Download - Intrum Justitia

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Great potential for increased outsourcing
In a number of major markets, such as England, France,
Germany and Italy, there is still resistance against outsourcing
credit management. These markets represent a great potential
for growth. I do not wish to underestimate the diffi culty of
changing established habits and traditions. On the contrary,
it will require patience and farsightedness to accelerate the
outsourcing trend in certain countries. To raise interest in outsourcing,
we have to increase understanding of modern credit
management and demonstrate the benefi ts of engaging Intrum
Justitia. We are working continuously with various targeted
marketing efforts for this purpose.
Strong relationships and high ethical standards
are key to success
With over 90,000 clients and more than 13 million collection
cases, Intrum Justitia handles thousands of sensitive business
relationships every day on behalf of a large portion of European
businesses. Success in this business is built on relationships
between people, on how we handle our clients’ integrity and
business relations, and on how we act toward debtors. To
support this day-to-day work, we have at our disposal welldesigned
processes and IT systems, in addition to the business
ethics and values we stand for and which are expressed in our
policy, Fair Pay... please!
The client survey conducted during the year in eight key
countries confi rms how important our employees and their
commitment are to our success. Among the most positive outcome
of the results is that it shows that our clients value our
expertise and have great confi dence in our ethical practices.
They also underscore the strength of the Intrum Justitia brand
and its importance to securing payment.
National laws governing the CMS industry are changing in
many places, not least as a result of the EU directive to alleviate
diffi culties with late payments in commercial transactions.
We support and are working actively to harmonize rules and
promote higher ethics in the industry. Greater transparency
and clearer terms will not only benefi t European businesses
but also Intrum Justitia as a market leader with a complete,
modern offering in an industry with good prospects for growth.
Market for Purchased debt growing
In recent years the most signifi cant change in Intrum Justitia’s
business is the greater emphasis on Purchased Debt. Buying
receivables and collecting them on our own behalf is a good
way for us to utilize our knowledge and processes for successful
credit management, at the same time that it provides a signi-
fi cant contribution to the Group’s earnings. These opera-tions
have therefore grown to become an increasingly important complement
to our core business.
The purchased debt market has grown substantially in
recent years as companies have shown more interest in quickly
and securely improving their cash fl ows. As a consequence, the
price of various types of portfolios has increased, and so has
competition. Our position is strong, however, and our presence
in many countries allows us to act fl exibly and to focus on the
markets that are the most attractive at present.
Interest among companies in selling their defaulted receivables
is expected to continue to rise, with a trend indicating sales of
such non-performing receivables earlier in the maturity cycle.
In 2005 the Board of Directors resolved to increase the limit on
our debt portfolio from SEK 600 M to SEK 1,200 M. During the
past year we completed several major acquisitions of portfolios.
Market outlook and priorities in 2006
Economic activity in Europe is expected to remain high in 2006,
along with consumer spending. A further increase in debt levels
can be expected as well. Interest rates have begun to rise in
several countries, but from historically low levels, and thus we
do not regard this as disruptive to our business. If anything, it
may lead to more collection cases.
As a whole, the market’s development in 2006 is expected
to benefi t Intrum Justitia, with the potential for volume increases
in our core business and good collection results. In this type of
market we can certainly expect greater competition, although
Intrum Justitia’s position as Europe’s leading CMS company is,
I would claim, stronger than ever. From this position, we will act
forcefully in our marketing.
Another important factor for our success in 2006 is being
able to take advantage of the opportunities in Purchased Debt.
We will also continue to refi ne our processes across the Group
through best practices and by devoting energy to the required
changes now under way in Germany, Italy, Norway and the UK.
Last but not least, we will continue to train and support our
employees and thereby help to develop the future leaders of
Intrum Justitia.
Stockholm, March 2006
Jan Roxendal
President and CEO