Managing cash in society.

Transcription

1 Year-End Report January December 2012 Managing cash in society.

2 Strong earnings growth and dividend increase proposed January December 2012 Revenue for the full year 2012 amounted to SEK 11,360 million (10,973) Real growth was 3 percent (7) and organic growth was 0 percent (1). Operating income (EBITA) 1) amounted to SEK 1,019 million (912), of which exchange rate effects accounted for SEK 8 million. The operating margin was 9.0 percent (8.3). Income before taxes amounted to SEK 932 million (743) and income after taxes was SEK 650 million (513). Earnings per share was SEK 8.90 (7.03) before dilution and SEK 8.60 (6.79) after dilution. Cash flow from operating activities amounted to SEK 860 million (700), equivalent to 84 percent (77) of operating income (EBITA). A dividend increase to SEK 4.50 per share (3.75) is proposed. 1) Earnings Before Interest, Taxes and Amortization of acquisition-related intangible fixed assets, Acquisition-related costs and revenue and Items affecting comparability. Loomis offers safe and effective comprehensive solutions for the distribution, handling and recycling of cash for banks, retailers and other commercial companies via an international network of almost 400 branches in 16 countries. The Group has approximately 20,000 employees and annual revenue of SEK 11 billion. Loomis is a Mid-Cap listed Company on the NASDAQ OMX Stockholm. This is a translation of the original Swedish Year-end Report. In the event of differences between the English translation and the Swedish original, the Swedish Year-end Report shall prevail.

3 Year-end Report for January December Comments by the President and CEO» The fourth quarter results were Loomis best ever for the Group as a whole and for our two segments.«the fourth quarter results were Loomis best ever both for the Group as a whole and for our two segments. The Group s operating income (EBITA) amounted to SEK 310 million (266) and the operating margin was 10.9 percent (9.2). In Europe the operating income was SEK 219 million (204) and in the USA it was SEK 125 million (89), while the operating margins improved to 12.4 (11.5) and 11.5 percent (8.1) respectively. Thanks to a favorable development in handling claims, the operating income in the USA was positively affected by a non-recurring item of SEK 25 million relating to revaluations of casualty and medical provisions as a whole was a strong year. Operating income (EBITA ) amounted to SEK 1,019 million (912), including negative exchange rate effects of SEK 8 million, while the operating margin increased to 9.0 percent (8.3). Earnings per share amounted to SEK 8.90 (7.03), which is an improvement of 27 percent compared to the previous year. The cash flow from operating activities remained strong, despite the negative effect of an unusually high number of non-business days at the end of the year, and amounted to SEK 860 million (700) or 84 percent (77) of operating income (EBITA). The most important explanations for the positive earnings development in the fourth quarter and for the full year are our continuous efforts to improve efficiency and to develop our offering and our business. These parallel processes are now reflected in our earnings. Another explanation for our earnings improvement is that we are starting to see the effect of the low profitability contracts we deliberately terminated in 2012, particularly in France and the UK. In the fourth quarter, we have signed a number of new large contracts in Sweden. The increased annual order value was around SEK 200 million and the new contracts are partly the result of the fact that a competing cash handling company went bankrupt. These contracts were already having an impact on revenue in the fourth quarter, while the effect on earnings will start to be seen in the first quarter, and more substantially in the second quarter of In January 2013 we also signed our first strategically important contract on the Turkish market. This two-year contract represents a total order value in the region of SEK 20 million. Despite the weak economy in most of the countries where we operate, our market was relatively strong. In most of the European countries people tend to pay with cash when times are more difficult in order to have better control over their personal finances. In the USA, our market has benefitted from increased interest among banks in outsourcing more of their cash management. The result for us was that the percentage of cash management services (CMS) increased in 2012 to 24 percent (22) of our revenue in the USA. This trend will also improve our profitability over time. In the fourth quarter we reached an agreement with the seller of Pendum s cash handing operations on compensation for lost volumes due to the fact that some of the customers that were taken over in the acquisition decided to diversify their cash handling services providers. Under the agreement we received a repayment installment of USD 4.9 million of the purchase price which we are reporting as acquisition-related revenue. The negotiations have not yet been concluded. In summary, we had a good year with a strong finish. We have secured many exciting orders, improved efficiency and successfully integrated our acquisitions in Spain and Argentina. Last but not least, we are well on the way to reaching our margin target of 10 percent by 2014 at the latest. Lars Blecko President and CEO

4 2 Year-end Report for January December 2012 The Group and the segments in brief SEK m Oct Dec Oct Dec Full year Full year Full year Group total Revenue 2,852 2,881 11,360 10,973 11,033 Real growth, % Organic growth, % Operating income (EBITA) 1) , Operating margin, % Earnings per share before dilution, SEK ) ) ) ) 6.80 Earnings per share after dilution, SEK Cash flow from operating activities as % of operating income (EBITA) Segment Europe Revenue 1,762 1,778 6,955 6,934 7,024 Real growth, % Organic growth, % Operating income (EBITA) 1) Operating margin, % USA Revenue 1,091 1,104 4,405 4,039 4,009 Real growth, % Organic growth, % Operating income (EBITA) 1) Operating margin, % ) Earnings Before Interest, Taxes, Amortization of acquisition-related intangible fixed assets, Acquisition-related costs and revenue and Items affecting comparability. 2) The number of outstanding shares, which comprises the basis for calculation of earnings per share, amounts to 73,011,780, and includes 132,318 treasury shares per December 31, The treasury shares are a result of Loomis Incentive Scheme 2011 and will, according to agreements, be allotted to employees in the future. 3) The number of outstanding shares which comprises the basis for calculation of earnings per share amounts to 73,011,780, and included 124,109 treasury shares per December 31, The treasury shares were as a result of Loomis Incentive Scheme 2010 and have been allotted to employees in accordance with agreements. Operating margin (EBITA) % Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Operating margin (EBITA) per quarter Operating margin (EBITA) rolling 12 months

