Full-year report 2004

• Earnings per share improved to SEK 2.36 (–2.12). • Net earnings for the year increased to SEK 200.4 M (–180.2). • Consolidated revenues for the year amounted to SEK 2,848.8 M (2,864.6). • Cash flow from operating activities amounted to SEK 481.1 M (301.8). • The Board of Directors proposes a redemption corresponding to SEK 7 per share and a change in dividend policy.

January–December: Revenues and Earnings Consolidated revenues for the period January–December were unchanged in local currency. Continued growth in Finland, Sweden and Switzerland, with rising volumes from clients in the telecom and energy sectors, is being offset mainly by lower revenues in England, Germany and Norway, due to lower inflow of cases. Operating earnings (EBITA) increased to SEK 431.4 M (30.1). After a re-evaluation of the purchased debt portfolios, the value of the Norwegian portfolios has been written down by SEK 22.1 M. For other portfolios, an estimation of anticipated future cash flow has led to lower amortization, which positively affected revenues and earnings by SEK 18.9 M. No items affecting comparability were reported in 2004. In total, 2003 was charged with SEK 398 M, of which SEK 356 M related to the accounting problems in England and SEK 42 M to the integration of the German operations and a rationalization package in Belgium and the Netherlands. Operating earnings (EBIT) increased to SEK 319.3 M (–93.9). Earnings before tax and minority interests for January– December increased to SEK 282.9 M (–146.8), while net earnings for the period reached SEK 200.4 M (–180.2). In accordance with the recommendation of Stockholmsbörsen, the effects of the transition to IFRS are reported in separate columns of the consolidated income statement and balance sheet for 2004. In connection with the adaptation of IFRS, Intrum Justitia has chosen to report purchased debt portfolios according to an effective interest rate method, as a result of which their value increases by SEK 12.4 M. A detailed explanation follows below. October–December: Revenues and Earnings Consolidated revenues during the last quarter of the year amounted to SEK 745.2 M (742.7). The quarter is seasonally strong in Finland, mainly due to tax refund payments, and in Switzerland, which also affects operating earnings positively. Operating earnings (EBITA) during the fourth quarter 2004 increased to SEK 131.8 M (–41.6). In 2003 earnings were charged with SEK 139.0 M for accounting inaccuracies in England. In addition, lower production costs and improved cost control, contributes to the increased earnings. The accounting reserve of SEK 15 M established for England in the 2003 year-end accounts was utilized during the quarter, which improved the result. The audit of the English company was completed without any remarks. Finland, Sweden and Switzerland attributed to a continued rise in earnings. Operating earnings (EBIT) increased to SEK 103.9 M (–72.3). Earnings before tax and minority interests for the quarter increased to SEK 96.9 M (–80.5), while net earnings for the period reached SEK 72.1 M (–151.6). Service Lines Consumer Collection & Debt Surveillance: Quarterly revenues increased to SEK 451.2 M (445.3). New and existing clients in the healthcare, telecom and utility sectors, mainly in Sweden and Switzerland, contributed positively. Denmark and Finland also contributed to organic growth, mainly through higher volumes in Debt Surveillance. This business is developing positively as a result of expansion to more of the Group’s markets. Operating earnings (EBITA) for the fourth quarter 2004 increased to SEK 130.2 M (99.2), attributable in significant part to the above-mentioned volume increases. Last year’s high costs in England also affected the quarterly comparison positively. Commercial & International Collection: Quarterly revenues fell to SEK 161.4 M (164.1) due to a lower case inflow in Italy, France and Germany. Operating earnings (EBITA) for the quarter increased to SEK 15.8 M (9.5) mainly due to improvements in Finland and Switzerland. Purchased Debt: Service line revenues increased to SEK 81.1 M (57.4) during the fourth quarter. Collections from portfolios in England, Finland, Sweden and Switzerland remained good during the quarter. Operating earnings (EBITA), on the other hand, declined to SEK 18.9 M (22.0) due to lower volumes and higher collection costs in Poland. After a re-evaluation of purchased debt portfolios, the Group wrote down the value of the Norwegian portfolios by SEK 18.9 M. For other portfolios, an estimation of anticipated future