Intrum AB (publ)

Good morning, everyone. Thank you for listening.

It's great to have you back for another quarterly earnings call. Today, we have a new setup.

I am obviously in the new position, and I also want to sort of say hello to Masih, who's been with us now for, what is it, 8 weeks, roughly, almost?

Yes.

And yes, we will go through the Q3 results. In normal order, we will take you through the presentation, and then we'll open up for Q&A at the end.

If we start with the quarterly, I think the quarter as such, it is a bit messy when you start looking at it. But a few things to highlight.

I mean, on the underlying, we have a higher servicing income. The underlying business is, in general, performing well.

The adjusted EBIT has been increasing 30% year-on-year, and we continue to report net profits. This is the third quarter in a row.

And the leverage ratio is going in the right direction, and the investing volumes are increasing if we compare to Q1 and Q2 earlier this year. On the servicing side, we have now reached the 25% on an adjusted EBIT margin rolling 12 months.

And on the investing side, I think the collections, they are slightly above the forecast again. However, the income is down, but I mean, that is on the back of the lower -- the book that we have, which is now at SEK 22.5 billion.

If we go to the servicing a little bit more specific. I mean, this is the first quarter where we have an organic growth since 2022.

I think it was Q3 2022, the last time. So, we're now actually not only improving the margins, we're also having a top line that is going in the right direction.

We did grow in 10 out of 16 servicing markets. The pipeline is increasing.

So, we've had a lot of focus on the top line. I think we discussed this earlier with you, and we continue to now see hopefully a bit of results from that.

We're working closely with the entire sales organization. We're adding new people.

We are upgrading. We are working with target lists, pipeline.

We're working closely with churn. And the good thing is that there's still potential from our pricing program that should trickle through going into 2026.

And we also see that the margin that we get on the new deals is higher than the current margin. On top of that, we also have now started, and that will be something we'll probably speak about a little bit more when we get to the Q4, what kind of ancillary business is there -- out there and what's the growth potential.

Moving to the investing side. I think here, it's a bit of a -- I mean, the good thing is it's a quarter where we see the investments increasing.

So, we're now at SEK 303 million. The IRR remains at a very high and comforting level.

And I think for us, it's very important that the discipline on price is always going to be more important than the volume as such. Of course, we want to increase the volumes, but we will never increase the volumes on the back of being undisciplined on the pricing.

We see that we are successful in smaller deals. But on the bigger deals, I think there is an overall market pressure on the downward side, and we have not gone all the way to meet that where the market is.

We'll see where the market takes us going forward. And we're also working closely with Cerberus.

So, half of the -- more than half of the deals has been done with them. And we now have deployed SEK 2.9 billion since we started in total.

And the good thing is, I mean, we continue to extract value out of the portfolio. So, performance index remains above 100%.

And if you compare to the original curve or original forecast, we're now at 109% in the quarter. I think, with that, I'm handing over to Masih, who will take us through the financials in a little bit more details.

Yes. Thank you, Johan, and good morning to everyone.

I thought I'd start with going through all the one-offs we have. I think it's natural, both me and Johan, new in our positions to do a thorough analysis of the balance sheet, and what we've tried to do here is to apply a more conservative approach as well as trying to minimize items affecting comparability going forward.

So, therefore, this quarter, we have a pretty messy quarter in terms of write-downs of impairments and goodwill and also some one-off tax items. So, as you can see, the reported EBIT is almost minus SEK 600 million.

If you move that to the net income to shareholders, that has impacted by the gain we had on recapitalization of SEK 2.3 billion, and we have underlying financial expense of SEK 838 million. We had a couple of one-off tax items and underlying tax of SEK 158 million, which takes you to the almost SEK 400 million net profit.

Then we have a goodwill impairment related to Spain, where the development has been more negative than was assumed in our goodwill calculations, and therefore, we have that impairment. And then we have some other impairments mainly of client contracts on the balance sheet that we have now written down.

So, overall, a messy quarter, a lot of one-offs. But as I said, we have taken a conservative approach on the balance sheet, and we're hoping that you'll see much less of IACs going forward.

If I move to the next slide, Slide 9, and look at the key financials for the group. As you probably have seen, income is down 3% compared to a year ago.

More than half of that is FX related. At the same time, the cost trend continues to be positive, as you can see, and the cash generation has improved compared to a year ago.

The leverage ratio has been restated. Again, here, a bit more conservative approach.

We're looking at the nominal value of debt rather than the book value, which means that the leverage ratio is higher than it otherwise would have been had we used the old definition. With the old definition, it would be at 4.4.