5 Year-end Report for January December Revenue and income SEK m Oct Dec Oct Dec Full year Full year Full year Revenue 2,852 2,881 11,360 10,973 11,033 Operating income (EBITA) 1) , Operating income (EBIT) Income before taxes Net income for the period Key ratios Real growth, % Organic growth, % Operating margin (EBITA), % ) Earnings Before Interest, Taxes, Amortization of acquisition-related intangible fixed assets, Acquisition-related costs and revenue and Items affecting comparability. October December 2012 Revenue in the fourth quarter was SEK 2,852 million compared to SEK 2,881 million for the same period the previous year. Real growth for the quarter amounted to 2 percent (8) and is mainly explained by acquisitions made in the USA (Oregon Armored Services, OAS ), Spain and Argentina. Organic growth, which was 0 percent (2), was positively affected by favorable market development in the Swedish market. Growth was impeded, however, by lower volumes after low profitability contracts were cancelled in the UK and France earlier in the year. Changes in the fuel surcharges which are passed on to the customers had no significant effect on the organic growth. Operating income (EBITA), which amounted to SEK 310 million (266), was affected by negative exchange rate effects of SEK 7 million. The quarter s operating income was also positively affected by a non-recurring item of SEK 25 million after revaluation of the US subsidiary s casualty and medical provisions. The revaluations result from a positive development in claims handling whereby the actuarial assumptions that are the basis for the assessment of the size of the provisions have been changed. After adjustment for this nonrecurring item, the operating margin was 10.0 percent. The improved margin is mainly due to the continuous Group-wide efforts to improve efficiency and the fact that the integration of the cash handing operations acquired from Pendum has shown positive results. Operating income (EBIT), which amounted to SEK 333 million (262), includes acquisition-related costs of SEK 3 million ( 6) and a repayment installment of SEK 33 million of the purchase price for Pendum s cash handling operations. Net financial items was SEK 11 million ( 15). The improvement is mainly attributable to more favorable interest rates. Income before tax was SEK 321 million (247) and net income was SEK 222 million (180). The tax rate in the current quarter was 31 percent (27). January December 2012 Revenue for the full year amounted to SEK 11,360 million (10,973) and real growth was 3 percent (7). Real growth is mainly attributable to the acquisitions made in 2011 in the USA (Pendum) and Turkey, and in 2012 in the USA (OAS), Spain and Argentina. Organic growth amounted to 0 percent (1) and was positively affected by slightly improved market conditions in most markets. Organic growth was, however, negatively affected by terminated contracts in the USA (Pendum) and by reduced volumes resulting from the termination of low profitability contracts in France. Changes in the fuel surcharges which are passed on to the customers had no significant effect on the organic growth for the Group. Price increases as a percentage of revenue exceeded wage increases in percent during the period. Operating income (EBITA), which was negatively affected by currency effects of SEK 8 million, amounted to SEK 1,019 million (912) and the operating margin was 9.0 percent (8.3). The Group s continuous efforts to improve efficiency as well as the integration of the cash handling operations acquired from Pendum had a positive impact on the operating margin. Operating income was, however, negatively affected by restructuring costs relating to preventing the over-capacity that would otherwise have occurred, mainly in the French operations but also in the UK, as a result of termination of contracts. The Group s staff turnover remained at an acceptable level, amounting to around 22 percent (22). Operating income (EBIT) amounted to SEK 988 million (805) which includes acquisition-related costs of SEK 18 million ( 42) and an item affecting comparability of SEK 16 million ( 44). The acquisition-related item is mainly costs relating to the acquisition of Efectivox and a repayment installment of SEK 33 million of the purchase price for Pendum s cash handling operations. The item affecting comparability is a reversal of a portion of the provision amounting to SEK 59 million made in 2007 for overtime compensation in Spain. Net financial items amounted to SEK 56 million ( 62), while income before taxes was SEK 932 million (743). Income after taxes amounted to SEK 650 million (513) and the tax rate for the period was 30 percent (31).

6 4 Year-end Report for January December 2012 The Segments Loomis europe SEK m Oct Dec Oct Dec Full year Full year Full year Revenue 1,762 1,778 6,955 6,934 7,024 Real growth, % Organic growth, % Operating income (EBITA) 1) Operating margin, % ) Earnings Before Interest, Taxes, Amortization of acquisition-related intangible fixed assets, Acquisition-related costs and revenue and Items affecting comparability. Revenue and operating income Europe October December Revenue in the fourth quarter amounted to SEK 1,762 million compared to SEK 1,778 million for the same period the previous year. The acquisitions made during the year in Spain and Argentina* contributed to the quarter s real growth which was 2 percent (4). Organic growth, which was 0 percent (3), is mainly the result of favorable market, increased market shares and prices remaining stable in most of the European countries. In Spain the increase in revenue from retail customers compensated for the negative impact that the structural changes in the country s banking sector had on growth. Also, changes in the Swedish cash handling market have had a positive impact on growth. Organic growth was, however, negatively affected by lower volumes due to the termination of low profitability contracts in France and the UK earlier in the year. Operating income (EBITA) for the quarter amounted to SEK 219 million (204) and the operating margin increased to 12.4 percent (11.5). The improvement is mainly attributable to the Group s continuous efforts to improve efficiency and cut costs and the fact that the ongoing restructuring work within the French operations has continued to show positive results. * Argentina is included in the European segment because the operations there are reported and followed up as part of the European segment. January December Revenue for the European segment for the full year amounted to SEK 6,955 million (6,934). The 2 percent (3) real growth for the period was positively affected by the acquisition in Turkey in 2011 and by the acquisitions in Spain and Argentina* in Organic growth, which was 0 percent (2), was positively affected by a more favorable market and by the fact that prices remained stable in most of the European markets. In Spain the negative impact that the restructuring of the banking sector had on growth was offset by an increase in revenue from retail customers. However, for the segment as a whole, the organic growth was negatively impacted by the termination of low profitability contracts in the French cash in transit operation earlier in the year. Operating income for the period (EBITA) amounted to SEK 736 million (714) and the operating margin was 10.6 percent (10.3). The improvement is mainly attributable to the restructuring work that is ongoing in France and the Group s continuous efforts to improve efficiency and cut costs, which continues to show results. The operating income was affected by costs relating to preventing the over-capacity which would otherwise have occurred in the French and UK operations as a result of terminated contracts. Operating income was also affected by a non-recurring item of SEK 16 million relating to a dispute that Loomis lost in Denmark in the third quarter.

