Nobina : Interim Report 1 September 2020–30 November 2020

Q3 NOBINA Q3 1 SEPTEMBER-30 NOVEMBER 2020

Strong earnings, two acquisitions

175

and a new climate target

TESTING STATIONS SET

MOBILE COVID-19

Despite the challenging market, Nobina has continued to improve earnings through efficiency

UP BY SAMTRANS

improvements, retroactive revenue from negotiations and the comprehensive adaptation carried

out by the subsidiary Samtrans to its business model during the pandemic. In November, a new

climate­

target was launched that demonstrates the company's high ambitions in its endeavour to

80%

reduce GHG-emissions and to help tackle climate challenges. In December, two acquisitions were

announced that strengthen our operations and capabilities in key strategic areas.

REDUCTION TARGET

IN GHG-EMISSIONS

The third quarter

Significant events after the

BY 2030

• Net sales amounted to SEK 2,854 million (2,763), an increase of 3.3 percent

end of the quarter

compared to the prior-year quarter, of which +5.1 percent was organic

• Nobina's buses in Norrtälje, together with SL, will become the

growth offset by -1.8 percent of currency effects.

first in Sweden to reopen their front entrance doors thanks to the new glass

• EBITA amounted to SEK 307 million (243).

shield around the driving compartment. The use of the front entrance doors

• EBIT amounted to SEK 288 million (225).

will improve the flow through the bus, and reduce the risk of crowding.

• Profit before tax amounted to SEK 251 million (191).

• Skånetrafiken has awarded Nobina a renewed agreement to operate and deve-

• Profit after tax amounted to SEK 199 million (148), and earnings

lop regional and rural traffic services in Lund. The total value of the contract is

per share totalled SEK 2.25 (1.66) before dilution.

almost SEK 1.6 billion over an eight-year term, with an option to extend for two

• Cash flow from operations was SEK 485 million (318).

additional years. The new contract will start in two stages during 2021 and 2022

The nine-month period

with a total of 99 buses.

• In December, Nobina entered into an agreement to acquire the bus company

• Net sales amounted to SEK 7,927 million (8,040), a decrease of 1.4 percent,

Karl Erik Elofsson Buss AB based in Kungsbacka. Through the acquisition,

of which 0.0 percent was organic growth and -1.4 percent derived from

Nobina strengthens its position in western Sweden and expects to generate

currency effects.

new synergies between existing contracts, upcoming tenders and investments

• EBITA amounted to SEK 586 million (573).

in replacement traffic. The acquisition comprises an operation of approxima-

• EBIT amounted to SEK 533 million (533).

tely 100 buses and 100 employees in the markets for tendered scheduled traf-

• Profit before tax amounted to SEK 420 million (389).

fic, school traffic and replacement traffic and has an annual turnover of appr.

• Profit after tax amounted to SEK 334 million (305), and earnings per share

SEK 90 million. The acquisition is a continued part of Nobina's strategy to both

totalled SEK 3.78 (3.45) before dilution.

broaden and grow in the Nordic market, while at the same time building a plat-

• Cash flow from operations was SEK 1,536 million (1,121).

form for increased competitiveness in smaller contracts.

• In December, Nobina also entered into an agreement regarding a strategic

Significant events during the third quarter

acquisition of Göteborgs Buss AB based in Gothenburg and thereby, through

the wholly owned subsidiary Samtrans, strengthened its position in special

• The City of Turku awarded a new contract to Nobina to operate and develop

needs transportation and at the same time achieved market access in western

city transport services in the Turku region. The contract is worth more than

Sweden. The acquisition comprises an operation of approximately 170 vehicles

EUR 71 million over eight years, with an option for two additional years, and will

and 220 employees in tendered special needs transportation and has an annual

include 42 fully electric buses. Traffic is scheduled to start in July 2021.

turnover of appr. SEK 130 million. The acquisition is part of Nobina's strategy to

• As part of a new agreement for bus-for-rail services covering unscheduled dis-

strengthen and develop its position in special needs transportation.

ruption of Öresundståg services, Nobina is collaborating with SJ Öresund and

Bergkvarabuss to create the conditions required to find quick solutions focu-

sing on the needs of passengers. The contract will start in December 2020.