And I should also mention that full year 2024, without the discontinued operations, it would have been at 5.3. So, we are moving in the right direction in terms of leverage, but obviously, we want to move this even further going forward.

If I move to the next slide and look at the underlying cost trend, you can see that we've had a strong cost discipline also in Q3, the run rate is now SEK 12.5 billion in terms of costs and costs are down 10% compared to the same quarter last year. And that is mainly driven by a reduction of FTEs, down about 1,000 people compared to a year ago.

Moving into servicing. As Johan said, encouraging to see that we have organic growth in the quarter.

The total income is flat, but that is completely driven by FX of a 3% negative effect, offset by organic growth of 3%. A lot of the one-offs is in the servicing business, so the EBIT is distorted by that.

But if you look at the adjusted EBIT, it's up 27%, and it's also up 30% so far in 2025 versus the same period in 2024. We want to double-click on the leverage we have.

What's happened in this company the last couple of years is a quite large shift in the composition of the business. If you look at the bars, you can see that 2 years ago, 24% of the cash generation was coming from the servicing business that has almost doubled to 43%.

In our view, I think the general conception is that servicing is less risky than the investment business, which means that the cash flows generated from that business should be able to cope with a higher leverage. Here, we have assumed that our investment business has an LTV of 80% that should be financed by debt of 80%.

And if we assume that the remainder of the debt on the balance sheet is in the servicing business, you can see that the leverage ratio for the servicing business is actually coming down quite a lot, especially the last few quarters, given the fact that the cash generation from the servicing business has improved quite a lot. I think if anything, this chart shows that we want to, going forward, take into account the riskiness of our business when we set our leverage targets so that it takes into account if we continue to derisk and have a larger share of our revenues and profit coming from servicing.

Moving into next slide, Slide 13, investing. You've seen this, but the income is down.

This is partly FX, but largely due to the lower investments compared to the amortizations we have. So, a smaller book value leads to lower income.

We are collecting well on this portfolio, which means that income is down slightly less than the book value. Nevertheless, as Johan said before, we have done more investments this quarter.

We want to do even more going forward, but we want to strike a good balance between pricing discipline and volumes. Moving to Slide 14.

Looking at the debt and maturity profile. You can see that net debt is now at just below SEK 45 billion.

We have about SEK 5 billion of cash, SEK 2 billion of that is restricted. It could be used to buy back bonds.

The remaining cash is free will. And you can see the maturity profile with about SEK 12 billion of maturities in 2027, of which about half is the new money notes we've issued.

I think with that, I'll hand back to Johan, and he'll do a couple of final remarks before we open up for Q&A.

Okay. So, I think, first of all, the quarter is a quarter where we see the underlying business performing well.

It is positive to see a servicing top line year-on-year organic growth. I mean, I think we discussed and talked about this a lot.

We are really emphasizing the top line, and we are putting a lot of effort in making sure that we get new business into the group. However, I think servicing business as such is a slow-moving business.

It comes with RFP processes, there's onboarding, there's ramp-up, et cetera. But there's definitely an ambition to keep this top line growing.

And the investing volumes, as we said, we will continue to have a balance between volumes and returns, but it's always good to see volumes going up when the returns remain high, and we will continue to focus on developing the partnership with Cerberus. The one-offs from the recapitalization and impairments, I'm sure we'll get a lot of questions on, so I'll leave that for the Q&A.

And we have now reached a 25% margin. I think everyone expected us to reach it, but it's always good to reach a goal that everyone expects you to reach.

So, it's a tick in the box. And we will come back when we present our full year results with the strategic review and also updated financial targets.

So, I think with that, I think we can open up for questions.

So, my first question is on the adjusted EBIT margin for servicing, which reached 25% in Q3, which is up from 18% a year ago. It seems to be driven primarily by cost reduction.

How sustainable is this margin expansion? And what portion came from operational improvements versus onetime efficiencies?

I can start here. I mean, I think that the margin has proven to be sustainable.

It's been proven to increase quarter-by-quarter. Given the focus that we now have on growing the top line, I think we will have to strike a balance between how much more margin improvements we want and how much do we want to actually put into our commercial proposition in order to grow the top line.

And if you ask me, on the balance, I would say, I'm quite happy with 25% margin if I can grow my business at the same time.

All right. Perfect.

