Interim Report
January - March 2020
Loomis Interim Report January - March 2020
January - March 2020
- Revenue SEK 5,329 million (5,006). Real growth 2 percent (5) of which organic growth 0 percent (2).
- Operating income (EBITA)1)SEK 589 million (564) and operating margin 11.0 percent (11.3).
- Income before tax SEK 490 million (509) and income after tax SEK 365 million (379).
- Earnings per share before and after dilution SEK 4.85 (5.04).
- Cash flow from operating activities2)SEK 768 million (30), equivalent to 134 percent (5) of operating income (EBITA)2).
- As previously communicated the Board of Directors has decided to withdraw the dividend proposal for 2019 of SEK 11 per share and intends for the final dividend decision to be made at an extraordinary shareholders' meeting when it is possible to assess the consequences of the coronavirus pandemic.
- The ongoing pandemic had an overall limited negative impact on revenue and operating income during the quarter.
- Earnings Before Interest, Taxes and Amortization ofacquisition-related intangible fixed assets, acquisition-related costs and revenue, and items affecting comparability.
- Cash flow from operating activities excluding the effects of IFRS 16. The adoption of IFRS 16 has therefore had no net impact on cash flow from operating activities according to Loomis's definition. See also under Definitions on page 23.
KEY RATIOS | ||||
2020 | 2019 | 2019 | ||
SEK m | Jan - Mar | Jan - Mar | Change (%) | Full year |
Revenue | 5,329 | 5,006 | 6 | 21,044 |
Of which: | ||||
Organic growth | 0 | 88 | 0 | 443 |
Acquisitions and divestments | 90 | 115 | 2 | 535 |
Exchange rate effects | 233 | 317 | 5 | 898 |
Total growth | 323 | 520 | 6 | 1,876 |
Operating income (EBITA)1) | 589 | 564 | 4 | 2,601 |
Operating margin (EBITA), %1) | 11.0 | 11.3 | 12.4 | |
Operating income (EBITA) | 544 | 558 | -3 | 2,422 |
Earnings before tax | 490 | 509 | -4 | 2,210 |
Net income for the period | 365 | 379 | -4 | 1,646 |
Earnings per share, SEK1) | 4.85 | 5.04 | -4 | 21.88 |
Tax rate, % | 25 | 25 | 26 | |
Cash flow from operating activities2) | 768 | 30 | 2,057 | |
Cash flow from operating activities as % of operating income (EBITA)2) | 134 | 5 | 81 |
- For information on the effects of IFRS 16, see Note 8.
- Cash flow from operating activities excluding the effects of IFRS 16. The adoption of IFRS 16 has therefore had no net impact on cash flow from operating activities according to Loomis's definition. See also under Definitions on page 23.
This is a translation of the original Swedish interim report. In the event of differences between | |
the English translation and the Swedish original, the Swedish interim report shall prevail. | 2 |
Loomis Interim Report January - March 2020
Comments by the President and CEO
Similar to the world around us, Loomis's current situation is of course very much characterized by the ongoing coronavirus pandemic. We have a very important func tion to fill when society faces serious chal lenges. The payment system is dependent on the cash market working efficiently and we are doing our utmost to ensure that we can continue supporting our customers with cash handling services. All of our branches in more than 20 markets are in operation. The safety of our employees is the top priority and we are carefully follo wing the advice of local public health agen cies. Routines are in place to minimize the risk of our employees contracting or spreading the virus at our workplaces. Accordingly, among other things, we have informed our employees about the importance of avoiding personal contact, keeping a safe distance from the nearest person, wearing gloves, frequent hand washing and staying at home if they have symptoms. No business travel is taking place. Meetings are instead being held remotely. During these difficult times our employees have shown fantastic loyalty and they deserve a lot of credit for Loomis's ability to continue providing our customers with high quality services.
False rumors have been spread saying that cash is a source of transfer of the virus. Several medical experts engaged by, among others, the European Central Bank (ECB) and Bundesbank, have spoken out and denied that the virus can be spread by cash. The WHO has also been clear that it has never communicated that cash presents a risk of spreading the virus.
During the first quarter of this year the
impact of the pandemic on Loomis was limited. It was not until the latter part of March that the effects became visible.
During the first quarter Loomis was negati vely affected to a slightly greater extent in Europe than in the USA. This is in line with the spread of the pandemic in general. In April the negative effects of the pandemic on the Group's revenues increased and they were around 25 percent lower compared with April 2019. The revenues declined to a higher degree in Europe than in USA.
At the end of March the Board of Directors decided to withdraw the proposal for the 2019 dividend of SEK 11 per share. The Board also announced that the final divi dend decision is expected to be made at an extraordinary shareholders' meeting later in the year when it is possible to bet ter assess the consequences of the corona virus pandemic.
Retail volumes have, of course, been negati vely affected by the actions the authorities in our markets have decided to take, but at the same time we saw in March a tem porary increase in revenue from grocery retail and ATM services. We are also taking a number of steps to make Loomis more financially resilient. All capital expenditures that can be postponed will have to wait and in several of our markets we have unfortunately been forced to fur lough or give notice of termination to employees. A large percentage of our costs are variable and our ambition is to offset the reduced volumes as far as possible by quickly reducing expenses. I want to emp hasis that Loomis has a strong financial position and, in addition, we have also increased our liquidity buffer by signing a new loan of SEK 1,200 million.
In many of our markets we have in a short space of time managed to advance our positions. There are many good examples. In Spain, for example, we are offering new solutions to our financial customers and this has already had a positive impact on our revenue. In the USA we have signed new customer contracts when other provi ders have found it difficult to deliver servi ces. Within our international business we are also seeing a higher level of interest as
Loomis' financial targets
Revenue
SEK 24 billion 2021
24 | ||||||
18 | ||||||
12 | ||||||
6 | ||||||
0 | ||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | R12* |
* Refers to the period April 1, 2019 - March 31, 2020.
Annual dividend, %
40-60% of the Group's net income
60 | |||||
40 | |||||
20 | |||||
0 | |||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019* |
- The Board of Directors has decided to withdraw the proposal for the 2019 dividend to the 2020 AGM. The Board intends to convene an extraordinary shareholders' meeting for the purpose of deciding on the dividend when the business climate and market conditions will hopefully have stabilized and it will be possible to assess the consequences of the coronavirus pandemic.
Operating margin (EBITA), %
12-14% | |||||||||
2018 | 2019 | 2020 | |||||||
14 | |||||||||
12 | |||||||||
10 | |||||||||
8 | |||||||||
6 | |||||||||
4 | |||||||||
2 | |||||||||
0 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 |
Operating margin (EBITA) per quarter Operating margin (EBITA) rolling 12 months
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Loomis Interim Report January - March 2020
precious metal transportation has increased since the pandemic took hold. Interest in gold as an investment normally increases when stock market values go down. Our swift actions have opened up new opportunities and these will to some extent compensate for the generally lower volumes in retail business.
We started the quarter by signing two att ractive acquisitions. In January an agree ment was signed to purchase Nokas's Swe dish cash handing operations and in Febru ary we announced that we had reached an agreement to acquire Automatia in Finland. These operations provide a good comple ment to Loomis's business. In Sweden we are securing higher volumes and we will be better able to increase our service offering in the long term. The acquisition of Auto matia in Finland is an exciting investment in ATM services. The acquisition expands our knowledge base and the company pro vides us with experience in operation and maintenance of ATMs as well as digital pay ment systems. Both acquisitions are in line with our strategic plan.
In the first quarter the Group's real growth amounted to 2 percent (5), of which organic growth made up 0 percent (2). The positive growth that our European operations gene
rated in 2019 continued in the first two months of the year, but slowed down in March when the pandemic began to grow. The effects of the pandemic on our US ope rations were not noticeable until the end of March and this resulted in positive organic growth in the USA for the quarter as a who le. Revenue from SafePoint in the USA con tinued to develop well, rising by around 12 percent for the quarter.
One factor in the ability to deliver high- quality services to our customers is our focus on profitability in the customer port folio. We remain selective when we enter into new contracts and in the short term this may have a negative impact on organic growth. This is the case in all markets - both Europe and the USA.
The Group's operating margin (EBITA) amounted to 11.0 percent (11.3). The nega tive effects of the pandemic as a whole have lowered the operating margin.
In the USA a more profitable customer portfolio in combination with higher reve nue from SafePoint, as well as efficiency improvement programs at the branches, are the main reasons for the continued strong earnings.
