Loomis — Interim / Quarterly Report 2019

Apr 25, 2019

Interim Report January – March 2019

January – March 2019

• Revenue 5,006 SEK million (4,486). Real growth 5 percent (8) of which organic growth 2 percent (3).
• Operating income (EBITA)1) SEK 564 million (472) and operating margin 11.3 percent (10.5).
• Income before taxes SEK 509 million (425) and income after taxes SEK 379 million (318).
• Earnings per share before and after dilution amounted to SEK 5.04 (4.22).
• Cash flow from operating activities SEK 173 million (271), equivalent to 31 percent (57) of operating income (EBITA).

1) Earnings Before Interest, Taxes and Amortization of acquisition-related intangible fixed assets, acquisition-related costs and revenue, and items affecting comparability.

KEY RATIOS

	2019	2018
SEK m	Jan–Mar	Jan–Mar	Change (%)
Revenue	5,006	4,486	12
Of which:
Organic growth	88	135	2
Acquisitions and divestments	115	212	3
Exchange rate effects	317	–140	7
Total growth	520	207	12
Operating income (EBITA)	5641)	472	19
Operating margin (EBITA), %	11.31)	10.5
Operating income (EBIT)	558	450	24
Earnings before tax	509	425	20
Net income for the period	379	318	19
Earnings per share, SEK	5.041)	4.22	19
Tax rate, %	25	25
Cash flow from operating activities	173	271	–36
Cash flow from operating activities as % of operating income (EBITA)	31	57

1) For information regarding the IFRS 16 impact, see Note 7.

Comments by the President and CEO

We entered 2019 maintaining a fast pace. In January we signed an agreement to acquire Ziemann in Germany. This transaction will enable us to advance our position in Germany and become one of two leading actors in one of the most cashintensive markets in Europe. CMS outsourcing in Germany is in an early phase and we believe that volumes will increase over time. In February we signed an agreement to divest our fine art storage and logistics operations, which were not part of our core business. At the beginning of April we reached an agreement with Prosegur to acquire its French operations. These operations complement our own, both in terms of customers and geographical presence. In addition, the acquisition also provides significant potential for synergies.

The Group's real growth during the quarter remained strong, amounting to 5 percent (8), of which 2 percent (3) was organic growth. It is very gratifying to witness the increasing organic growth in Europe. Many countries are contributing to this trend and I would in particular like to mention Spain, Belgium, Turkey and our operations in South America. The organic growth in the USA was negatively impacted by fewer work days during the quarter and the ongoing restructuring of our international operations. The aim is to increase our operating margin by being more selective with respect to the

customer portfolio, and volumes were therefore slightly lower in the quarter. The underlying organic growth in the USA for domestic CMS operations remained good. Revenue from SafePoint grew in the USA by just over 14 percent during the quarter. On the product side, we have now added cash recyclers to our portfolio. Recyclers are intended primarily for larger retailers. Although in our assessment the market for cash recyclers is not as large as for SafePoint, we believe that this new product area will be a successful and appreciated comprehensive solution for our larger retail customers.

The Group's operating margin (EBITA %) in the first quarter amounted to 11.3 percent (10.5). The introduction of IFRS 16 had a positive impact of 0.3 percentage points. Our operations in the USA continue to deliver good margins. Higher revenue from SafePoint and CMS as well as efficiency improvement programs at the branches continue to provide good results. In Europe several countries are contributing with higher operating margins and the acquisition of CPoR, completed just before year-end 2018, is also helping to raise profitability. The positive effects of the restructuring programs in France and Sweden in 2018 are now visible, but we believe that there is more work to do before their full effect is reached. The "yellow vest" protests that started in France in the fourth quarter of 2018 and continued into the first quarter have had a negative impact on our business.

On September 5 we will hold a Capital Markets Day in London to describe developments and present the activities since we first communicated our strategic plan and financial targets for 2018–2021. We welcome all interested parties to attend the event.

Patrik Andersson President and CEO

Loomis' financial targets

Revenue

SEK 24 billion 2021

Annual dividend, %

60

40–60% of the Group's net income

Operating margin (EBITA), % 12–14%

Group – Revenue and earnings

January – March 2019

Revenue for the quarter amounted to SEK 5,006 million (4,486). Real growth was 5 percent (8) of which organic growth was 2 percent (3). The acquisitions in Chile and France in 2018 had a positive impact on real growth. Sales increased in several countries in the European segment, where Spain, Turkey, Argentina, Chile Belgium and Austria showed good growth. The underlying organic growth for cash in transit (CIT) and cash management services (CMS) in the USA was good, but the US segment as a whole was negatively impacted by fewer work days and the restructuring program that is under way in the international operations in the USA.

The operating income (EBITA) amounted to SEK 564 million (472) and the operating margin was 11.3 percent (10.5). At comparable exchange rates the income improvement was around SEK 56 million, of which the IFRS 16 impact was around SEK +13 million. The restructuring programs implemented in 2018 in France and Sweden had a positive effect on the operating margin, even though the operating margin, similar to the fourth quarter of 2018, was somewhat negatively impacted by the "yellow vest" protests in France. The restructuring program under way within the international operations had a positive effect on the operating margin in the USA.

The operating income (EBIT) for the quarter amounted to SEK 558 million (450) and includes amortization of acquisitionrelated intangible assets of SEK –25 million (–17), acquisitionrelated costs of SEK –15 million (–6), as well as an item affecting comparability of SEK +33 million relating to recognized capital gains from the divestment of the fine art storage and logistics operations, Artcare. The increase in amortization of acquisitionrelated intangible assets is related to the acquisitions in Chile and France over the past twelve months.

Income before tax of SEK 509 million (425) includes a net financial expense of SEK –43 million (–25), of which the IFRS 16 impact was around SEK –25 million. The tax expense for the quarter amounted to SEK –130 million (–107), which represents a tax rate of 25 percent (25). Earnings per share before and after dilution amounted to SEK 5.04 (4.22). The total impact on earnings per share as a result of IFRS 16 entering into force was SEK –0.12.

