Nobina : Interim Report 1 June 2021–31 August 2021

Q2 NOBINA Q2 1 JUNE-31 AUGUST 2021

Strong earnings and reduced climate impact

Nobina reported a very strong second quarter of 2021/2022 and noted the highest quarterly ­earnings in the Group's history. The earnings improvement is largely due to a strong performance by our Covid-19 testing activities, higher level of pandemic-adapted contracts in place compared to corresponding quarter last year, more replacement traffic and positive index effects. The recovery in passenger volumes continued in the second quarter. It is also gratifying to see the positive trend in terms of our ambition to reduce the Group's climate impact, which is reflected in a major step taken during the second quarter towards reaching our target to reduce carbon dioxide emissions per driven kilometre by 80 percent no later than 2030.

190

ELECTRIC BUSES	SEK1.7BILLION
BEGAN OPERATING
IN THE QUARTER	IN NEWLY SECURED
	CONTRACT VALUE
	IN THE QUARTER

The second quarter

• Net sales amounted to SEK 3,040 million (2,564), an increase of 18.6 percent compared with the prior-year quarter, of which +14.8 percent was organic growth, +4.0 percent acquisitions and -0.2 percent currency effects.
• EBITA amounted to SEK 333 million (190).
• EBIT amounted to SEK 307 million (175).
• Profit after tax amounted to SEK 218 million (114), and earnings per share totalled SEK 2.52 (1.29) before dilution.
• Cash flow from operations was SEK 658 million (483).

The first half of the year

• Net sales amounted to SEK 6,314 million (5,073), an increase of 24.5 percent, of which +21.9 percent was organic growth, +3.1 percent­
  acquisitions­and -0.5 percent derived from currency effects.
• EBITA amounted to SEK 588 million (279).
• EBIT amounted to SEK 543 million (245).
• Profit after tax amounted to SEK 365 million (135), and earnings per share totalled SEK 4.23 (1.53) before dilution.
• Cash flow from operations was SEK 1,127 million (1,051).

Significant events during and after the quarter

• New 10-year contract was won with Västtrafik in Vänersborg and Trollhättan worth SEK 1.7 billion.
• During the quarter, Nobina started new traffic with a total of 244 buses in Skåne, Helsinki, Turku, Piteå and Copenhagen due to the contracts secured in 2020.

• As of 1 July 2021, the strategic acquisition Telepass AB, market leader for service traffic in Skåne, was consolidated into the Nobina Group's operations and accounts.
• After the end of the quarter, a 10-year agreement with Movia in Copenhagen was renewed and expanded, valued at approximately SEK 780 million.

Key metrics				Quarter			Period			Full year		Rolling 12 months
(SEK million, except as otherwise indicated)	Jun-Aug 2021	Jun-Aug 2020		Mar-Aug 2021	Mar-Aug 2020		Mar 2020-Feb 2021	Sep 2020-Aug 2021
Net sales				3,040	2,564	6,314		5,073	10,787	12,028
EBITDA				721	481	1,312		847	1,951	2,416
EBITA				333	190	588		279	757	1,066
EBIT				307	175	543		245	689	987
EBT				267	138	458		169	534	822
Adjusted EBT1)				293	153	503		203	602	902
Adjusted EBT margin	9.6%	6.0%	8.0%		4.0%	5.6%	7.5%
Profit after tax				218	114	365		135	445	675
Cash flow for the period	-89	86	19		491	760	288
									31 Aug 2021		31 Aug 2020		28 Feb 2021
Net debt/EBITDA								2.4x		3.2x		2.6x
Net debt/EBITDA, excluding bus financing						0.1x		0.2x		0.1x
Equity/assets ratio, %						16.6	14.9	17.0
									31 Aug 2021		31 Aug 2020		28 Feb 2021
Reduction of CO	2	emissions2)						65%		n/a	61%

A complete table of key metrics, including definitions, can be found on page 25-26.

1. Adjusted for income, costs and amortisations related to acquisition accounting effects.
2. By 2030, Nobina aims to reduce carbon dioxide emissions per driven kilometre by 80 percent with 2015 as base year. The climate target refers to greenhouse gas intensity measured in carbon dioxide equivalents per driven kilometre.

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"We can also see that our testing activities tend to have a higher persistence than we previously assessed"

STATEMENT FROM THE CEO

Statement from the CEO

The second quarter of the fiscal year was again very strong and Nobina noted the highest quarterly earnings in the Group's history. Sales, adjusted for currency effects, rose 18.6 percent to more than SEK 3 billion and adjusted EBT amounted to SEK 293 million (153).