In Europe several countries are contribu ting with higher operating margins. Our French company, CPOR, had a successful quarter in which precious metal opera tions in particular contributed to the increased revenue. The integration in France of the operations we acquired in the summer of 2019 remained intense during the first two months of the year but is now proceeding at a slightly slower pace. Due to the impact of the pandemic we have determined that it will take slightly longer than planned to fully realize the synergies. We should reach the full effect in late 2020 or early 2021. Our German operations developed according to plan in January and February but was affected by the pan demic thereafter. Efficiency improvement programs continue in Germany and will be intensified when the negative effects of the pandemic on society are reduced.
I am convinced that Loomis will come out strong of this difficult situation, that we and the world around us find ourselves in. I would in particularly like to thank all of Loomis's employees for their very strong commitment to our company at this diffi cult time.
Patrik Andersson
President and CEO
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Loomis Interim Report January - March 2020
The segments
SEGMENT EUROPE - REVENUE AND OPERATING INCOME | ||||
2020 | 2019 | R12 | 2019 | |
SEK m | Jan - Mar | Jan - Mar | Full year | |
Revenue | 2,842 | 2,711 | 11,629 | 11,498 |
Real growth, % | 2 | 6 | 7 | 8 |
Organic growth, % | -2 | 2 | 1 | 2 |
Operating income (EBITA)1) | 276 | 293 | 1,413 | 1,429 |
Operating margin, % | 9.7 | 10.8 | 12.1 | 12.4 |
Number of full-time employees | 15,100 | 14,900 | 15,400 | 15,300 |
1) Earnings Before Interest, Taxes, Amortization of acquisition-related intangible fixed assets, acquisition-related costs and revenue and Items affecting comparability.
SEGMENT USA - REVENUE AND OPERATING INCOME | ||||
2020 | 2019 | R12 | 2019 | |
SEK m | Jan - Mar | Jan - Mar | Full year | |
Revenue | 2,507 | 2,310 | 9,835 | 9,639 |
Real growth, % | 1 | 2 | 2 | 2 |
Organic growth, % | 2 | 2 | 3 | 3 |
Operating income (EBITA)1) | 371 | 321 | 1,422 | 1,372 |
Operating margin, % | 14.8 | 13.9 | 14.5 | 14.2 |
Number of full-time employees | 9,600 | 10,400 | 9,600 | 9,600 |
1) Earnings Before Interest, Taxes, Amortization of acquisition-related intangible fixed assets, acquisition-related costs and revenue and Items affecting comparability.
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Loomis Interim Report January - March 2020
Revenue and earnings
January - March 2020
Group - revenue
Revenue for the quarter amounted to SEK 5,329 million (5,006). Real growth was 2 percent (5), of which organic growth made up 0 percent (2).
Segment Europe - revenue
Revenue for the quarter amounted to SEK 2,842 million (2,711). The real growth of 2 percent (6) was positively affected by reve nue attributable to the acquisition of Prosegur Cash's French operations in July 2019. Organic growth was -2 percent (2). Operations developed well during the first two months of the year when several countries were still experiencing positive organic growth. In March the ongoing coronavirus pandemic negatively affected revenue and, accordingly, the organic growth for the quarter as a whole was negative.
Segment USA - revenue
Revenue amounted to SEK 2,507 million (2,310) and organic growth was 2 percent (2). The real growth amounted to 1 percent
(2). During the quarter the increase in the number of SafePoint units installed was the main factor for the positive organic growth, but the growth rate for CIT and CMS in the USA was also positive compared with the corresponding period in 2019. Revenue for the quarter from SafePoint accounted for 17 percent (15) of the segment's total revenue. The change in fuel fees, which Loomis passes on to its customers, did not have a significant impact on organic growth for the quarter. The negative effects of the spread of the pandemic had less of an effect in the USA than in Europe as the virus started spreading slightly later in North America compared to in Europe.
The share of revenue from CMS during the quarter amounted to 34 percent (33) of the segment's total revenue.
Group - operating income (EBITA)
The operating income (EBITA) amounted to SEK 589 million
- and the operating margin was 11.0 percent (11.3). At com parable exchange rates the earnings development was around SEK-5 million.
Segment Europe - operating income (EBITA)
The operating income (EBITA) amounted to SEK 276 million
- and the operating margin was 9.7 percent (10.8). In France, the precious metal operations of CPOR developed well during the quarter. Interest in gold and other precious metals as investments normally increases at times of uncertainty in the global economy. The quarter as a whole saw a lower operating margin as the impact on the pandemic on volumes in the two last weeks of March became evident. The acquisition in France, in July 2019, was dilutive to operating margin.
Segment USA- operating income (EBITA)
The operating income (EBITA) amounted to SEK 371 million
- and the operating margin was 14.8 percent (13.9). Higher revenue from SafePoint, a more profitable customer portfolio, as well as efficiency improvement programs at the branches, were the main drivers for the continued strong operating performance.
Other
The operating income (EBIT) for the quarter amounted to SEK 544 million (558), which includes amortization of acquisition- related intangible assets of SEK -27 million (-25), acquisition- related costs of SEK -18 million (-15) and items affecting com parability of SEK 0 million (33). The item in 2019 of SEK 33 mil lion is reported capital gains from the divestment of the art logis tics and storage operations.
Income before tax of SEK 490 million (509) includes a net
financial expense of SEK -54 million (-49).
The tax expense for the quarter amounted to SEK -125 million (-130), which represents a tax rate of 25 percent (25).
Earnings per share after dilution amounted to SEK 4.85 (5.04).
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Loomis Interim Report January - March 2020
Cash flow and capital expenditures
January - March 2020
Cash flow from operating activities, excluding effects from IFRS 16, amounted to SEK 768 million (30), equivalent to 134 percent
(5) of operating income (EBITA).
Net capital expenditures in fixed assets during the period amounted to SEK -386 million (-317), which can be compared to depreciation (excluding the IFRS 16 impact) of SEK 336 mil lion (305). Capital expenditures were mainly invested in build ings, vehicles, machinery and equipment during the period. Investments in relation to depreciation for the period amounted to 1.2 (1.0). For the effects of IFRS 16, see Note 8.
Capital employed and financial position
Capital employed
Loomis's total capital employed as of March 31, 2020 amounted to SEK 17,796 million (16,924 as of December 31, 2019), which represents 83 percent (80) of revenue. Return on capital employed amounted to 15 percent (15).
Shareholders' equity and financing
Shareholders' equity increased in the first quarter by SEK 1,146 million to SEK 10,738 million as of March 31, 2020 (9,592 as of 31 December 2019). Net income for the period of SEK 365 mil lion, translation differences of SEK 818 million and actuarial gains of SEK 110 million increased shareholders' equity by SEK 1,293 million. Share related compensations of SEK -34 million as well as hedging of net investments of SEK -114 million reduced shareholders' equity by SEK -148. The return on share holders' equity was 15 percent (17 on December 31, 2019) and the equity ratio was 39 percent (36).
Net debt amounted to SEK 7,058 million as of March 31, 2020 (7,332 as of December 31, 2019) and the net debt/EBITDA amounted to 1.56 (1.65 as of December 31, 2019).
As of March 31, 2020, total long-term loan facilities amounted to approximately SEK 8.4 billion. Unutilized loan facilities amounted to approximately SEK 4.1 billion on March 31, 2020, of which 1.6 billion was used as back-up for outstanding com mercial papers. Available cash and bank assets amounted to around SEK 2.2 billion (see Note 6). In addition to the above the Company signed a two-year credit agreement in April 2020 of SEK 1.2 billion. See page 8 for more information.
Other events
Significant events during the period
In March 2020 the Board of Directors of Loomis AB decided to withdraw the proposal of a dividend for 2019 of SEK 11 per share and at the same time announced that the intention is for the final dividend decision to be made at an extraordinary shareholders' meeting later in the year when it is possible to assess the conse quences of the pandemic.
The Board of Directors has decided to propose that a resolution be passed at the 2020 Annual General Meeting regarding a new incentive scheme (Incentive Scheme 2020). Similar to Incentive Scheme 2019, the proposed incentive scheme (Incentive Scheme 2020) will involve two thirds of the variable remuneration being paid out in cash the year after it is earned. The remaining one third will be in the form of Class B shares in Loomis AB to be allotted to the participants at the beginning of 2022. The allot ment of shares is contingent upon the employee still being employed by the Loomis Group on the last day of February 2022, other than in cases where the employee has left his/her position due to retirement, death or a long-term illness, in which case the individual will retain the right to receive bonus shares. The prin ciple of performance measurement and other general principles already being applied in the existing Incentive Scheme will con tinue to apply. Loomis AB will not issue any new shares or simi lar instruments for this Incentive Scheme. To enable Loomis to allot the shares, it is proposed that Loomis AB enters into a share swap agreement with a third party under which the third party will acquire the shares in its own name and transfer them to the Incentive Scheme participants. The Incentive Scheme will enable around 350 key individuals within Loomis to become sharehold ers in Loomis AB over time. This will increase employee commit ment to Loomis' development for the benefit of all shareholders. To read the Board's full incentive scheme proposal, refer to the notice of the AGM on www.loomis.com.