Segment Europe – Revenue and operating income

	2019	2018	R12	2018
SEK m	Jan–Mar	Jan–Mar		Full year
Revenue	2,711	2,492	10,730	10,511
Real growth, %	6	8	8	8
Organic growth, %	2	–1	0	–1
Operating income (EBITA)1)	293	241	1,290	1,238
Operating margin, %	10.8	9.7	12.0	11.8
Number of full-time employees	14,900	14,000	14,900	14,600

1) Earnings Before Interest, Taxes and Amortization of acquisition-related intangible fixed assets, acquisition-related costs and revenue, and items affecting comparability.

Revenue and operating income

January – March 2019

Revenue for the quarter amounted to SEK 2,711 million (2,492) and organic growth was 2 percent (–1). Spain, Argentina, Chile, Turkey, Belgium and Austria continued to show good organic growth, but several other countries also contributed to the organic growth. In the Nordic countries as a whole volumes are expected to continue to decline slightly in Cash in Transit (CIT) and Cash Management Services (CMS). The real growth of 6 percent (8) was positively affected by revenue generated by the operations acquired over the past 12 months in Chile and France.

The operating income (EBITA) amounted to SEK 293 million (241) and the operating margin was 10.8 percent (9.7). The restructuring programs in Sweden and France, which were concluded in 2018, have improved profitability, but the "yellow vest" demonstrations in France negatively affected the margin development to some extent. The operating margin for CIT and CMS is expected to continue to gradually increase in 2019 in the French market, which is an important market for Loomis. The acquisition of CPoR in France, which was concluded just before the end of 2018, had a positive effect on the operating margin. The restructuring programs under way in most countries have also had a positive effect on the operating margin.

Segment USA – Revenue and operating income

	2019	2018	R12	2018
SEK m	Jan–Mar	Jan–Mar		Full year
Revenue	2,310	2,007	9,019	8,716
Real growth, %	2	8	6	7
Organic growth, %	2	8	5	7
Operating income (EBITA)1)	321	272	1,172	1,123
Operating margin, %	13.9	13.5	13.0	12.9
Number of full-time employees	10,400	10,200	10,200	10,200

1) Earnings Before Interest, Taxes and Amortization of acquisition-related intangible fixed assets, acquisition-related costs and revenue, and items affecting comparability.

Revenue and operating income

January – March 2019

Revenue amounted to SEK 2,310 million (2,007) and both real growth and organic growth was 2 percent (8). Fewer work days and the restructuring program relating to the segment's international operations had a negative effect on growth in the segment during the quarter. The aim of the program is to increase our operating margin by being more selective with respect to the customer portfolio. The underlying organic growth in the USA for domestic CMS operations continued to develop according to plan. Increased revenue from ATM replenishment contributed to CIT development, while an increase in the number of installed SafePoint units explains much of the growth in CMS. The sustained outsourcing trend among banks also helped drive growth. Revenue for the quarter from SafePoint accounted for around 14 percent (12) of the segment's total revenue. Changes in fuel fees, which Loomis passes on to its customers, did not impact organic growth for the quarter.

Revenue from CMS during the quarter accounted for 33 percent (32) of the segment's total revenue.

The operating income (EBITA) amounted to SEK 321 million (272) and the operating margin was 13.9 percent (13.5). The main explanation for the higher operating margin is positive effects from the restructuring of the international operations. The operating margin for the domestic CIT and CMS operations were at the same level as during the same quarter in 2018.

Cash flow and liquidity

Cash flow from operating activities SEK 173 million (271), equivalent to 31 percent (57) of operating income (EBITA).

Similar to previous years, the effect on cash flow from changes in other working capital and other items was negative in the first quarter because large payments for items such as personnel costs and insurance premiums are normally made during this period. Positive cash flow relating to changes in working capital normally occur during the latter part of the year.

Net investments in fixed assets during the period amounted to SEK 317 million (357), which can be compared to depreciation of fixed assets of SEK 435 million (285). Investments were made primarily in buildings, machinery, equipment and vehicles during the period. Investments in relation to depreciation for the quarter amounted to 0.7 (1.3). For information regarding the IFRS 16 impact, see Note 7.

Other events

Significant events during the period

In January 2019 it was announced that Loomis AB, through a wholly owned subsidiary, had entered into an agreement to acquire 100 percent of the shares in Ziemann Sicherheit Holding GmbH (Ziemann). Ziemann conducts primarily domestic cash handling services. In addition, Ziemann also carries out security services as well as trading activities with the wholesale and retail market for currencies and precious metals. The enterprise value, i.e. the purchase price plus acquired net debt, was around EUR 160 million, equivalent to around SEK 1,640 million. Ziemann has around 2,700 employees and annual net revenue in 2018 was around EUR 175 million. More than 90 percent of net revenue relates to cash handling services. The current operating margin (EBITA %) is around 7 percent. The business will be reported under segment Europe and consolidated into Loomis upon completion of the transaction, which will take place after merger control clearance. The purchase price is payable on closing.

In March 2019 there was a change in ownership of all of Loomis AB's 3 428 520 Class A shares. The transaction corresponded to 4.6 percent of the capital and 32.3 percent of the votes in Loomis. The buyer has requested conversion of the Class A shares to Class B shares in accordance with the Articles of Association of Loomis AB.

In March 2019 the number of votes in Loomis AB (publ) was changed due to conversion of all 3,428,520 Class A shares to a total of 3,428,520 Class B shares, which means there are no issued Class A shares in the Company. The conversion was implemented based on the possibility for Class A shareholders to request conversion of Class A shares into Class B shares, which was entered into the Articles of Association at the extraordinary general meeting on September 5, 2018. The number of Class B shares has therefore increased by 3,428,520 shares and the number of Class A shares has decreased by the same number of shares. The number of votes has decreased by 30,856,680. As of March 29, 2019 the total number of shares and votes in the Company amounted to 75,279,829.

