Loomis : Interim report January-June 2021

Interim Report

January - June 2021

Loomis Interim Report January - June 2021

Quarter 2 2021

Six months 2021

• Revenue SEK 4,779 million (4,239). Real growth 23 percent (-18) of which organic growth 17 ­percent (-20).
• Operating income (EBITA)1) SEK 428 million (202) and operating margin 9.0 percent (4.8). Excluding Loomis Pay, the operating margin amounted to 9.6 percent (5.1).
• Income before tax SEK 338 million (42) and income after tax SEK 251 million (2).
• Earnings per share before and after dilution amounted to SEK 3.33 (0.02).
• Cash flow from operating activities)2) SEK 290
  million­ (501), equivalent to 68 percent (248) of operating income (EBITA).
• Overall, the ongoing coronavirus pandemic had a significantly lower negative impact on revenue and operating income compared to the corresponding quarter in 2020.
• The Board of Directors has resolved to exercise the authorization to repurchase own shares.

• Revenue SEK 9,262 million (9,567). Real growth 7 percent (-8) of which organic growth was 3 percent (-10).
• Operating income (EBITA)1) SEK 786 million (791) and operating margin 8.5 percent (8.3) Excluding Loomis Pay, the operating margin amounted to 9.2 percent (8.4)
• Income before tax SEK 608 million (532) and income after tax SEK 449 million (367).
• Earnings per share before and after dilution amounted to SEK 5.96 (4.88).
• Cash flow from operating activities2) SEK 632
  million­ (1,269), equivalent to 80 percent (160) of operating income (EBITA).
• The ongoing coronavirus pandemic had, during the first quarter, a negative impact on revenue and operating income compared to the first quarter
  2020. During the second quarter the impact from the pandemic was significantly lower compared to the second quarter 2020.

KEY RATIOS
	2021	2020		2021	2020		2020
				Six	Six
SEK m	Quarter 2	Quarter 2	Change (%)	months	months	Change (%)	Full year
Revenue	4,779	4,239	12.8	9,262	9,567	-3.2	18,813
Of which:
Organic growth	731	-1,018	17.3	289	-1,009	3.0	-1,968
Acquisitions and divestments	231	86	5.5	368	176	3.8	326
Exchange rate effects	-422	-34	-10.0	-963	191	-10.1	-589
Total growth	541	-966	12.8	-305	-642	-3.2	-2,231
Operating income (EBITA)1)	428	202		786	791		1,775
Operating margin (EBITA), %1)	9.0	4.8		8.5	8.3		9.4
Operating income (EBIT)	388	96		702	640		1,304
Earnings before tax	338	42		608	532		1,096
Profit for the period	251	2		449	367		716
Earnings per share, SEK1)	3.33	0.02		5.96	4.88		9.52
Tax rate, %	26	96		26	31		35
Cash flow from operating activities2)	290	501		632	1,269		2,218
Cash flow from operating activities as
% of operating income (EBITA)2)	68	248		80	160		125

1. Earnings Before Interest, Taxes and Amortization of acquisition-related intangible fxed 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 23-24 and "Defnitions" on page 25.

An explanation and reconciliation of alternative performance measures can be found on pages 23-24 of this report.

This is a translation of the Swedish original report. In the event of differences between

2

the English translation and the Swedish original report, the Swedish original report shall prevail.

Loomis Interim Report January - June 2021

Comments by the President and CEO

The world is opening up again

The impact of the pandemic is decreasing as the vaccination programs that are now under way in communities yield results, and this is leading to gradual positive effects for Loomis. Restrictions are no longer as extensive and the volumes in our markets are increasing as our customers' businesses are opening up again. As in previous periods the negative effects of the pandemic are more tangible within our European segment than in our US opera- tions, but we are now hopeful that sales will pick up again in Europe.

We are well equipped for the future and will be able to benefit from the lessons learned over that past year and from the commercial opportunities that are now presenting themselves.

Acquisition in Switzerland

At the end of March we were able to announce that Loomis had reached an agreement to acquire the cash handling operations from the Swiss Post, the national postal service of Switzerland. The transaction­ was closed at the beginning of May and integration is under way. Revenue generated by these operations in 2020 amounted to around CHF 66 million. This acquisition enables us to significantly advance our positions in the cash-intensive Swiss market. Swiss Post's nationwide cash in transit (CIT) operations, cash management services (CMS) and SafePoint portfolio is a good complement to our own operations and will help us to develop our

offering in all areas of the Swiss market. Over time it will be possible to realize good synergies.

Progress during the quarter

In the second quarter the Group's real growth amounted to 23 percent (-18), of which organic growth was 17 percent (-20). The Group's operating margin (EBITA %) in the second quarter amounted to 9.0 percent (4.8). Both growth and operating margin are primarily impacted in a positive way by less negative effects from the pandemic. ­Loomis Pay had a negative impact on the income as planned. Excluding Loomis Pay, the operating margin amounted to 9.6 percent (5.1).

The pandemic's impact on our business witnessed in 2020 and in the first quarter of this year began to gradually decrease in the second quarter. The impact on our US operations has been 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.

Revenue within our US operations grew in the second quarter in local currency by around 20 percent. Revenue has therefore now fully recovered and even exceeded the level in the second quarter of 2019. We are seeing sustained good SafePoint growth in the US market, with an increase in revenue from SafePoint of 21 percent during the quarter. The rollout of the comprehensive agreement we signed with EG America in the fourth quarter of 2020 is progressing according to plan and is expected to be concluded before the end of the year. The second quarter operating margin in the USA amounted to 15.5 percent (15.1). It is gratifying to see this positive trend con-

tinuing. Similar to previous periods, a more profitable customer portfolio, higher revenue from SafePoint and ATMs, and efficiency improvement programs at our

Revenue, SEK billion

24
18
12
6
0
2015	2016	2017	2018	2019	2020 2021*
*Refers to the period July 1, 2020-June 30, 2021.