Acquisitions during the period
In January 2020 Loomis AB announced that, through the wholly owned subsidiary Loomis Sverige AB (Loomis Sweden), it had entered into an agreement to acquire all of the shares in the lim ited liability company Nokas Värdehantering AB (Nokas Värde hantering), a subsidiary of Nokas Kontandthåntering AS in
Norway . The enterprise value, i.e. the purchase price payable on a debt free basis, is around SEK 80 million. Nokas Värdehan tering has around 220 employees and its net revenue over the
12-month period ending in September 2019 was around SEK 215 million. The company's current operating margin, EBITA, is neg ative. The acquired operations will be reported within Segment Europe and consolidated into Loomis's accounts as of the closing of the transaction. Nokas Värdehantering and Loomis Sweden are both payment institutions under the supervision of the Swed ish Financial Supervisory Authority (SFSA) and Loomis Sweden must therefore undergo an ownership assessment performed by
7
Loomis Interim Report January - March 2020
the SFSA. The acquisition will be completed on condition that the SFSA approves Loomis Sweden as the owner. The purchase price is payable on closing. Including integration costs, the acquisition is expected to have a negative impact on Loomis's earnings per share for 2020. Thereafter, the acquired operations are expected to show a profit. Nokas CMS AB, a subsidiary of Nokas Värdehantering which has an ATM business in the Nordic region, is not part of the transaction and will remain part of the Nokas Group.
In February 2020 Loomis entered into an agreement to acquire all of the shares in Automatia Pankkiautomaatit Oy (Automatia) from its current owners Danske Bank, Nordea and OP Financial Group. The enterprise value, i.e. the purchase price payable on a debt-free basis, is approximately EUR 42 million. Automatia operates Finland's largest ATM business, under the Otto brand, but also offers cash supply services to bank branches, service boxes for retail and a digital platform for realtime payments. Automatia has around 30 employees. Its net revenue over the
12-month period ending in December 2019 was around EUR 42 million. Under the acquisition agreement, the sellers will sign long-term service agreements and will therefore also remain sig nificant customers of Automatia. The acquired operations will be reported within Segment Europe and consolidated into Loomis's accounts as of closing of the transaction. The transaction is con tingent upon approval from the Finnish competition and con sumer protection agency and from other relevant authorities. The acquisition will be completed following approval, which is expected to be in the third quarter of 2020. The purchase price is payable on closing. Including integration costs, the acquisition is expected to have a marginally positive impact on Loomis's operating margin, EBITA, and on profit per share for 2020.
Events after the end of the period
In April 2020 it was announced that Loomis AB had signed a two-year credit agreement of SEK 1,200 million. It is in the form of a term loan and matures in April 2022. The arrangers of the loan are Danske Bank A/S, and Nordea Bank Abp. The loan may be used to finance working capital, capital expenditures and other purposes.
Loomis Foreign Exchange AS in Norway (Loomis FX) has in the recent year strengthened its organization and processes to address the shortcomings revealed by the investigations described in 2019. Loomis FX is in dialogue with the Norwegian financial supervisory authority (Finanstilsynet) and a statement is expected to be received in the second quarter of this year.
Kristoffer Wadman, who currently holds the position as Chief Innovation Officer, will leave the Group management team and become Marketing Director for Loomis's initiatives within digital payment platforms.
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Loomis Interim Report January - March 2020
Financial reports in brief
CONSOLIDATED STATEMENT OF INCOME | ||||||
Note | 2020 | 2019 | R12 | 2019 | ||
SEK m | Jan - Mar | Jan - Mar | Full year | |||
Revenue, continuing operations | 5,213 | 4,883 | 20,741 | 20,411 | ||
Revenue, acquisitions | 116 | 123 | 626 | 633 | ||
Total revenue | 3,4 | 5,329 | 5,006 | 21,367 | 21,044 | |
Production expenses | -3,921 | -3,665 | -15,466 | -15,210 | ||
Gross income | 1,408 | 1,341 | 5,901 | 5,833 | ||
Selling and administration expenses | -820 | -777 | -3,276 | -3,233 | ||
Operating income (EBITA)1) | 5897) | 5647) | 2,625 | 2,6017) | ||
Amortization of acquisition-related intangible assets | -27 | -25 | -103 | -101 | ||
Acquisition-related costs and revenue | -182) | -152) | -105 | -101 | ||
Items affecting comparability | - | 333) | -11 | 234) | ||
Operating income (EBIT) | 544 | 558 | 2,407 | 2,422 | ||
Net financial items | -477) | -437) | -182 | -1787) | ||
Loss on monetary net assets/liabilities | -6 | -6 | -35 | -34 | ||
Income before taxes | 490 | 509 | 2,191 | 2,210 | ||
Income tax | -125 | -130 | -559 | -564 | ||
Net income for the period 5) | 3657) | 3797) | 1,632 | 1,6467) | ||
KEY RATIOS | ||||||
Real growth, % | 2 | 5 | 4 | 5 | ||
Organic growth, % | 0 | 2 | 2 | 2 | ||
Operating margin (EBITA), % | 11.07) | 11.37) | 12.3 | 12.47) | ||
Tax rate, % | 25 | 25 | 26 | 26 | ||
Earnings per share before and after dilution, SEK6) | 4.857) | 5.047) | 21.70 | 21.887) |
1) Earnings Before Interest, Taxes and Amortization of acquisition-related intangible fixed assets, acquisition-related costs and revenue, and items affecting comparability.
2)Acquisition-related costs and revenue for the period January - March 2020 consist of transaction costs of SEK -16 million (-10), restructuring costs of SEK -14 million (0), integration costs of SEK 0 million (-5) and remeasurement of previously recognized deferred considerations of SEK 12 million (0). Of the transaction costs of SEK -16 million, SEK -16 million is for acquisitions in progress for the period January - March 2020, SEK 0 million is for completed acquisitions and SEK 0 million pertains to discontinued acquisitions.
- The item affecting comparability of SEK 33 million relates to reported capital gains from the divestment of the fine art storage and logistics operations, Artcare.
- The item affecting comparability of SEK 23 million relates to reported capital gains of SEK 35 million from the divestment of the fine art storage and logistics operation, Artcare, and costs of SEK -12 million related to the allegations of money laundering put forward in the spring of 2019.
- Net income for the period is entirely attributable to the owners of the Parent Company.
- For further information please refer to page 21.
- For information regarding the IFRS 16 impact, see Note 8.
STATEMENT OF COMPREHENSIVE INCOME | ||||
2020 | 2019 | R12 | 2019 | |
SEK m | Jan - Mar | Jan - Mar | Full year | |
Net income for the period | 365 | 379 | 1,632 | 1,646 |
Other comprehensive income | ||||
Items that will not be reclassified to the statement of income | ||||
Actuarial gains and losses after tax | 110 | -145 | 168 | -87 |
Items that may be reclassified to the statement of income | ||||
1) | 818 | 350 | 889 | 421 |
Exchange rate differences | ||||
Hedging of net investments, net of tax | -114 | -47 | -141 | -74 |
Other comprehensive income and expenses for | ||||
the period, net after tax | 814 | 158 | 916 | 260 |
Total comprehensive income for the period2) | 1,180 | 537 | 2,549 | 1,906 |
- Includes effects of hyperinflation in Argentina. As of March 31, 2020 the consumer price index in Argentina, National CPI, was 303.1 with the base period as December 2016. The SEK/ARS rate as of December 31, 2019 was 0.1554 and as of March 31, 2020, 0.1567.
2)Total comprehensive income is entirely attributable to the owners of the Parent Company.