The Board of Directors has decided to propose that a resolution be passed at the 2019 Annual General Meeting on an incentive scheme (Incentive Scheme 2019). Similar to Incentive Scheme 2018, the proposed incentive scheme (Incentive Scheme 2019) will involve two thirds of the variable remuneration being paid out in cash the year after it is earned. The remaining one third will be in the form of Class B shares in Loomis AB to be allotted to the participants at the beginning of 2021. The allotment of shares is contingent upon the employee still being employed by the Loomis Group on the last day of February 2021, other than in cases where the employee has left his/her position due to retirement, death or a long-term illness, in which case the individual will retain the right to receive bonus shares. The principle of performance measurement and other general principles already being applied in the existing Incentive Scheme will continue to apply. Loomis AB will not issue any new shares or similar instruments for this Incentive Scheme. To enable Loomis to allot these shares, it is proposed that Loomis AB enters into a share swap agreement with a third party under which the third party will acquire Loomis shares in its own name and transfer them to the Incentive Scheme participants. The Incentive Scheme will enable around 350 key individuals within Loomis to become shareholders in Loomis AB over time. This will increase employee participation to Loomis' development, which will benefit of all shareholders. To read the Board's full incentive scheme proposal, refer to the notice of the AGM on www.loomis.com.

Other events during the period

In January 2019 it was announced that Loomis AB had signed a EUR 150 million five-year multicurrency revolving credit facility. The facility matures in January 2024. The lead arrangers of the credit facility are Danske Bank A/S, Nordea Bank Apb and Crédit Lyonnais. The facility can be used for general corporate purposes. The facility replaces a previous USD 100 million facility.

In February 2019 Loomis AB, through a wholly owned subsidiary, divested its fine art storage and logistics business, Artcare, to Iron Mountain (Schweiz) AG. Artcare was acquired as part of the VIA MAT acquisition in 2014 and was not part of Loomis' core business. The divested operations had an annual revenue in 2018 of approximately CHF 5 million (equivalent to around SEK 45 million). Artcare had been reported as part of the International segment. A profit on sale before tax of around CHF 4 million, equivalent to SEK 33 million, have been realized and reported as an item affecting comparability in the first quarter of 2019.

Events after the end of the period

On April 4, 2019 it was announced that Loomis AB, through a wholly owned subsidiary, had entered into an agreement to acquire 100 percent of Prosegur Cash Holding France (PCF). PCF conducts primarily domestic cash handling services in France and has its head office in Lyon. The final purchase price will be determined on closing of the transaction. The closing date is expected to take place in the third quarter of 2019 pending local works council procedures and approval by the French foreign investment regulator. The purchase price is payable on closing. PCF has around 630 employees and the annual net revenue in 2018 was around EUR 38.5 million. The operations will be reported in Segment Europe and consolidated into Loomis as of closing of the transaction.

Financial reports in brief

CONSOLIDATED STATEMENT OF INCOME

	Note	2019	2018	R12	2018
SEK m		Jan–Mar	Jan–Mar		Full year
Revenue, continuing operations		4,883	4,274	18,909	18,300
Revenue, acquisitions		123	212	779	868
Total revenue	3,4	5,006	4,486	19,688	19,168
Production expenses		–3,665	–3,323	–14,469	–14,127
Gross income		1,341	1,162	5,220	5,041
Selling and administration expenses		–777	–690	–2,927	–2,841
Operating income (EBITA)1)		5647)	472	2,292	2,200
Amortization of acquisition-related intangible assets		–25	–17	–90	–83
Acquisition-related costs and revenue		–152)	–62)	–55	–46
Items affecting comparability		333)	–	119	864)
Operating income (EBIT)		558	450	2,266	2,158
Net financial items		–437)	–25	–108	–90
Loss on monetary net assets/liabilities		–6	–	–17	–11
Income before taxes		509	425	2,141	2,057
Income tax		–130	–107	–542	–519
Net income for the period5)		3797)	318	1,599	1,538
KEY RATIOS
Real growth, %		5	8	7	8
Organic growth, %		2	3	2	3
Operating margin (EBITA), %		11.37)	10.5	11.6	11.5
Tax rate, %		25	25	25	25
Earnings per share before and after dilution, SEK6)		5.047)	4.22	21.26	20.45

1) Earnings Before Interest, Taxes and Amortization of acquisition-related intangible fixed assets, acquisition-related costs and revenue, and items affecting comparability.

2) Acquisition-related costs and revenue for the period January – March 2019 consist of transaction costs of SEK –10 million (–4), restructuring costs of SEK 0 million (–1) and integration costs of SEK –5 million (–1). Of the transaction costs of SEK –10 million, SEK –8 million is for acquisitions in progress for the period January – March 2019, SEK –2 million is for completed acquisitions and SEK 0 million pertains to discontinued acquisitions.

3) The item affecting comparability of SEK 33 million is reported capital gains from the divestment of the fine art storage and logistics operations, Artcare.

4) Items affecting comparability of SEK 86 million consist primarily of a positive non-recurring item of SEK 178 million relating to a revaluation of the UK pension obligation, as well as impairment of goodwill relating to two operations within the European segment that took place during the second quarter and costs incurred during the fourth quarter relating to restructuring of Segment International.

5) Net income for the period is entirely attributable to the owners of the Parent Company.

6) For further information please refer to page 19.

7) For information regarding the IFRS 16 impact, see Note 7.

STATEMENT OF COMPREHENSIVE INCOME

	2019	2018	R12	2018
SEK m	Jan–Mar	Jan–Mar		Full year
Net income for the period	379	318	1,599	1,538
Other comprehensive income
Items that will not be reclassified to the statement of income
Actuarial gains and losses after tax	–145	82	–128	99
Items that may be reclassified to the statement of income
Exchange rate differences1)	350	258	743	651
Hedging of net investments, net of tax	–47	–39	–146	–139
Other comprehensive income and expenses for
the period, net after tax	158	301	469	612
Total comprehensive income for the period2)	537	618	2,068	2,150

1) Includes effects of hyperinflation in Argentina.

2) Total comprehensive income is entirely attributable to the owners of the Parent Company.