7 Year-end Report for January December Loomis USA SEK m Oct Dec Oct Dec Full year Full year Full year Revenue 1,091 1,104 4,405 4,039 4,009 Real growth, % Organic growth, % Operating income (EBITA) 1) Operating margin, % ) Earnings Before Interest, Taxes, Amortization of acquisition-related intangible fixed assets, Acquisition-related costs and revenue and Items affecting comparability. Revenue and operating income USA October December The fourth quarter revenue amounted to SEK 1,091 million compared to SEK 1,104 million for the same period the previous year. Real growth was 1 percent (17). The organic growth in the current quarter was marginally negatively affected by the reduction of volumes that was noticeable in the fourth quarter of 2011 relating to the contract portfolio overtaken from Pendum. Increased volumes from other contracts compensated for the reduction in volumes, and organic growth for the quarter amounted to 0 percent (1). The Pendum purchase agreement contained a clause on compensation for parts of the volume loss, which resulted in a repayment installment of USD 4.9 million of the purchase price being paid to Loomis during the quarter. The repayment installment is reported as acquisition-related revenue. Organic growth was not significantly impacted by the changes in fuel surcharges which are passed on the customers. The US operation developed in a positive direction in the fourth quarter. Operating income (EBITA) amounted to SEK 125 million (89) while the operating margin increased to 11.5 percent (8.1). A non-recurring item of SEK 25 million relating to the revaluation of casualty and medical provisions had a positive impact on operating income. The revaluations result from a positive development in claims handling whereby the actuarial assumptions that are the basis for the assessment of the size of the provisions have been changed. After adjustment for this non-recurring item, the operating margin was 9.2 percent. The margin improvement is mainly attributable to the continuous efforts to cut costs and improve efficiency and to the effect of the integration of the operations acquired from Pendum. The margin was also positively affected by the fact that the share of revenue from cash management services (CMS) increased to 26 percent (22) of the segment s total revenue. January December Revenue for the full year amounted to SEK 4,405 million (4,039). Real growth was 5 percent (12) and is mainly related to acquisitions conducted in 2011 of Pendum s cash handling operation and OAS. Organic growth for the period amounted to 0 percent (0) and was affected by the fact that a number of the customers who were taken over in connection with the acquisition of Pendum s cash handling operation decided to diversify their providers of cash handling services. Changes to fuel surcharges which are passed on to the customers did not have a significant impact on the period s organic growth. Operating income (EBITA) amounted to SEK 400 million (295) and the operating margin was 9.1 percent compared to 7.3 percent for the full year After adjustment for the aforementioned revaluation of casualty and medical provisions, the operating margin amounted to 8.5 percent. The effect of the integration of the operations acquired from Pendum and the continuous efforts to cut costs and improve efficiency are the main reasons for the improved margin. The margin was also positively affected due to the share of revenue from cash management services (CMS) increased to 24 percent (22) of the segment s total revenue.

8 6 Year-end Report for January December 2012 Cash flow STATEMENT OF CASH FLOWS SEK m Oct Dec Oct Dec Full year Full year Full year Operating income (EBITA) 1) , Depreciation Change in accounts receivable Change in other operating working capital and other items Cash flow from operating activities before investments ,607 1,540 1,645 Investments in fixed assets, net Cash flow from operating activities Financial items paid and received Income tax paid Free cash flow Cash flow effect of items affecting comparability Acquisition of operations 2) Acquisition-related costs and revenue, paid and received 3) Dividend paid Repayments of leasing liabilities Change in interest-bearing net debt excluding liquid funds Cash flow for the period KEY RATIOS Cash flow from operating activities as % of operating income (EBITA) Investments in relation to depreciation Investments as % of total revenue ) Earnings Before Interest, Taxes, Amortization of acquisition-related intangible fixed assets, Acquisition-related costs and revenue and Items affecting comparability. 2) As from January 1, 2011, Acquisition of operations includes the cash flow effect of acquisition-related costs. 3) Refers to acquisition-related restructuring and integration costs. During the fourth quarter of 2012 a repayment installment of the purchase price attributable to the cash handling operations of Pendum was received in the amount of SEK 33 million. Cash flow October December 2012 Cash flow from operating activities was SEK 313 million (234), equivalent to 101 percent (88) of operating income (EBITA). The investment requirement was lower than the same period the previous year when significant investments were made in both existing and acquired operations. Net investments in fixed assets during the period amounted to SEK 222 million (323), which can be compared to depreciation of fixed assets of SEK 179 million (169). During the period SEK 98 million (178) was invested in vehicles and security equipment, which comprise the two major categories of recurring investments. SEK 49 million (25) was also invested in Loomis SafePoint. Cash flow from paid and received acquisition-related costs and revenue had a positive effect of SEK 33 million from a repayment installment of the purchase price for Pendum s cash handling operation. Cash flow January December 2012 Cash flow from operating activities was SEK 860 million (700), equivalent to 84 percent (77) of operating income (EBITA). If adjusted for investments in Loomis SafePoint, the cash flow from operating activities was 100 percent (87) of operating income (EBITA). The effect on cash flow of the change in other operating capital and other items amounted to SEK 182 million ( 58), which is largely the result of lower accounts payable compared to the previous year. Net investments in fixed assets for the period amounted to SEK 747 million (840), which can be compared to depreciation of fixed assets of SEK 717 million (658). During the period SEK 290 million (404) was invested in vehicles and security equipment, the two major categories of recurring investments. SEK 156 million (95) was invested in Loomis SafePoint during the period. Cash flow from acquisition of operations amounted to SEK 289 million ( 667), mainly relating to the acquisition of Efectivox in Spain, OAS in the USA and Vigencia in Argentina. A repayment installment of SEK 33 million of the purchase price for Pendum s cash handling operation positively affected the item acquisition-related costs and revenue, paid and received. Cash flow for the period includes a dividend to shareholders of SEK 273 million (256).