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Loomis Interim Report January - March 2020
BALANCE SHEET | ||||
Note | 2020 | 2019 | 2019 | |
SEK m | Mar 31 | Mar 31 | Dec 31 | |
ASSETS | ||||
Fixed assets | ||||
Goodwill | 5 | 7,586 | 6,718 | 7,094 |
Acquisition-related intangible assets | 5 | 477 | 510 | 478 |
Other intangible assets | 218 | 183 | 208 | |
Tangible fixed assets | 6,189 | 5,371 | 5,822 | |
Right-of-use assets | 8 | 2,996 | 2,955 | 2,911 |
Other non-interest-bearing fixed assets | 910 | 638 | 817 | |
1) | 725 | 355 | 565 | |
Interest-bearing financial fixed assets | ||||
Total fixed assets | 19,101 | 16,730 | 17,893 | |
Current assets | ||||
Non-interest-bearing current assets2) | 3,993 | 3,625 | 3,536 | |
1) | 6 | 40 | 61 | |
Interest-bearing financial current assets | ||||
Liquid funds | 6 | 4,700 | 4,420 | 5,073 |
Total current assets | 8,699 | 8,086 | 8,670 | |
TOTAL ASSETS | 27,800 | 24,816 | 26,563 | |
SHAREHOLDERS' EQUITY AND LIABILITIES | ||||
Shareholders' equity | 10 | 10,738 | 8,961 | 9,592 |
Long-term liabilities | ||||
Interest-bearinglong-term lease liabilities | 8 | 2,372 | 2,349 | 2,313 |
Other interest-bearinglong-term liabilities | 6,865 | 5,085 | 6,711 | |
Non-interest-bearing provisions | 1,291 | 1,024 | 1,117 | |
Total long-term liabilities | 10,529 | 8,458 | 10,141 | |
Current liabilities | ||||
Tax liabilities | 242 | 243 | 199 | |
Non-interest-bearing current liabilities | 3,248 | 2,940 | 3,022 | |
Liabilities, cash processing operations | 2,287 | 2,672 | 3,021 | |
Interest-bearing current lease liabilities | 8 | 585 | 521 | 560 |
Other interest-bearing current liabilities | 171 | 1,020 | 29 | |
Total current liabilities | 6,533 | 7,397 | 6,831 | |
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 27,800 | 24,816 | 26,563 | |
KEY RATIOS | ||||
Return of shareholders' equity, % | 15 | 18 | 17 | |
Return of capital employed, % | 7 | 153) | 143) | 153) |
Equity ratio, % | 39 | 36 | 36 | |
Net debt | 7 | 7,0583) | 7,4093) | 7,3323) |
Net debt/EBITDA | 1.563) | 2.043) | 1.653) |
1) As of the balance sheet date and in the comparative information all derivatives are measured at fair value based on market data in accordance with IFRS.
2)During the fourth quarter of 2019, Loomis changed the reporting of inventory of cash at the cash processing operations, see Note 1. The comparative figures have been adjusted as a result of this change.
3) For information excluding the IFRS 16 impact, see Note 8.
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Loomis Interim Report January - March 2020
CHANGE IN CONSOLIDATED SHAREHOLDERS' EQUITY | ||||
2020 | 2019 | R12 | 2019 | |
SEK m | Jan - Mar | Jan - Mar | Full year | |
Opening balance | 9,592 | 8,422 | 8,961 | 8,422 |
Actuarial gains and losses after tax | 110 | -145 | 168 | -87 |
1) | 818 | 350 | 889 | 421 |
Exchange rate differences | ||||
Hedging of net investments, net of tax | -114 | -47 | -141 | -74 |
Total other comprehensive income | 814 | 158 | 916 | 260 |
Net income for the period | 365 | 379 | 1,632 | 1,646 |
Total comprehensive income2) | 1,180 | 537 | 2,549 | 1,906 |
Dividend paid to Parent Company's shareholders | - | - | -750 | -750 |
Share-related remuneration | -34 | 2 | -22 | 14 |
Non-controlling interest | 0 | 1 | -1 | 0 |
Closing balance | 10,738 | 8,961 | 10,738 | 9,592 |
1)Includes effects of hyperinflation in Argentina. As of March 31, 2020 the consumer price index in Argentina, National CPI, was 303.1 with the base period as December 2016. The SEK/ARS rate as of December 31, 2019 was 0.1554 and as of March 31, 2020, 0.1567.
2)Total comprehensive income is entirely attributable to the owners of the Parent Company.
CONSOLIDATED STATEMENT OF CASH FLOWS | |||||
Note | |||||
2020 | 2019 | R12 | 2019 | ||
SEK m | Jan - Mar | Jan - Mar | Full year | ||
Operations | |||||
Income before taxes | 490 | 509 | 2,191 | 2,210 | |
Items not affecting cash flow | 559 | 471 | 2,226 | 2,138 | |
Financial items received | 8 | 7 | 37 | 36 | |
Financial items paid | -61 | -50 | -258 | -247 | |
Income tax paid | -135 | -123 | -653 | -641 | |
Change in accounts receivable | 98 | -87 | 35 | -150 | |
Change in other operating capital employed and other items | 147 | -422 | 585 | 17 | |
Cash flow from operations | 1,106 | 304 | 4,163 | 3,362 | |
Investing activities | |||||
Investments in fixed assets | -394 | -319 | -1,783 | -1,709 | |
Disposals of fixed assets | 7 | 2 | 71 | 66 | |
Divestments of operations | - | 38 | - | 38 | |
Acquisitions of operations | - | -2 | -382 | -384 | |
Cash flow from investing activities | -386 | -281 | -2,094 | -1,989 | |
Financing activities | |||||
Dividend paid | - | - | -750 | -750 | |
Change in interest-bearing net debt excluding liquid funds | -273 | -210 | -404 | -341 | |
Issuance of bonds | - | - | 2,795 | 2,795 | |
Amortization of bonds | - | - | -1,000 | -1,000 | |
Change in commercial papers issued and | 24 | 25 | -1,754 | -1,753 | |
other long-term borrowing | |||||
Cash flow from financing activities | -249 | -185 | -1,113 | -1,049 | |
Cash flow for the period | 470 | -162 | 957 | 325 | |
Liquid fund at beginning of the period | 1,655 | 1,308 | 1,170 | 1,308 | |
Translation differences in liquid funds | 79 | 24 | 77 | 22 | |
Liquid funds at end of period | 6 | 2,204 | 1,170 | 2,204 | 1,655 |
11
Loomis Interim Report January - March 2020
CONSOLIDATED STATEMENT OF CASH FLOWS EXCLUDING THE IFRS 16 IMPACT, ADDITIONAL INFORMATION
2020 | 2019 | R12 | 2019 | |
SEK m | Jan - Mar | Jan - Mar | Full year | |
Operating income (EBITA) 1) | 573 | 551 | 2,570 | 2,548 |
Depreciation 1) | 336 | 305 | 1,295 | 1,265 |
Change in accounts receivable | 98 | -87 | 35 | -150 |
Change in other operating capital employed and other items1) | 148 | -422 | 607 | 37 |
Cash flow from operating activities before investments | 1,154 | 347 | 4,507 | 3,700 |
Investments in fixed assets, net | -386 | -317 | -1,713 | -1,643 |
Cash flow from operating activities | 768 | 30 | 2,794 | 2,057 |
Financial items paid and received1) | -26 | -18 | -114 | -106 |
Income tax paid | -135 | -123 | -653 | -641 |
Free cash flow | 607 | -111 | 2,027 | 1,310 |
Cash flow effect of items affectingcomparability | 0 | 0 | -11 | -12 |
Divestment of operations | - | 38 | - | 38 |
Acquisition of operations | - | -2 | -382 | -384 |
2) | -33 | -19 | -90 | -75 |
Acquisition-related costs and revenue, paid and received | ||||
Dividend paid | - | - | -750 | -750 |
1) | -127 | -92 | 121 | 155 |
Change in interest-bearing net debt excluding liquid funds | ||||
Issuance of bonds | - | - | 2,795 | 2,795 |
Amortization of bonds | - | - | -1,000 | -1,000 |
Change in commercial papers issued and | ||||
other long-term borrowing | 24 | 25 | -1,754 | -1,753 |
Cash flow for the period | 470 | -162 | 957 | 325 |
KEY RATIOS | ||||
Cash flow from operating activities as % of operating income (EBITA)1) | 134 | 5 | 109 | 81 |
1) | 1.2 | 1.0 | 1.3 | 1.3 |
Investments in relation to depreciation | ||||
Investments as a % of total revenue | 7.2 | 6.3 | 8.0 | 7.8 |
- Excluding the IFRS 16 impact.
- Refers to the cash flow effect ofacquisition-relatedtransaction-, restructuring and integration costs.
12
Loomis Interim Report January - March 2020
Notes
NOTE 1 - ACCOUNTING PRINCIPLES
The Group's financial reports are prepared in accordance with the International Financial Reporting Standards (IAS/IFRS, as adopted by the European Union) issued by the International Accounting Standards Board, and statements issued by the IFRS Interpretations Committee (formerly IFRIC).
This interim report has been prepared according to IAS 34 Interim Financial Reporting. The interim report is on pages 1-25, and the pages 1-8 are thus an integrated part of this financial report. The most important accounting principles according to IFRS, which are the accounting standards used in the preparation of this interim report, are described in Note 2 on pages 97-105 of the 2019 Annual Report.
Reporting of cash at the cash processing operations
Loomis' operations involve the transportation of cash and other valuables based on customer contracts in place. If stipulated in the customer contract, the transported cash is processed at Loo- mis' cash centers. The cash that is received by Loomis is on consignment unless otherwise agreed with the customer. Consignment stocks of cash are accounted for by the other parties and not by Loomis.