Key metrics

Quarter

Period

Full year

Rolling 12 months

(SEK million, except as otherwise indicated)

Sep-Nov 2020

Sep-Nov 2019

Mar-Nov 2020

Mar-Nov 2019

Mar 2019-Feb 2020

Dec 2019-Nov 2020

Net sales

2,854

2,763

7,927

8,040

10,645

10,532

EBITDA

603

538

1,450

1,407

1,764

1,807

EBITA

307

243

586

573

662

675

EBIT

288

225

533

533

597

597

EBT

251

191

420

389

399

430

Adjusted EBT1)

270

209

473

429

464

508

Adjusted EBT margin

9.5%

7.5%

5.9%

5.3%

4.4%

4.8%

Profit after tax

199

148

334

305

305

334

Cash flow for the period2)

97

-261

588

-867

-753

702

30 Nov 2020

30 Nov 2019

29 Feb 2020

Net debt/EBITDA

2.9x

3.2x

3.1x

Net debt/EBITDA, excluding bus financing

0.2x

0.4x

0.5x

Equity/assets ratio, %

16.7

14.9

14.7

A complete table of key metrics, including definitions, can be found on pages 24-25.

1. Adjusted for income, costs and amortisations related to acquisition accounting effects.
2. Cash flow for the period was positively impacted by the non-payment of a dividend and less cash-financed bus investments compared with the corresponding period in the previous year.

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"The acquisi-

tions are part of our

strategy to both

broaden­ and grow the

business in the Nordic region"

STATEMENT FROM THE CEO

Statement from the CEO

We have continued to deliver strong earnings, driven by increased effi- ciency, the effects of the renegotiation of incentive contracts, and, above all, from the adjustment of operations carried out by Samtrans during this challenging year. During the quarter, organic growth was 5.1 percent and adjusted EBT SEK 270 million (209). For the first nine months of the fiscal year, total Group earnings were 10 percent higher year-on-year. Our tendering work has been successful and we secured a renewed agreement to operate regional and rural traffic services in Lund for a period of eight years, which will include new electric buses, and we recently completed two acquisitions.

The acquisitions are part of our strategy to both broaden and grow the business in the Nordic region. The acquisition of

KE Buss AB strengthens our position in western Sweden and broadens our contract portfolio, with new synergies between existing contracts, forthcoming tenders and bus-for-rail services. Above all, we can see

an opportunity to create a platform for increased competitiveness in small-scale contracts. Also our second acquisition Göteborgs Buss AB has operations in western Sweden with a strong position in service transport and special needs transportation. This means we have expanded our special needs transportation business into a new geography to add to the expansion in prior years with Samtrans in the Stock- holm Region and Orslev in the Faxe municipality in Denmark.

Both acquisitions together comprise 320 employees and 270 vehicles.

Safe travel

The pandemic is continuing to affect society and people's willingness to travel. The steady recovery in travel volume we saw in the summer turned into a rapid decrease in the late autumn, and we are now back to the same low levels of travel we witnessed in April and May. However, even in the midst of a pandemic, public transport has a central role in keeping society functioning. Our special task force, with experts from different parts of the company, has continued to draw up clear guidelines for operations. We carry out real-time analysis of passenger journey and numbers, add extra traffic as required and modify timetables. The safety of our drivers has naturally been in focus since the outbreak of the pandemic. Allowing passengers to board the bus through the rear doors was one measure to guarantee safety, though this also meant fewer available seats, the risk of crowding and lower ticket revenue for our clients. A few weeks ago, we launched a solution in Sweden to address these different challen-

ges, a protective glass shield around the driving compartment. In collaboration with the PTA, SL, these screens have been installed in buses in Norrtälje and Tyresö and we are now reviewing a similar solution for our buses in other traffic areas of Sweden. Drivers regain contact with passengers, more space is created and there is a better passenger flow through the bus. The focus on a good work environment is an integral part of our operations. I am pleased to see the strong level of engagement for their duties among Nobina's employees, and this has enabled us to continue to deliver 99,97 percent of our traffic services.

Successful transition

One good example of engagement can be found in our subsidiary for special needs transportation, Samtrans. Its rapid adjustment during the spring to provide even more support to society during the pandemic in the form of various emergency logistics services has been very important. By the end of the quarter, Samtrans operated 175 mobile testing stations across Sweden and thereby helped society to improve its goal for increased testing and tracing. These services are still needed and we expect as a Group that we can continue to offer solutions for mobile infrastructure in many different situations in the future. This in parallel to our primary role, to provide a public transport solution that is vital to the development of society in the form of flexible and safe buses using fossil-free fuels.

Ambitious climate target

We naturally take this assignment very seriously, particularly in relation to our opportunity to contribute to tackling climate challenges. Today, we are launching a new, ambitious target for the reduction of our climate -affecting emissions. By 2030 we aim to reduce climate impact

from fuel per driven kilometre by 80 percent with 2015 as base year. To achieve this target, we must convert the entire bus

fleet to 100-percent renewable fuels or electricity from only renewable sources. We continue to see a rapid

shift to electric buses in our markets, and we are driving this development through our complete solutions concept for electrification, Nobina Electrical Solutions. Buses have the potential to be one of the most flexible and green modes of transport for everyone who needs to travel. In addition to initiatives linked to the new climate target, our endeavours

moving forward will include making our depots "green" and developing new digital services and other techno-

logy that facilitate door-to-door travel with minimal climate impact.