And then, if we move to investing side, collection performance was 101% in this quarter, slightly better than a year ago at 98%, but cash EBITDA from investing still declined to SEK 1.35 billion from SEK 1.5 billion a year ago due to a smaller book. When should we expect cash EBITDA to stabilize or grow again given your stated intention to increase the investment pace?

I mean, it's a very tricky question to answer because I cannot predict how much we will invest over the next quarters. But the ambition is clearly that we want to get the investing business to flatten out.

So, if you think about the decay, we've had over the last years in terms of portfolios going down, investment volume going down, now it's time to turn that around and stabilize. But we also said that we have a SEK 2 billion target.

Let's make sure that we reach the SEK 2 billion target first, and then we'll get sort of to the next level. And by then, I think also we will have our, let's say, Q4 report, and we'll give more guidance on where we see a future portfolio.

Okay. And just finally, on your updated financial targets, you mentioned focusing on improving profitability, driving growth and strengthening the balance sheet.

These can sometimes conflict with each other. So, which takes a priority if you face trade-offs?

For example, would you sacrifice near-term growth investment to the 3.5x leverage target faster? Or how should we think?

I think in -- I mean, we need to address our leverage. That's the main priority.

But then doing that, I think it's also important to always strike a balance between sort of short-term sacrifices and long-term gains. But I think we will give you more clarity on that when we talk again in 3 months' time.

Can you hear me?

Yes.

Perfect. So, my first question is to Masih as he comes in with a little bit of a new outsider's perspective.

So, in your new role and given that you're new, can you talk a little bit how you view a sustainable and long-term capital structure in Intrum? And how do you think that should look in terms of leverage ratio?

Thanks, Patrick, for that question. A sustainable balance sheet is a balance sheet that is in better shape than the current balance sheet.

I think that's clear for everyone. We'll come back with actual targets on that when we present the Q4 results.

But generally, I would say that we need to take into account what the composition of the business will be in the future depending on how we grow our servicing and investing business, and we will take the different levels of riskiness of those 2 different business lines into account when we set new leverage targets. That's the hint I can give you in addition to what I started with saying that we need to be in better shape in the future than we are today.

So that's the main priority of this company. That's going to be my main priority of -- myself as well, obviously.

So yes, you need to give it some time. We'll come back, but the direction is clear.

We need to be in better shape.

Okay. And speaking of the balance sheet, you have some new money notes given out in connection with this restructuring.

And to my understanding, those will partly be used to buy back bonds. So, can you talk about how much you aim to buy back with this?

And when should we start seeing that these actions being taken?

Yes. I mean, we can use that money to buy back.

We'll do that if we believe that, that's good for the company as a whole. We can't give you any timing of that.

We will do that when we think that the timing is right, if we do it. But the whole purpose would be to make sure that we deal with the maturities we have in the sort of short term, the 2027s.

But again, it's an opportunistic action tactics from us. So, we can't give you any timing on it.

But if we feel that it's going to address the balance sheet to some extent, we'll do that.

Okay. And servicing, it's growing with 3%.

It's, however, below a little bit the old target level. Do you see that you need to invest more in the cost side in order for this to ramp up?

Or is there anything you can do that wouldn't drive increased cost in the short term to ramp up income on this side?

I mean I'll start here and then Masih can add. But in servicing, I think the cost trend will always be sort of, on a relative basis, going down.

We need to become more efficient. We need to be more automated.

We need to be -- we basically need to build on a scalable platform. Are there short-term investments we need to grow -- we need to do to grow the servicing business?

Nothing that is material from my perspective. But then, I think one of the key questions that we have that we will have to address in the sort of strategic review is also how -- what's the ancillary business that we can grow?

Because right now, we are involved in some very important processes with our clients, and there could be opportunities to grow ancillary business out of that, that would be sort of a nice add-on to the business we run today. But -- and that could require CapEx.

But I think that's something, again, we will have to come back to when we have done our own homework.

Yes. I mean if I add what's, I think, interesting with the servicing business is that there's a lot of legacy in that business, not just with Intrum, but with the whole business.

And really improving the offering has a lot to do with becoming more cost efficient. So, it's actually the case that the more cost efficient we become, the more automated we are in that business, the better the offering will be to our customers and the more deals we will win at better margins.

And so, in that business, it is not really a conflict between investing more and you seeing more higher cost in our P&L and winning business. I mean we are hiring salespeople now, but we're talking about 30 people, and we have almost 7,000 people working with collections within servicing.

So, it's nothing compared to the base we have to work with in terms of becoming more efficient.

Given that you were at the other seat of the table when you -- in your previous job, do you see any immediate actions that the Intrum could do in order to improve their -- the top line growth within servicing to win new inflow from, for say, banks?