The strong earnings must also be seen in light of an impairment of our bus fleet of SEK 72 million during the quarter as certain buses, due to their vehicle specification, have been identified as difficult to optimise, or where production of vehicles has ceased with subsequent problems acquiring spare parts.

The earnings improvement is largely due to a strong performance by our Covid-19 testing activities, which were still in a start-up phase in the second quarter of last year. During the second quarter of the year, Nobina operated an average of approximately 250 test

lines, compared with the corresponding quarter last year when we operated an average of approximately 50 test lines. We can also see that our testing activities tend to have a higher persistence than

we previously assessed. Our testing capacity, in the form of the number of testing lines, was reduced slightly for most of the second quarter compared with the first quarter of the year, though this was in line with our expectations. However, at the end of the period the trend reversed and we now expect testing activities in the third quarter to remain at roughly the same high level as for the second quarter. The assessment is therefore that the contribution from testing activities in the third quarter will be greater than in the year-earlier quarter, which would in such a case exceed our previous expectations. The relevant authorities can best explain the reason for this trend, but we can see indications that it is linked to the fact that insufficient numbers in certain areas have been vaccinated and possibly that many, out of concern for col-

leagues and friends, have continued to test themselves as society now slowly opens up. The performance of the underlying operations in

Samtrans,­ Göteborgs Buss and Telepass, which we acquired in the first quarter, is positive. Work to capitalise on our shared expertise is well on track and is helping to consolidate our role as the market's leading provider of service traffic.

In bus operations, the underlying business also developed positively during the period and the recovery in passenger volumes we noted earlier this year has continued in the second quarter. During the quarter, we also received remuneration in accordance with our Covid-adapted incentive contracts, which we have renegotiated due to the pandemic and was slightly higher than in the prior-year period. In addition, our successful and profitable activities in replacement buses and positive index effects contributed to the improvement in earnings. We believe our core business in Sweden will continue its strong recovery in the third quarter.

The large-scale transition to electric buses is continuing in public transport and Nobina is unquestionably playing an active role in driving the development. In the second quarter alone, by starting up 190 new ones, we doubled our number of electric buses in traffic. Electrification is well suited to us and our sustainability agenda and we have made a substantial effort to adapt our own fleet to the new ­reality. Nobina has

decided to further accelerate its sustainability work. It is therefore gratifying to see the positive trend in reducing the Group's cli-

mate impact, which is reflected in a major step towards reaching our target to reduce carbon dioxide emissions

per driven kilometre by 80 percent no later than 2030. In the quarter, we again demonstrated our competitiveness with the renewed contract to operate public transport in Vänersborg, Trollhättan and Lilla Edet for a total contract value of about SEK 1.7 billion. In addi- tion, Movia in Denmark has chosen to renew two new ­contracts with Nobina after the end of the quarter, one

of which also involves an expansion of the current

collaboration­and has a total contract value of approximately SEK 780 million. The contracts comprise a total of 89 scheduled buses, of which most operate on electricity and a few on

biogas, and these will make further contributions in our journey to reduce climate impact.

Furthermore, I can confirm that the recent stable and successful development of operations has naturally further strengthened the company's financial position, giving us more scope to quickly and flexibly act in a market that remains characterised by favourable long-term growth conditions, so that we can continue to create value for all of our stake- holders. We are confident as we enter the autumn of 2021 that we will once again become the natural choice for all those who wish to travel

- both young and old. We look forward to this.

Magnus Rosén,

President and CEO

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FINANCIAL PERFORMANCE

Nobina's financial performance

Second quarter (1 June-31 August 2021) and first half of the year (1 March-31 August 2021)

Net sales

The second quarter

Nobina's second-quarter net sales amounted to SEK 3,040 million (2,564), up 18.6 percent compared with the prior-year period. Organic growth was 14.8 percent. The development in net sales was largely due to the positive performance of Samtrans in Covid-19-related services, pandemic-adapted contracts in Sweden and positive index effects. Acquisitions in the Swedish operations increased sales by 4.0 percent. Currency effects amounted to -0.2 percent for the quarter.