In cases where Loomis, according to the customer contract, assumes ownership of the cash received, it is reported as inventory of cash. These inventories are financed by specific credit facilities and prepayments from customers. The credit facilities and prepayments are only used for this purpose.
CASH PROCESSING OPERATIONS: | ||
2020 | 2019 | |
SEK m | Mar 31 | Mar 31 |
Inventory of cash1) | 1,796 | 2,226 |
Prepayments from customers | 700 | 1,023 |
Liabilities related to prepayments from | ||
customers and liabilities to customers | -1,310 | -1,345 |
Credit facility related to cash processing | ||
operations | -977 | -1,328 |
Funds within cash processing opera- | ||
tions (net) | 209 | 577 |
1) Excluding consignment stocks of money.
As a consequence of the changed accounting principle regarding funds in the cash processing operations, which is described in Note 2 of the 2019 Annual Report, Loomis has retroactively reclassified earlier periods according to the following table:
March | March | ||
31, 2019 | Reclassi | 31, 2019 | |
SEK m | Reported | fication | Adjusted |
Current assets | |||
Liquid funds | 1,170 | 3,250 | 4,420 |
Other current receivables | 695 | -577 | 118 1) |
Current liabilities | |||
Liabilities, cash processing | |||
operations | - | 2,672 | 2,672 |
1)Included in Non-interest-bearing current assets.
The reclassification has had no impact on Loomis' net debt.
Interest expense for the above-mentioned credit facilities is still reported under "Production expenses" and not as a net financial expense as it relates to financing of operating activities/inventory of cash. The adjustment has therefore had no impact on operating income, operating margin or earnings per share before and after dilution.
Even though inventories of cash are disposable deposits, they are entirely separated from Loomis' other liquid funds and cash flow, and according to internal guidelines they are not used in Loomis' other operations or business. In the cash flow statement inventories if cash are therefore reported net against the above-mentioned credit facilities and prepayments from customers. The reclassification in the balance sheet has therefore no impact on the Group's cash flow.
Reconciliation of liquid funds according to the consolidated balance sheet as of March 31 (after the above reclassification) against liquid funds in the Group's cash flow statement is as follows:
2020 | 2019 | |
SEK m | Mar 31 | Mar 31 |
Liquid funds according to the Group's | ||
balance sheet | 4,700 | 4,420 |
- Adjusted for inventory of cash at the | ||
cash processing operations | -1,796 | -2,226 |
- Adjusted for prepayments from custo- | ||
mers | -700 | -1,023 |
Liquid funds according to the Group's | ||
cash flow statement | 2,204 | 1,170 |
Critical estimates and assessments
For critical estimates and assessments as well as contingent liabili- ties, please refer to pages 105-107 and 134 of the 2019 Annual Report. There have been no other significant changes compared to what is described in the Annual Report.
Parent Company - Loomis AB
The Parent Company's financial statements have been prepared in accordance with the Swedish Annual Accounts Act and RFR 2 Accounting for Legal Entities. The most important accounting principles applying to the Parent Company are described in Note 37 on page 138 of the 2019 Annual Report.
13
Loomis Interim Report January - March 2020
NOTE 2 - RISKS AND UNCERTAINTIES
Risks
Loomis' operations, which include cash in transit, cash management services and international valuables logistics, involve Loomis assuming the customer's risks associated with managing, transporting and storing cash, precious metals and valuables. Loomis has established routines and processes to identify, take action to mitigate and monitor risks. Risks are assessed based on two criteria: the likelihood that an event will occur and the severity of the consequences for the business if the event should occur. There is risk both in terms of circumstances pertaining to Loomis itself or the industry as a whole, as well as risks that are more general in nature. Certain risks are outside of Loomis' control.
Below is a description of some of the most significant risks and uncertainties that may have a negative impact on Loomis' opera- tions, financial position and results, and that should therefore be taken into account when making assessments based on full-year or interim information. The risks described below are not in any particular order of significance.
Operational risks:Operational risks are risks associated with the day-to-day operations and the services offered by the Company to its customers. Some of the most significant risks Loomis has identified are:
- IT-relatedrisks, such as operational disruptions and extended stoppages of systems linked to operating activities, as well as risks linked to installation of new systems.
- Risk of changed behavioral patterns relating to purchases and payments.
- Customer-relatedrisks, such as the risk of loss of certain cus- tomers as well as significant changes in the banking sector.
- Competition risk, such as Loomis' ability to develop competi- tive offerings.
- Employee risk, such as a high staff turnover.
- Risk of robbery and other criminal activity.
- Risk of internal theft and/or failing cash reconciliation routines at cash centers.
- Risk associated with the implementation of acquisitions, such as difficulties integrating new operations and employees, as well as the anticipated benefits of a certain acquisition not being realized or being only partially realized.
Financial risks:In its operations, Loomis is exposed to risk associated with financial instruments such as liquid funds, accounts receivable, accounts payable and loans. The risks relating to these instruments are mainly:
- Interest rate risk associated with liquid funds and loans.
- Exchange rate risk associated with transactions and translation of shareholder's equity.
- Financing risk relating to the Company's capital requirements.
- Liquidity risk associated withshort-term solvency.
- Credit risk pertaining to financial and commercial activities.
- Capital risk pertaining to the capital structure.
- Price risk.
The financial risks are described in more detail in Note 6 in the 2019 Annual Report.
Legal risks:Through its operations Loomis is exposed to legal risks such as:
- Risk of disputes and legal action.
-
Risk associated with the application of existing laws, other
regulations and changes in legislation.
Factors of uncertainty
The economic trends during 2019 impacted certain geographic areas negatively, and it cannot be ruled out that Loomis' revenue and earnings for 2020 may be negatively impacted as a result.
As a consequence of the outbreak of the coronavirus (COVID-19), the authorities in many markets have initiated measures that have lowered demand in retail business in these countries. The Company's revenue and earnings in the first quarter of 2020 were negatively impacted and this trend is expected to continue until the development of the pandemic slows and retail businesses in the countries where Loomis operates can start to grow again. Loomis is monitoring events carefully and taking steps to minimize or eliminate the impact on the Group's operations. Loomis is following the guidelines issued by the Public Health Agency of Sweden, the WHO, ECDC (European Centre for Disease Prevention and Control) and the CDC in the USA.
Changes in general economic conditions and market trends have various effects on demand for cash handling services. These include the ratio of cash purchases to credit card purchases, changes in consumption levels, the risk of robbery and bad debt losses, and the staff turnover rate.
The preparation of financial reports requires the Board of Directors and Group Management to make estimates and assess- ments. Estimates and assessments affect both the income statement and the balance sheet as well as the information disclosed on things like contingent liabilities. Actual outcomes may deviate from these estimates and assessments depending on other circumstances or other conditions.
In 2020 the actual financial results of certain previously reported items affecting comparability, provisions and contingent liabili- ties, as described in the 2019 Annual report and where applicable under the heading "Critical estimates and assessments" in Note 1 of this report, may deviate from the financial assessments and provisions made by management. This may impact the Group's profitability and financial position.
14
Loomis Interim Report January - March 2020
Seasonal variations
Loomis' earnings fluctuate across the seasons and this should be taken into consideration when making assessments based on interim financial information. The primary reason for these
seasonal variations is that the need for cash handling services increases during the vacation periods and in connection with public holidays.