There are things we're looking at in terms of how we price deals. We have a fairly large, fixed cost base.

And obviously, the more servicing revenue we have on the platform, the smaller is the fixed cost base per deal, so to say. So, we are making some changes to how we price new deals.

And I hope and we think that that change in financial steering will make us more competitive in new deals and still uphold or maybe even improve the margins from current levels. So yes, there are things we can do, and we're looking into it, and we're trying to apply it as quickly as possible.

A very last question from my side is just on Slide 12. You -- on that changed composition of cash flows, you showed the total leverage.

Can you -- the dotted line there, the servicing leverage, which we don't see a number for. Can you please share the detail what that level would be in Q3 '25?

Can we get a reference?

Yes. I think if you look at where that dash line was a year ago, so it was above 10x, and now it's around 7x.

So, it's a pretty strong deleveraging if you allocate some of the debt to the servicing business. So, it pretty much follows obviously the improved cash generation from that business.

I'll continue on Slide 12. Thank you for that, I've asked for a long time, so appreciate it.

And just to hear a little bit how you're reasoning with the 80% LTV you're assuming on the investment. I suppose on the Cerberus Project Orange, you had 60%, if I remember correctly, on the Intesa SPV, it was 60%.

Why do you feel 80% would be the kind of fair level to assume for investing?

I mean, you can argue whether it could be 60%, 70%, 80% or 90%. I don't think that's the main point.

I think the main point is to show that irrespective of how much you allocate to it, if you allocate the remaining debt we have on the balance sheet to the servicing business with stronger cash generation in the servicing business, you would have seen a declining leverage for that business. I mean, coming from the banking world, a comparison I would make is that if you have a bank that is only doing consumer lending and then a few years later, it's only doing mortgages, you should probably view that bank as being less risky and therefore, would be allowed to have more leverage.

And I think this is a -- it's a fair comparison with our business as we are more and more moving towards servicing, which we believe is less risky and therefore, should be allowed to have a higher leverage on. This doesn't mean that we will set leverage targets in the future that are less ambitious than the ones we've had, we just think it's important to take into account how the composition of our business changes.

But if I can follow up on that, maybe I'm thinking about it the wrong way, but [indiscernible] the opposite. If you are a bank, when you have a lending book, you can have some leverage.

If you just have commissions, you would have less leverage.

Well, I would -- yes, I mean, if you take a bank, it's typically the case that you have risk weights for the lending business and the riskier the lending is, the higher is the risk weight and therefore, the more capital you have to have. That's the way I would look at it.

Yes. And I wouldn't compare -- I mean, remember, when we do the servicing business, I mean, the contracts that we run are usually sort of 3 to 5 years.

It's a long-term relationship, and it's also -- it creates quite a lot of stickiness. So, I think that's where we're coming from.

Whereas on the investing side, in the end, it very much depends on what's your investment appetite and how much can you invest to continue to either replenish your portfolio, increase your portfolio or decrease your portfolio. So, it's going to be more sensitive in the short run in terms of your investment appetite.

And then also, there's always a, I think, a question mark, at least from the market when you invest into these type of portfolios, will they actually yield the returns that you put up when you made the investment.

Fair enough. Then moving over to the servicing side.

Organic growth, now you're back to organic growth again, which I think is, of course, highly positive. Is -- around the 3%, is that a new baseline we should think about?

And maybe extending the question a little bit, I suppose getting back to organic growth has been a focus for several years. Why have you tweaked now that's making it possible to do that while also doing it in a profitable manner?

And maybe lastly on that question, the SEK 1.8 billion pipeline you mentioned, how should we think about that? What's your typical win rate?

I suppose that's a gross number. How should we think about the underlying churn you have?

So how much from that SEK 1.8 billion should we think about adding to your future income?

If we start with your first question, which is, is this a new sort of baseline? I think that one we will have to refer to when we come back in Q4.

Then we will try to -- if we articulate something, it will be then hopefully answering your question. I think there were many questions in one.

But churn, I mean, in general, we tend to manage churn in a good way. So, we actually don't lose that many contracts.

And then there might be always -- I mean, contract could also be amended. So, there could be parts of what was in scope before is not in scope in the future.

I mean a lot of clients, they usually use 2 or 3 providers to have benchmarks. So, the composition might change.

When it comes to new business, I mean, as I said, we have a very high focus on this. And this is now about sort of moving the organization from a very margin sort of focused type of effort to something that is much more forward leaning and thinking about new business.

