relationships reduced by SEK 393 M to SEK 1,053 M, the movement was recognised in cost of sales in the profit and loss. For the client relationship impairment the discount rate of 7.7% was used compared to 14.1% at initial recognition. In addition, fair value loss on derivative amounting to SEK 95 M resulted in a liability of SEK 85 M, the movement was recognised in net financial items in the profit and loss. Net FX movement was mainly due to SEK/EUR exposure which changed by a positive SEK 1,599 M the first nine months of 2022. Working capital was SEK -1,278 M at the end of September 2022 compared to the SEK -1,244 M at the end of December 2021. The share of revenues denominated in EUR amounted to 71 per cent (60).

Transactions with related parties

During the quarter no significant transactions occurred between the Group and other closely related companies, board members or the Group management team.

Investments in joint ventures

IAS 28 requires recognition of impairment losses relating to joint ventures if objective evidence is available to support such losses. Such assessment ordinarily includes significant management judgement and forward looking assumptions with limited observable data. Objective evidence considered can include for example continued underperformance compared to forecasts and/ or comparable transactions completed by third parties at arm's length.

Market development and outlook

The Group's integrated business model consists of credit management services and portfolio investments and benefits from favourable medium term development prospects in both areas. The Group continues to execute its Transformation program and will gradually standardise, globalise and improve its collections processes. The Group anticipates the actions being taken in this area will continue to improve efficiency and margins, as well as enabling sustainable and organic growth.

Significant risks and uncertainties

Risks to which the Group and Parent Company are exposed include but are not strictly limited to any and all risks relating to economic developments, compliance and changes in regulations, reputation risks, tax risks, risks attributable to IT and information management, epidemic and pandemic risks, geopolitical risks such as political risks, civil unrest, disruption, or conflicts including armed conflicts and war directly or indirectly affecting locations where Intrum or its clients maintain or conduct business, risks attributable to acquisitions, market risks, liquidity risks, credit risks, risks inherent in and associated with portfolio investments and payment guarantees, as well as financing risks. The risks are described in more detail in the Board of Directors' report in Intrum's 2021 Annual and Sustainability report. High level of uncertainty with high inflation and in particular high and increasing energy prices and interest rates are a major concern for the euro-area. Intrum has a resilient business model and demand for our services and solutions are expected to increase over the coming quarters. No new significant risks have arisen besides those described in the Annual and Sustainability report.

Fair value of financial instruments

Most of the Group's financial assets and liabilities (portfolio investments, accounts receivable, other receivables, cash and cash equivalents, liabilities to credit institutions, bonds, commercial paper, accounts payable and other liabilities) are carried at amortised cost in the consolidated financial statements. For most of these financial instruments, the carrying amount is deemed to be a good estimate of fair value. For outstanding bonds with a total carrying value of SEK 46,098 M (44,129) at the end of the quarter, fair value is, however, estimated at SEK 39,777 M (46,156). The Group also holds forward exchange contracts and other financial assets of SEK 280 M (78), as well as financial liabilities of SEK 75 M (78) carried at fair value through the income statement.

Financing

Net debt amounted to SEK 52,488 M (48,693), the share of fixed rate debt amounts to 72 per cent of net debt and is principally composed of EUR bonds with maturities between 2024 and 2027. Net debt in relation to the RTM cash EBITDA stands at 4.0x compared to 4.2x at the end of the third quarter 2021. By the end of the third quarter, Intrum had SEK 1,829 M (3,882) outstanding commercial paper, the decrease reflects a more negative short term credit sentiment. Drawings under the revolving credit facility have been used to cover for this. At the end of the quarter SEK 8,816 M (2,684) of Intrum's revolving credit facility was utilised.

Events after the balance sheet date

No events after the balance sheet date.

Other information

The share

Intrum AB's (publ) share is included in Nasdaq Stockholm's Large Cap list. During the period 1 July–30 September 2022, 18,665,326 shares were traded for a total value of SEK 3,404 M, corresponding to 15 per cent of the total number of shares at the end of the period.

The highest price paid during the period 1 July–30 September 2022 was SEK 223.2 (11 August) and the lowest was SEK 131.9 (28 September). On the last trading day of the period, 30 September 2022, the price was SEK 140.7 (latest paid). During the period 1 July–30 September 2022, Intrum AB's (publ) share price fell by 29 per cent, while Nasdaq OMX Stockholm fell by 3 per cent.

