Loomis : Interim report January-March 2021

Interim report

January-March 2021

Loomis Interim report January-March 2021

Quarter 1, 2021

• Revenue SEK 4,483 million (5,329). Real growth -6 percent (2) of which organic growth -9 percent (0).
• Operating income (EBITA)1) SEK 358 million (589) and operating margin 8.0 percent (11.0). Loomis Pay progresses according to plan and SEK 32 million was recorded as net costs. Excluding Loomis Pay, the
  operating­ margin was 8.7 percent (11.0).
• Income before tax SEK 269 million (490) and income after tax SEK 198 million (365).
• Earnings per share before and after dilution SEK 2.63 (4.85).
• Cash flow2) from operating activities SEK 342 million (768), equivalent to 96 percent (130) of operating
  profit­ (EBITA).
• The ongoing coronavirus pandemic had an overall negative impact on revenue and operating income during the quarter. Significant differences compared to the first quarter of 2020 are related to the pandemic.

KEY RATIOS
	2021	2020		2020
			Change
SEK m	Quarter 1	Quarter 1	(%)	Full year
Revenue	4,483	5,329	-15.9	18,813
Of which:
Organic growth	-461	0	-8.7	-1,968
Acquisitions and divestments	136	90	2.6	326
Exchange rate effects	-521	233	-9.8	-589
Total growth	-846	323	-15.9	-2,231
Operating income (EBITA)1)	358	589	-39	1,775
Operating margin (EBITA), %1)	8.0	11.0		9.4
Operating income (EBIT)	315	544	-42	1,304
Earnings before tax	269	490	-45	1,096
Profit for the period	198	365	-46	716
SEK earnings per share, SEK1)	2.63	4.85	-46	9.52
Tax rate, %	27	25		35
Cash flow from operating activities2)	342	768	-55	2,218
Cash flow from operating activities as % of operating income (EBITA)2)	96	130		125

1. Earnings Before Interest, Taxes and Amortization of acquisition-related intangible fixed assets, acquisition-related costs and revenue, and items affecting comparability.
2. Cash flow from operating activities excluding the effects of IFRS 16. See also under "Alternative performance measures" on pages 21-22 and "Definitions" on page 23.

An explanation and reconciliation of alternative performance measures can be found on pages 21-22 of this report.

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Loomis Interim report January-March 2021

Comments by the President and CEO

Impact of the pandemic

Once the vaccination programs, now under way in our communities, yield results, positive effects will gradually be realized for Loomis. Unlike much of last year, we feel that the optimism has returned in our business as the possibility of eased restrictions has improved.

Compared with the fourth quarter 2020, the impact on our operations in the first quarter this year was more extensive as many areas in multiple European countries were in lockdowns throughout the quarter. Our branches took comprehensive measures to reduce costs early on when the pandemic broke out and revenues were decreasing. We will continue to benefit from these measures once volumes return. Whether we are in a pandemic or not, the health and safety of our employees is our top priority and also essential in order to maintain a high level of access to our services and personnel. Since the pandemic broke out we have ­succeeded in keeping the virus away from our workplac- es and in our contacts with the external environment.

Acquisition in Switzerland

At the end of March we announced an agreement reached by Loomis to acquire the cash handling operations of the Swiss Post. The revenue from these operations in 2020 was approximately CHF 66 million and the acquisition will allow us to further advance our positions in the Swiss market. Swiss Post's nationwide cash in transit (CIT) operations, cash management

services (CMS) and SafePoint portfolio provide a good complement to our own operations and will help us to develop our offering in all areas of the Swiss market.

Recent developments

In the first quarter the Group's real growth amounted to -6 percent (2), of which organic growth was -9 percent (0). The Group's operating margin (EBITA %) amounted to 8.0 percent (11.0). The operating margin has been negatively affected above all by the ongoing pandemic. Loom- is pay progresses according to plan. Excluding Loomis Pay, the operating ­margin amounted to 8.7 percent (11.0).

