Intrum : Report Q321 Eng

Interim report

Third quarter, 2021

• Favourable economic sentiment throughout the quarter, sup- ported by gradual normalisation, improving consumption and a strong economic growth outlook.
• Seasonally softer third quarter 2021, especially when compared to the exceptionally strong, rebound-driven third quarter 2020.
• High commercial activity with increasing demand for our services driven by economic recovery and growth expectations, but also financial services clients' need to proactively address their bal- ance sheets.
• Transformation program on track with global front office deploy- ment ahead of plan and accelerating case migrations.
• In the third quarter cash EBIT decreased to SEK 1,394 M (1,659), cash RoIC to 7.8 per cent (9.2) and cash earnings per share (cash EPS) to SEK 3.68 (5.88).
• Cash EBIT for Credit Management Services decreased to SEK 396 M (495) and the adjusted operating margin decreased to 23 per cent (29). The segment cash RoIC for the quarter was 8.2 per cent (10.2).
• Cash EBIT for Strategic Markets decreased to SEK 482 M (819) and the adjusted operating margin decreased to 22 per cent (30). The segment cash RoIC for the quarter was 12.3 per cent (19.6).
• Cash EBIT for Portfolio Investments increased to SEK 907 M (748), cash RoIC was 9.9 per cent (8.4) and total portfolio investments made amounted to SEK 1,633 M (873) for the quarter.

As the operating environment continues to gradually normalise we are focusing on our two key strategic priorities - delivering on the ONE Intrum transformation program and building a sustainable organic growth trajectory

Third quarter, 2021

							Rolling
		Third quarter			9 months		12 months	Full year
	July-Sep	July-Sep	Change	Jan-Sep	Jan-Sep	Change	Oct 2020-
SEK M, unless otherwise indicated	2021	2020	%	2021	2020	%	Sep 2021	2020
Revenues	4,294	4,521	-5	12,919	11,739	10	18,028	16,848
Adjusted revenues	4,183	4,520	-7	12,803	12,372	3	17,162	16,731
Operating earnings (EBIT)	1,341	1,688	-21	4,435	3,495	29	5,635	4,695
Adjusted operating earnings (EBIT)	1,533	1,687	-9	4,659	4,127	13	6,270	5,738
Earnings per share, SEK	4.33	6.97	-38	16.90	11.80	43	23.38	15.18
Cash EBITDA	2,906	3,142	-8	8,583	8,484	1	11,706	11,607
Cash EBIT	1,394	1,659	-16	4,172	4,058	3	5,694	5,580
Cash EPS, SEK	3.68	5.88	-37	15.03	16.40	-8	24.04	25.28
Cash RoIC, %	7.8	9.2	-1.4 ppt	7.8	7.4	0.4 ppt	8.0	7.7
Net debt/RTM cash EBITDA, x							4.2	4.0
Cash EBIT: Credit Management Services	396	495	-20	1,202	1,315	-9	1,484	1,596
Cash EBIT: Strategic Markets	482	819	-41	1,699	1,664	2	2,574	2,539
Cash EBIT: Portfolio Investments	907	748	21	2,662	2,357	13	3,496	3,190
Total portfolio investments made	1,633	873	87	5,423	3,856	41	6,696	5,129
Carrying value of portfolio investments	36,179	34,940	4	36,179	34,940	4	36,179	33,305
Adjusted return on portfolio investments, (ROI), %	14	12	2 ppt	14	12	2 ppt	14	12

Q3 in brief Comment by the President and CEOGroup overview Segment overview Financial report Other information Definitions About Intrum

Intrum  Interim report, third quarter 2021

2

Comment by the President and CEO

Gradual normalisation across our footprint and significant acceleration of ONE Intrum transformation

The third quarter of 2021 was characterised by a continued, gradual normalisation - both in terms of consumer and business behaviour. With increasing vaccination rates and restrictions continuing to be eased, Europeans returned to leisure activi- ties, including holiday travel, over the summer months as well as more in office work thereafter. For Intrum this was reflected in a seasonally slower third quarter, in line with more normalised pre-pandemic patterns. However, we continue to maintain a generally high level of cash revenues, only 5 per cent down from the second quarter this year and 4 per cent down from last year's exceptionally strong, rebound-driven, third quarter.