cash flow led to lower amortization, which meant an increase of revenues and earnings of SEK 18.9 M. The estimation of future cash flows complies with upcoming IFRS rules. Sales Ledger: Revenues decreased to SEK 30.5 M from SEK 35.6 M in the fourth quarter of 2003. The integration of the EOS unit with the other operations in the Netherlands, has negatively affected service line revenues. The operating deficit for the period amounted to SEK –10.4 M, to be compared with SEK –31.4 M, including restructuring costs in 2003. Other Services: Revenues declined from SEK 64.5 M to SEK 60.2 M and produced operating earnings (EBITA) of SEK 8.6 M (13.9). The decrease in quarterly revenues and earnings is mainly due to lower activity in the Norwegian operation that purchases fresh receivables. For the full-year the write-down of Norwegian portfolios adversely affected earnings by SEK 3.2 M. Net Financial Items Financial expenses were lower than the year-on-year, and amounted to SEK –36.4 M (–52.9), an improvement due to a lower net debt, resulting in lower interest expenses. Cash Flow and Investments Cash flow from operating activities improved to SEK 481.1 M during the year, against SEK 301.8 M in 2003. The change in working capital remained positive during the fourth quarter. The Group’s English subsidiary received a repayment of preliminary tax of SEK 27.7 M. Cash flow during 2004 was charged with SEK 70.4 M for repayments of previously unallocated receipts in England. Investments in tangible and intangible fixed assets were lower than the corresponding period of 2003. Purchases of written-off receivables during the year amounted to SEK 266.8 M (200.8). Financing The Group’s financial position has been strengthened through a reduction in net debt to SEK 456.5 M during the fourth quarter, against SEK 768.6 M at year-end 2003. The net debt/equity ratio improved to 0.32 (0.62). Shareholders’ equity amounted to SEK 1,436.3 M, compared with SEK 1,240.8 M on December 31, 2003. Shareholders’ equity was positively affected by SEK 1.7 M from exchange rate fluctuations, which was offset by a negative net effect of SEK 6.6 M after tax for a change in accounting principles for pensions. As of December 31, 2004 liquid assets totaled SEK 338.3 M, against SEK 243.2 M on December 31, 2003. Unutilized credit facilities amounted to SEK 385.8 M (301.7). Minority Interests Minority interests of SEK –10.3 M in the income statement and SEK 27.6 M in the balance sheet refer principally to the 40% minority holdings in the Group’s companies in Poland, the Czech Republic and Hungary as of April 2003. Goodwill Consolidated goodwill amounted to SEK 1,401.0 M, against SEK 1,528.1 M at year-end 2003. The change during the year consists of goodwill amortization of SEK –112.1 M, additional acquisition costs of SEK 0.7 M, an adjustment of SEK –6.9 M in the acquisition analysis for the Group’s company in Scotland and SEK –8.8 M for the effect of exchange rate fluctuations. An impairment test conducted for all goodwill in the Group has not led to any write-downs. Tax The reported tax expense for the full-year is based on the companies’ estimated actual tax expense for the year, in contrast to the year’s first three interim reports, where pre-tax earnings were charged with an estimated average tax rate for the entire Group. The resulting tax rate used in the annual accounts is lower than the one estimated previously during the year. The Group has reported no deferred tax receivables for the tax loss carry forwards in England. Human Resources The average number of employees during the year was 2,945 (2,870). The number of employees has increased in Finland, the Netherlands and Poland to handle expanded volume, at the same time that reductions have been made in England and Germany. Parent Company 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, services and marketing activities. The parent company had revenues of SEK 39.0 M (34.3) and a pre-tax deficit of SEK –67.5 M (–16.5). The parent company invested SEK 0.5 M (1.9) in fixed assets during the year and had liquid assets of SEK 7.7 M (0.0) at year-end. The average number of employees was 23 (20). Other In November 2004 Intrum Justitia decided to withdraw from the acquisition of Legal & Trade Collections (Ireland). The financial prerequisites on which Intrum Justitia based the acquisition are no longer at hand, based on new information provided by the seller, Legal & Trade Financial. The matter is currently being processed in the Irish courts. The Intrum Justitia Share Intrum Justitia’s market capitalization as of