9 Year-end Report for January December Capital employed Capital employed amounted to SEK 5,755 million (5,617). Return on capital employed amounted to 18 percent (16). Shareholders equity and financing Shareholders equity amounted to SEK 3,595 million (3,397). Return on shareholders equity was 18 percent (15) and the equity ratio was 40 percent (37). Net debt amounted to SEK 2,161 million (2,220).

10 8 Year-end Report for January December 2012 Acquisitions Company Country Segment Date of consolidation Acquired share (%) 1) Annual revenue, LOC m 2) Number of employees Purchase price 3) SEK m Goodwill, SEK m Acquisition related intangible assets, SEK m Opening balance January 1, , Other capital employed, SEK m Oregon Armored Services Inc. 7) USA USA January ) 3 15 Efectivox 7) Spanien Europa March ) Vigencia 7) 8) Argentina Europa April ) 11 5 Total acquisitions January December Amortization of acquisition related intangible assets 28 Exchange rate differences Closing balance December 31, , ) Refers to voting rights. For assets deals, no voting rights are stated. 2) Estimated annual revenue translated to SEK as per acquisition date amounted to approximately SEK 40 million for Oregon Armored Services, to approximately SEK 130 million for Efectivox and to approximately SEK 60 million for Vigencia. 3) Purchase price, translated to SEK as per acquisition date. The reported purchase price includes contingent considerations of approximately SEK 16 million, which will be due for payment in 2015 if certain contractual criteria are achieved, e.g. sales volume and net income, as well as deferred payments of approximately SEK 8 million which will be due for payment during The contingent considerations are reported based on best estimates and are equivalent to an achievement of 100% of the contractual criteria. 4) The reported goodwill is primarily attributable to achieving synergy effects. Any impairment losses are not tax deductible. 5) The reported goodwill is attributable to achieving geographic expansion and synergy effects. Any impairment losses are not tax deductible. 6) The reported goodwill is attributable to achieving geographic expansion. Any impairment losses are not tax deductible. 7) The acquisition analyses are subject to final adjustment up to one year after the acquisition date. 8) Argentina is reported in the European segment, as the operations are reported and monitored as a part of the European segment. Acquisitions January December 2012 In December 2011, it was announced that the Loomis subsidiary in the USA had signed an agreement to acquire the shares in Oregon Armored Service Inc. The acquisition has further strengthened Loomis presence in north-west USA. In December 2011, it was announced that Loomis Spanish subsidiary had entered into an agreement to acquire the shares in the Spanish cash handling company Efectivox. As a result of the structural changes in the Spanish banking sector in recent years there is now an increased requirement for cash handling companies and banks to operate on a nationwide basis. This acquisition has enabled Loomis to offer cash handling services throughout the entire Spanish mainland. When the acquisition was announced it was contingent upon approval from the Spanish competition authority. This approval was obtained in February Although the integration of the acquired operation was completed in the second quarter of 2012, some acquisition-related costs negatively affected the 2012 third quarter earnings. In April 2012, it was announced that Loomis Spanish subsidiary had signed an agreement to acquire the shares in the Argentinean cash handling company Vigencia. The company, which mainly operates in the Buenos Aires region, was taken over on April 1, The acquisition, which is Loomis first outside Europe and the USA, marks the beginning of a broader expansion into Latin America. In November 2012, Loomis subsidiary in the USA received a repayment installment of SEK 33 million of the purchase price for Pendum s cash handling operations. This repayment installment is reported as acquisition-related revenue in the statement of income. The negotiations have not yet been concluded.

11 Year-end Report for January December Significant events and the number of full-time employees Significant events January December In accordance with the decision by the Board of Directors in July 2011 and authorized by the 2011 Annual General Meeting, Loomis AB repurchased 57,876 Class B shares during the period March 28 30, The repurchased shares are a portion of the shares that may subsequently be transferred to the participants in Incentive Scheme As of March 31, 2012 the company was holding 111,113 treasury shares. On April 2 and on May 18, 2012 Loomis AB repurchased 17,205 and 4,000 Class B shares respectively. These shares may subsequently be transferred to the participants in Incentive Scheme As of December 31, 2012 Loomis AB was holding 132,318 treasury shares. In April 2012, the Board of Directors for Loomis AB decided on a proposal to the 2012 Annual General Meeting on the introduction of an incentive scheme (Incentive Scheme 2012), equivalent to the scheme adopted at the 2011 Annual General Meeting. Similar to the existing incentive scheme, the proposed one will involve two thirds of variable remuneration being paid out in cash the year after it is earned. The remaining third will be used by Loomis AB to repurchase shares which will be allotted to the employees no later than June 30, On June 1, 2012, Anders Haker took up his position as the Group CFO. Marcus Hagegård took up his post as CFO for Loomis operations in the USA. In the summer of 2012, Loomis Swedish subsidiary signed a framework agreement with Swedbank. Under the agreement, which covers cash management and cash in transit services, Swedbank s customers will have access to cash management services, transport logistics for cash and a nationwide network of service boxes. This assignment further reinforces Loomis position as the specialist in cash handling. In September 2012, Loomis Danish subsidiary lost a dispute with one of Denmark s large retail chains. The dispute began at the beginning of 2008 when Loomis terminated a supply contract due to non-payment by the customer. The total cost for Loomis, including Loomis share of the court costs, amounted to SEK 20 million, of which SEK 16 million negatively affected operating income and SEK 4 million negatively affected net financial items in the third quarter of As a result of changes in the Swedish cash handling industry, Loomis Swedish subsidiary signed in September several new customer contracts. The combined order value of the new contracts is around SEK 120 million on an annual basis. The contracts, which cover cash handling services, went into effect immediately. In December the co-operation with bank-owned Bankomat AB in Sweden was expanded so that Loomis Swedish subsidiary will manage all of the approximately 2,000 ATMs owned by Bankomat AB. The expanded agreement will run for four years and represents an annual order value of SEK 100 million. These new agreements have further strengthened Loomis position as the specialist in cash handling in the Swedish market. Number of full-time employees The average number of full-time employees in 2012 was 19,448 (19,511). The completed acquisitions have increased the average number of full-time employees. The ongoing cost-saving programs have primarily reduced the number of overtime hours and temporary employees but have also reduced the number of regular employees.

