Investor Slide Presentation

Encore Capital Group

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

This presentation contains forward-looking statements within the meaning of the

Private Securities Litigation Reform Act of 1995 (the “Reform Act”). The words

“believe,”

“expect,”

“anticipate,”

“estimate,”

“project,”

or the negation thereof or similar

expressions constitute forward-looking statements within the meaning of the Reform

Act. These statements may include, but are not limited to, projections of revenues,

income or loss, estimates of capital expenditures, plans for future operations,

products or services, and financing needs or plans, as well as assumptions relating to

these

matters.

Such

statements

involve

risks,

uncertainties

and

other

factors

that

may cause actual results, performance or achievements of the Company and its

subsidiaries

materially

different

from

any

future

results,

performance

achievements expressed or implied by such forward-looking statements. For a

discussion of these factors, we refer you to the Company's reports filed with the

Securities and Exchange Commission, including its Annual Report on Form 10-K for

the year ended December 31, 2006. In light of the significant uncertainties inherent in

the forward-looking statements included herein, the inclusion of such information

should not be regarded as a representation by the Company or by any other person

or entity that the objectives and plans of the Company will be achieved. For all

forward-looking statements, the Company claims the protection of the safe-harbor for

forward-looking statements contained in the Reform Act.

FORWARD-LOOKING STATEMENTS

Encore Capital Group

2006 WAS THE 3RD CONSECUTIVE YEAR OF PORTFOLIO PRICING INCREASES

7.00%

7.50%

8.00%

8.50%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

Q1 06

Q2 06

Q3 06

Q4 06

5.25%

9.75%

12.50%

13.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

2004

2005

2006

2007

More than

doubled over the

past 3 years

Large national bank’s core product

(% on a dollar of face)

21% increase

from the

beginning of 2006

Top 10 issuer of fresh charge-off

forward flow

(% on a dollar of face)

Encore Capital Group

WHICH WAS DRIVEN BY NEW ENTRANTS INTO THE BUSINESS AND THE

DROP IN SUPPLY FROM CREDIT CARD ORIGINATORS

5.88%

5.83%

5.53%

5.39%

6.85%

6.79%

7.25%

5.68%

5.88%

5.73%

5.91%

6.22%

3.21%

3.36%

3.46%

3.86%

3.83%

3.68%

4.15%

4.07%

3.96%

4.08%

4.34%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

Jan.

Feb.

Mar.

Apr.

May

Jun.

July

Aug.

Sept.

Oct.

Nov.

Dec.

Charge-off rate from Moody’s credit card indices*

(%, 2005 versus 2006)

2005

2006

*The indices track approximately $400 billion of U.S. bank credit card loans backing securities rated by Moody's

Source: Moody’s Investors Service

Encore Capital Group

THE INCREASE IN PRICING HAS REDUCED OUR COLLECTION

MULTIPLES AND THE RELATED IRR’S

0.2

0.4

0.5

0.6

0.9

1.5

1.9

0.3

1.0

1.7

3.1

4.2

4.5

4.2

2000

2001

2002

2003

2004

2005

2006

Estimated remaining multiple

Multiple to date

Source: Derived from Encore Capital Group 2006 Form 10-K

Purchase multiple by year of purchase

Encore Capital Group

WE RECOGNIZED THIS TREND IN EARLY 2005 AND PROACTIVELY

DEVELOPED A PLAN TO ADDRESS IT BY:

•

Identifying large, negotiated portfolio purchase

opportunities where pricing is more rational

•

Developing new collection strategies designed to improve

liquidation and reduce cost per dollar collected

–

New strategies enabled IRR targets to be achieved

despite higher pricing for portfolio

•

Diversifying into other areas of the distressed consumer

debt management business

•

Expanding capability to purchase and collect upon

alternative asset classes

Encore Capital Group

OUR MULTI-CHANNEL COLLECTION STRATEGY HAS BEEN THE CATALYST

Proprietary

account allocation

software

Legal outsourcing

collections

Third-party agency

outsourcing

Call center

collections

Mail collections

Account sales to

third-parties

Continuous feedback

Monitor/no current

work effort

Portfolio

valuation

Core competency:

Consumer level analytics on distressed consumer debt

Encore’s proprietary account routing system

Consumer

analysis

Encore Capital Group

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

Jun-

Jul-

Aug-

Sep-

Oct-

Nov-

Dec-

Jan-

Feb-

Mar-

Apr-

May-

Jun-

Jul-

Aug-

Sep-

Oct-

Nov-

Dec-

THIS DIVERSE APPROACH HAS ALLOWED US TO MAINTAIN CONSISTENT

COLLECTIONS ON THE JEFFERSON CAPITAL BULK PURCHASE

Jefferson Capital bulk purchase -

actual monthly collections

Total monthly collections

Monthly legal collections

Encore Capital Group

THIS INVESTMENT MAKES US VERY COMPETITIVE ON LOWER BALANCE

PORTFOLIOS

RECENT TELECOM EXAMPLE

Enhancement

Collections

Bal>250

Bal<250

283M

(68% total)