So, coming back to your question around the pipeline, a lot of this business -- a lot of those tenders will materialize in Q4. It doesn't mean that that will bring income from the 1st of January.

It means that we will start ramping up the new contracts during 2026. And for bigger contracts, the ramp-up period can be as long as 6 to 12 months, especially if it's with the banking client where you do sort of gradual steps.

So, I think that the SEK 1.8 billion should be just seen as a -- there's a big amount out there. We're trying to get the biggest share out of it as possible.

But I wouldn't sort of -- I wouldn't expect that, that just means that we suddenly add all these revenues from the 1st of January on top of what we have today. It's a bit more complicated than that.

Got it. That's helpful.

Then, just one final question. On cost, how much more is left to be done there?

And I suppose common costs looked very strong this quarter, down almost SEK 100 million quarter-on-quarter. Is that a sustainable level that we should think about going forward?

And I suppose generally with cost, have you compromised the servicing quality to an extent? Or have you been able to add more technology usage already now?

Yes, I can start with that. I think there is a lot more to be done on the cost side when I'm talking about the mid-to-long-term, and that has to do with applying new tech and making the manual processes more automatic.

So, I think this business over time should have a clearly lower cost base than it has at this point. How quickly that goes obviously depends on how quickly we apply best practice from different markets we work in but also use tech in a higher degree than we have today.

In terms of the central costs, I think that most of the work there has been done, but I still think that there is some more to be done. I would also add that if you look at the impairments we've taken in the quarter, those will just in itself lead to about SEK 300 million less cost in 2026 than otherwise would have been the case.

So, we are obviously moving into '26 with a positive momentum on the cost side given the FTEs we have today compared to a few quarters ago. And we think that this is a long game where the cost trend should be downwards in the mid-to-long term.

Then the question is, to what extent do you use that to reinvest in your business and grow top line even more? And to what extent do you allow it to improve margins.

And that's a balance we need to sort of try to strike in the future.

So, I had one -- starting with one technical question. The gains you're making on the debt that you -- that has been written down, it seems like there is an element of mark-to-market of the outstanding debt.

Is that something new or -- because you did write it down by SEK 3.5 billion, right?

Yes. It is a mark-to-market, which happens when you do the recapitalization.

So, you use the bid price basically that establishes just after the recapitalization and the difference between that nominal value of the debt and the bid price leads to a gain for us as the bid price was lower than nominal level.

Exactly. Exactly.

So, it's like a fair value adjustment.

Okay. But that is not going to be fair value going forward from here?

No.

Okay. And then secondly, I was thinking about the aging back book in investments.

What's your take on the collection performance over time when the portfolio gets older? Is it kind of constant or is it gradually degrading?

I mean if your question is, if we will continue to collect according to our forecast or better, I think we have taken in -- I mean, when you do the portfolio and you put out the forecast, you obviously take into account the decay. And we have an ambition to continue to collect above the index.

But I mean, any portfolio -- well not any, but most portfolios, they have a higher collection rate in the beginning rather than the end. But that's also why I think we emphasize that our investment pace should continue to increase because we need to replenish.

Okay. And then lastly, regarding the market.

Now we've been through a rate hike cycle and rates are coming down. What's your feeling on your markets that -- I mean, how much should we expect the market to grow when rates are much lower now in the coming years?

You're talking about the servicing business?

Yes, servicing, yes, right.

I mean, I think there's a -- I mean, there are a few trends in the servicing business. I mean one is obviously the macro has an impact on, especially banks, utilities, telcos.

But there's also a lot of new kind of business verticals that has had an impact on the market as such. I'm thinking about Buy Now Pay Later, the steady state of increase of consumer lending, new entrants, all of that.

And then you have -- in many parts of Europe, we also have some of the traditional business that we see in the North, it doesn't even exist. So, I think we will continue to see this market sort of growing but not growing massively.

And then, as I said, I think in the previous interview, when we plan, we have to plan for a normal business cycle, which means that we cannot plan for another euro crisis, real estate crisis, financial crisis. That's when things sort of shift around.

But we should be able to replenish and grow the servicing business, just basically capitalizing on the fact that we are in every country, we meet every different dynamics. And then, on top of that, we hope we can also figure out what's the next step when it comes to ancillary business because we are closely tied to many clients, and there are services that we don't provide today that we can probably provide tomorrow.

Just 4 questions from me as well. First of all, with regards to the servicing pipeline of SEK 1.8 billion that you mentioned, can you give us some color on where those clients -- those new clients could be coming from in terms of sort of industry?