This was a reflection on an exciting future. 2020, however, is an unusual year. As I look back on last spring, and our precarious situation, I can only feel enormous pride in what this organisation has since achie- ved. I'm not only talking about the financial performance, which will offer us the strength to continue investing in the public transport of the future and create value for all of our stakeholders, but also the flexibility and adaptability that has characterised the business. We are still in the midst of a pandemic with many challenges, but Nobina's role as a critical resource has become even more important and our latest acquisitions demonstrate our strong confidence in our industry/business. We will carry these insights with us, together with all of our passengers and partners, as we now move into 2021, a year of new challenges and many opportunities.

Magnus Rosén,

President and CEO

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FINANCIAL PERFORMANCE

Nobina's financial performance

Third quarter (1 September-30 November 2020) and nine-month period (1 March-30 November 2020)

Net sales

The third quarter

Nobina's third-quarter net sales amounted to SEK 2,854 million1) (2,763), up 3.3 percent compared with the prior year period. Organic growth increased 5.1 percent. Development in net sales was largely due to the positive performance of Samtrans with Covid-19 testing stations, positive contract migration through contracts started in the Swedish segment during the year and increased extra traffic in Norway.

The nine-month period

Nobina's net sales for the nine-month period amounted to SEK 7,927 million (8,040), a decrease of 1.4 percent compared with the prior year period. Adjusted for currency effects, sales were in line with the prior year period (0.0%). Lower revenue resulting from the decline in travel due to Covid-19 was offset by new activities in Samtrans linked to Covid-19 testing stations and positive contract migration in Norway.

Results

The third quarter

EBITA for the third quarter amounted to SEK 307 million (243), an increase of 26.1 percent, largely attributable to the performance of Sam- trans, improved efficiency and retroactive revenue. Contract migration

1. Sales for the quarter include SEK 17 million 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 pande- mic. Agreements with clients on alternative measures for the contracts are normally implemen- ted retroactively and Nobina identifies any retroactive effects on revenue.

was on par with the year-earlier period. EBIT for the third quarter amounted to SEK 288 million (225), an increase of 28.1 percent. Profit before tax amounted to SEK 251 million (191). Adjusted profit before tax totalled SEK 270 million (209).

The nine-month period

EBITA for the nine-month period amounted to SEK 586 million (573), an increase of 2.3 percent. The increase was a result of new activities in Samtrans pertaining to Covid-19 testing stations and increased effi- ciency. EBIT for the nine-month period amounted to SEK 533 million (533). Profit before tax amounted to SEK 420 million (389). Adjusted profit before tax totalled SEK 473 million (429).

Income tax

Nobina's income tax in the income statement for the third quarter comprised current tax of SEK -2 million (0) and the change in deferred tax of SEK -50 million (-43). The effective rate of tax was 20.7 percent (23.0). Tax paid in the third quarter amounted to SEK 1 million (9). Nobina's income tax for the nine-month period comprised current tax of SEK -6 million (-2) and a change in estimated deferred tax of SEK -80 million (-82). Tax paid in the nine-month period amounted to SEK 5 million (11). The effective rate of tax was 20.5 percent (22.0).

Net sales

SEKm
3,000
2,400
1,800
1,200
600
0
Q3	Q4	Q1	Q2	Q3
2019/2020		2020/2021

EBITA
SEKm
300
240
180
120
60
0
Q3	Q4	Q1	Q2	Q3
2019/2020		2020/2021

Contributing to a better climate

Despite the many short-term challenges we must handle in the current pande- mic, we must not forget to address the long-term and very important challenge to limit global warming. As a leading player, Nobina has a particular responsibility and opportunity to exert an influence, and we already provide a service that allows more people to travel together and with a limited climate impact. But ­everyone can do more, even us.

Nobina is aiming by 2030 to operate our bus fleet on 100-percent renewable fuels. As a complement to this target, we are launching another target whereby we aim to reduce our climate affecting emissions from fuel per driven kilometre by 80 percent until 2030, compared with the level in 2015.

We aim to achieve this by gradually transitioning a larger share of the fleet to electric buses and replacing the remaining diesel buses with buses powered by renewable fuels. With this initiative, we want to demonstrate a serious effort to earnestly tackle the shared challenge to minimise our climate impact in society, in close dialogue and cooperation with our clients and partners in the vehicle industry.

Facts about the target: The climate target refers to greenhouse gas intensity

measured­ in carbon dioxide equivalents per driven kilometre. The intensity target is set so as to be independent of the number of kilometres driven. The benchmark year is the 2015/2016 fiscal year and the target is to be achieved in the 2030/2031 fiscal year. On 30 November 2020, the reduction was 61 percent.