The effects of the pandemic on our business that we experienced 2020 continued into the first quarter this year. The impact on our US operations was significantly lower than on our European operations. This is mainly due to a generally lower degree of lockdowns in the USA and the structure of our customer portfolios. In the USA we benefitted from the fact that a larger percentage of our revenue is based on fixed monthly fees. Fixed revenue from, for example, SafePoint and financial institutions is significantly higher in the USA than in Europe. In the US market our Safe- Point solution is experiencing sustained good development and rollout of the comprehensive agreement we signed with EG- US in the fourth quarter 2020 is progressing according to plan. Revenue from Safe- Point for the quarter in the USA increased by more than 11 percent, despite the ongoing pandemic. The operating margin in the USA in the first quarter amounted to 16.3 percent (14.8). It is fantastic to witness this positive development continuing quarter after quarter. Similar to previous years, a more profitable customer portfolio, higher revenue from SafePoint and efficiency improvements at our branches are the main contributing factors.

Segment Europe was hit hard by extensive lockdowns in the first quarter. However, the situation going forward will improve once the vaccination programs have the desired effect and communities open up again. The actions we have taken on the cost side will benefit us once volumes

Revenue, SEK billion

24
18
12
6
0
2015	2016	2017	2018	2019	2020 2021*
*Refers to the period April 1, 2020 - March 31, 2021.

Operating margin (EBITA), %

		2019			2020		2021
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

Annual dividend, %

60
40
20
0
2015	2016	2017	2018	2019	2020*

*Calculated based on the dividend proposal presented to the 2021 AGM.

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Loomis Interim report January-March 2021

increase. We are prepared to quickly adapt our operations when things return to normal in society.

The launch of Loomis Pay in Denmark began in October of last year. We are keeping up the pace and we have also been offering Loomis Pay in the Swedish market since February this year. The offer has been well received and several contracts have already been signed. Loomis Pay provides a solution to many of the challenges that merchants currently face in digital payment processes and also facilitates cash management. We intend to roll Loom- is Pay out in more markets going forward. We have set challenging but realistic targets and we expect to generate revenue in excess of SEK 3 billion with a good operating margin within five years.

Upcoming Capital Markets Day

We are approaching the end of the strategy period that began in 2018 and cover the years 2018-2021. New targets for the next strategy period are currently being set and we intend to present our future focus and targets at an upcoming Capital Markets Day. Due to the ongoing pandemic the date has not yet been set. We look forward to being able to meet all of our stakeholders in person again.

Patrik Andersson

President and CEO

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Loomis Interim report January-March 2021

The segments

Revenue, operating income and number of full-time employees

SEGMENT EUROPE
	2021	2020	2020
SEK m	Quarter 1	Quarter 1	Full year
Revenue	2,268	2,842	9,788
Sales growth, %	-20.2	4.7	-14.9
-of which organic growth, %	-18.7	-1.8	-15.4
-of which acquisitions / divestments, %	4.4	4.2	2.9
-of which exchange rate effects, %	-6.0	2.3	-2.5
Real growth, %	-14.2	2.4	-12.4
Operating income (EBITA)	69	276	588
Operating margin, %	3.0	9.7	6.0
Number of full-time employees	13,400	15,100	13,900
SEGMENT USA
	2021	2020	2020
SEK m	Quarter 1	Quarter 1	Full year
Revenue	2,234	2,507	9,098
Sales growth, %	-10.9	8.5	-5.6
-of which organic growth, %	2.8	2.2	-2.2
-of which acquisitions / divestments, %	0.3	-1.0	-0.2
-of which exchange rate effects, %	-14.0	7.3	-3.2
Real growth, %	3.1	1.2	-2.4
Operating income (EBITA)	363	371	1,425
Operating margin, %	16.3	14.8	15.7
Number of full-time employees	8,800	9,600	9,100
SEGMENT LOOMIS PAY
	2021	2020	2020
SEK m	Quarter 1	Quarter 1	Full year
Revenue	2	n/a	7
Sales growth, %	n/a	n/a	n/a
-of which organic growth, %	n/a	n/a	n/a
Real growth, %	n/a	n/a	n/a
Operating income (EBITA)	-32	n/a	-68
Operating margin, %	n/a	n/a	n/a

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