Interim report, Third Quarter (July - September)

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Operating profit increased by 19 percent ·Group revenues increased by 10 percent to SEK 692.3M (627.7) for the third quarter. ·Adjusted EBITA increased by 19 percent to SEK 124.7M (105.0) for the third quarter. ·Cash flow increased to SEK 212.6M (180.7) for the third quarter 2002 ·The number of collection cases in stock increased by 16 percent, from 6.9 to 8.0 million compared to the third quarter 2001. ·Stirling Park, one of Scotland's primary company within Receivables Management Services, acquired in July and progressing ccording to expectation. ·Organic growth for full year 2002 expected to reach the average target of at least 10 percent. Intrum Justitia Group During the period Mr. Peter Sjunnesson resigned from his position as Chief Executive Officer of Intrum Justitia AB. The Board of Directors appointed Mr. Bertil Persson, Chief Financial Officer of Intrum Justitia, as Deputy CEO and acting CEO of the company. In order to support the group management during the interim period, Mr. Bo Ingemarson, Chairman of the Board, has assumed the role of working Chairman. The process of recruiting a new CEO is ongoing. Review July - September: Revenues and EBITA Revenues for the period July - September 2002 amounted to SEK 692.3 million (627.7), an increase of 10 percent. Out of this increase, 10 percentage points came from organic growth, 2 percentage points came from acquisitions, (Vía Ejecutiva in Spain and Portugal and also Stirling Park in Scotland) and there was also a -2 percentage point effect of the strengthening of the Swedish Krona. The increase in revenues is primarily attributable to growth in the regions Sweden, Norway & Denmark and also Netherlands, Belgium & Germany, where collection cases and percentage of collections have been high, particularly within Consumer Collection & Debt Surveillance. Adjusted operating profit before goodwill depreciation (EBITA) increased by 19 percent to SEK 124.7 million. Adjusted for currency effects, the increase was 21 percent and is primarily attributable to economies of scale and increased productivity in Consumer Collection & Debt Surveillance. Earnings before Interest and Tax (EBIT) increased by 26 percent to SEK 85.0 million (67.3). Income before tax for the third quarter increased to SEK 65.9 million (17.7), and the net result for the period was SEK 41.4 million (5.7). Review January - September: Revenues and EBITA Revenues for the first nine months 2002 amounted to SEK 2,024.1 million (1,614.2), an increase of 23 percent. Out of this increase, 13 percentage points came from organic growth, 9 percentage points came from acquisitions and 1 percentage point came from currency movements. Adjusted EBITA increased by 21 percent to SEK 338.3 million (280.2). Adjusted for currency effects, the increase was 20 percent. Earnings before Interest and Tax (EBIT) increased by 30 percent to SEK 236.0 million (182.2). Income before tax amounted to SEK 139.2 million (86.7) and the net result amounted to SEK 81.2 million (47.9). Service line highlights Growth for the quarter is primarily attributable to Consumer Collection & Debt Surveillance; with revenue growing to SEK 414.5 million (353.2). Operating profit (EBITA) for the period increased by 34 percent to SEK 104.8 million. Much of the increase in revenues during the period is generated by the Netherlands, Belgium & Germany region, whereas the United Kingdom & Ireland region contributed most to the increase in profits for the period July - September. The revenues of the service line Commercial & International Collection decreased slightly to SEK 168.4 (170.5). EBITA increased by 43 percent during the quarter to SEK 37.2 million, thereby contributing to an improvement in operating margin of 7 percentage points compared to July - September 2001. Sweden, Norway & Denmark and Netherlands, Belgium & Germany as well as France, Spain & Portugal are the regions, which provided the greatest contribution to the positive margin development through economies of scale. Revenue for the service line Purchased Debt amounted to SEK 33.2 million (36.3). EBITA during the period decreased by 37 percent to SEK 15.9 million. The margin amounted to 48 percent (69). The main reasons for the lower result compared to last year's third quarter are higher amortization costs due to faster and shorter collection process, which is characteristic of some of the recently acquired portfolios. Third quarter revenues for the service line Sales Ledger were SEK 25.5 million (15.5), an increase of 65 percent compared to the same period last year.. EBITA for the same period amounted to SEK -8.3 million, mainly due to the fact that the service line is still in its start-up phase. Since critical volumes have not been achieved, the service line's resources are now being focused on the Nordic market where opportunities of reaching a speedy positive result are greater. Other services experienced revenue growth of 19 percent to SEK 72.8 million (61.2). During the period, the EBITA loss decreased somewhat to SEK 4.1 million. Most of the increase in revenue is attributable to increased demand for the Credit Information service in the region Switzerland, Austria & Italy and increase in purchase of fresh receivables in Sweden, Norway & Denmark region. Regional highlights Growth during the third quarter has continued to be strong in the regions Sweden, Norway & Denmark and France, Spain & Portugal. Revenues and EBITA for the period increased 16 and 23 percent respectively in the prior region compared to 2001. Increased operating profit for the quarter is related to continued high volume growth and benefits of scale, which have contributed to regional profitability. The latter region's revenue growth for the third quarter was 31 percent compared to the same period last year, due to an increase in large clients. The region also showed positive operating profit of SEK 1.5 million (-1.4). Integration of Vía Ejecutiva, with operations in Spain and Portugal, continues to progress well and completion is expected at the end of 2002. The region Finland, Estonia, Latvia & Lithuania has also performed well during the third quarter. Revenue increased to SEK 56.7 million, an increase of 9 percent compared to the same period last year. EBITA saw positive development during the period with an increase of 22 percent compared to third quarter 2001. The region comprising United Kingdom & Ireland has been characterized by close monitoring of all areas to ensure increased productivity. This has had a positive effect and the region increased operating profit in the third quarter by 42 percent, compared to the same period 2001. Competition remains fierce and an increased demand for the outsourcing of debt portfolios is evident, as an alternative to traditional debt collection activities. The third quarter has, like the previous two quarters, been somewhat demanding for the Netherlands, Belgium & Germany region. Revenue growth has however increased by 15 percent to SEK 147.4 million. This is to a large extent due to increased sales activities in the respective countries. Operating profit for the period amounted to 17.0 million (24.8). The decrease is largely due to costs related to increased sales activities and cost savings programmes. Work in identifying further operational savings as well as reducing costs have intensified, and measures are being taken to combine the two German operations. Details of these measures will be presented in the full-year report 2002 at the latest. Switzerland, Austria & Italy region has seen an increase in revenue to SEK 94.0 million (93.4). Growth in EBITA for the third quarter was 8.4 percent, to SEK 16.7 million. The period July - September has been characterized by restructuring and the organization in the respective countries in the region. Above all, focus has been directed toward increasing effectiveness of sales efforts. Revenue for the region Poland, Czech Republic & Hungary amounted to SEK 29.6 million (23.7) for the period. Any negative effect of flooding in the Czech Republic was limited as sales drives focused on those areas that were not affected. However, the result was somewhat impacted due to increased employee costs during the third quarter, which together with a temporary negative development for the Purchased Debt service line in Poland. EBITA for the third quarter was negatively impacted at SEK 3.5 million (7.4). A project aimed at increasing profitability through improved productivity and reduced costs has been initiated. The project will continue through to year-end and is expected to yield positive results during 2003. Acquisitions On 17 July 2002, Intrum Justitia acquired Stirling Park, one of Scotland's primary Receivables Management Services businesses. The purchase price is set at a maximum of GBP 7.9 million (approximately SEK 117 million) and creates goodwill of approximately SEK 116 million. The company, with revenues in 2001 of GBP 3.75 million (SEK 56 million), has a leading position in the Scottish local authorities market. Stirling Park has 108 employees divided into 6 offices with head offices located in Glasgow. The company has been incorporated in Intrum Justitia from 17 July 2002. The total integration costs for the companies that were acquired during 2001 amounted to SEK 11.7 million during the third quarter 2002. The Group's operating profit includes costs of SEK 3.7 million, and the remaining SEK 8 million has been charged to the restructuring reserve, now amounting to SEK 7 million. Expenses Administrative costs are somewhat lower for the period, due the inclusion of IPO related costs in the third quarter 2001. Item affecting comparability Severance payment plus social welfare costs for the departing managing director and CEO amounted to SEK 8.5 million, has been reported as an item affecting comparability in the third quarter. Cash flow Operating cash flow increased to SEK 212.6 million for January - September 2002 from SEK 180.7 million for the corresponding period in 2001. The Group continues to focus on reducing working capital, which combined with normal seasonality, has resulted in a positive effect for the quarter. Financing Net debt amounted to SEK 838.6 million as at 30 September, 2002, compared to SEK 1,142.5 million at year- end 2001. Shareholders' equity amounted to SEK 1,447.9 million (529.1). The strengthening of the Swedish Krona against the Euro by 2.2 percent from 31 December 2001 to 30 September 2002 has affected shareholders' equity. As of 30 September 2002, the Group had liquid assets amounting to SEK 113.1 million (184.9). As of the same date, the Group had un-utilized credit facilities of SEK 237.8 million. Employees The average number of employees increased to 2,739 (2,487). The increase is mainly attributable to acquisitions. Parent company The parent company, Intrum Justitia AB (publ), had revenues of SEK 25.1 million (-) and a result before tax of SEK 26.2 million (-) for January - September. Outlook The current downturn and, particularly, increased unemployment have an impact on Intrum Justitia. In this economic environment fewer debtors are able to pay, whilst the amount of claims, and therefore the amount of debt collection cases, increases. Despite a gradual deterioration of the economic environment the Group's expects to meet its average target of 10 percent for full year 2002. Post closing events In November Intrum Justitia and D&B RMS in North America, Mexico and Hong Kong signed a multi-year strategic alliance to provide international receivables management services for each other's clients. The two companies will work together in developing new products and services as well as in marketing activities. Accounting principles This interim report has been prepared in accordance with Swedish GAAP and recommendation RR 20 issued by the Swedish Financial Accounting Standards Council. Comparable figures for 2001 consist of the Intrum Justitia Group with Intrum Justitia Holding N.V. as the parent company. These figures have been prepared in accordance with Swedish GAAP. The joint venture company Intrum CAI Debt Finance AB is consolidated with proportional consolidation. The Company applies the same accounting principles as the year before. Reporting dates The Year-end report for 2002 will be published on 25 February 2003. The interim report for the first quarter 2003 (January - March) will be published in May 2003. Stockholm, 25 November 2002 Intrum Justitia AB (publ) Bertil Persson, Acting Chief Executive Officer This interim report has not been subject to a review by the Company's auditors. This Interim Report and other financial information is available on the website, Denna rapport finns även i svensk version. ------------------------------------------------------------ This information was brought to you by Waymaker The following files are available for download: The full report The full report