Share price, SEK (1 October 2019 – 30 September 2022)

Shareholders

		Capital and
30 September 2022	No of shares	Votes, %
Nordic Capital through companies	45,338,475	37.2
AMF Pension & Fonder	10,896,900	9.0.
Swedbank Robur Fonder	3,845,402	3.2
Första AP-fonden	2,931,960	2.4
Handelsbanken Fonder	2,869,427	2.4
Vanguard	2,596,350	2.1
Länsförsäkringar Fonder	2,120,999	1.7
TIAA - Teachers Advisors	2,069,729	1.7
C WorldWide Asset Management	2,033,411	1.7
Capital Group	1,900,000	1.6
BlackRock	1,196,664	1.0
Intrum AB	1,183,983	1.0
State Street Global Advisors	1,064,974	0.9
Degroof Petercam	990,259	0.8
Avanza Pension	943,657	0.8
Total fifteen largest shareholders	81,982,190	67.3
Total number of shares excluding treasury	120,536,935

Total number of shares excluding treasury shares

Source: Modular Finance Holdings and Intrum

Treasury holdings of 1,183,983 shares are not included in the number of shares outstanding. The proportion of Swedish ownership amounted to 38.5 per cent (institutions 8.1 percentage points, mutual funds 18.2 percentage points and private individuals 12.2 percentage points).

Currency exchange rates

	Closing	Closing	Average	Average	Average
	rate	rate	rate	rate	rate
	30 Sep	30 Sep	July–Sep	July–Sep	Jan–Dec
	2022	2021	2022	2021	2021
1 EUR=SEK	10.90	10.17	10.53	10.15	10.48
1 CHF=SEK	11.40	9.39	10.41	9.31	9.80
1 NOK=SEK	1.03	1.00	1.05	0.99	0.98
1 HUF=SEK	0.0258	0.0282	0.0274	0.0284	0.0299

For further information, please contact

Andrés Rubio, Acting President and CEO, tel: +46 8 546 102 02 Michael Ladurner, CFO, tel: +46 8 546 102 02 Michael Ladurner, Investor Relations, tel: +46 8 546 102 02

Michael Ladurner is the contact under the EU Market Abuse Regulation.

The information in this interim report is such as Intrum AB (publ) is required to disclose pursuant to the EU's markets abuse directive and the Securities Markets Act.

The information was provided under the auspices of the contact person above for publication on 27 October 2022 at 07.00 a.m. CET.

Year-end reports, interim reports and other financial information are available on www.intrum.com.

Denna delårsrapport finns även på svenska.

Stockholm, 27 October 2022

Andrés Rubio

Acting President and CEO

Auditor's Review Report

Introduction

We have reviewed the interim report for Intrum AB (publ) as of 30 September 2022 and for the nine month period then ended. The Board of Directors and the Chief Executive Officer are responsible for the preparation and presentation of this interim report 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.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity.

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 a different focus and is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (ISA) 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 interim report is not, in all material respects, prepared 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 26 October 2022 Deloitte AB

Patrick Honeth

Authorised Public Accountant

Definitions

Result concepts, key figures and alternative indicators

Acquired growth

Growth in cash revenues related to mergers and acquisitions of Group companies.

Adjusted earnings per share

Net earnings for the period attributable to parent company's shareholders adjusted for IACs attributable to the parent company's shareholders and the corresponding tax amount divided by average number of outstanding shares for the period.

Adjusted revenues

Revenues excluding portfolio revaluations and other items affecting comparability.

Adjusted operating earnings (EBIT)

Adjusted operating earnings (EBIT) is operating earnings excluding revaluations of portfolio investments and other items affecting comparability.

Adjusted operating margin

Adjusted operating earnings (EBIT) in relation to adjusted revenues.

Adjusted segment earnings

Adjusted segment earnings is segment earnings excluding revaluations of portfolio investments and other items affecting comparability.

Amortisation percentage

Amortisation on portfolio investments during the period, as a percentage of collections.

Cash EBIT

Cash EBITDA less replenishment capex and other capex.