NOTE 3 - REVENUE DISTRIBUTION
Elimina- | Elimina- | ||||||||
Europe | USA | tions | Total | Europe | USA | tions | Total | ||
SEK m | Jan - Mar 2020 | Jan - Mar 2019 | |||||||
Cash in transit (CIT) | 1,682 | 1,565 | - | 3,247 | 1,631 | 1,457 | - | 3,088 | |
Cash management services (CMS) | 747 | 846 | - | 1,593 | 741 | 753 | - | 1,494 | |
International | 207 | 82 | - | 289 | 181 | 87 | - | 268 | |
Other | 195 | 5 | - | 199 | 152 | 4 | - | 156 | |
Revenue, internal | 11 | 9 | -20 | 0 | 7 | 9 | -15 | 0 | |
Total revenue | 2,842 | 2,507 | -20 | 5,329 | 2,711 | 2,310 | -15 | 5,006 | |
Timing of revenue recognition, external | |||||||||
At a point in time | 426 | 81 | - | 507 | 403 | 82 | - | 486 | |
Over time | 2,405 | 2,417 | - | 4,822 | 2,301 | 2,219 | - | 4,521 | |
Total external revenue | 2,831 | 2,498 | - | 5,329 | 2,704 | 2,301 | - | 5,006 | |
Europe | USA | Eliminations | Total | ||||||
SEK m | Jan - Dec 2019 | ||||||||
Cash in transit (CIT) | 6,856 | 5,946 | - | 12,802 | |||||
Cash management services (CMS) | 3,172 | 3,288 | - | 6,460 | |||||
International | 812 | 333 | - | 1,145 | |||||
Other | 619 | 17 | - | 636 | |||||
Revenue, internal | 39 | 53 | -92 | - | |||||
Total revenue | 11,498 | 9,639 | -92 | 21,044 | |||||
Timing of revenue recognition, external | |||||||||
At a point in time | 1,566 | 311 | - | 1,877 | |||||
Over time | 9,893 | 9,274 | - | 19,167 | |||||
Total external revenue | 11,459 | 9,585 | - | 21,044 | |||||
REVENUE PER SIGNIFICANT GEOGRAPHICAL MARKET | |||||||||
2020 | 2019 | 2019 | |||||||
SEK m | Jan - Mar | Jan - Mar | Jan-Dec | ||||||
USA | 2,507 | 2,310 | 9,639 | ||||||
France | 854 | 728 | 3,166 | ||||||
Spain | 396 | 371 | 1,632 | ||||||
UK | 375 | 387 | 1,562 | ||||||
Other countries and eliminations | 1,197 | 1,210 | 5,047 | ||||||
Total revenue | 5,329 | 5,006 | 21,044 | ||||||
15
Loomis Interim Report January - March 2020
NOTE 4 - SEGMENT OVERVIEW
Loomis has operations in a number of countries, with country presidents being responsible for each country. Segment presidents supervise operations in a number of countries and also support the respective country president. Operating segments are reported in accordance with the internal Loomis reporting, submitted to Loomis' CEO who has been identified as the most senior executive decision-maker within Loomis. Loomis has the following segments: Europe, USA, and Other. Presidents for the
segments Europe and USA are responsible for following up the segments' operating income before amortization of acquisition- related intangible assets, acquisition-related costs and revenue and items affecting comparability (EBITA), according to the manner in which Loomis reports its consolidated statement of income. This then forms the basis for how the CEO monitors development, allocates resources etc. Loomis has therefore chosen this structure for its segment reporting.
SEGMENT OVERVIEW STATEMENT OF INCOME | |||||
Europe | USA | Other1) | Eliminations | Total | |
SEK m | Jan - Mar 2020 | Jan - Mar 2020 | Jan - Mar 2020 | Jan - Mar 2020 | Jan - Mar 2020 |
Revenue, continuing operations | 2,726 | 2,507 | - | -20 | 5,213 |
Revenue, acquisitions | 116 | - | - | - | 116 |
Total revenue | 2,842 | 2,507 | - | -20 | 5,329 |
Production expenses | -2,176 | -1,767 | - | 23 | -3,921 |
Gross income | 667 | 739 | - | 3 | 1,408 |
Selling and administrative expenses | -391 | -369 | -58 | -3 | -820 |
Operating income (EBITA) | 276 | 371 | -58 | - | 589 |
Amortization of acquisition-related | |||||
intangible assets | -21 | -5 | - | - | -27 |
Acquisition-related costs | -18 | -1 | 0 | - | -18 |
Items affecting comparability | - | - | - | - | - |
Operating income (EBIT) | 237 | 365 | -58 | - | 544 |
Net financial items | - | - | -47 | - | -47 |
Loss on monetary net assets/liabilities | - | - | -6 | - | -6 |
Income before taxes | 237 | 365 | -112 | - | 490 |
1)Segment Other consists of the Parent Company's costs and certain other group-wide costs.
SEGMENT OVERVIEW STATEMENT OF INCOME | |||||
Europe | USA | Other1) | Eliminations | Total | |
SEK m | Jan - Mar 2019 | Jan - Mar 2019 | Jan - Mar 2019 | Jan - Mar 2019 | Jan - Mar 2019 |
Revenue, continuing operations | 2,590 | 2,309 | - | -15 | 4,883 |
Revenue, acquisitions | 122 | 1 | - | - | 123 |
Total revenue | 2,711 | 2,310 | - | -15 | 5,006 |
Production expenses | -2,034 | -1,655 | - | 23 | -3,665 |
Gross income | 678 | 655 | - | 8 | 1,341 |
Selling and administrative expenses | -385 | -334 | -49 | -8 | -777 |
Operating income (EBITA) | 293 | 321 | -49 | - | 564 |
Amortization of acquisition-related | |||||
intangible assets | -20 | -5 | - | - | -25 |
Acquisition-related costs | -8 | - | -7 | - | -15 |
Items affecting comparability | 332) | - | - | - | 332) |
Operating income (EBIT) | 299 | 316 | -56 | - | 558 |
Net financial items | - | - | -43 | - | -43 |
Loss on monetary net assets/liabilities | - | - | -6 | - | -6 |
Income before taxes | 299 | 316 | -106 | - | 509 |
1)Segment Other consists of the Parent Company's costs and certain other group-wide costs.
2)The item affecting comparability of SEK 33 million relates to reported capital gains from the divestment of the fine art storage and logistics operations, Artcare.
16
Loomis Interim Report January - March 2020
SEGMENT OVERVIEW STATEMENT OF INCOME, ADDITIONAL INFORMATION | ||||
2020 | 2019 | R12 | 2019 | |
SEK m | Jan - Mar | Jan - Mar | Full year | |
Europe | ||||
Operating income (EBITA) | 276 | 293 | 1,413 | 1,429 |
Operating margin (EBITA), % | 9.7 | 10.8 | 12.1 | 12.4 |
USA | ||||
Operating income (EBITA) | 371 | 321 | 1,422 | 1,372 |
Operating margin (EBITA), % | 14.8 | 13.9 | 14.5 | 14.2 |
Other 1) | ||||
Revenue | - | - | - | - |
Operating income (EBITA) | -58 | -49 | -209 | -200 |
Eliminations | ||||
Revenue | -20 | -15 | -97 | -92 |
Operating income (EBITA) | - | - | - | - |
Group total | ||||
Operating income (EBITA) | 589 | 564 | 2,625 | 2,601 |
Operating margin (EBITA), % | 11.0 | 11.3 | 12.3 | 12.4 |
1) Segment Other consists of the Parent Company's costs and certain other group-wide costs.
SEGMENT OVERVIEW BALANCE SHEET | |||
2020 | 2019 | 2019 | |
SEK m | Mar 31 | Mar 31 | Dec 31 |
Europe | |||
Assets | 11,700 | 10,545 | 11,234 |
Liabilities | 3,107 | 2,683 | 3,009 |
USA | |||
Assets | 10,965 | 9,444 | 9,965 |
Liabilities | 1,031 | 893 | 1,012 |
Other 1) | |||
Assets | 5,135 | 4,827 | 5,364 |
Liabilities | 12,924 | 12,279 | 12,950 |
Shareholder's equity | 10,738 | 8,961 | 9,592 |
Group total | |||
Assets | 27,800 | 24,816 | 26,563 |
Liabilities | 17,062 | 15,855 | 16,971 |
Shareholder's equity | 10,738 | 8,961 | 9,592 |
1) Segment Other consists mainly of Group assets and liabilities that cannot be divided by segment.
17
Loomis Interim Report January - March 2020
NOTE 5 - ACQUISITIONS
In January 2020 Loomis AB announced that, through the wholly owned subsidiary Loomis Sverige AB (Loomis Sweden), it had entered into an agreement to acquire all of the shares in the limited liability company Nokas Värdehantering AB (Nokas Värde- hantering), a subsidiary of Nokas Kontandthåntering AS in Nor- way. The enterprise value, i.e. the purchase price payable on a debt free basis, is around SEK 80 million. The acquired operations will be consolidated into Loomis's accounts as of the closing of the transaction. The acquisition will be completed on condition that the Swedish Financial Supervisory Authority (SFSA)
approves Loomis Sweden as the owner.
In February 2020 Loomis entered into an agreement to acquire all of the shares in Automatia Pankkiautomaatit Oy (Automatia) from its current owners Danske Bank, Nordea and OP Financial Group. The enterprise value, i.e. the purchase price payable on a debt-free basis, is around EUR 42 million. The acquired operations will be consolidated into Loomis's accounts on closing of the transaction. The transaction is contingent upon approval from the Finnish competition and consumer protection agency and from the relevant authorities.