Overall European economic sentiment remained favourable throughout the quarter, with our customers and clients continuing to have a positive view of the near-term future, supported by improving consumption and a strong economic growth outlook. We continue to see an increasing demand for our services driven by economic recovery and growth expectations but also our financial services clients' need to proactively address their balance sheets.

For the third quarter we recorded a decline in cash EBIT of 16 per cent versus the same quarter last year. However, looking at the first nine months of the year compared against the same period in 2020 we saw growth of 3 per cent. The leverage ratio was 4.2x net debt to cash EBITDA and the RTM cash EPS at the end of the third quarter amounted to SEK 24.04.

Transformation program on track with global front office deployment ahead of plan

The transformation program is on track with scaling up of the four global front offices well ahead of plan covering 14 countries with 302 agents. The team leads in our global front offices are using the latest technology to make more than 100,000 calls per day. Our focus on recruiting, onboarding and training our new colleagues remains high - instilling the ethical and sound debt collection principles we launched during the second quarter and

building a common culture. The successful establishment of our global front offices clearly highlights the benefits inherent in the ONE Intrum transformation program.

Case migrations accelerated during the third quarter and we completed the largest migration to date when we moved part of one of our largest markets, Spain, to the new global platform with more than 2.2 million cases migrated. This was achieved through a single migration with only minimal exceptions detected - highlighting the maturity of our migration concept and processes. This migration tripled the total number of cases on the new platform and we expect to add a further 4.5 million cases to the platform during the fourth quarter. It is exciting and pleasing to see the smooth acceleration in case migrations - the leading indicator for our ONE Intrum transformation - as well as the resulting increasing use of our new global platform.

New case inflows continuing to normalise

The peak of the vacation period and more normalised consumption patterns led to seasonally lower revenues in our CMS seg- ment, both compared to the second quarter 2021 as well as the third quarter 2020. The new CMS case inflow trend continues to gradually improve from the inflection point observed during the first quarter. We are now down approximately 5 per cent compared to pre-pandemic levels and expect this development to gradually continue throughout the fourth quarter and into 2022. We expect case volumes, from both existing and new clients, to over time drive normalisation and growth of both revenues and profitability. Commercial activity remains high and during the quarter we signed an agreement with a large niche bank to become their servicer in Sweden, showcasing our continued success in the important bank and financial services sector.

The CMS cash EBIT is down 20 per cent compared to the third quarter 2020 and return on invested capital is at 8.2 per cent.

"Global front office deployment ahead of plan and accelerating case migration"

Q3 in brief Comment by the President and CEOGroup overview Segment overview Financial report Other information Definitions About Intrum

Intrum  Interim report, third quarter 2021

3

Significant commercial successes during a seasonally softer quarter

Seasonality across our Strategic Markets is reverting to pre-pandemic patterns, highlighting the success of vaccination campaigns and progress in reopening societies. Driven by this normalisation, we recorded a softer quarter in Strategic Markets from a revenue and profitability perspective, albeit the level of commercial activity remained high, including the signing of significant new servicing contracts in Spain and Italy. We were awarded a groundbreaking contract to service a more than EUR 1 bn Unlikely to Pay ("UTP") portfolio highlighting Intrum's position as the leading Spanish servicer for residential mortgages. In Italy we are also able to add further volumes to several of our servicing contracts.

The cash EBIT came in 41 per cent below the third quarter last year and the return on invested capital was 12.3 per cent for the third quarter.

Continued strong performance in terms of cash collections and returns

Strong operations, focus on affordable and stable payment plans as well as positive customer sentiment underpin a continued strong performance trajectory across all markets in our Portfolio Investments segment. During the third quarter our gross cash collections amounted to approximately SEK 3 bn, equivalent to 112 per cent of the active forecast.