Are we talking mostly about banks or other type of clients? And secondly, with regards to the organic servicing revenue growth, can you break the 3% down into regions like Northern Europe, Middle Europe and Southern Europe, like you've done in the past?

So, yes, on the first one, I think some of the bigger clients or potential clients in the pipeline are bank related because that's usually when you have sort of bigger size. But it is a mix, but the bigger contracts are bank related.

I think when it comes to the growth, I don't have the numbers in my head. I don't know if you remember, Masih, but I think we -- I have -- yes, we need to -- let us come back to that.

We'll just get the numbers.

And if I just may ask a couple of questions on the leverage ratio and the debt. So, first of all, you mentioned, I think, in your remarks that you have restated the debt and the leverage ratio to now take into account the market value of the debt.

Can you give us some more details? Maybe I misunderstood that.

And why are you doing that? Because I thought the typical definition of leverage ratio for every company is just the nominal value of the debt divided by the 12 months EBITDA.

So, if you can just give us some more color with regards to the restated calculation? And then second question on the debt.

How do you plan to refinance the 2027 maturities at the moment? I appreciate that this may change, but based on where we currently stand, what would be the plan?

Yes. We haven't used the market value when it comes to the leverage ratio.

So, we are using nominal value. The market value was referring to the effect of the recapitalization and that net gain we had.

So, when calculating the leverage ratio, we do it exactly the way you described it. We look at the nominal value and the 12-month running cash EBITDA.

On the refinancing, the 2027, obviously, we have a few quarters to go before we need to deal with that. The whole purpose is to put the company in a better position so that refinancing goes well.

So, it's about continuing to improve the business, generating more cash, improving the top line, continuing to reduce costs. So, we can only sort of focus on the company and how we're doing operationally to put ourselves in a good position before we need to deal with that maturity.

If I just may come back to the leverage ratio...

On the growth, just to answer your question, most of the growth is from Middle Europe, but we also have some growth in selected markets in the South, in particular, Italy. And then the North is fairly sort of neutral.

Sorry, just to come back to the leverage ratio because I think you mentioned in the beginning that you have obviously reported 4.7, consensus was looking for 4.5. And I think you mentioned that under the old definition, it would be 4.4.

So, I'm not sure what you have changed. If you can just explain what you have restated, if there's something that has been restated in the calculation.

Yes. So, now we are looking at the nominal value of the debt, whereas with the old definition, it was the book value, and the nominal value is a higher number.

And therefore, the new definition leads to a higher leverage ratio than would have been the case with the old definition.

Right. And are you -- is that because in your covenants, you have to use the nominal value of the debt?

Or what is the reason behind the change?

Well, it is more in line with the covenants. So, it's not a perfect, but it's a very, very close proxy to how the covenants are set up.

And we also did change because if we would have done the old method, we would basically take benefit out of this accounting adjustment, and that's why we say with the old definition, it should have been 4.4, but we think it's more right to actually look at the nominal value and then talk about 4.7.

Can you hear me?

Yes.

Just coming back again there to the leverage ratio. Sorry if you get tired of it.

But this view that you can lever the company more on service as opposed to investing. I think that has -- some would challenge that view, although I agree and appreciate that lower risk, everything else equal, would be possible to finance.

But again, yes, I think Ermin alluded to it as well, having investable assets on balance sheet would also be financeable. So that view, has any of that been cleared with creditor group out of curiosity?

Or is that strictly your own view? That would be my first question.

And then maybe secondly, if I can ask on your non-recurring items and I think SEK 2 billion in one-offs related to restructuring. Is there any of that actual payments, bills you need to pay from that, that -- how much of that is a hit?

And when is those costs expected to be completely over and done with also in your cash flow statements?

Yes. If I start with the first question, as I said before, this analysis of looking at the leverage for the different parts of our business will not mean that we will set a leverage target in the future that is less ambitious than we otherwise would.

We just think it's fair for ourselves to look at the riskiness of the business when we do set that target. So, I think we're just basically alluding to that we will probably look at having different leverage targets for the 2 types of business that we operate.

What that lands in terms of aggregate leverage, whether that's going to be a target that's at the 3.5x that we have today or what it's going to be more ambitious than that and what the time frame of that will be, we'll come back with it in Q4, we just think for ourselves and how to operate the business, it's good to look at different targets for the different business lines that we operate and take into account how we think that those business lines will develop going forward a few years from now. On your second question, yes.

Yes. It's Anne here.