12 10 Year-end Report for January December 2012 Risks and uncertainties Operational risks Operational risks are risks associated with the day-to-day operations and the services offered by the Company to its customers. These risks can result in negative consequences when the services performed do not meet the established requirements and result in loss of or damage to property or personal injury. Loomis strategy for operational risk management is based on two fundamental principles: No loss of life Balance between profitability and risk of theft and robbery. Although the risk of robbery is unavoidable in cash handling, Loomis continually strives to minimize this risk. The most vulnerable situations are at the roadside, in the vehicles and during cash processing. Loomis operations are insured, meaning that the maximum cost of each theft or robbery incident is limited to the deductible amount, as stipulated in the insurance cover. The Parent Company, Loomis AB, is deemed not to have any significant operational risks, as the Company does not engage in operations, other than the conventional control of subsidiaries and the management of certain Group matters. Factors of uncertainty The economic trend during 2012 impacted certain countries and geographic markets negatively, and it cannot be ruled out that revenue and income may be impacted during Changes in general economic conditions can have various effects on the market for cash handling services, such as changes in the consumption level, the proportion of cash purchases compared with credit card purchases, the risk of robbery and bad debt losses as well as the rate of staff turnover. Seasonal variations The Company s earnings fluctuate across the seasons, which should be taken into consideration when making assessments on the basis of interim financial information. The primary reason for these seasonal variations is that the need for cash handling services increases during the summer vacation period, July August, and during the holiday season at the end of the year, i.e. November December. The major risks deemed to apply to the Parent Company refer to fluctuations in exchange rates, particularly as regards USD and EUR, increased interest rates and the risk of possible impairment of assets.

13 Year-end Report for January December Parent Company SUMMARY STATEMENT OF INCOME SEK m Full year Full year Full year Gross income Operating income (EBIT) Income after financial items Net income for the period SUMMARY BALANCE SHEET SEK m Dec 31 Dec 31 Dec 31 Fixed assets 7,355 7,578 6,438 Current assets Total assets 7,830 8,271 7,401 Shareholders' equity 4,507 1) 4,654 2) 4,718 Liabilities 3,323 3,617 2,683 Total shareholders' equity and liabilities 7,830 8,271 7,401 1) As of December 31, 2012 the Company had 132,318 Class B treasury shares. The treasury shares will be allotted to the employees in accordance with the Incentive Scheme ) As of December 31, 2011 the Company had 124,109 Class B treasury shares. The treasury shares were allotted to the employees in accordance with the Incentive Scheme The Parent Company s gross income comes mainly from franchise fees from subsidiaries. Income after financial items was SEK 73 million (333) including a write-down of SEK 468 million of the book value of shares in the UK subsidiary. The write-down was made so that the amount recorded in the Parent Company s accounts would be equal to the book value in the consolidated accounts, and for this reason, the write-down has not had any effect on the Group s income or balance sheet total. Income after financial items were also affected by dividends and group contributions received from subsidiaries totaling SEK 492 million. The corresponding dividends for 2011 were recognized as anticipated dividends in the 2010 year-end accounts and were therefore not included in the 2011 income. The Parent Company s fixed assets consist mainly of shares in subsidiaries and loan receivables from subsidiaries. The liabilities are mainly interest-bearing liabilities. The Group s Parent Company consists of Group management and head office departments providing strategic management for the Group. The average number of full-time employees at the head office in 2012 was 17.

14 12 Year-end Report for January December 2012 Other significant events For critical estimates and assessments and contingent liabilities, please refer to pages 53 and 80 of the 2011 Annual Report. The dispute in Denmark described on page 80 of the 2011 Annual Report was resolved during the year and this resulted in a cost of SEK 20 million which negatively impacted the 2012 income. As there have been no other significant changes to the events described in the Annual Report, no further comments have been made on these matters in this year-end report. 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 International Financial Reporting Interpretations Committee (IFRIC). This interim report has been prepared according to IAS 34 Interim Financial Reporting. 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 of the 2011 Annual Report. IAS 19 Employee Benefits was amended in June The amendment means that past service costs should be recognized immediately. Interest expenses and the expected return on plan assets will be replaced by a net interest calculated applying the discount rate based on the net surplus or net deficit in the defined benefit plan. The Group will apply the amended standard for the financial year starting on January 1, For years prior to 2013 the impact is not expected to amount to significant amounts. In addition, Loomis will recognize the pension liability as part of net debt starting January 1, The Parent Company s financial reports have been prepared in accordance with the Swedish Annual Accounts Act and recommendation RFR 2 Accounting for Legal Entities. The most important accounting principles for the Parent Company can be found in Note 36 on page 86 of the 2011 Annual Report. Outlook for 2013 The Company does not provide forecast information for Stockholm, February 6, 2013 Lars Blecko President and CEO

15 Year-end Report for January December Review report (translation of the Swedish original) Review report over Interim Financial Statements (Interim report) prepared in accordance with IAS 34 and Chapter 9 of the Swedish Annual Accounts Act. Introduction We have reviewed this report for the period 1 January 2012 to 31 December 2012 for Loomis AB. The Board of Directors and the President and CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review. Scope of Review We conducted our review in accordance with the Swedish Standard on Review Engagements SÖG 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company. Stockholm, February 6, 2013 PricewaterhouseCoopers AB Patrik Adolfson Authorized Public Accountant