The first half of the year

Nobina's net sales for the first half of the year amounted to SEK 6,314 million (5,073), up 24.5 percent compared with the prior-year period. Organic growth was 21.9 percent. The increase is primarily attributable to Covid-19-related business for Samtrans, and also positive index effects, pandemic-adapted contracts in Sweden and positive contract migration. Acquisitions increased sales by 3.1 percent and currency effects amounted to -0.5 percent in the first half of the year.

1. Sales for the quarter include SEK 33 million (27) in retroactive negotiated revenue, of which SEK 14 million relate to the first quarter and SEK 19 million to the previous fiscal year. Sales for the first half of the year include SEK 49 million (0) in retroactive negotiated revenue.
   Nobina normally reports incentive contracts according to the provisions of the agreement in force at the time based on passengers registered as travelling, and this has also been the case during the pandemic. Agreements with clients on alternative measures for the con- tracts are normally implemented retroactively and Nobina identifies any retroactive effects on revenue.

Results

The second quarter

EBITA for the second quarter amounted to SEK 333 million (190), an increase of 75.3 percent, largely attributable to the performance of Samtrans, positive index effects in Sweden and the pandemic-adapted contracts in place in the Swedish operations. Earnings were negatively impacted by an impairment of SEK -72 million on buses, which due to their vehicle specification have been identified as difficult to optimise, or where production of vehicles has ceased with subsequent problems acquiring spare parts. EBIT for the second quarter amounted to SEK 307 million (175), an increase of 75.4 percent. Profit after tax amounted to SEK 218 million (114). Adjusted profit before tax totalled SEK 293 million (153).

The first half of the year

EBITA for the first half of the year amounted to SEK 588 million (279), an increase of 110.8 percent. The improvement was mainly due to the strong performance of Samtrans, positive index effects and the pandemic-adapted contracts in place. Acquisitions also made a positive contribution, while impairment of buses (SEK -72 million) and a revaluation of available-for-sale buses due to a reduction in commercial traffic related to Covid-19 (SEK -30 million) - both of which are recognised as depreciation - had a negative impact compared with the year-earlier period. Operating profit (EBIT) for the first half of the year amounted to SEK 543 million (245), an increase of 121.6 percent. Profit after tax amounted to SEK 365 million (135). Adjusted profit before tax totalled SEK 503 million (203).

Net sales

MSEK
3 500
2 800
2 100
1 400
700
0
Q2	Q3	Q4	Q1	Q2
	2020/2021		2021/2022

EBITA
MSEK
350
280
210
140
70
0
Q2	Q3	Q4	Q1	Q2
	2020/2021		2021/2022

We are raising our ambitions

Nobina is accelerating its sustainability work, for example by introducing an even more structured approach in the organisation and by raising ambi- tions. One such ambition is to further reduce the Group's climate impact and energy consumption. It was recently announced that Nobina has joined the Science Based Target initiative (SBTi), after commencing comprehensive efforts to analyse the Group's emissions based on Scope 1, 2 and 3. When the analysis is completed, it will provide supporting data that can be used in the application process to establish an emissions target that is in accordance with SBTi's guidelines, which is a science-based target in line with the Paris Agreement.

"Nobina already contributes to a better planet by encouraging people to travel by bus rather than by car, which reduces congestion and emissions. But we want to, and can do, more. This is why we are

accelerating our efforts and setting new, ambitious targets, including climate targets," says Petra Axelsson, Director of Strategy and Sustainability at Nobina.

There is an existing target to reduce CO2 emissions per driven kilometre by 80 percent no later than 2030, with 2015 as the baseline year, and to operate all buses solely on renewable fuels. The new targets being drawn up cover not only the vehicle fleet but all areas of the business that have a direct impact on the climate, including acquired companies. Moreover, an evaluation is taking place of emissions throughout Nobina's value chain, for example from bus manufac- turers. Petra:

"We want to show that we are serious in our sustainability ambitions and this requires us to have knowledge and control over all areas that are in any way relevant to the Group. To help us in these efforts, we employ effective analysis and monitoring tools, which

have already resulted in one of the Nordic region's most complete offerings of expertise, support and services in sustainable public transport. Our long- term commitment to Science Based Targets reflects our willingness to lead our industry towards an even more sustainable future and will further improve our competitiveness.

Read more about SBTi on sciencebasedtargets.org.