New investments in portfolios amounted to SEK 1.6 bn, almost twice the amount invested during the third quarter 2020. We continue to invest at attractive return levels and newly acquired portfolios are well diversified geographically. The segment is ready for a seasonally more active fourth quarter when we expect increasing volumes and high activity levels all the way to year end.

The cash EBIT from the segment is up to SEK 907 M (748) with return on invested capital increasing to 9.9 per cent compared to 8.4 per cent during the third quarter 2020.

A transparent climate footprint

Climate change is one of the biggest challenges of our time and it affects everybody - nations, industries and companies. For us as a business it is crucial to consider and address climate related

risks in the context of our operations in order to contribute to a sustainable society.

Transparently reporting climate related risks as well as opportunities supports reducing emissions and contributes to a faster change towards a low-fossil fuel society. Such change is needed in order to minimise both climate related risks and the negative impact on our ecosystems and economies. Transparency is also a prerequisite to enable our stakeholders to make insightful decisions and thus contribute to limiting the climate impact.

This is why we at Intrum choose to support Task Force on Climate -related Financial Disclosures (TCFD) recommendations and have initiated the implementation of these. In parallel we have also started to report to the Carbon Disclosure Project (CDP), which evaluates companies' climate efforts and mitigating actions.

These are important tools for the way we operate, as they provide frameworks for how to describe and communicate about our climate efforts.

A year of executing on transformation and organic growth When reflecting on my first year as CEO of Intrum, I am excited about the path we have embarked on with our transformation journey towards ONE Intrum as well as the progress made to date. In combination with addressing pandemic related chal- lenges, these last four quarters have been focused on two things

• and two things only - our transformation program and building the foundation for sustainable organic growth. I am very proud of all team members' persistent dedication to find client and cus- tomer centric solutions for all challenges at hand and to serve all stakeholders in an empathic and ethical manner.
  I am convinced that the societal megatrends provide a positive backdrop for our continued success, as highlighted by the activity level amongst our clients both with regard to servicing as well as investment opportunities. I look forward to an active fourth quar- ter with important milestones in the transformation program as well as ample business opportunities to address.

Stockholm, October 2021

Anders Engdahl

President & CEO

"Strong operations, focus on affordable and stable payment plans as well as positive customer sentiment underpin a continued positive performance trajectory across all markets in our Portfolio Investments segment"

Q3 in brief Comment by the President and CEO Group overviewSegment overview Financial report Other information Definitions About Intrum

Intrum  Interim report, third quarter 2021

4

Group overview

Development during the third quarter

Revenues and operating earnings

Revenues for the quarter decreased 5 per cent to SEK 4,294 M (4,521), with organic growth accounting for -6 per cent, revaluations for 2 per cent and currency effects for -1 per cent compared to the third quarter the preceding year. The share of revenues denominated in EUR amounted to 60 per cent (67).

Operating earnings (EBIT) for the quarter amounted to SEK 1,341 M (1,688), with items affecting comparability of SEK -192 M (1). The adjusted operating earnings, excluding items affecting comparability, decreased to SEK 1,533 M (1,687).

Items affecting comparability

Operating earnings for the quarter included items affecting comparability of SEK -192 M (1). Portfolio revaluations amounted to SEK 112 M, items affecting comparability attributable to joint ventures of SEK -219 M and other items affecting comparability to SEK -85 M.

Net financial items

Net financial items for the quarter amounted to SEK -579 M (-573). Net interest amounted to SEK -468 M (-442), interest cost

on leasing liabilites to SEK -9 M (-10), exchange rate differences to SEK -15 M (19) and other financial items to SEK -87 M (-139).

Earnings for the period and taxes

The tax expense for the quarter was SEK 221 M, representing

22.5 per cent of earnings before tax excluding write-downs in joint ventures. Net earnings for the quarter amounted to SEK 541 M (864), corresponding to earnings per share of SEK 4.33 (6.97) before and after dilution.