Cash EBITDA

Cash EBITDA is adjusted operating earnings (EBIT) adding back depreciation and amortisations and portfolio amortisations. In addition, the EBIT contribution from joint ventures is replaced by the actual cash contribution from the joint venture.

Cash EPS

Cash EBIT minus cash net financial items and cash net tax normalised divided by the average number of outstanding shares.

Cash return on invested capital (RoIC)

Annualised cash EBIT divided by average invested capital for the period. Average invested capital calculated using quarterly opening and closing balances for the relevant period. Year to date and RTM is calculated using the opening and closing balances of the quarters in the period.

Cash revenues

Revenues excluding non-cash revenues such as portfolio amortisation and earnings from joint ventures.

Cash tax normalised

Earnings tax paid adjusted for non recurring items.

Cash flow from joint ventures

The cash flow received by Intrum in form of distributions and dividends from investments in non-consolidated joint ventures.

EBITDA

EBITDA is defined as operating earnings (EBIT) adding back deprecation and amortisations of tangible and intangible assets.

Estimated remaining collections, ERC

The estimated remaining collections represent the nominal value of the expected future collection on the Group's portfolio investments, including Intrum's anticipated cash flows from investments in joint ventures.

Exchange rates in change of revenues

Change in revenues related to the effects of changes in exchange rates.

External revenues

Revenues from Intrum's external clients and revenues generated from Real Estate Owned assets (REO).

Internal revenues

Predominantly related to revenues paid by the Portfolio Investment segment to Credit Management Services and Strategic Markets segments for collection activities made on the behalf of Intrum's own portfolios.

Items affecting comparability

Significant items that impact comparability of key metrics are adjusted from IFRS reported numbers to provide more relevant information to external users. Items Affecting Comparability ("IAC") are based on three sub-groups: Group Restructurings ("Restructurings"), Non-Recurring Items ("NRIs") and Non-Cash Items ("NCIs"). Restructurings are costs relating to group-wide business transformation programs and M&A transactions. Incremental temporary incurred costs over and above anticipated net fixed costs are reported as an IAC. NRIs are one-off costs or income that weren't incurred in previous reporting periods and are not expected to recur in future reporting periods. An item that is part of core operations is not reported as an NRI irrespective how infrequent it could be occurring in business operations. For cash metrics, NCIs represent all valuation, estimates and provisions which are non-cash in nature and relates to future periods. For non-cash metrics, NCIs represent items that enhances periodic comparability, like adjustments to prospective accounting changes, measurement adjustments to match revenue and costs that are interconnected or recognition of partial impairment losses that relate to the current reporting period. NCI excludes normal working capital changes. NCIs could arise from Restructurings or NRIs.

Net debt

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

Net debt/cash EBITDA

This key figure refers to net debt divided by Cash EBITDA on a rolling 12-month basis. The key figure is included among the Group's financial targets, it is an important measure for assessing the level of the Group's borrowings and is a widely accepted measure of financial capacity among lenders. This key figure is calculated in accordance with the definitions stated in the terms of the Group's revolving syndicated loan facility, which means, among other things, that participations in non-consolidated joint ventures is only included to the extent that earnings are distributed to Intrum and that operations acquired during the period are included on a pro forma-basis throughout the 12-month period.

Operating earnings (EBIT)

Operating earnings consist of revenues less operating expenses as shown in the income statement.

Operating margin

The operating margin consists of operating earnings expressed as a percentage of revenues.

Operating margin, segment

The operating margin, segment consists of service line earnings expressed as a percentage of revenues.

Organic growth

Organic growth refers to the average increase in cash revenues in local currency, adjusted for revaluations of portfolio investments and the effects of acquisitions and divestments of Group companies. Organic growth is a measure of the development of the Group's existing operations that management has the ability to influence.

Other capex

Investments made to maintain and grow the business. For example, IT and tangible assets.

Portfolio investments – collected amounts, amortisations and revaluations

Portfolio investments consist of portfolios of delinquent consumer debts purchased at prices below the nominal receivable. These are recognised at amortised cost applying the effective interest method, based on a collection forecast established at the acquisition date of each portfolio. Revenues attributable to portfolio investments consist of collected amounts less amortisation for the period and revaluations. The amortisation represents the period's reduction in the portfolio's current value, which is attributable to collection taking place as planned. Revaluation is the period's increase or decrease in the current value of the portfolios attributable to the period's changes in forecasts of future collection.