BALANCE SHEET

Note	2019	2018	2018
SEK m	Mar 31	Mar 31	Dec 31
ASSETS
Fixed assets
Goodwill	6,718	5,838	6,533
Acquisition-related intangible assets	510	405	515
Other intangible assets	183	104	168
Tangible fixed assets	5,371	5,121	5,358
Right-of-use assets	7 2,955	–	–
Other non-interest-bearing fixed assets	638	476	506
Interest-bearing financial fixed assets1)	355	115	500
Total fixed assets	16,730	12,059	13,580
Current assets
Non-interest-bearing current assets2)	4,202	3,174	3,565
Interest-bearing financial current assets1)	40	14	37
Liquid funds	1,170	867	1,308
Total current assets	5,413	4,056	4,911
TOTAL ASSETS	22,143	16,115	18,491
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity	8,961 9	7,647	8,422
Long-term liabilities
Interest-bearing long-term lease liabilities	7 2,349	–	–
Other interest-bearing long-term liabilities	5,085	4,764	5,092
Non-interest-bearing provisions	1,024	767	812
Total long-term liabilities	8,458	5,530	5,904
Current liabilities
Tax liabilities	243	195	171
Non-interest-bearing current liabilities	2,940	2,563	2,936
Interest-bearing current lease liabilities	7 521	–	–
Other interest-bearing current liabilities	1,020	179	1,058
Total current liabilities	4,724	2,937	4,165
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	22,143	16,115	18,491
KEY RATIOS
Return of shareholders' equity, %	18	19	18
Return of capital employed, %	143)	18	17
Equity ratio, %	40	47	46
Net debt	7,4093)	3,947	4,305
Net debt/EBITDA	2.043)	1.23	1.27

1) As of the balance sheet date and in the comparative information all derivatives are measured at fair value based on market data in accordance with IFRS.

2) Funds in the cash processing operations are reported net in the item "Non-interest-bearing current assets". For more information, refer to page 111 and Note 23 in the 2018 Annual Report.

3) For information excluding the IFRS 16 impact, see Note 7.

CHANGE IN CONSOLIDATED SHAREHOLDERS' EQUITY

	2019	2018	R12	2018
SEK m	Jan–Mar	Jan–Mar		Full year
Opening balance	8,422	7,037	7,647	7,037
Effect of change in accounting principle IFRS 15	–	–15	–	–15
Effect of IAS 29	–	–	2	2
Opening balance adjusted in accordance with new accounting principle	8,422	7,022	7,649	7,024
Actuarial gains and losses after tax	–145	82	–128	99
Exchange rate differences1)	350	258	743	651
Hedging of net investments, net of tax	–47	–39	–146	–139
Total other comprehensive income	158	301	469	612
Net income for the period	379	318	1,599	1,538
Total comprehensive income2)	537	618	2,068	2,150
Dividend paid to Parent Company's shareholders	–	–	–677	–677
Share-related remuneration	2	7	–80	–76
Non-controlling interest	1	–	1	1
Closing balance	8,961	7,647	8,961	8,422

1) Includes effects of hyperinflation in Argentina.

2) Total comprehensive income is entirely attributable to the owners of the Parent Company.

CONSOLIDATED STATEMENT OF CASH FLOWS

	2019	2018	R12	2018
SEK m	Jan–Mar	Jan–Mar		Full year
Operations
Income before taxes	509	425	2,141	2,057
Items not affecting cash flow	471	322	1,422	1,273
Financial items received	7	4	34	31
Financial items paid	–50	–20	–163	–132
Income tax paid	–123	–76	–519	–472
Change in accounts receivable	–87	71	–165	–6
Change in other operating capital employed and other items	–422	–202	–136	85
Cash flow from operations	304	525	2,615	2,835
Investing activities
Investments in fixed assets	–319	–361	–1,422	–1,464
Disposals of fixed assets	2	4	13	15
Divestments of operations	38	–	38	–
Acquisitions of operations	–2	–162	–1,243	–1,403
Cash flow from investing activities	–281	–519	–2,614	–2,852
Financing activities
Dividend paid	–	–	–677	–677
Change in interest-bearing net debt excluding liquid funds	–210	–42	–464	–296
Change in commercial papers issued and other long-term borrowing	25	49	1,423	1,447
Cash flow from financing activities	–185	7	282	473
Cash flow for the period	–162	12	282	456
Liquid fund at beginning of the period	1,308	839	867	839
Translation differences in liquid funds	24	16	22	13
Liquid funds at end of period	1,170	867	1,170	1,308

CONSOLIDATED STATEMENT OF CASH FLOWS, ADDITIONAL INFORMATION

	2019	2018	R12	2018
SEK m	Jan–Mar	Jan–Mar		Full year
Operating income (EBITA)	564	472	2,292	2,200
Depreciation	435	285	1,333	1,183
Change in accounts receivable	–87	71	–165	–6
Change in other operating capital employed and other items	–422	–202	–136	85
Cash flow from operating activities before investments	490	628	3,324	3,462
Investments in fixed assets, net	–317	–357	–1,409	–1,449
Cash flow from operating activities	173	271	1,915	2,013
Financial items paid and received	–43	–16	–128	–101
Income tax paid	–123	–76	–519	–472
Free cash flow	7	179	1,267	1,439
Cash flow effect of items affecting comparability	0	0	–1	–1
Divestment of operations	38	–	38	–
Acquisition of operations	–2	–162	–1,243	–1,403
Acquisition-related costs and revenue, paid and received1)	–19	–10	–61	–52
Dividend paid	–	–	–677	–677
Change in interest-bearing net debt excluding liquid funds	–210	–42	–464	–296
Change in commercial papers issued and other long-term borrowing	25	49	1,423	1,447
Cash flow for the period	–162	12	282	456
KEY RATIOS
Cash flow from operating activities as % of operating income (EBITA)	31	57	84	91
Investments in relation to depreciation	0.7	1.3	1.1	1.2
Investments as a % of total revenue	6.3	8.0	7.2	7.6

1) Refers to the cash flow effect of acquisition-related transaction-, restructuring and integration costs.