On your second question regarding the costs that went through from cash in the third quarter, around SEK 550 million went through as cash. And then I think you also asked about the tail, if there's anything more to come through.

It's very, very small. I don't think there's anything material.

Yes. I mean, I would say, as for Q3, the recap is closed.

And yes, going forward, it's sort of business as usual.

Okay. No fine.

I was just curious on it. So, appreciate that.

Maybe a third question, if I can. And so just it appears that my interpretation of what you're saying is that growth ahead might be a tad difficult for you, I mean, also on lower FTE base that for you to capture any growth, maybe underlying growth seen in Europe for you to really capture that, you need to sort of invest in automations, et cetera, to actually release capacity with your employee base to actually capture this top line.

Otherwise, it will be more or less a lost opportunity for you because there's not too much capacity left with the current FTE base. Is that a fair way to say it like that?

No. I mean, I think what we're saying is we have room to grow with the current capacity.

We think that if we can be even more efficient going forward, we will naturally win even more business. So, part of the -- sort of by being the more efficient you are, the more attractive value proposition you have.

So, I think we have a different take on that. I mean, today, we can grow.

We have capacity to grow in every market. But the more efficient we become; the higher likelihood is that we can grow even more.

Yes. Okay.

That's fair enough. Understood.

I think there is some comments in the market that Buy Now Pay Later loans are perhaps seeing particular growth. Would you capture any of that?

Or would this bank-related clients coming in, would that be more to your larger ticket items, maybe not to the same growth? Or would you comment on that?

I think Buy Now Pay Later is a very interesting segment, and we're already working with it, and we have been successful to actually onboard more Buy Now Pay Later volumes just in the last 2 quarters. And it's a segment that we will continue to target.

And I think it's a segment that, in particular, fits with our digital collection platform. And yes -- so, yes, I don't see any -- it's a big opportunity.

Hi, can you hear me?

Yes.

So, to start with, yes, to be sure, looking at the cash flow, you have very high interest paid in Q3. And I assume this is related to accumulated interest from the capitalization.

And you said that we're more or less done with all the cash flow now. Is that also [ for ] interest?

So, we will not see any more tails out of this on the financial side?

Yes. All the accrued interest was paid in Q3.

Super. We talked a lot about the growth in frequency.

Just a follow-up on that also. Have you seen any changes from your bank customers around handling non-performing loans in terms of volumes and signs of earlier collections or earlier divestments of portfolios?

No, nothing that is particular for the quarter. I mean this continues to evolve differently depending on market, depending on the situation.

I mean, for now, now we have a situation in Germany where you see the Stage 2 is going up. So, it's very -- there's no sort of a coherent trend across Europe.

Okay. I see.

And then, of course, also, I'm not sure if you would like to answer, but -- and it has been discussed a lot around this Page 12 about leverage. But if you would have a fully service business, I mean, without any investing vehicle at all, what would you say a total leverage would be for such business?

I think -- again, I think that's something we will leave for the future. I think the point we're trying to make is not that -- I think the point -- we're just trying to show that our business has fundamentally changed.

And the 2 legs, they have a very different type of business profile. And we will have to come back to this when we come with our Q4 strategic review and explain more how we see the future.

But all things equal, we definitely have an ambition to become a much more resilient company when it comes to leverage. But we don't have a number for you.

So, fully understand. But as you also understand, I mean, this -- all this kind of discussion around leverage probably we have a lot of attention among investors and analysts.

Of course. So, I think the message that we -- if we want to conclude one message, it's that the leverage has to go down.

I think it has to continue to go down and it needs to be sustainable. And we will tell you more in Q4 how we will make it happen.

Hello, can you hear me?

Yes.

I have 2 remaining really, only. One is regarding the SEK 2 billion target that you were mentioning earlier in the context of your investment division bottoming out.

I'm not really sure what target you were referring to there. If you could just repeat that again, that would be fantastic.

And then obviously, you've just restructured. And if you're looking across to your competitors, say, in the U.K., for instance, after the restructuring can be before the restructuring.

And so, I guess if you're looking at your own balance sheet and given your restructuring has also just been a very light restructuring, despite the complexion perhaps, how would you rate your options today to manage liabilities perhaps a little further?

First one, I mean, we have -- I think we've mentioned before that we have an ambition to invest SEK 2 billion per year, so roughly or SEK 500 million per quarter. That's the SEK 2 billion I'm referring to.

And then I think on your question on leverage, I think Masih did answer that before. I mean the way we see is that we need to continue to operate our business in an improving fashion.