Total portfolio investments made

The investments for the period in portfolios of overdue receivables, with and without collateral, investments in real estate and in joint ventures whose operations entail investing in portfolios of receivables and properties.

Replenishment capex

The estimated portfolio investments required to maintain the ERC in a steady state. Calculated by dividing the in quarter gross cash collections by the RTM MoM multiple.

REO Real estate owned.

Return on Portfolio Investments (ROI)

Return on portfolio investments is the service line earnings for the period, excluding operations in factoring and payment guarantees (financial services), recalculated on a full-year basis, as a percentage of the average carrying amount of the balance-sheet item purchased debt. The ratio sets the segment's earnings in relation to the amount of capital tied up and is included in the Group's financial targets. The definition of average book value is based on using average values for the quarters. Year to date and RTM is calculated using the opening and closing balances of the quarters in the period.

Revenues

Consolidated revenues include external servicing earnings (variable collection commissions, fixed collection fees, debtor fees, guarantee commissions, subscription earnings, etc.), earnings from portfolio investments operations (collected amounts less amortisation and revaluations for the period) and other earnings from financial services (fees and net interest from financing services).

RTM

Rolling Twelve Months, RTM, refers to figures on a last 12-month basis.

RTM MoM multiple

The average quarterly underwriting money-on-money multiple for the past 12 months. Calculated by dividing the lifetime ERC of acquired portfolios with the purchase price of the portfolios.

Segment earnings

Segment earnings relate to the operating earnings of each segment, Credit Management Services, Strategic Markets, Portfolio Investments and Group items.

About Intrum

Intrum is the industry-leading credit management company in Europe with presence in 24 markets. We help companies prosper by offering solutions designed to improve cash flow as well as long-term profitability and by caring for their customers. Our focus is to create shared value for business and society, which both benefit from companies being paid on time and citizens getting out of debt. Intrum has around 10,000 dedicated professionals who serve around 80,000 companies across Europe. In 2021, the company generated revenues of SEK 17.8 billion. Intrum is headquartered in Stockholm, Sweden, and the Intrum AB (publ) share is listed on the Nasdaq Stockholm exchange. For further information, please visit www.intrum.com.

Business model

We ensure that companies are paid by offering a full range of services covering companies' entire credit management chain. In our Credit Management Services and Strategic Markets segments we act as agents, collect late payments on our clients' behalf and generate a commission. In our Portfolio Investments segment we act as principals and invest in portfolios of overdue receivables as well as similar claims and collect on our own behalf.

Intrum as an investment

Growing market – The market for our services is growing, supported by our clients' desire to manage their balance sheets, also aided by regulation, focus on their core businesses as well as ongoing NPL generation. Digitisation and changes in customer behaviour lead to new types of receivables being generated. This market backdrop is a strong foundation for sustainable organic growth.

Market-leading position – Intrum is the industry leader in Europe, with a presence in 24 countries. We also work with partners to cover approximately 160 countries across the world. Given our comprehensive footprint we can partner with clients across several markets. Our broad knowledge spans multiple industries and our scale enables us to invest in the newest technologies and innovative solutions.

A complete range – Intrum offers a complete range of credit management services, covering companies' complete credit management chain.

Considerable trust and 100 years of experience – Our work can only be performed if we have our clients' complete trust and conduct our operations ethically and with respect for the end-customer. Our 100 years of experience demonstrate the strength of our business model. We build long-term partnerships with our clients.

Intrum leads the way towards a sound economy – A functioning credit market is a prerequisite for the business community and consequently for society as a whole. Intrum plays an important role in this context.

Financial targets

Returns: Cash RoIC >10% medium term

Growth: Cash EPS >10% p.a. on average medium term

Leverage: Net debt/Cash EBITDA 2.5–3.5x by end of 2022

Shareholder remuneration policy: Absolute annual increase in dividend per share

For further details and definitions, see https://www.intrum.com/investors/financial-info/ financial-targets/

Financial calendar 2022 26 January 2023 Full-year report 2022

Intrum AB (publ)

Sicklastråket 4, Nacka 105 24 Stockholm, Sweden Tel +46 8 546 10 200 Fax +46 8 546 10 211 www.intrum.com info@intrum.com