Notes

NOTE 1 – 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 interim report is on pages 1–22, and pages 1–8 are thus an integrated part of this financial report. 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 81–89 of the 2018 Annual Report.

IFRS 16 Leases is being applied as of January 1, 2019. The 2018 Annual Report describes the accounting principles as well as the change between operating leases as of December 31, 2018 and the lease liability as of January 1, 2019. In addition to this information Loomis provides details of the impact on the financial statements for 2019, see Note 7.

Critical estimates and assessments

For critical estimates and assessments as well as contingent liabilities, please refer to pages 90–91 and 119 of the Annual Report for 2018. There have been no other significant changes compared to what is described in the Annual Report.

Parent Company – Loomis AB

The Parent Company's financial statements have been prepared in accordance with the Swedish Annual Accounts Act and RFR 2 Accounting for Legal Entities. The most important accounting principles applying to the Parent Company can be found in Note 36 on page 123 of the 2018 Annual Report.

NOTE 2 – RISKS AND UNCERTAINTIES Risks

Loomis' operations, which include cash in transit, cash management services and international valuables logistics, involve Loomis' assuming the customer's risks associated with managing, transporting and storing cash, precious metals and valuables. Loomis has established routines and processes to identify, take action to mitigate and monitor risks. Risks are assessed based on two criteria: the likelihood that an event will occur and the severity of the consequences for the business if the event should occur. There is risk both in terms of circumstances pertaining to Loomis itself or the industry as a whole as well as risks that are more general in nature. Certain risks are outside of Loomis' control.

Below is a description of some of the most significant risks and uncertainties that may have a negative impact on Loomis' operations, financial position and results, and that should therefore be taken into account when making assessments based on full-year or interim information. The risks described below are not in any particular order of significance.

Operational risks: Operational risks are risks associated with the day-to-day operations and the services offered by the Company to its customers. Some of the most significant risks Loomis has identified are:

• IT-related risks, such as operational disruptions and extended stoppages of systems linked to operating activities, as well as risks linked to installation of new systems.
• Risk of changed behavioral patterns relating to purchases and payments.
• Customer-related risks, such as the risk of loss of certain customers as well as significant changes in the banking sector.
• Competition risk, such as Loomis' ability to develop competitive offerings.
• Employee risk, such as a high staff turnover.
• Risk of robbery
• Risk of internal theft and/or failing cash reconciliation routines at cash centers.
• Risk associated with the implementation of acquisitions, such as difficulties integrating new operations and employees, as well as the anticipated benefits of a certain acquisition not being realized or being only partially realized.

Financial risks: In its operations, Loomis is exposed to risk associated with financial instruments such as liquid funds, accounts receivable, accounts payable and loans. The risks relating to these instruments are mainly:

• Interest rate risk associated with liquid funds and loans.
• Exchange rate risk associated with transactions and translation of shareholder's equity.
• Financing risk relating to the Company's capital requirements.
• Liquidity risk associated with short-term solvency.
• Credit risk pertaining to financial and commercial activities.
• Capital risk pertaining to the capital structure.
• Price risk.

The financial risks are described in more detail in Note 6 in the 2018 Annual Report.

Legal risks: Through its operations Loomis is exposed to legal risks such as:

• Risk of disputes and legal action.
• Risk associated with the application of existing laws, other regulations and changes in legislation.

Factors of uncertainty

The economic trends in the first quarter of 2019 impacted certain geographic areas negatively, and it cannot be ruled out that Loomis' revenue and earnings for the remainder of 2019 may be negatively impacted as a result. Changes in general economic conditions and market trends have various effects on demand for cash handling services. These include the ratio of cash purchases to credit card purchases, changes in consumption levels, the risk of robbery and bad debt losses, and staff turnover rate.

The preparation of financial reports requires the Board of

Directors and Group Management to make estimates and assessments. Estimates and assessments affect both the income statement and the balance sheet, as well as the information disclosed on things like contingent liabilities. Actual outcomes may deviate from these estimates and assessments depending on other circumstances and other conditions.

In 2019 the actual financial results of certain previously reported items affecting comparability, provisions and contingent liabilities, as described in the 2018 Annual report and where applicable under the heading "Critical estimates and assessments" on page 13, may deviate from the financial assessments and provisions made by management. This may impact the Group's profitability and financial position.

Seasonal variations

Loomis' earnings fluctuate across the seasons and this should be taken into consideration when making assessments based on interim financial information. The primary reason for these seasonal variations is that the need for cash handling services increases during the vacation periods and in connection with public holidays and holiday periods.

NOTE 3 – REVENUE DISTRIBUTION

			Elimina				Elimina
	Europe	USA	tions	Total	Europe	USA	tions	Total
SEK m	Jan–Mar 2019					Jan–Mar 2018
Cash in transit (CIT)	1,631	1,457	–	3,088	1,567	1,276	–	2,844
Cash management services (CMS)	741	753	–	1,494	696	638	–	1,334
International1)	181	87	–	268	167	80	–	247
Other1)	152	4	–	156	57	3	–	61
Revenue, internal	7	9	–15	0	5	10	–14	0
Total revenue	2,711	2,310	–15	5,006	2,492	2,007	–14	4,486
Timing of revenue recognition, external
At a point in time	403	82	–	486	289	71	–	360
Over time	2,301	2,219	–	4,521	2,199	1,926	–	4,126
Total external revenue	2,704	2,301	–	5,006	2,488	1,997	–	4,486

1) For information regarding allocation of revenue for segment International, please refer to Note 4.

	Europe	USA	Eliminations	Total
SEK m	Jan–Dec 2018	Jan–Dec 2018	Jan–Dec 2018 Jan–Dec 2018
Cash in transit (CIT)	6,472	5,489	–	11,961
Cash management services (CMS)	3,000	2,850	–	5,850
International1)	748	320	–	1,068
Other1)	272	15	–	288
Revenue, internal	19	42	–60	0
Total revenue	10,511	8,716	–60	19,168
Timing of revenue recognition, external
At a point in time	1,555	304	–	1,859
Over time	8,940	8,370	–	17,309
Total external revenue	10,495	8,674	–	19,168

1) For information regarding allocation of revenue for segment International, please refer to Note 4.