December 30, 2004 was SEK 4,377 M (3,229). The price of Intrum Justitia’s share increased by 36 percent in 2004. During the same period Stockholmsbörsen’s All Share Index rose by 18 percent. During the year 59.7 million shares were traded, corresponding to 70 percent of the total number of shares outstanding as of December 30. Since July 1, 2004 the share is traded in Stockholms¬börsen’s Attract40 segment. The number of shareholders as of December 30 was 4,833 (3,458). Highlights after Closing Date Refinancing On February 11, 2005 Intrum Justitia AB signed a five-year syndicated loan facility of EUR 210 M with Danske Bank A/S, Nordea Bank AB and Svenska Handelsbanken AB. Each bank’s share is EUR 70 M. The facility will be used for general corporate purposes and to refinance the current loan facility of EUR 150 M. The agreement increases the number of banks involved. The Group’s strong financial position ensured improved, flexible terms. Clarification of agreement with related party In connection with a previous agreement, Intrum Justitia and Visegrad NV, the minority owner of the Group subsidiary Intrum Justitia Central Europe BV, signed a new agreement in January 2005 that in principle partly governs investments in portfolios of written-off receivables in Poland, the Czech Republic and Hungary and partly specifies the calculation of the variable commission on these portfolios. The variable commission is calculated as the amount exceeding Intrum Justitia’s yield requirement on each of the investments in portfolios of written-off receivables in the three aforementioned countries. Visegrad NV’s share of the variable commission for 2004 amounts to SEK 2.0 M. Proposed Dividend and Redemption of Shares The Board of Directors proposes that no dividend be paid for fiscal year 2004 (0.00). With reference to Intrum Justitia’s strong financial position and good cash flow situation, the Board proposes that the Annual General Meeting approve a payment to shareholders of approximately SEK 600 M, corresponding to approximately SEK 7 per share, through an offer to redeem shares. Trading in redemption rights is expected to take place on Stockholmsbörsen beginning in May 2005. Payment of redemption proceeds is expected to take place around the end of June 2005. Information on the redemption price, redemption ratio and other details of the offer will be announced in connection with the notice of the Annual General Meeting. The Board of Directors is confident that following the redemption the company will still have the capacity to expand through organic growth, debt purchases and company acquisitions. New Dividend Policy The Board of Directors has amended the dividend policy, which means an increase of the share of distribution: The aim of Intrum Justitia’s Board of Directors is to annually propose that shareholders receive a dividend or corresponding form of distribution that over time averages at least half of net profit for the year after tax. Decisions related to the dividend proposal will take into account the company’s future revenues, financial condition, capital requirements and situation in general. Annual General Meeting The Annual General Meeting will be held at 4:00 p.m. (CET) on Wednesday, April 27, 2005 at Södra Paviljongen, Vasagatan 1, Stockholm, Sweden. A notice and other information for the Annual General Meeting will be available at www.intrum.com. The Annual Report is scheduled for publication in early April 2005 and will be distributed my mail to shareholders upon request. The Annual Report will be available at Intrum Justitia AB’s head office and at www.intrum.com. Accounting Principles This Full-year Report has been prepared in accordance with generally accepted accounting principles in Sweden and accounting standard RR 20 of the Swedish Financial Accounting Standards Council (RR). From January 1, 2004 the company applies the Swedish Financial Accounting Standards Council’s accounting standard RR29 “Employee Benefits”, which contains, among other things, uniform regulations on the actuarial calculation of provisions for pensions in defined-benefit pension plans. These pensions were previously reported by each Group company in accordance with the local practice in each country. The amended accounting principles have resulted in an increase in provisions for defined-benefit pensions and similar commitments in Norway, France, Italy and Finland totalling SEK 18.6 M through a decrease in shareholders’ equity of SEK 6.6 M, a deferred tax receivable of SEK 0.7 M and a reclassification of other long-term liabilities of SEK 11.3 