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Income tax

Nobina's income tax in the income statement for the second quarter comprised current tax of SEK 0 million (1) and the change in estimated deferred tax of SEK 49 million (23). The effective rate of tax was 18.5 percent (17.4). Tax paid in the second quarter amounted to SEK 0 million

(0). Nobina's income tax for the first half of the year comprised current tax of SEK 1 million (4) and a change in estimated deferred tax of SEK 92 million (30). The effective rate of tax was 20.3 percent (20.1). Tax paid in the first half of the year amounted to SEK 6 million (4).

Financial position

Cash and cash equivalents amounted to SEK 1,073 million (786) at the end of the period. Nobina has an available bank credit facility of SEK 300 million (300) as of 31 August 2021. Nobina's interest-bearing liabilities amounted to SEK 6,906 million (6,306), mainly divided between right-­of-use liabilities of SEK 2,498 million (2,975) and other external liabilities, mainly loans for bus financing, of SEK 4,016 million (2,836). The bus financing also includes Nobina's green bond of SEK 703 million (500). Nobina's liabilities are primarily attributable to the financing of investments in buses and equipment used in operations, but also include ­certain strategic debt in the form of two loans related to acquisition financing amounting to SEK 312 million (428), see Note 1 of the Financial Statements. Nobina has pledged shares in Samtrans Omsorgsresor AB and Nobina Danmark Holding ApS as collateral for the two acquisition loans, see Note 3. Net debt totalled SEK 5,833 million (5,520) at the end of the period, and net debt/EBITDA was 2.4x (3.2x). Shareholders' equity totalled SEK 1,842 million (1,491). The equity/assets ratio at the end of the period was 16.6 percent (14.9).

Investments and divestments

The second quarter

Bus investments in the second quarter amounted to SEK 890 million

1. and other investments were SEK 38 million (19). Nobina signed right-of-use agreements of SEK -17 million (-27) and new loans of SEK -868 million (-253) were raised. Nobina's cash investments for procure- ment of buses, accessories and other PPE amounted to SEK 43 million

1. . Nobina sold buses and other PPE for a value of SEK 50 million (2). During the second quarter, the revaluation of buses and other PPE available for sale amounted to SEK -19 million (-13) and impairment of SEK -72 million on buses, which due to their vehicle specification have been identified as difficult to optimise, or where production of vehicles has ceased with subsequent problems acquiring spare parts. For more information, see Note 2.

The first half of the year

Bus investments in the first half of the year amounted to SEK 1,101 million

1. and other investments were SEK 59 million (38). Nobina signed finance leases of SEK -17 million (-27) and new loans of SEK -1,071 million (-825). Nobina's cash investments for procurement of buses, accessories and other PPE amounted to SEK 72 million (142). Nobina sold buses and

FINANCIAL PERFORMANCE

other PPE for a value of SEK 52 million (7). The sale generated a capital loss of SEK -3 million (-1). During the first half of the year, the revaluation of buses and other available-for-sale PPE amounted to SEK -68 million (-27) and impairment of SEK -72 million on buses, which due to their vehicle specification have been identified as difficult to optimise, or where production of vehicles has ceased with subsequent problems acquiring spare parts. For more information, see Note 2.

Cash flow

The second quarter

Cash flow from operations before changes in working capital amounted to SEK 713 million (485) mainly influenced by higher earnings. The change in working capital amounted to SEK -56 million (-2) and related primarily to the impact of postponed final settlements pertaining to incentive contracts due to Covid-19, the settlement of holiday pay liabilities and the payment of trade receivables related to Samtrans' testing activities.

Cash flow from investing activities amounted to SEK -953 million (-350) and included a purchase price, net of SEK -91 million related to the Telepass acquisition and investments in buses and equipment, which were financed by loans amounting to SEK 868 million (253).

Cash flow from financing activities amounted to SEK 206 million (-47). Total cash flow for the quarter amounted to SEK -89 million (86) and was positively impacted by the strong earnings but negatively impacted by the reintroduction of dividends, higher repayments and the purchase price for Telepass.

The first half of the year

Cash flow from operations before changes in working capital amounted to SEK 1,302 million (848) mainly influenced by higher earnings. The change in working capital amounted to SEK -169 million (-207) and reflected primarily the impact of postponed final settlements pertaining to incentive contracts due to Covid-19, the settlement of holiday pay liabilities and the payment of trade receivables related to Samtrans' testing activities.

Cash flow from investing activities amounted to SEK -1,198 million (-1,007) and was impacted by a payment of a purchase price, net of SEK -91 million related to the acquisition of Telepass as well as investments in buses and equipment of SEK -1,143 million (-967), which were financed by loans amounting to SEK 1,071 million (1,025), which also included proceeds of SEK 200 million from the financing of previous acquisitions.