16 14 Year-end Report for January December 2012 Financial reports in brief Statement OF INCOME SEK m Oct Dec Oct Dec Full year Full year Full year Revenue, continuing operations 2,798 2,723 10,983 10,441 10,990 Revenue, acquisitions Total revenue 2,852 2,881 11,360 10,973 11,033 Production expenses 2,150 2,223 8,781 8,556 8,516 Gross income ,579 2,417 2,516 Selling and administration expenses ,560 1,506 1,634 Operating income (EBITA) 1) , Amortization of acquisition-related intangible assets Acquisition-related costs and revenue 2) Items affecting comparability ) 44 4) Operating income (EBIT) Net financial items Income before taxes Income tax Net income for the period 5) Key ratios Real growth, % Organic growth, % Gross margin, % Selling and administration expenses as % of total revenue Operating margin (EBITA), % Tax rate, % Net margin, % ) Earnings Before Interest, Taxes, Amortization of acquisition-related intangible fixed assets, Acquisition-related costs and revenue and Items affecting comparability. 2) Acquisition-related costs and revenue is reported as a separate item as from 2011 and, for the period January December 2012, refer to transaction costs of SEK 9 million ( 16), restructuring costs of SEK 42 million ( 1) and integration costs of SEK 0 million ( 25) as well as a repayment installment of the purchase price attributable to the cash handling operations of Pendum in the amount of SEK 33 million (0). Transaction costs for the period January December 2012 amount to SEK 1 million for acquisitions in progress, to SEK 8 million for completed acquisitions and to SEK 0 million for discontinued acquisitions. Restructuring costs of SEK 42 million are primarily attributable to the acquisition of Efectivox in Spain. 3) Items affecting comparability refers to a reversal of part of the provision of SEK 59 million which was made in 2007, attributable to overtime compensation in Spain. In total, SEK 25 million has been reversed. 4) Of the items affecting comparability, SEK 53 million refers to incorrect valuation of assets and liabilities in the Austrian subsidiary, and SEK 9 million refers to a reversal of part of the provision of SEK 59 million which was made in 2007, attributable to overtime compensation in Spain. 5) Net income for the period is entirely attributable to the Parent Company s shareholders. Statement of comprehensive income SEK m Full year Full year Full year Net income for the period Actuarial gains and losses after tax Exchange rate differences Cash flow hedges Other comprehensive income and expenses for the period, net after tax Total comprehensive income for the period 1) ) Comprehensive income for the period is entirely attributable to the Parent Company s shareholders. Data per share SEK Oct Dec Oct Dec Full year Full year Full year Earnings per share before dilution ) ) ) ) 6.80 Earnings per share after dilution 3) Earnings per share, fully diluted 4) Dividend Number of outstanding shares (millions) ) ) ) ) 73.0 Average number of outstanding shares (millions) ) The number of outstanding shares, which comprises the basis for calculation of earnings per share, amounts to 73,011,780, and includes 132,318 treasury shares per December 31, The treasury shares are a result of Loomis Incentive Scheme 2011 and will, according to agreements, be allotted to employees in the future. 2) The number of outstanding shares, which comprises the basis for calculation of earnings per share, amounts to 73,011,780, and included 124,109 treasury shares per December 31, The treasury shares were a result of Loomis Incentive Scheme 2010 and have been allotted to employees in accordance with agreements. 3) The average price per share during the fourth quarter of 2012 amounted to SEK For the whole year of 2012 the corresponding figure was SEK ) Earnings per share, fully diluted, show the earnings per share as if all outstanding warrants had been converted into shares. At full dilution, the number of outstanding shares would amount to 75.6 million.

17 Year-end Report for January December Financial reports in brief Balance Sheet SEK m Dec 31 Dec 31 Dec 31 ASSETS Fixed assets Goodwill 3,317 3,281 2,582 Acquisition-related intangible assets Other intangible assets Tangible fixed assets 2,865 2,887 2,610 Non-interest-bearing financial fixed assets Interest-bearing financial fixed assets Total fixed assets 6,907 6,927 5,719 Current assets Non-interest-bearing current assets 1,689 1,728 1,585 Interest-bearing financial current assets Liquid funds Total current assets 2,079 2,142 1,863 TOTAL ASSETS 8,986 9,069 7,582 SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity 1) 3,595 3,397 3,123 Long-term liabilities Interest-bearing long-term liabilities 2,566 2, Non-interest-bearing provisions Total long-term liabilities 3,547 3,640 1,507 Current liabilities Tax liabilities Non-interest-bearing current liabilities 1,722 1,837 1,675 Interest-bearing current liabilities ,110 Total current liabilities 1,845 2,032 2,951 TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 8,986 9,069 7,582 Key ratios Equity ratio, % ) Shareholders equity is entirely attributable to the Parent Company s shareholders.

18 16 Year-end Report for January December 2012 Financial reports in brief Additional information intangible assets SEK m Goodwill Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Acquisitionrelated Other Goodwill Acquisitionrelated Other Goodwill Acquisitionrelated Opening balance 3, , , Acquisitions/Investments Amortization/Impairment Exchange rate differences Reclassifications Closing balance 3, , , Other Change in shareholders equity SEK m Full year Full year Full year Opening balance 3,397 3,123 3,129 Actuarial gains and losses after tax Exchange rate differences Cash flow hedges Total other comprehensive income Net income for the period Total comprehensive income Dividend paid to Parent Company s shareholders Share-related remuneration 1) Closing balance 3,595 3,397 3,123 1) Including re-purchase of warrants. As per December 31, 2012 Loomis had 273,407 warrants in own custody.