M. The pension obligations in Sweden according to the so-called ITP plan are still reported as defined-contribution pension solutions in accordance with the pronouncement from the Swedish Institute of Authorized Public Accountants. As of 2004 the Group reports bad debt losses on its accounts receivable as a portion of sales and marketing expenses, in accordance with Swedish practice. In the previous year they were reported as cost of services sold. Comparative figures have been restated due to this reclassification. The joint ventures owned together with Goldman Sachs, SDF 75 AG and SDF 50 AG, are reported in the consolidated financial reports in accordance with the proportional method. The company has otherwise applied the same accounting principles as in previous years. Harmonization of New Accounting Principles From January 1, 2005 Intrum Justitia will report in accordance with the International Financial Reporting Standards (IFRS, formerly IAS). The Annual Report for 2005 and interim reports will contain comparative figures for 2004 restated according to IFRS, which means that January 1, 2004 will be considered Intrum Justitia’s date of transition to IFRS. The following information on anticipated significant effects of the transition is preliminary and may change if the IFRS recommendations or their interpretation changes during the year. According to IFRS, new rules apply to acquisition analyses and consolidated accounts. As a result, the Group will no longer amortize goodwill, which improves consolidated operating earnings for 2004 by SEK 112.1 M. Pursuant to IFRS, the theoretical value of the Group’s employee stock option program will be charged as a personnel cost during the period May 2004–December 2006. The value may be adjusted during this period for changes in the conditions for exercising allotted options. The effect of the change in reporting employee stock options is a decrease in operating earnings for 2004 of SEK 5.0 M. Another effect is that forward currency contracts and other derivatives used in the Group’s treasury operations will be valued at fair value on each accounting date. This will not have a significant effect on the Group’s accounts for 2004. For portfolios of purchased debt, amortization will be calculated based on an effective interest rate method, where the book value of each portfolio consists of the present value of all estimated future cash flows discounted using the effective interest rate determined when the portfolio was originally purchased. Reported revenues are defined as collected amounts less amortization for the period. The effect on operating earnings of the new way to calculate amortization will be positive, SEK 4.2 M. The estimated overall impact of IFRS on the Group’s income statement and balance sheet for 2004, including the effect on deferred tax, is reported in separate columns in the Full-year Report. Moreover, in connection with the introduction of IFRS the reporting of purchased fresh receivables will be adapted in line with the reporting of purchases of written-off receivables. As a result of this change, reported revenues decrease. Reporting Dates 2005 The Interim Report for January-March 2005 will be published on April 27, 2005. The Annual General Meeting will be held on the same day, Wednesday, April 27, 2005. The Interim Report for January–July 2005 will be published on August 17, 2005. The Interim Report for January–September 2005 will be published on October 26, 2005. Stockholm, February 17, 2005 Intrum Justitia AB (publ) Jan Roxendal President & Chief Executive Officer This Full-year Report has not been reviewed by the company’s auditors This Full-year Report and other financial information are available at Intrum Justitia’s website: www.intrum.com Denna delårsrapport finns även på svenska. Presentation of the Full-year Report This Full-year Report and presentation material will be available at www.intrum.com > Investors. President & CEO Jan Roxendal and CFO Bo Askvik will comment on the report at an analysts’ meeting and telephone conference held today at 10:00 a.m. CET. Location: Operaterrassen in Stockholm. The presentation can be viewed at www.financialhearings.com To participate by telephone, call +44 207 162 0183. A recorded version will be available through February 24 by telephone +44 207 031 4064, using the code 645 197. For further information, please contact: Jan Roxendal, President & CEO Tel: +46 8 546 10 200 Bo Askvik, Chief Financial Officer Tel: +46 8 546 10 200 Anders Antonsson, Investor Relations Tel: +46 8 546 10 206, mobile: +46 703 367 818