135M

(32% total)

21M

(84% total)

(16% total)

21M

(51% total)

20M

(49% total)

400%

Multiple

Total

(market price:

3.5% over face)

6.0%

9.8%

1.71

2.80

Pre India

Post India

Liquidation

Face value

418M

25M

41M

Total

64%

Balance band

Encore Capital Group

WE ALSO DIVERSIFIED INTO DISTRESSED CONSUMER DEBT

BANKRUPTCY SERVICES THROUGH THE ASCENSION ACQUISITION

•

August 2005

•

Strong platform to enter large consumer bankruptcy processing

outsourcing market with significant entry barriers and high switching

costs

•

Cross-selling opportunity with core business

•

Automated legal processing platform leveraged in collection litigation

Timing

•

Location:

Arlington, Texas

•

Number of employees:

160*

•

Business scope:

Core: Secured consumer bankruptcy account servicing, mainly auto

Others: Secured auto bankruptcy accounts purchasing**,

Bankruptcy software licensing

•

Major clients:

Large national auto lenders and local banks

Two new clients added since acquisition

Ascension

business

overview

Synergies

and

capabilities

targeted

* As of December 31, 2006 ** Last purchase made in 2001

Encore Capital Group

UNFORTUNATELY, AS A RESULT OF BK REFORM, BANKRUPTCIES WERE AT

AN ALL TIME LOW IN 2006

U.S. Chapter 7 bankruptcy filings

100,000

200,000

300,000

400,000

500,000

600,000

U.S. Chapter 7 bankruptcy filings

Sources: U.S. Courts

Volume increase

due to BK reform

For the first 8 months of 2006

Chapter 7 bankruptcies were

at their lowest levels since

1987

Encore Capital Group

AS A RESULT, ASCENSION HAS NOT MET OUR EXPECTATIONS, BUT IT IS

CURRENTLY POISED TO TAKE ADVANTAGE OF INCREASED BANKRUPTCY

FILINGS

•

Hired two new sales executives

•

Client prospects now include top 100 Banks and top 50 Credit Unions

•

Ascension Capital and Encore are teaming on events and sales calls

Sales & Marketing

Pricing

Improved Contracts

Cost Containment

•

Revised pricing methodologies to achieve a 20% margin

•

Renegotiated long-term contracts with key clients

•

India pilot program to begin April 1, 2007

•

Re-engineered workflow processes: 50% of the improvement in

accounts/FTE realized in 2006 and another 50% expected in 2007

Encore Capital Group

MOST IMPORTANTLY, WE CONTINUED TO LEARN ABOUT OUR

CONSUMERS

Willingness to pay

Is the debtor willing to resolve the debt on fair terms?

•

Minimal discount offered

•

Pursue legal strategy if court cost is

justified and accounts are in statute

•

Minimal discount offered

•

Mail, call, legal if necessary

•

Minimal to no effort

•

Accept smaller payments and longer payment

plans

•

Mail, call

•

Push to legal if the risk

adjusted returns justify

the costs and accounts

are in statute

•

Use discounts, payment plans and friendly talk-off

to cultivate liquidation

Encore Capital Group

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

WHICH LED TO OUR NEW LEGAL INITIATIVE

Blended performance

Blended expectation

Cumulative liquidation for specific type of “unwilling consumers”

Historical “unwilling consumers”

accounts performance

Encore Capital Group

-4

-2

THIS WILL HAVE A SIGNIFICANT POSITIVE CASH IMPACT IN THE LONG RUN

Incremental collections over previous program

Incremental cash flows impacts of 2007 legal initiative

($Million)

Total 2007 placements

expected to yield almost

$80 million in incremental

collections over the life of

the accounts

LEGAL INITIATIVE EXAMPLE

Incremental net cash flows

Incremental cash outflows

Encore Capital Group

HOWEVER, DETERMINING THE TIMING OF THE REVENUE IMPACT FOR

2007 PLACEMENTS IS CHALLENGING AND, IS DEPENDENT ON SEVERAL

FACTORS

Factors that impact the

revenue recognition

Remaining book value

of accounts

•

Age of accounts on book from the original pools

•

Prior collections on the specific pool groups before

the application of legal initiative

•

Original purchase price for the pools

IRR used to

recognize revenue

•

Expected collections from original pool groups as a

whole

•

The actual collections from the legal initiative can

vary by 1) time left in statute 2) balance 3) state 4)

credit quality and 5) availability of asset information

of debtors

Operational

challenges

•

Placements are selected based on litigation

eligibility, not by portfolio or pool group

Potential variance

Encore Capital Group

FOR THE YEAR, OUR TOP LINE RESULTS WERE ABOVE 2005, ALTHOUGH

THIS PERFORMANCE DID NOT DROP TO THE BOTTOM LINE

2005 Actual

2006 Actual

Purchases

Revenue

Collections

EPS, FD

Net Income

Revenue

recognized as

% of

collections

$195.6

$292.2

$221.8

$31.1

$144.3

$337.1

$255.1

$24.0

2006 versus 2005

Performance

($ millions)