NOTE 4 – SEGMENT OVERVIEW

As a result of restructuring, Segment International is no longer a separate segment. The purpose of the restructuring program was to take better advantage of growth opportunities and further improve efficiency. As of the first quarter of 2019 the international operations in North America are included in Segment USA, while other international operations are included in Segment Europe. Comparative figures have been adjusted to include the former Segment International in Segment USA and in Segment Europe respectively and also to create future comparability.

SEGMENT OVERVIEW STATEMENT OF INCOME

	Europe	USA	Other1)	Eliminations	Total
SEK m	Jan–Mar 2019	Jan–Mar 2019	Jan–Mar 2019	Jan–Mar 2019	Jan–Mar 2019
Revenue, continuing operations	2,590	2,309	–	–15	4,883
Revenue, acquisitions	122	1	–	–	123
Total revenue	2,711	2,310	–	–15	5,006
Production expenses	–2,034	–1,655	–	23	–3,665
Gross income	678	655	–	8	1,341
Selling and administrative expenses	–385	–334	–49	–8	–777
Operating income (EBITA)	293	321	–49	–	564
Amortization of acquisition-related intangible assets	–20	–5	–	–	–25
Acquisition-related costs	–8	–	–7	–	–15
Items affecting comparability	332)	–	–	–	–332)
Operating income (EBIT)	299	316	–56	–	558
Net financial items	–	–	–43	–	–43
Loss on monetary net assets/liabilities	–	–	–6	–	–6
Income before taxes	299	316	–106	–	509

1) Segment Other consists of the Parent Company's costs and certain other group-wide costs.

2) The item affecting comparability of SEK 33 million is reported capital gains from the divestment of art logistics and storage operations, Artcare.

SEGMENT OVERVIEW STATEMENT OF INCOME

	Europe	USA	Other1)	Eliminations	Total
SEK m	Jan–Mar 2018	Jan–Mar 2018	Jan–Mar 2018	Jan–Mar 2018	Jan–Mar 2018
Revenue, continuing operations	2,285	2,003	–	–14	4,274
Revenue, acquisitions	208	4	–	–	212
Total revenue	2,492	2,007	–	–14	4,486
Production expenses	–1,885	–1,460	–	22	–3,323
Gross income	607	547	–	8	1,162
Selling and administrative expenses	–366	–275	–41	–8	–690
Operating income (EBITA)	241	272	–41	–	472
Amortization of acquisition-related intangible assets	–13	–4	–2	–	–17
Acquisition-related costs	–3	0	–	–	–6
Operating income (EBIT)	225	268	–43	–	450
Net financial items	–	–	–25	–	–25
Income before taxes	225	268	–68	–	425

1) Segment Other consists of the Parent Company's costs and certain other group-wide costs.

SEGMENT OVERVIEW STATEMENT OF INCOME, ADDITIONAL INFORMATION

	2019	2018	R12	2018
SEK m	Jan–Mar	Jan–Mar		Full year
Europe
Operating income (EBITA)	293	241	1,290	1,238
Operating margin (EBITA), %	10.8	9.7	12.0	11.8
USA
Operating income (EBITA)	321	272	1,172	1,123
Operating margin (EBITA), %	13.9	13.5	13.0	12.9
Other 1)
Revenue	–	–	–	–
Operating income (EBITA)	–49	–41	–169	–160
Eliminations
Revenue	–15	–14	–61	–60
Operating income (EBITA)	–	–	–	–
Group total
Operating income (EBITA)	564	472	2,292	2,200
Operating margin (EBITA), %	11.3	10.5	11.6	11.5

1) Segment Other consists of the Parent Company's costs and certain other group-wide costs.

SEGMENT OVERVIEW BALANCE SHEET

	2019	2018	2018
SEK m	Mar 31	Mar 31	Dec 31
Europe
Assets	11,111	8,000	9,388
Liabilities	2,683	2,428	2,612
USA
Assets	9,455	6,853	7,528
Liabilities	893	729	998
Other 1)
Assets	1,577	1,261	1,574
Liabilities	9,607	5,310	6,459
Shareholder's equity	8,961	7,647	8,422
Group total
Assets	22,143	16,115	18,491
Liabilities	13,183	8,468	10,069
Shareholder's equity	8,961	7,647	8,422

1) Segment Other consists mainly of Group assets and liabilities that cannot be divided by segment.

NOT 5 – ACQUISITIONS

In the first quarter of 2019 Loomis AB, through a wholly owned subsidiary, entered into an agreement to acquire all of the shares in Ziemann Sicherheit Holding GmbH. The transaction will be completed after merger control clearance. Therefore no further details can be provided other that those stated on page 7.

In April 2019 it was announced that Loomis AB, through a wholly owned subsidiary, had entered into an agreement to acquire all of the shares in Prosegur Cash Holding France. Closing of the acquisition is expected to take place in the third quarter of 2019 pending local works council procedures and approval by the French foreign investment regulator. No further details can be provided other than those stated on page 8.

NOTE 6 – CAPITAL EMPLOYED AND FINANCING

	2019	2018	2018
SEK m	Mar 31	Mar 31	Dec 31
Operating capital employed	9,227	5,374	5,771
Goodwill	6,718	5,838	6,533
Acquisition-related intangible assets	510	405	515
Other capital employed	–85	–23	–93
Capital employed	16,370	11,594	12,727
Net debt	7,4091)	3,947	4,305
Shareholders' equity	8,961	7,647	8,422
Key ratios
Return on capital employed, %	141)	18	17
Return on equity, %	18	19	18
Equity ratio, %	40	47	46
Net debt/EBITDA	2.041)	1.23	1.27

1) For information regarding the IFRS 16 impact, see Note 7.

NOT 7 – LEASES

Loomis has not early-adopted IFRS 16 and is applying the standard as of January 1, 2019. The Group is using the simplified transition method, modified retroactively, and will therefore not restate the comparative figures.