We need to continue to become more efficient. We need to continue to improve our servicing business and adding top line growth.

And then on the investing side, we need to, at the first instance, reach the SEK 2 billion per year as replenishing. And then we'll see what the next step is in terms of investment volumes.

And that's the organic path on how we can delever.

And so, you're not currently looking at anything -- we shouldn't be expecting anything inorganic, so to speak, over the next, say, year?

I mean when we do a strategic review, we will look at all options, and we will see which one creates the most value. But the base case is obviously always that we move on organic path.

Hi, can you hear me?

Yes.

Just going back to the one-off. So, can you talk about the impairments, the goodwill impairments and what kind of -- what does that mean basically for the future?

Yes. I mean there are a few different impairments.

The big one is the goodwill impairment we have done for Spain. As I said previously, it's related to what we thought would happen with that business and the actual performance, and we could see that the actual performance had been worse in the short term.

And therefore, we felt that it would be conservative to do a goodwill impairment there. The other impairments mainly relate to client contracts we've had on the balance sheet, where you do the same kind of assessment of what kind of revenues you think you're going to generate from those customers going forward.

And again, we've taken a conservative approach and have a lower assessment on those revenues, and therefore, we've done impairments there. And the remaining impairments relate to software we've had on the balance sheet that we've written down.

And as I said before, what this means is that D&A will be lower than otherwise would have been the case going forward. And for 2026, we're talking around SEK 300 million lower D&A expense.

Okay. But just to understand that a bit more, does that mean -- like, should we expect kind of less -- I was trying to understand the impact of the -- in terms of collections, et cetera, going forward.

Like would the impact be for the short term as in like next quarters? Or like how should I think about that?

There is no impact on collections. It's just an impact on the cost line, which will be -- everything else equal will be lower in Q4 and also lower in 2026.

But this is not related to how collections will perform going forward.

Okay. And then, just looking at the maturity profile, Page 14.

So just to be clear, you still have outstanding in 2025?

That's a term loan that we're paying back to some extent, and it's been -- it has been extended. So, it's not a -- yes, so it's nothing you need to be concerned about.

So that has been extended?

We're currently in negotiations on that.

Well, it should be done fairly short -- fairly soon. And it's not fully being -- I mean, it's partly being paid, partly is extended, and it's just to give us a bit more flexibility going forward.

Okay. So, I guess it will be dealt with...

Before we -- when we announced Q4, it's fully dealt with.

So partly extended and partly paid down.

Correct.

And just looking at the RCF, so what's the drawn amount as of 3Q?

RCF.

Sorry, say that again?

What is the drawn amount of the RCF?

It's around 11 point….

10 point -- yes, I mean it's almost fully drawn.

One follow-up question really quickly. Can you give us some guidance on your sort of speed of collection going forward?

Are you going to maintain the same rate of collection? Do you think you're going to maybe slow it down a little bit?

What should be sort of a stable case from here, all else equal?

When you talk about our collection rate, in what context? Are you thinking about our investing portfolios or...?

Yes. I'm sorry, only the investing portfolio.

I mean the investing portfolios, they will -- it's hard to predict, but we've -- historically, we've been collecting slightly more than our forecast. And I think that's the ambition going forward as well.

And then obviously, the amount of collections depends on the size of the book and the profile.

Yes. So, if -- I'm trying to picture it like this.

If you are maintaining as many people as you were before, but you have a smaller book, then you would be churning that book or turning it over a little bit more quickly. Is that the idea?

Or is the idea to shrink your collection engine, if I can call it like that, to maintain the same speed of working out the smaller book?

I mean, we're always trying to collect as much as possible. And then at the same time, we're trying to be more efficient in every collection.

So, I think your analogy is not really the way it works in reality. But of course, if you have lower volumes, you need less people.

But I mean, out of our 7,000 people working in collections, serving our own portfolios is just one part of it. I mean we have a much bigger book with our clients where we operate.

Yes. No, that I understand.

So -- but I think I understand your answer.

So, thank you for a lot of questions today. I hope we've been able to clarify what is a little bit of a difficult quarter to understand, given all the one-offs.

But I think as we pointed out, we're happy with the underlying. We're making progress.

We're deleveraging. Cost continues down.

We see a bit of servicing income growth and the investing portfolios are collecting slightly better than planned. And the investing volumes are higher than before.

And, obviously, we want to further improve going forward. And we hope to see you when we present the Q4 and talk more about the way forward.

Thanks a lot and have a great day.