Operating margin (EBITA), %

		2019			2020		2021
14
12
10
8
6
4
2
0	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2

Operating margin (EBITA) per quarter Operating margin (EBITA) rolling 12 months

Annual dividend, %

60
40
20
0
2015	2016	2017	2018	2019	2020

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Loomis Interim Report January - June 2021

branches are the main contributing factors. The operating margin for the second quarter of this year was slightly lower than for the first quarter. This is due to the fact that CIT is now recovering and showing good growth. CIT has a lower operating margin than, for example, SafePoint and therefore has a somewhat dilutive effect on the US operating margin as a whole.

Segment Europe was hit hard by the extensive lockdowns in previous periods but the situation is now improving. This positive trend will continue as vaccination programs reach more people and communities start to return to normal. Demand for our ­services will quickly increase as activity in retail, restaurants and travel picks up in Europe.

Our ambitious Loomis Pay initiative is making progress. Loomis Pay provides a solution to many of the challenges that merchants currently face in processing digital payments and also facilitates their cash management. We currently offer Loomis Pay in the Danish and Swedish markets and rollout in more markets will follow. Dialogue with customers is a priority and our focus is on continuing to develop Loomis Pay. Our aim for Loomis Pay is to be the most complete payment option in the market. We have set challenging but realistic targets and within five years we expect Loomis Pay to generate revenue in excess of SEK 3 billion with a good operating margin.

Transition to environmental friendly vehicles

Loomis's intention is to transform the vehicle fleet over time so that most of the vehicles are run on environmental friendly fuel or electricity. We have made good progress in many countries and there are multiple good examples of the transition process. The majority of our vehicles in Sweden run on environmental friendly alternatives and in the USA the number of electric armored vehicles is gradually increasing. Loomis USA recently placed an order with US manufacturer Xos Inc. for an additional 20 electric vehicles. The vehicles will be delivered before the end of the year and will be on the roads in California, Texas, New Jersey and North Carolina.

ECB announces strategic cash goals

Demand for cash has been high during the pandemic with many people opting to keep a larger percentage of their assets in cash than normal. As a result, in June the European Central Bank (ECB) expressed its strong support for cash and identified four strategic goals. These include that the ECB will ensure effective and robust access to cash throughout the EU; an assurance that cash will be accepted as a payment method by all retailers and restaurants; the ECB will provide bills with a design

and appearance that accentuates European integration; and environmentally­ sound production of notes and coins by using new products and new production processes.

Patrik Andersson

President and CEO

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Loomis Interim Report January - June 2021

The segments

Revenue, operating income and number of full-time employees

SEGMENT EUROPE
	2021	2020	2021	2020	R12	2020
			Six	Six	Twelve
SEK m	Quarter 2	Quarter 2	months	months	months	Full year
Revenue	2,456	2,052	4,724	4,894	9,618	9,788
Sales growth, %	19.6	-27.3	-3.5	-11.6	-11.5	-14.9
of which organic growth, %	14.2	-28.6	-4.6	-15.4	-10.4	-15.4
of which acquisitions / divestments, %	10.8	3.3	7.1	3.7	4.4	2.9
of which exchange rate effects, %	-5.4	-1.9	-6.0	0.1	-5.4	-2.5
Real growth, %	25.0	-25.3	2.5	-11.6	-6.0	-12.4
Operating income (EBITA)	148	-71	217	205	600	588
Operating margin, %	6.0	-3.4	4.6	4.2	6.2	6.0
Number of full-time employees	13,900	13,200	13,700	14,200	13,800	13,900
SEGMENT USA
	2021	2020	2021	2020	R12	2020
			Six	Six	Twelve
SEK m	Quarter 2	Quarter 2	months	months	months	Full year
Revenue	2,348	2,206	4,582	4,713	8,967	9,098
Sales growth, %	6.4	-8.2	-2.8	0.0	-7.0	-5.6
of which organic growth, %	20.2	-8.8	11.1	-3.3	4.8	-2.2
of which acquisitions / divestments, %	0.4	-0.3	0.4	-0.6	0.3	-0.2
of which exchange rate effects, %	-14.1	0.9	-14.2	4.0	-12.1	-3.2
Real growth, %	20.6	-9.0	11.4	-4.0	5.1	-2.4
Operating income (EBITA)	363	332	726	703	1,449	1,425
Operating margin, %	15.5	15.1	15.8	14.9	16.1	15.7
Number of full-time employees	8,800	9,000	8,800	9,300	8,800	9,100
SEGMENT LOOMIS PAY
	2021	2020	2021	2020	R12	2020
			Six	Six	Twelve
SEK m	Quarter 2	Quarter 2	months	months	months	Full year
Revenue	1	n/a	3	n/a	10	7
Sales growth, %	n/a	n/a	n/a	n/a	n/a	n/a
of which organic growth, %	n/a	n/a	n/a	n/a	n/a	n/a
Real growth, %	n/a	n/a	n/a	n/a	n/a	n/a
Operating income (EBITA)	-33	-16	-65	-16	-117	-68
Operating margin, %	n/a	n/a	n/a	n/a	n/a	n/a

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