NOTE 6 - LIQUID FUNDS
2020 | 2019 | 2019 | |
SEK m | Mar 31 | Mar 31 | Dec 31 |
Liquid funds | 4,700 | 4,420 | 5,073 |
- Adjusted for inventory of cash at the cash processing operations | -1,796 | -2,226 | -2,384 |
- Adjusted for prepayments from customers | -700 | -1,023 | -1,034 |
Liquid funds excluding funds for cash processing activities | 2,204 | 1,170 | 1,655 |
NOTE 7 - CAPITAL EMPLOYED AND FINANCING
2020 | 2019 | 2019 | |
SEK m | Mar 31 | Mar 31 | Dec 31 |
Operating capital employed | 9,628 | 9,227 | 9,238 |
Goodwill | 7,586 | 6,718 | 7,094 |
Acquisition-related intangible assets | 477 | 510 | 478 |
Other capital employed | 105 | -85 | 114 |
Capital employed | 17,796 | 16,370 | 16,924 |
Net debt | 7,0581) | 7,409 | 7,332 |
Shareholders' equity | 10,738 | 8,961 | 9,592 |
Key ratios | |||
Return on capital employed, % | 15 | 14 | 15 |
Return on equity, % | 15 | 18 | 17 |
Equity ratio, % | 39 | 36 | 36 |
Net debt/EBITDA | 1.56 | 2.04 | 1.65 |
1)For information regarding the IFRS 16 impact, see Note 8.
NET DEBT | |||
2020 | 2019 | 2019 | |
SEK m | Mar 31 | Mar 31 | Dec 31 |
Liquid funds excluding funds for cash processing activities | 2,204 | 1,170 | 1,655 |
Interest-bearing financial fixed assets | 725 | 355 | 565 |
Interest-bearing financial current assets | 6 | 40 | 61 |
Interest-bearing lease liabilities | -2,957 | -2,871 | -2,873 |
Other interest-bearinglong-term liabilities | -6,865 | -5,085 | -6,711 |
Other interest-bearing current liabilities | -171 | -1,020 | -29 |
Net debt | -7,058 | -7,409 | -7,332 |
18
Loomis Interim Report January - March 2020
NOTE 8 - LEASES
Loomis has applied IFRS 16 since January 1, 2019. The Group is using the simplified transition method, modified retroactively, and has therefore not restated the comparative figures. For further information about IFRS 16, please see Note 2 of the 2019 Annual Report.
Impact
As a result of the introduction of IFRS 16 the operating income (EBITA) is charged with depreciation of right-of-use assets instead of an operating lease expense. In addition, the increased lease liability is negatively impacting net financial expense. See also the tables below.
Right-of-use assets, which are reported on a separate line in the balance sheet, amounted to SEK 2,996 million as of March 31, 2020 (2,955). Buildings account for 74 percent (79) of total right- of-use assets. The lease liability as of March 31, 2020 totaled SEK 2,957 million (2,870), of which the long-term lease liability amounts to SEK 2,372 million (2,349) and the short-term lease
liability to SEK 585 million (521). The long-term and short-term lease liabilities are recognized as interest-bearinglong-term lease liabilities and interest-bearingshort-term lease liabilities respectively in the balance sheet.
As of March 31 2020, the costs relating to short-term leases (lease term of 12 months or less) amounted to SEK 9 million (7) and leases for which the underlying asset has a low value (
Outcomes for Loomis' key ratios are presented below both including and excluding the impact of IFRS 16 as of March 31, 2020:
Including | Excluding | |
IFRS 16 | IFRS 16 | |
Mar 31, 2020 | Mar 31, 2020 | |
Net debt | 7,058 | 4,191 |
Net debt/EBITDA | 1.56 | 1.08 |
Return on capital employed, % | 15 | 17 |
Including | Excluding | Including | Excluding | Including | Excluding | |
IFRS 16 | IFRS 16 | IFRS 16 | IFRS 16 | IFRS 16 | IFRS 16 | |
SEK m | Jan - Mar 2020 | Jan - Mar 2020 | Jan - Mar 2019 | Jan - Mar 2019 | Jan - Dec 2019 | Jan - Dec 2019 |
Operating income, EBITDA | 1,083 | 909 | 999 | 856 | 4,435 | 3,813 |
Depreciation | 494 | 336 | 435 | 305 | 1,834 | 1,265 |
Operating income, EBITA | 589 | 573 | 564 | 551 | 2,601 | 2,548 |
Operating margin, EBITA, % | 11.0 | 10.8 | 11.3 | 11.0 | 12.4 | 12.1 |
Net financial items | -47 | -21 | -43 | -19 | -178 | -73 |
Net income for the period | 365 | 374 | 379 | 388 | 1,646 | 1,685 |
Earnings per share | 4.85 | 4.97 | 5.04 | 5.16 | 21.88 | 22.40 |
Investments in relation to depreciation | 0.8 | 1.2 | 0.7 | 1.0 | 0.9 | 1.3 |
19
Loomis Interim Report January - March 2020
NOTE 9 - TRANSACTIONS WITH RELATED PARTIES
Transactions between Loomis and related parties are described in Note 7 of the 2019 Annual Report. As previously communicated, board member Lars Blecko provides consulting services to Loomis Armored US LLC. pursuant to an existing agreement between Loo- mis Armored US LLC and a company owned by him. Board member Johan Lundberg has also been asked to provide consulting services as of January 1, 2020. There have been no transactions with related parties during the period that have materially impacted the Compa- ny's earnings and financial position.
NOTE 10 - NUMBER OF SHARES AS OF MARCH 31, 2020
Votes | No. of shares | No. of votes | Quota value | SEK m | |
Class B shares | 1 | 75,279,829 | 75,279,829 | 5 | 376 |
Total no. of shares | 75,279,829 | 75,279,829 | 376 | ||
Total Class B treasury shares1) | 1 | -53,797 | -53,797 | ||
Total no. of outstanding shares | 75,226,032 | 75,226,032 | |||
1) The number of treasury shares has remained unchanged during the period and has not affected shareholders' equity.
NOTE 11 - CONTINGENT LIABILITIES, GROUP
2020 | 2019 | 2019 | |||
SEK m | Mar 31 | Mar 31 | Dec 31 | ||
Securities and guarantees | 2,2331) | 1,6801) | 2,0141) | ||
Other contingent liabilities | - | - | - | ||
Total contingent liabilities | 2,233 | 1,680 | 2,014 | ||
1) Excluding intra-group contingent liabilities.
20
Loomis Interim Report January - March 2020
OTHER INFORMATION - KEY RATIOS
2020 | 2019 | R12 | 2019 | ||
Jan - Mar | Jan - Mar | Full year | |||
Real growth, % | 2 | 5 | 4 | 5 | |
Organic growth, % | 0 | 2 | 2 | 2 | |
Total growth, % | 6 | 12 | 9 | 10 | |
Gross margin, % | 26.4 | 26.8 | 27.6 | 27.7 | |
Selling and administration expenses in % of total revenue | -15.4 | -15.5 | -15.3 | -15.4 | |
Operating margin (EBITA), % | 11.02) | 11.32) | 12.3 | 12.42) | |
Tax rate, % | 25 | 25 | 26 | 26 | |
Net margin, % | 6.9 | 7.6 | 7.6 | 7.8 | |
Return of shareholders' equity, % | 15 | 18 | 15 | 17 | |
Return of capital employed, % | 152) | 14 | 15 | 15 | |
Equity ratio, % | 39 | 36 | 39 | 36 | |
Net debt (SEK m) | 7,0582) | 7,409 | 7,058 | 7,332 | |
Net debt/EBITDA | 1.562) | 2.04 | 1.56 | 1.65 | |
Cash flow from operating activities as % of operating income (EBITA)3) | 134 | 31 | 109 | 81 | |
3) | 2) | 2) | 0.9 | 2) | |
Investments in relation to depreciation | 0.8 | 0.7 | 0.9 | ||
Investments as a % of total revenue | 7.2 | 6.3 | 8.0 | 7.8 | |
Earnings per share before and after dilution, SEK1) | 4.852) | 5.042) | 21.70 | 21.882) | |
Shareholders' equity per share before and after dilution, SEK | 142.74 | 119.12 | 142.74 | 127.51 | |
Cash flow from operating activities per share after dilution, SEK | 14.70 | 4.04 | 55.35 | 44.69 | |
Dividend per share, SEK | - | - | 10.00 | 10.00 | |
Number of outstanding shares (millions) | 75.2 | 75.2 | 75.2 | 75.2 | |
1) | 75.2 | 75.2 | 75.2 | 75.2 | |
Average number of outstanding shares (millions) |
- The number of outstanding shares, which constitutes the basis for calculation of earnings per share before dilution, is 75,226,032. The number of treasury shares amount to 53,797.
- For information on key ratios excluding the IFRS 16 impact, see Note 8.
- Excluding the IFRS 16 impact.