19 Year-end Report for January December Financial reports in brief Statement of cash flows SEK m Oct Dec Oct Dec Full year Full year Full year Income before taxes Items not affecting cash flow, items affecting comparability and acquisition-related costs Income tax paid Change in accounts receivable Change in other operating working capital and other items Cash flow from operations ,239 1,203 1,271 Cash flow from investment activities ,003 1, Cash flow from financing activities Cash flow for the period Liquid funds at beginning of the period Translation differences in liquid funds Liquid funds at end of period Statement of cash flows, Additional information SEK m Oct Dec Oct Dec Full year Full year Full year Operating income (EBITA) 1) , Depreciation Change in accounts receivable Change in other operating working capital and other items Cash flow from operating activities before investments ,607 1,540 1,645 Investments in fixed assets, net Cash flow from operating activities Financial items paid and received Income tax paid Free cash flow Cash flow effect of items affecting comparability Acquisition of operations 2) Acquisition-related costs and revenue, paid and received 3) Dividend paid Repayments of leasing liabilities Change in interest-bearing net debt excluding liquid funds Cash flow for the period Key ratios Cash flow from operating activities as % of operating income (EBITA) Investments in relation to depreciation Investments in % of total revenue ) Earnings Before Interest, Tax, Amortization of acquisition-related intangible fixed assets, Acquisition-related costs and revenue and Items affecting comparability. 2) Acquistion of operations includes from January 1, 2011 acquisition-related transaction costs. 3) Refers to acquisition-related restructuring and integration costs. During the fourth quarter of 2012 a repayment installment of the purchase price attributable to the cash handling operations of Pendum was received in the amount of SEK 33 million.

20 18 Year-end Report for January December 2012 Financial reports in brief Segment overview SEK m Oct Dec Oct Dec Full year Full year Full year Europe Revenue 1,762 1,778 6,955 6,934 7,024 Real growth, % Organic growth, % Operating income (EBITA) 1) Operating margin (EBITA), % USA Revenue 1,091 1,104 4,405 4,039 4,009 Real growth, % Organic growth, % Operating income (EBITA) 1) Operating margin (EBITA), % Other 2) Revenue Operating income (EBITA) 1) Group total Revenue 2,852 2,881 11,360 10,973 11,033 Real growth, % Organic growth, % Operating income (EBITA) 1) , Operating margin (EBITA), % Segment overview By quarter SEK m Oct Dec Jul Sep Apr Jun Jan Mar Oct Dec Jul Sep Apr Jun Jan Mar Oct Dec Europe Revenue 1,762 1,710 1,764 1,720 1,778 1,813 1,713 1,630 1,733 Real growth, % Organic growth, % Operating income (EBITA) 1) Operating margin (EBITA), % USA Revenue 1,091 1,077 1,134 1,102 1,104 1, Real growth, % Organic growth, % Operating income (EBITA) 1) Operating margin (EBITA), % Other 2) Revenue Operating income (EBITA) 1) Group total Revenue 2,852 2,788 2,898 2,822 2,881 2,882 2,683 2,526 2,691 Real growth, % Organic growth, % Operating income (EBITA) 1) Operating margin (EBITA), % ) Earnings Before Interest, Taxes, Amortization of acquisitions-related intangible fixed assets, Acquisition-related costs and revenue and Items affecting comparability. 2) The category Other consists of the Parent Company s costs and certain other Group items.

21 Year-end Report for January December Financial reports in brief Quarterly data SEK m Oct Dec Jul Sep Apr Jun Jan Mar Oct Dec Jul Sep Apr Jun Jan Mar Oct Dec Income Statement Revenue 2,852 2,788 2,898 2,822 2,881 2,882 2,683 2,526 2,691 Gross income Operating income (EBITA) 1) Operating income (EBIT) Key ratios Operating margin (EBITA), % Cash flow Operations Investment activities Financing activities Cash flow for the period Capital employed and financing Operating capital employed 2,316 2,316 2,503 2,388 2,168 2,059 2,049 1,975 1,929 Goodwill 3,317 3,310 3,505 3,360 3,281 3,276 3,041 2,465 2,582 Acquisition-related intangible assets Other operating capital Operating capital 5,755 5,786 6,214 5,859 5,617 5,536 5,314 4,567 4,555 Key ratios Operating capital employed as % of revenue Capital employed as a % of revenue Net debt 2,161 2,415 2,873 2,413 2,220 2,322 2,337 1,418 1,432 Shareholders equity 3,595 3,371 3,341 3,446 3,397 3,214 2,977 3,149 3,123 1) Earnings Before Interest, Taxes, Amortization of acquisitions-related intangible fixed assets, Acquisition-related costs and revenue and Items affecting comparability.

22 20 Year-end Report for January December 2012 Financial reports in brief Statement of income by quarter SEK m Oct Dec Jul Sep Apr Jun Jan Mar Oct Dec Jul Sep Apr Jun Jan Mar Oct Dec Revenue, continuing operations 2,798 2,734 2,787 2,665 2,723 2,681 2,548 2,489 2,656 Revenue, acquisitions Total revenue 2,852 2,788 2,898 2,822 2,881 2,882 2,683 2,526 2,691 Production expenses 2,150 2,131 2,278 2,222 2,223 2,243 2,100 1,991 2,060 Gross income Selling and administration expenses Operating income (EBITA) 1) Amortization of acquisition- related intangible assets Acquisition-related costs and revenue 2) Items affecting comparability 16 3) 9 4) 53 4) Operating income (EBIT) Net financial items Income before taxes Income tax Net income for the period 5) Key ratios Real growth, % Organic growth, % Gross margin, % Selling and administration expenses as % of total revenue Operating margin (EBITA), % Tax rate, % Net margin, % Earnings per share before dilution (SEK) ) Earnings Before Interest, Tax, Amortization of acquisition-related intangible fixed assets, Acquisition-related costs and revenue and Items affecting comparability. 2) Acquisition-related costs and revenue is reported as a separate item as from 2011 and, for the period January December 2012, refer to transaction costs of SEK 9 million ( 16), restructuring costs of SEK 42 million ( 1) and integration costs of SEK 0 million ( 25) as well as a repayment installment of the purchase price attributable to the cash handling operations of Pendum in the amount of SEK 33 million (0). Transaction costs for the period January December 2012 amount to SEK 1 million for acquisitions in progress, to SEK 8 million for completed acquisitions and to SEK 0 million for discontinued acquisitions. Restructuring costs of SEK 42 million are primarily attributable to the acquisition of Efectivox in Spain. 3) Items affecting comparability refers to a reversal of part of the provision of SEK 59 million which was made in 2007, attributable to overtime compensation in Spain. In total, SEK 25 million has been reversed. 4) Of the items affecting comparability, in the second and fourth quarter 2011 respectively, SEK 53 million refers to incorrect valuation of assets and liabilities in the Austrian subsidiary, and SEK 9 million refers to a reversal of part of the provision of SEK 59 million which was made in 2007, attributable to overtime compensation in Spain. 5) Net income for the period is entirely attributable to the Parent Company s shareholders.

