Fourth quarter 2016
- Consolidated revenues for the fourth quarter of 2016 amounted to SEK 1,719 M (1,396).
- Operating earnings (EBIT) amounted to SEK 559 M (385). The operating earnings include revaluations of purchased debt portfolios amounting to –2 SEK M (–36). The operating margin excluding revaluations was 33 percent (29).
- Earnings also included items affecting comparability with a positive impact on operating earnings of SEK 39 M. These relate to a positive effect of SEK 69 M from the sale of purchased debt portfolios. The quarter was further burdened by transaction costs of SEK 30 M related to the planned merger with Lindorff.
- Net earnings for the quarter amounted to SEK 429 M (274) and earnings per share were SEK 5.90 (3.76).
- Cash flow from operating activities amounted to SEK 1,112 M (878).
- The carrying amount of purchased debt has increased by 24 percent compared with the fourth quarter of 2015. Investments in purchased debt during the quarter amounted to SEK 1,166 M (1,130).
- The Extraordinary General Meeting December 14, 2016 approved the Board’s proposed combination with Lindorff.
- Consolidated revenues during the 2016 full-year amounted to SEK 6,088 M (5,628).
- Operating earnings (EBIT) amounted to SEK 1,978 M (1,624). The operating earnings include revaluations of purchased debt portfolios amounting to SEK 49 M (31). The operating margin excluding revaluations was 32 percent (28).
- Earnings also included non-recurring items with a positive impact on operating earnings of SEK 54 M. These relate to a positive effect of SEK 84 M from the sale of purchased debt portfolios. Earnings were further burdened by transaction costs of SEK 30 M related to the planned merger with Lindorff.
- Net earnings for the year amounted to SEK 1,468 M (1,172) and earnings per share were SEK 20.15 (15.92).
- Cash flow from operating activities amounted to SEK 3,374 M (2,905).
- Investments in purchased debt during the year amounted to SEK 3,100 M (2,428).
- The Board of Directors proposes a dividend of SEK 9.00 (8.25) per share, corresponding to a total of SEK 651 M (597).
Comment by President and CEO Mikael Ericson
Intrum Justitia’s fourth quarter 2016 was among the most eventful in the Group’s history. At the beginning of the quarter, we concluded acquisitions in Spain and Denmark, strengthening our local Credit Management presence for small and medium-sized enterprises. In October, we were also able to announce the Group’s first major investment in a secured debt portfolio, an asset class in which we see strong future growth prospects. In November, we entered into an agreement to acquire 1st Credit in the UK, our largest acquisition to-date, thereby securing an attractive position in one of Europe’s largest markets for purchased debt. Last but not least, we ended the year by announcing a planned merger with Lindorff to create the leading European player in our industry and we expect to generate significant value for the new Group’s customers, employees and shareholders.
The fourth quarter was financially strong, which demonstrated our organization’s capability to maintain a strong customer focus despite multiple transactions that required a lot of attention. Operating earnings were the highest in our history, and we experienced a significant increase in our earnings in all three regions and in both of our service lines. The level of investment was strong, with investments in purchased debt amounting to approximately SEK 1.2 billion and company acquisitions to about SEK 200 million.
For the full year 2016, we can also look back on a very strong development and a strict adherence to our strategy. We have improved our market position through five acquisitions and continued increase in investments in purchased debt, which reached SEK 3.1 billion in 2016, compared with SEK 2.4 billion for 2015. By improving operating efficiency, we have increased the margin in credit management services and maintained a good return on purchased debt of about 20 percent. We have also continued to develop our offering by broadening our presence in new customer segments and asset classes and through continued successful launches of payment services to online merchants. For our key financial ratio, growth in earnings per share, we achieved an increase of 27 percent for 2016, well above our target of 10 percent growth per year.
Equally important during the year has been the development of our Group's contribution to society where we for example signed the ten principles of the UN “Global Compact” to, among other things, improve human rights and fight corruption. In our sustainability efforts we have also continued to develop our contribution to preventing over-indebtedness with “Spendido”, an interactive lesson tool for high schools that focuses on credit, consumption and household economics.
We now look forward to a continued positive development for the Group in 2017 while maintaining a focus on offering our customers the most competitive solutions in credit management and financing of receivables. Through our investment activity in 2016 we have significantly increased our addressable market and strengthened our platform for profitable growth. Our planned merger with Lindorff continues to move forward with a competitive review estimated for completion in the second quarter of 2017. I am looking forward with confidence to a strong development for Intrum Justitia over the coming years.
Presentation of the year-end Report
The year-end report and presentation material are available at www.intrum.com/Investor relations. President & CEO Mikael Ericson and Chief Financial Officer Erik Forsberg will comment on the report at a teleconference January 26, starting at 9:00 CET. The presentation can be followed at www.intrum.com and/or www.financialhearings.com. To participate by phone, call +46 8 566 426 98 (SE) or +44 20 300 898 01 (UK).
For further information, please contact
Mikael Ericson, President and CEO, tel: +46 8 546 102 02
Erik Forsberg, Chief Financial Officer, Tel.: +46 8 546 102 02
The information in this interim report is such that Intrum Justitia AB (publ) is required to disclose pursuant to the EU’s markets abuse directive and the Securities Markets Act. The information was submitted for publication on January 26, 2017 at 7:00 a.m. CET.