See Note 2 in the 2018 Annual Report regarding the new accounting principles as well as the change between operating leases as of December 31, 2018 and the lease liability as of January 1, 2019. In addition to the description provided in Note 2 of the 2018 Annual Report regarding IFRS 16 and its impact on Loomis, the Company would like to provide the information below.

Impact

As a result of the introduction of IFRS 16 the operating income (EBITA) is charged with depreciation of right-of-use assets instead of an operating lease expense. During the quarter there was a positive effect on operating income (EBITA) of around SEK 13 million and on the operating margin (EBITA %) of SEK +0.3 percentage points. In addition to this, the increased lease liability had a negative effect on financial items of SEK 25 million and the total impact of IFRS 16 on net income for the period was SEK –9 million.

Right-of-use assets, which are reported on a separate line in the balance sheet, amounted to SEK 2,955 million as of March 31, 2019. Buildings make up 79 percent of total right-of-use assets. The lease liability as of March 31, 2019 totaled SEK 2,870 million, of which the long-term lease liability amounts to SEK 2,349 million and the current lease liability to SEK 521 million. The long-term and current lease liabilities are recognized as interestbearing long-term lease liabilities and interest-bearing current lease liabilities respectively in the balance sheet.

The costs relating to short-term leases (lease term of 12 months or less) amounted to SEK 7 million and leases for which the underlying asset has a low value (<USD 5,000) amounted to SEK 6 million in the first quarter of 2019.

Outcomes for Loomis' key ratios are presented below both including and excluding the impact of IFRS 16 as of March 31, 2019:

	Including IFRS 16	Excluding IFRS 16
		Jan–Mar 2019 Jan–Mar 2019
Operating income, EBITDA	999	856
Operating income, EBITA	564	551
Operating margin, EBITA, %	11.3	11.0
Earnings per share	5.04	5.16
Investments in relation to depreciation	0.7	1.0

	Mar 31, 2019	Mar 31, 2019
Net debt	7,409	4,650
Net debt/EBITDA	2.04	1.34
Return of capital employed, %	14	17

NOT 8 – TRANSACTIONS WITH RELATED PARTIES

Transactions between Loomis and related parties are described in Note 7 on page 96 of the 2018 Annual Report.

There have been no transactions with related parties during the quarter that have materially impacted the Company's earnings and financial position.

NOTE 9 – NUMBER OF SHARES AS OF MARCH 31, 2019

	Votes	No. of shares		No. of votes Quota value	SEK m
Class B shares	1	75,279,829	75,279,829	5	376
Total no. of shares		75,279,829	75,279,829		376
Total Class B treasury shares1)	1	–53,797	–53,797
Total no. of outstanding shares		75,226,032	75,226,032

1) The number of treasury shares has remained unchanged during the period and has not affected shareholders' equity.

NOTE 10 – CONTINGENT LIABILITIES, GROUP

	2019	2018	2018
SEK m	Mar 31	Mar 31	Dec 31
Securities and guarantees	4,254	3,443	4,353
Other contingent liabilities	26	16	39
Total contingent liabilities	4,280	3,459	4,391

OTHER INFORMATION – KEY RATIOS

	2019	2018	R12	2018
	Jan–Mar	Jan–Mar		Full year
Real growth, %	5	8	7	8
Organic growth, %	2	3	2	3
Total growth, %	12	5	13	11
Gross margin, %	26.8	25.9	26.5	26.3
Selling and administration expenses in % of total revenue	–15.5	–15.4	–14.9	–14.8
Operating margin (EBITA), %	11.32)	10.5	11.6	11.5
Tax rate, %	25	25	25	25
Net margin, %	7.6	7.1	8.1	8.0
Return of shareholders' equity, %	18	19	18	18
Return of capital employed, %	142)	18	14	17
Equity ratio, %	40	47	40	46
Net debt (SEK m)	7,4092)	3,947	7,409	4,305
Net debt/EBITDA	2.042)	1.23	2.04	1.27
Cash flow from operating activities as % of operating income (EBITA)	31	57	84	91
Investments in relation to depreciation	0.7	1.3	1.1	1.2
Investments as a % of total revenue	6.3	8.0	7.2	7.6
Earnings per share before dilution, SEK1)	5.042)	4.22	21.26	20.45
Earnings per share after dilution, SEK	5.04	4.22	21.26	20.45
Shareholders' equity per share after dilution, SEK	119.12	101.66	119.12	111.95
Cash flow from operating activities per share after dilution, SEK	4.04	6.98	34.76	37.69
Dividend per share, SEK	–	–	9.00	9.00
Number of outstanding shares (millions)	75.2	75.2	75.2	75.2
Average number of outstanding shares (millions)1)	75.2	75.2	75.2	75.2

1) The number of outstanding shares, which constitutes the basis for calculation of earnings per share before dilution, is 75,226,032. The number of treasury shares amount to 53,797. 2) For information on key ratios excluding the IFRS 16 impact, see Note 7.

Parent Company

PARENT COMPANY SUMMARY STATEMENT OF INCOME

	2019	2018	2018
SEK m	Jan–Mar	Jan–Mar	Full year
Revenue	145	130	516
Operating income (EBIT)	94	74	310
Income after financial items	20	48	834
Net income for the period	15	46	880

The Parent Company's revenue mainly consists of license fees and other revenue from subsidiaries. The decrease in net income is mainly related due to no dividends from subsidiaries being recognized in the first quarter of 2019.

PARENT COMPANY SUMMARY BALANCE SHEET

	2019	2018	2018
SEK m	Jan–Mar	Jan–Mar	Dec 31
Fixed assets	11,285	9,900	11,160
Current assets	1,382	1,095	1,283
Total assets	12,667	10,994	12,444
Shareholders' equity1)	5,260	5,237	5,209
Liabilities	7,407	5,747	7,234
Total shareholders' equity and liabilities	12,667	10,994	12,444

1) The number of Class B treasury shares was 53,797 for all periods above.