We intend to report on the ­target every quarter in the future.

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Financial position

Cash and cash equivalents amounted to SEK 876 million (192) at the end of the period. Nobina has an available bank credit facility of SEK 300 million (300) as of 30 November 2020. Nobina's interest-bearing liabilities amounted to SEK 6,132 million (5,893), mainly divided between right-of-use liabilities of SEK 2,930 million (3,271) and other external lia- bilities, mainly loans for bus financing, of SEK 3,138 million (2,512). The bus financing includes also Nobina's green bond of SEK 500 million (500), which was launched in February 2019. 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 385 million (259), which replaced a previous bridge loan, see Note 1. Net debt totalled SEK 5,256 million (5,701) at the end of the period, and net debt/EBITDA was 2.9x (3.2x). Shareholders' equity totalled SEK 1,682 million (1,388). The equity/assets ratio at the end of the period was 16.7 percent (14.9).

Investments and divestments

The third quarter

Bus investments in the third quarter amounted to SEK 27 million (460) and other investments were SEK 59 million (25). Nobina signed right-of- use agreements of SEK 0 million (-293) and new loans of SEK -21 million (-8). The previous year´s third quarter was impacted by the refinancing of buses, which were previously lease-financed, to a value of SEK 311 million. Nobina's cash investments for procurement of buses, accessories and other PPE amounted to SEK 65 million (184).

The nine-month period

Bus investments in the nine-month period amounted to SEK 983 million (2,275) and other investments were SEK 97 million (34). Nobina signed right-of-use agreements of SEK -27 million (-821) and new loans of SEK -846 million (-821). The previous year´s nine-month period was impacted by the refinancing of buses, which were previously lease-financed, to a value of SEK 813 million.Nobina's cash investments for procurement of buses, accessories and other PPE amounted to SEK 207 million (667) and consisted primarily of investments in loan-financed buses.

FINANCIAL PERFORMANCE

Cash flow

The third quarter

Cash flow from operations before changes in working capital amounted to SEK 603 million (538). The change in working capital amounted to SEK -119 million (-211) and was primarily related to various timing effects regarding bus purchases and VAT-payments in the fleet organization.

Cash flow from investing activities amounted to SEK -82 million (-194) and included investments in buses and equipment, which were financed by loans amounting to SEK 21 million (8). The previous year's cash flow from investing activities for the third quarter was burdened by bus investments of SEK -118 million financed by the green bond, which had been issued in the fourth quarter of 2018-2019.

Cash flow from financing activities amounted to SEK -306 million (-385) and was positively impacted by reduced purchase of treasury shares and lower leasing amortizations. Total cash flow for the quarter was SEK 97 million (-261).

The nine-month period

Cash flow from operations before changes in working capital amounted to SEK 1,451 million (1,393). The change in working capital amounted to SEK 88 million (-261) and reflected the impact of delayed liquidity settlements pertaining to incentive contracts due to Covid-19 and timing-effects related to bus purchases and VAT-payments in the fleet organization.

Cash flow from investing activities amounted to SEK -1,089 million (-1,476) and was impacted by a payment of an additional consideration of SEK -47 million related to the acquisition of Samtrans as well as investments in buses and equipment of SEK -1,053 million (-1,488), which were financed by loans amounting to SEK 1,046 million (821) which also included proceeds of SEK 200 million from the financing of previous acquisitions. Cash flow during the year-earliernine-month period was also impacted by the refinancing of buses, which were previously lease-financed, with loans corresponded to SEK 813 million in both investments and new loans. No such refinancing took place in the nine-month period of 2020. Cash flow during the year-earlier nine- month period was also impacted by bus investments of SEK -456 million financed by the green bond, which had been issued in the fourth quarter of 2018-2019.

Cash flow from financing activities amounted to SEK 141 million (-512), which was impacted by the decision not to pay a dividend, which amounted to SEK -331 million in the preceding year as well as reduced purchase of treasury shares of SEK 37 million. Cash flow for the nine-month period totalled SEK 588 million (-867).

Cash flow effect relating to Investments	Quarter			Period			Full year
Sep-Nov 2020	Sep-Nov 2019		Mar-Nov 2020	Mar-Nov 2019 Mar 2019-Feb 2020
Investments in new buses	-27	-460		-983	-2,275		-2,353
Other investments	-59	-25		-97	-34		-79
Total investments	-86	-485		-1,080	-2,309		-2,432
Lease-financed investments	-	293	27	821	905
Non-lease-financed investments	-86	-192		-1,053	-1,488		-1,527
Of which loan-financed investments	21	8	846	821	860
Total cash investments 1)	-65	-184		-207	-667		-667

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

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