% B/(W)

$1.30

$1.03

74%

71%

(26%)

15%

(23%)

(21%)

(4%)

Encore Capital Group

$0.8

$1.0

$2.0

$1.5

$1.2

$1.4

$1.7

$2.0

$3.0

$3.6

$3.7

$5.3

2004

2005

2006

WHICH WAS DRIVEN BY UPFRONT COSTS ASSOCIATED WITH THE RAMP UP

IN OUR LEGAL INITIATIVE AND OTHER NON-RECURRING COSTS

Court Cost Expense by Quarter

($ millions)

Encore Capital Group

WHICH RESULT FROM THE CONTINUED SHIFT TO NEWER, LOWER

REVENUE RECOGNITION POOLS

For the Year Ended

December 31, 2006

For the Year Ended

December 31, 2005

Revenue to

Collections

Percentage

Revenue

Collections

Percentage

of Total

Revenue

Revenue to

Collections

Percentage

Collections

Percentage

of Total

Revenue

Zero Basis Portfolios

100.0%

$28,588

11.9%

100.0%

$32,412

15.0%

1999 –

2003 Accrual

Basis Portfolios

77.0%

63,151

82,040

26.4%

82.4%

92,592

112,373

42.9%

2004 –

2005 Accrual

Basis Portfolios

66.2%

121,363

183,392

50.7%

62.1%

90,927

146,326

42.1%

2006 Accrual Basis

Portfolios

61.9%

26,238

42,354

11.0%

Total

71.2%

$239,340

$336,374

100.0%

74.2%

$215,931

$291,111

100.0%

Revenue

Source: Encore Capital Group 2006 Form 10-K

($ thousands)

Encore Capital Group

THERE ARE BROAD MACROECONOMIC FACTORS THAT WILL BE

CATALYSTS FOR OVERALL EXPANSION IN OUR CORE MARKETS

Dynamics for recovery

businesses

•

Strong potential for growth in

the next 2-3 years due to

overall volume increases

•

Significant opportunities for

tapping new growth areas as

market continues to evolve

Significant segment

specific catalytic

factors for bad debt

•

Minimum credit card

payment increase

•

CDHP penetration

•

High interest student

loans

Substantial ripple effects from high risk

mortgage loans accumulated

•

Up to $500 billion in sub prime mortgage

loans will be experiencing payment shock in

the next three years

Increasing number

and types of sellers

•

Healthcare providers

•

Captive auto lenders

•

Mortgage lenders

•

Multinational banks

Source: Literature search, interviews

Encore Capital Group

AS WE LOOK TO 2007, WE ALREADY SEE SEVERAL THINGS MOVING IN OUR

FAVOR

•

Purchasing: The legal initiative has made us more competitive

on “auctioned”

deals and we have developed new acquisition and

sales strategies

•

Bankruptcies: Filings are on the rise –

which will hopefully lead to

increased placements at Ascension

•

Auto deficiency: Saw the availability of auto paper rise in 2006 and

expect it to continue in 2007

•

Telecommunications: Plans are progressing quickly to add a new

low-cost channel to service this asset class

Encore Capital Group

WE ARE CONTINUALLY DEVELOPING NEW OPERATING INITIATIVES,

SOME OF WHICH HAVE ALREADY BEEN IMPLEMENTED, THAT ARE

DRIVING IMPROVEMENTS IN PORTFOLIO LIQUIDATION

Key levers for

IRR

enhancement*

•

Legal initiative

•

Settlement

enhancement

•

Deeper

penetration of low

balance accounts

through India

Collection

enhance-

ments

•

Location

optimization

•

Life cycle channel

optimization

•

Outsourcing

strategies for late

stage accounts

* Since operations are key focus of the discussion, assumes pricing is constant

Initiatives that have

been partially

deployed

Initiatives that will

be deployed in 2007

Cost

reduction

Net collection

curve shape

optimization

Encore Capital Group

WE BELIEVE ENCORE REPRESENTS AN OPPORTUNITY TO CAPITALIZE

ON A STRONG PLATFORM AND FAVORABLE INDUSTRY DYNAMICS TO

ACHIEVE ATTRACTIVE RETURNS

•

Strong cash flow generation

•

Significant growth momentum

•

Encore’s industry leading

business model and position

•

Proprietary

analytics and

technology

•

Strong and

visionary

management

team

•

Scalable and

transferable

operations

Strong industry fundamentals in distressed consumer debt space