23 Year-end Report for January December Financial reports in brief Balance Sheet by quarter SEK m Dec 31 Sep 30 Jun 30 Mar 31 Dec 31 Sep 30 Jun 30 Mar 31 Dec 31 ASSETS Fixed assets Goodwill 3,317 3,310 3,505 3,360 3,281 3,276 3,041 2,465 2,582 Acquisition-related intangible assets Other intangible assets Tangible fixed assets 2,865 2,822 2,919 2,891 2,887 2,789 2,646 2,490 2,610 Non interest-bearing financial fixed assets Interest-bearing financial fixed assets Total fixed assets 6,907 6,850 7,198 7,084 6,927 6,768 6,340 5,525 5,719 Current assets Non interest-bearing current assets 1,689 1,849 2,006 1,965 1,728 1,831 1,858 1,677 1,585 Interest-bearing financial current assets Liquid funds Total current assets 2,079 2,130 2,220 2,270 2,142 2,149 2,031 1,920 1,863 TOTAL ASSETS 8,986 8,980 9,417 9,354 9,069 8,917 8,371 7,444 7,582 SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity 1) 3,595 3,371 3,341 3,446 3,397 3,214 2,977 3,149 3,123 Long-term liabilities Interest-bearing long-term liabilities 2,566 2,729 3,096 2,689 2,671 2,642 2,496 1, Non interest-bearing provisions Total long-term liabilities 3,547 3,655 4,067 3,626 3,640 3,595 3,360 2,444 1,507 Current liabilities Tax liabilities Non interest-bearing current liabilities 1,722 1,710 1,782 1,920 1,837 1,901 1,848 1,668 1,675 Interest-bearing current liabilities ,110 Total current liabilities 1,845 1,954 2,010 2,281 2,032 2,108 2,033 1,851 2,951 TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 8,986 8,980 9,417 9,354 9,069 8,917 8,371 7,444 7,582 Key ratios Equity ratio, % ) Shareholders equity is entirely attributable to the Parent Company s shareholders.

24 22 Year-end Report for January December 2012 Financial reports in brief Cash flow By quarter SEK m Oct Dec Jul Sep Apr Jun Jan Mar Oct Dec Jul Sep Apr Jun Jan Mar Oct Dec Additional information Operating income (EBITA) 1) Depreciation Change in accounts receivable Change in other operating working capital and other items Cash flow from operating activities before investments Investments in fixed assets, net Cash flow from operating activities Financial items paid and received Income tax paid Free cash flow Cash flow effect of items affecting comparability Acquisition of operations 2) Acquisition-related costs and revenue, paid and received 3) Dividend paid Repayments of leasing liabilities Change in interest-bearing net debt excl liquid funds Cash flow for the period Key ratios Cash flow from operating activities as % of operating income (EBITA) ) Earnings Before Interest, Taxes, Amortization of acquisition-related intangible fixed assets, Acquisition-related costs and revenue and Items affecting comparability. 2) Acquisition of operations includes from January 1, 2011 acquisition-related transaction costs. 3) Refers to acquisition-related restructuring and integration costs. During the fourth quarter of 2012 a repayment installment of the purchase price attributable to the cash handling operations of Pendum was received in the amount of SEK 33 million. Key ratios Oct Dec Oct Dec Full year Full year Full year Operating margin (EBITA), % Cash flow from operating activities as % of operating income (EBITA) Return on capital employed, % Real growth, % Organic growth, % Total growth, % Earnings per share before dilution, SEK Equity ratio, % Net debt, SEK m 2,161 2,220 2,161 2,220 1,432

25 Year-end Report for January December Definitions Cash flow from operating activities as % of operating income (EBITA) Cash flow for the period before financial items, income tax, items affecting comparability, acquisitions and divestitures of operations and financing activities, as a percentage of operating income (EBITA). Return on capital employed, % Operating income (EBITA) as a percentage of the closing balance of capital employed. Real growth, % Increase in revenue for the period, adjusted for changes in exchange rates, as a percentage of the previous year s revenue. Organic growth, % 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. Total growth, % Increase in revenue for the period as a percentage of the previous year s revenue. Earnings per share before dilution Net income for the period in relation to the number of shares outstanding at the end of the period. Number of shares outstanding includes treasury shares which will be distributed to employees in the future. Calculation for: Oct Dec 2012: 222/73,011,780 x 1,000,000 = 3.04 Jan Dec 2012: 650/73,011,780 x 1,000,000 = 8.90 Earnings per share after dilution Calculation for: Oct Dec 2012: 222/75,566,780 x 1,000,000 = 2.93 Jan Dec 2012: 650/75,566,780 x 1,000,000 = 8.60 Earnings per share fully diluted Calculation for: Oct Dec 2012: 222/75,566,780 x 1,000,000 = 2.93 Jan Dec 2012: 650/75,566,780 x 1,000,000 = 8.60 Operating income (EBITA) Earnings before interest, taxes, amortization of acquisitionrelated intangible fixed assets, acquisition-related costs and revenue and items affecting comparability. Operating margin (EBITA), % Earnings before interest, taxes, amortization of acquisitionrelated intangible fixed assets, acquisition-related costs and revenue and items affecting comparability, as a percentage of revenue. Operating income (EBIT) Earnings before interest and tax. Return on equity Net income for the period as a percentage of the closing balance of shareholders equity. Net margin Net income for the period after tax as a percentage of total revenue. Net debt Interest-bearing liabilities less interest-bearing assets and liquid funds. 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.

26 24 Year-end Report for January December 2012