21
Loomis Interim Report January - March 2020
Parent Company
PARENT COMPANY SUMMARY STATEMENT OF INCOME | |||
2020 | 2019 | 2019 | |
SEK m | Jan - Mar | Jan - Mar | Full year |
Revenue | 163 | 145 | 631 |
Operating income (EBIT) | 98 | 94 | 374 |
Income after financial items | -61 | 20 | 733 |
Net income for the period | -47 | 15 | 692 |
The Parent Company's revenue consists mainly of license fees and other revenue from subsidiaries. The decrease in net income in 2020 is mainly due to a weaker SEK against USD and CHF. This decline does not affect the Group's earnings.
PARENT COMPANY SUMMARY BALANCE SHEET | |||
2020 | 2019 | 2019 | |
SEK m | Mar 31 | Mar 31 | Dec 31 |
Fixed assets | 11,956 | 11,285 | 11,571 |
Current assets | 1,736 | 1,382 | 1,671 |
Total assets | 13,693 | 12,667 | 13,242 |
1) | 5,100 | 5,260 | 5,158 |
Shareholders' equity | |||
Liabilities | 8,593 | 7,407 | 8,084 |
Total shareholders' equity and liabilities | 13,693 | 12,667 | 13,242 |
1) The number of Class B treasury shares was 53,797 for all periods above.
The Parent Company's fixed assets consist mainly of shares in subsidiaries and loan receivables from subsidiaries. The liabilities are mainly external liabilities and liabilities to subsidiaries.
CONTINGENT LIABILITIES, PARENT COMPANY | |||
2020 | 2019 | 2019 | |
SEK m | Mar 31 | Mar 31 | Dec 31 |
Guaranteed committed bank facilities | 4,749 | 4,112 | 4,401 |
Other contingent liabilities | 18 | 26 | 44 |
Total contingent liabilities | 4,767 | 4,138 | 4,444 |
22
Loomis Interim Report January - March 2020
Definitions
Use of key ratios not defined in IFRS
The Loomis Group's accounts are prepared in accordance with IFRS. See page 13 for more information on accounting princi- ples. Only a few key ratios are defined in IFRS. As of the beginning of the second quarter of 2016 Loomis is applying the new guidelines for Alternative Performance Measures issued by ESMA (European Securities and Markets Authority). Briefly, an alternative performance measure is a financial measurement of historical or future earnings development, financial position or cash flow not defined or specified in IFRS. To assist management
and other stakeholders in their analysis of the Group's perfor- mance, Loomis is reporting certain performance measures not defined by IFRS. Group Management believes that this data will facilitate an analysis of the Group's performance. This data supplements the IFRS information and does not replace the performance measures defined in IFRS. Loomis' definitions of measures not defined in IFRS may differ from definitions used by other companies. All of Loomis' definitions are included below. Key ratio calculations that cannot be checked against items in the statement of income and balance sheet can be found on page 2.
Gross margin, % | Gross income as a percentage of total revenue. |
Operating income (EBITA) | Earnings Before Interest, Taxes, Amortization of acquisition-related intangible fixed assets, |
Acquisition-related costs andrevenue and Items affecting comparability. | |
Operating margin (EBITA), % | Earnings Before Interest, Taxes, Amortization of acquisition-related intangible fixed assets, |
Acquisition-related costs andrevenue and Items affecting comparability, as a percentage | |
of revenue. | |
Operating income (EBITDA) | Earnings Before Interest, Taxes, Depreciation, Amortization of acquisition-related intangible |
fixed assets, Acquisition-related costs and revenue and Items affecting comparability. | |
Operating income (EBIT) | Earnings Before Interest and Tax. |
Items affecting comparability | Items affecting comparability are reported events and transactions whose impact are important |
to note when the period's results are compared with previous periods, such as capital gains | |
and capital losses from divestments of significant cash generating units, material write-downs | |
or other significant items affecting comparability. |
Real growth, %
Organic growth, %
Total growth, %
Net margin, %
Earnings per share before dilution
Earnings per share after dilution
Cash flow from operations per share
Increase in revenue for the period, adjusted for changes in exchange rates, as a percentage of
the previous year'srevenue .
Increase in revenue for the period, adjusted for acquisition/divestitures and changes in exchange rates, as a percentage of the previous year's revenue adjusted for divestitures.
Increase in revenue for the period as a percentage of theprevious year's revenue.
Net income for the period after tax as a percentage of totalrevenue .
Net income for the period in relation to the average number of outstanding shares during the period. Calculation for: Jan-Mar 2020: 365/75,226,032 x 1,000,000 = 4.85. Jan-Mar 2019: 379/75,226,032 x 1,000,000 = 5.04.
Calculation for: Jan-Mar 2020: 365/75,226,032 x 1,000,000 = 4.85. Jan-Mar 2019: 379/75,226,032 x 1,000,000 = 5.04.
Cash flow for the period from operations in relation to thenumber of shares after dilution.
Investments in relation to depreciation
Investments as a % of total revenue
Investments in fixed assets, net, for the period, in relation to depreciation, excluding the IFRS 16 impact.
Investments in fixed assets, net, for the period, as a percentage of total revenue.
Shareholders' equity per share
Cash flow from operating activities as % of operating income (EBITA)
Return on equity, %
Return on capital employed, %
Shareholders' equity in relation to the number of shares after dilution.
Operating income, EBITA, (excluding IFRS 16), adjusted for depreciation (excluding IFRS 16), change in accounts receivable and other items (excluding IFRS 16) as well as net investments in fixed assets as a percentage of operating income, EBITA, (excluding IFRS 16).
Net income for the period (rolling 12 months) as a percentage of the closing balance of shareholders' equity.
Operating income (EBITA) (rolling 12 months) as a percentage of the closing balance of capital employed.
23
Loomis Interim Report January - March 2020
Equity ratio, % | Shareholders' equity as a percentage of total assets. |
Capital employed | Shareholders' equity with the addition of net debt. Calculation as per March 31, 2020: 10,738 |
+ 7,058 = 17,796. March 31, 2019: 8,961 + 7,409 = 16,370. | |
Net debt | Interest-bearing liabilities less interest-bearing assets and liquid funds excluding funds for |
cash processing activities. | |
R12 | Rolling 12 months (April 2019 up to and including March 2020). |
n/a | Not applicable. |
Other | Amounts in tables and other combined amounts have been rounded off on an individual basis. |
Minor differences due to this rounding-off, may, therefore, appear in the totals. |
Outlook 2020
The company is not providing any forecast information for 2020.
Stockholm, May 6, 2020
Patrik Andersson
President and CEO
Board member
This interim report has not been subject to a review by the Company's auditors
24
Loomis Interim Report January - March 2020
Loomis in brief
Vision
Managing cash in society.
Financial targets 2018-2021
- Revenue: SEK 24 billion by 2021.
- Operating margin (EBITA):12-14 percent.
- Dividend:40-60 percent of net income.
Sustainability targets
- Zero workplace injuries.
- Decrease carbon emission by 30 percent by 2021.
- Decrease plastic volumes by 30 percent by 2021.
Operations
Loomis offers secure and effective comprehensive solutions for the distribution, handling, storage and recycling of cash and other valuables. Loomis' customers are banks, retailers and other operators. Loomis operates through an international network of around 400 branches in more than 20 countries. Loomis employs around 25,000 people and had revenue in 2019 of SEK 21 billion. Loomis is listed on Nasdaq Stockholm Large-Cap list.
Telephone conference and audio cast
A telephone conference will be held on May 7, 2020 at 09:00 a.m. (CEST).
To follow the conference call via telephone and to participate in the question and answer session, please call: UK: 0 844 822 8902
USA: 1 917 720 0181
Sweden: +46 8 566 184 30
Provide conference ID number: Loomis, 4627887.
The audio cast can be followed at our website www.loomis.com (follow "Financial presentation").
A recorded version of the audio cast will be available at www.loomis.com (follow "Financial presentation") after the telephone conference.
Future reporting and meeting
Interim report | January - June | July 24, 2020 |
Interim report | January - September | November 5, 2020 |
Loomis' Annual General meeting will be held on May 6, 2020 in Stockholm.
For further information
Anders Haker, Chief Investor Relations Officer +1 281 795 8580, e-mail: anders.haker@loomis.com
Questions can also be sent to: ir@loomis.com. Refer also to the Loomis website: www.loomis.com
This information is information that Loomis AB is obliged to make public pursuant to the EU Market Abuse
Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 03.00 p.m. (CEST) on May 6, 2020.
Loomis AB (publ.) Corporate Identity Number 556620-8095, PO Box 702, SE-101 33 Stockholm, Sweden. | 25 |
Telephone: +46 8-522 920 00, www.loomis.com |
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Loomis AB published this content on 06 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 May 2020 13:18:07 UTC