The Parent Company's fixed assets consist mainly of shares in subsidiaries and loan receivables from subsidiaries. The liabilities are mainly external liabilities and liabilities to subsidiaries.

CONTINGENT LIABILITIES, PARENT COMPANY

	2019	2018	2018
SEK m	Mar 31	Mar 31	Dec 31
Guaranteed committed bank facilities	1,704	1,331	1,683
Other contingent liabilities	2,434	1,963	2,577
Total contingent liabilities	4,138	3,294	4,260

Definitions

Use of key ratios not defined in IFRS

The Loomis Group's accounts are prepared in accordance with IFRS. See page 13 for more information on accounting principles. Only a few key ratios are defined in IFRS. As of the second quarter 2016, Loomis is applying the Alternative Performance Measures issued by ESMA (European Securities and Markets Authority). Briefly, an alternative key ratio is a financial measurement of historical or future earnings development, financial position or cash flow, not defined or specified in IFRS. To assist Group Management and other stakeholders in their analysis of

the Group's performance, Loomis is reporting certain key ratios not defined by IFRS. Group Management believes that this information will facilitate an analysis of the Group's performance. This data supplements the IFRS information and does not replace the key ratios defined in IFRS. Loomis' definitions of measurements not defined in IFRS may differ from definitions used by other companies. All of Loomis' definitions are included below. Key ratio calculations that cannot be checked against items in the statement of income and balance sheet can be found on page 2.

Gross margin, %	Gross income as a percentage of total revenue.
Operating income (EBITA)	Earnings Before Interest, Taxes, Amortization of acquisition-related intangible fixed assets,
	Acquisition-related costs and revenue and Items affecting comparability.
Operating margin (EBITA), %	Earnings Before Interest, Taxes, Amortization of acquisition-related intangible fixed assets,
	Acquisition-related costs and revenue and Items affecting comparability, as a percentage
	of revenue.
Operating income (EBITDA)	Earnings Before Interest, Taxes, Depreciation, Amortization of acquisition-related intangible
	fixed assets, Acquisition-related costs and revenue and Items affecting comparability.
Operating income (EBIT)	Earnings Before Interest and Tax.
Items affecting comparability	Items affecting comparability are reported events and transactions whose impact are important
	to note when the period's results are compared with previous periods, such as capital gains and
	capital losses from divestments of significant cash generating units, material write-downs or
	other significant items affecting comparability.
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.
Net margin, %	Net income for the period after tax as a percentage of total revenue.
Earnings per share before	Net income for the period in relation to the average number of outstanding shares during the
dilution	period. Calculation for: Jan–Mar 2019: 379/75,226,032 x 1,000,000 = 5.04. Jan–Mar 2018:
	318/75,226,032 x 1,000,000 = 4.22.
Earnings per share after	Calculation for: Jan–Mar 2019: 379/75,226,032 x 1,000,000 = 5.04. Jan–Mar 2018:
dilution	318/75,226,032 x 1,000,000 = 4.22.
Cash flow from operations per	Cash flow for the period from operations in relation to the number of shares after dilution.
share
Investments in relation to	Investments in fixed assets, net, for the period, in relation to depreciation.
depreciation
Investments as a % of total	Investments in fixed assets, net, for the period, as a percentage of total revenue.
revenue
	Shareholders' equity per share Shareholders' equity in relation to the number of shares after dilution.
Cash flow from operating	Cash flow for the period before financial items, income tax, items affecting comparability, acquisi
activities as % of operating	tions and divestitures of operations and financing activities, as a percentage of operating income
income (EBITA)	(EBITA).
Return on equity, %	Net income for the period (rolling 12 months) as a percentage of the closing balance of
	shareholders' equity.
	Return on capital employed, % Operating income (EBITA) (rolling 12 months) as a percentage of the closing balance of capital
	employed.
Equity ratio, %	Shareholders' equity as a percentage of total assets.
Net debt	Interest-bearing liabilities less interest-bearing assets and liquid funds.
R12	Rolling 12 months (April 2018 up to and including March 2019).
n/a	Not applicable.
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.

Outlook 2019

The company is not providing any forecast information for 2019.

Stockholm April 25, 2019

Patrik Andersson President and CEO, board member

This interim report has not been subject to a review by the Company's auditors.

Loomis in brief

Vision

Managing cash in society.

Financial targets 2018-2021

• Revenue: SEK 24 billion by 2021.
• Operating margin (EBITA): 12–14 percent.
• Dividend: 40–60 percent of net income.

Sustainability targets

• Zero workplace injuries.
• Decrease carbon emission by 30 percent by 2021.
• Decrease plastic volumes by 30 percent by 2021.

Operations

Loomis offers secure and effective comprehensive solutions for the distribution, handling, storage and recycling of cash and other valuables. Loomis' customers are banks, retailers and other operators. Loomis operates through an international network of around 400 branches in more than 20 countries. Loomis employs around 25,000 people and had revenue in 2018 of SEK 19.2 billion. Loomis is listed on Nasdaq Stockholm Large-Cap list.

Telephone conference and audio cast

A telephone conference will be held on April 26, 2019 at 09:00 a.m. (CEST).

To follow the conference call via telephone and to participate in the question and answer session, please call: UK: 0 844 822 8902 USA: 1 917 720 0181 Sweden: +46 8 566 184 30

Provide conference ID number: Loomis, 9799688.

The audio cast can be followed at our website www.loomis.com (follow "Financial presentation").

A recorded version of the audio cast will be available at www.loomis.com (follow "Financial presentation") after the telephone conference.

Future reporting and AGM

Interim report January – June July 25, 2019 Interim report January – September November 1, 2019

Loomis' Annual General meeting will be held on May 8, 2019 in Stockholm.

For further information

Anders Haker, Chief Investor Relations Officer +1 281 795 8580, e-mail: anders.haker@loomis.com Questions can also be sent to: ir@loomis.com. Refer also to the Loomis website: www.loomis.com

This information is information that Loomis AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 06.00 p.m. (CEST) on April 25, 2019.