The company's assessment is that the tax expense will, over the next few years, be around 20-25 per cent of earnings before tax for each year, excluding the outcome of any tax disputes.

Cash flow and investments

Cash revenues decreased to SEK 5,322 M (5,549). Cash EBITDA and cash EBIT decreased to SEK 2,906 M (3,142) and SEK 1,394 M (1,659) respectively. Cash EPS for the quarter amounted to SEK 3.68 per share (5.88). Cash EBIT corresponds to a return on invested capital (cash RoIC) of 7.8 per cent (9.2) for the quarter. RTM cash revenues increased to SEK 21,763 M (21,527), cash EBIT to SEK 5,694 M (5,477) and cash RoIC to 8.0 per cent (7.4).

Assets and financing

Total assets at the end of the quarter amounted to SEK 84,888 M, compared to SEK 84,275 M at the end of the third quarter of the preceding year. Net debt amounted to SEK 48,693 M (48,880). Net debt in relation to the RTM cash EBITDA stands at 4.2x compared to 4.2x at the end of the third quarter 2020. By the end of the third quarter Intrum had SEK 3,891 M (1,557) outstanding commercial paper, the increase reflects a more positive short term credit sentiment and the proceeds have been used to repay drawings under the revolving credit facility. At the end of the quarter SEK 2,684 M (3,720) of Intrum's revolving credit facility was utilised. In July, Intrum issued a three-year unsecured bond of SEK 1,500 M at STIBOR 3m +325 basis points under the Swedish MTN programme. The proceeds were used to refinance a fixed-rate bond maturing in 2022. Also during the quar- ter, Intrum issued a five-year unsecured bond under the Swedish MTN programme of SEK 1,000 M at STIBOR 3m +330 basis points. The proceeds of this issue were used to repay outstanding amounts under Intrum's revolving credit facility.

Cash revenues, SEK M							Cash EBIT, SEK M							Cash RoIC, %
Cash revenues rolling 12 months, SEK M	Cash EBIT rolling 12 months, SEK M		Cash RoIC rolling 12 months, %				Net Debt/RTM cash EBITDA
	5,549		5,601				5,591						1,659											9.2												4.2x								4.2x
						5,322															8.7													4.1x		4.1x
			5,249
						1,523
																																			4.0x
																	1,413									7.8		7.9		7.8
																			1,394
																	1,365
	21,527		21,377		21,376		21,990		21,763
													5,477		5,581		5,840		5,959		5,694				7.4		7.7		8.2		8.4		8.0
	Q 3		Q 4		Q 1		Q 2		Q 3				Q 3		Q 4		Q 1		Q 2		Q 3				Q 3		Q 4		Q 1		Q 2		Q 3				Q 3		Q 4		Q 1		Q 2		Q 3
	2020		2020		2021		2021		2021				2020		2020		2021		2021		2021				2020		2020		2021		2021		2021				2020		2020		2021		2021		2021

Q3 in brief Comment by the President and CEO Group overview Segment overviewFinancial report Other information Definitions About Intrum

Intrum  Interim report, third quarter 2021

5

Segment overview

Credit Management Services, Strategic Markets and Portfolio Investments

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
Items affecting comparability	-	6	107	79	192
Adjusted segment earnings	356	271	1,305	-400	1,533
Depreciation and amortisation	60	223	2	46	330
EBITDA	416	488	1,200	-433	1,671
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	-25
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	19,379	15,692	36 478	229	71 778
Cash RoIC, %	8.2	12.3	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
Depreciation and amortisation	60	223	2	46	330
Items affecting comparability	-	6	107	79	192
Adjusted EBITDA	416	494	1,307	-354	1,863
Depreciation and amortisation	-60	-223	-2	-46	-330
Adjusted segment earnings	356	271	1,305	-400	1,533