Cash flow from financing activities amounted to SEK 19 million (491), which was impacted by the decision to reintroduce dividends, which amounted to SEK -325 million. Total cash flow for the first half of the year amounted to SEK 19 million (491) and was positively impacted by the strong earnings but negatively impacted primarily by the reintroduction of dividends, higher repayments and that the year-earlier period was strengthened through liquidity of SEK 200 million from the financing of previous acquisitions.

Cash flow effect relating to Investments	Quarter			Period			Full year
Jun-Aug 2021	Jun-Aug 2020		Mar-Aug 2021	Mar-Aug 2020 Mar 2020-Feb 2021
Investments in new buses	-890	-313		-1,101	-956		-1,377
Other investments	-38	-19		-59	-38		-108
Total investments	-928	-332		-1,160	-994		-1,485
Lease-financed investments	17	27	17	27	27
Non-lease-financed investments	-911	-305		-1,143	-967		-1,458
Of which loan-financed investments	868	253	1,071	825	1,192
Total cash investments 1)	-43	-52		-72	-142		-266

1) The investment table includes investments in buses and other equipment but excludes acquisition financing.

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FINANCIAL PERFORMANCE

Results analysis, year to date

Management's assessment of explanatory items regarding net sales and adjusted EBT.

(SEK million)	Net sales	Adj. EBT	Comments on the outcome
Period March-August 2020	5,073	203
Price and Volume	942	488	The positive effect of price and volume on sales and earnings is primarily attribut-
			able to the strong performance of Samtrans, mainly Covid-19 testing stations, and
			pandemic-adapted contracts. Acquisitions also had a positive impact on both sales
			and earnings. Currency effects had a negative impact on sales.
Contract migration	123	-41	Positive impact on sales of contract migration primarily in Sweden. Contract
			migrations­	impacted the results negatively, primarily in Sweden and Denmark.
Indexation and operational ­efficiency	176	-6	Indexation had a positive impact on sales, primarily in Sweden.
			Operational efficiency slightly lower than previous year.
Other		-131	This item includes other costs, primarily within central functions and central­	fleet
			costs. The negative impact on earnings is primarily attributable to the revaluation of
			available-for-sale buses during the first quarter (SEK -30 million) due to a reduction
			in commercial traffic related to Covid-19 and also an impairment on buses during
			the second quarter (SEK -72 million).
Net financial items		-9	Profit for the year was adversely impacted by currency effects in comparison with
			the previous year.
Period from March-August 2021	6,314	503

Result analysis for net sales and earnings

The results analysis above explains accumulated results from the preceding year to the current year, related to net sales and adjusted EBT.

Price and volume show the effects of changes in existing traffic

contracts­ relating to prices of performed transport as well as changed transport volumes. This explanatory item includes all active traffic ­contracts carried out by Nobina during both the preceding and current period and also the effects of acquired companies.

Contract migration shows the effect of changes in the contract port- folio. A started traffic contract entails increased sales, and often an ­initial adverse impact on earnings due to start-up costs and lower initial efficiency. A concluded traffic contract results in lower sales and loss of the contract's contribution to earnings.

Age structure second quarter

Indexation shows the impact of indexation on net sales compared with underlying cost inflation as regards pay, fuel, consumables, etc., in existing contracts. This item can also include effects of ex post adjustment of index revenues, with different lag times depending on the structure of the traffic contracts.

Operational efficiency shows the effect on earnings of changes

in efficiency­ in the operations in the form of personnel expenses, ­maintenance, damage, etc.

Other includes property expenses, marketing and sales costs, other administrative expenses as well as results from fleet operations which includes the effect of sales of buses on earnings.

Net financial items include the effect on earnings of interest ­payments, exchange rates and other financial items.

8.8(8.8)

WEIGHTED AVERAGE

CONTRACT TERM, YEARS1)

The duration of contracts varies between countries, and was on

average­ (weighted by the number

of buses) 8.8 years.

1. Incorrectly presented in last year's second quarterly report as 7.6 years.

5.4(4.7)

WEIGHTED AVERAGE AGE OF THE CONTRACT PORTFOLIO, YEARS

The average contract age

(weighted by the number of buses)

was 5.4 years.

6.3(6.2)

AVERAGE AGE OF BUS

FLEET, YEARS

Nobina's bus fleet had an average age of 6.3 years.

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