Loomis — Interim / Quarterly Report 2019

Feb 5, 2020

Full-Year Report January – December 2019

October – December 2019

• Revenue SEK 5,342 million (4,956). Real growth 5 percent (8) of which organic growth 1 percent (3).
• Operating income (EBITA)1) SEK 693 million (593) and operating margin 13.0 percent (12.0).
• Income before tax SEK 552 million (515) and income after tax SEK 407 million (387).
• Earnings per share before and after dilution SEK 5.42 (5.14).
• Cash flow from operating activities2) SEK 325 million (856), equivalent to 48 percent (144) of operating income (EBITA)2).
• Revenue SEK 21,044 million (19,168). Real growth 5 percent (8) of which organic growth 2 percent (3).
• Operating income (EBITA)1) SEK 2,601 million (2,200) and operating margin 12.4 percent (11.5).
• Income before taxes SEK 2,210 million (2,057) and income after taxes SEK 1,646 million (1,538).
• Earnings per share before and after dilution SEK 21.88 (20.45).
• Cash flow from operating activities2) SEK 2,057 million (2,013), equivalent to 81 percent (91) of operating income (EBITA)2).
• Proposed dividend SEK 11.00 (10.00) per share.

1) Earnings Before Interest, Taxes and Amortization of acquisition-related intangible fixed assets, acquisition-related costs and revenue, and items affecting comparability. 2) Cash flow from operating activities excluding the effects of IFRS 16. The adoption of IFRS 16 has therefore had no net impact on cash flow from operating activities according to Loomis' definition. Cash flow from operating activities is consequently reported on the same basis as in 2018. For further information please refer to definitions on page 25.

KEY RATIOS

	2019	2018		2019	2018
SEK m	Oct–Dec	Oct–Dec	Change (%)	Full year	Full year	Change (%)
Revenue	5,342	4,956	8	21,044	19,168	10
Of which:
Organic growth	71	119	1	443	472	2
Acquisitions and divestments	169	211	3	535	868	3
Exchange rate effects	145	268	3	898	600	5
Total growth	386	598	8	1,876	1,940	10
Operating income (EBITA)	6931)	593	17	2,6011)	2,200	18
Operating margin (EBITA), %	13.01)	12.0		12.41)	11.5
Operating income (EBIT)	609	540	13	2,422	2,158	12
Earnings before tax	552	515	7	2,210	2,057	7
Net income	407	387	5	1,646	1,538	7
Earnings per share, SEK	5.421)	5.14	5	21.881)	20.45	7
Tax rate, %	26	25		26	25
Cash flow from operating activities2)	325	856	-62	2,057	2,013	2
Cash flow from operating activities as % of operating income (EBITA)2)	48	144		81	91

1) For information regarding the IFRS 16 impact, see Note 8.

2) Cash flow from operating activities is reported excluding the impact from IFRS 16. The adaption of IFRS 16 has therefore had no net impact on cash flow from operating activities according to Loomis' definition. Cash flow from operating activities is consequently reported on the same basis as in 2018. For further information please refer to definitions on page 25.

January – December 2019

Comments by the President and CEO

I am delighted to report that in 2019 we made further progress toward reaching our financial and sustainability targets for 2021. In 2019 we improved the Group's operating margin by 0.9 percentage points to 12.4 percent. Proposed dividend is SEK 11.00 (10.00) per share, which is an increase of 10 percent compared to previous year. Our sustainability initiatives included signing a new and very important agreement to purchase security bags for our European operations. Under the agreement, among other things, at least 80 percent of the plastic in the security bags will be made out of recycled material.

In the fourth quarter the Group's real growth amounted to 5 percent (8), of which organic growth made up 1 percent (3). The positive organic growth we started to see in Segment Europe at the end of 2018 is continuing. The underlying growth in Segment Europe is progressing well despite the demonstrations and protests in France and Chile which have had a temporary, slightly slowing effect as they made it difficult for us to operate, mainly in the area of cash in transit. In December the German competition authority announced that it was stopping the acquisition of Ziemann, which was announced in January 2019. We are surprised and naturally disappointed over this decision, but we will now focus on our existing German operations and instead initiate activities to grow organically and improve profitability. Growth opportunities in the German market are significant as the degree of outsourcing of cash management services (CMS) to specialized companies like Loomis is currently low.

In the US market we are still seeing good,

long-term growth potential for CMS and SafePoint. The outsourcing potential for CMS in the USA is significant as around 60 percent of CMS in the US is still conducted by banks. Our assessment is that the total CMS market in the USA, which is not outsourced, amounts to around USD 1.4 billion. Market penetration for SafePoint in the USA is still low and falls short of 20 percent. We have a very competitive Safe-Point offering for our existing and potential customers. Our revenue from SafePoint increased in the USA by almost 18 percent during the quarter. Similar to earlier quarters in 2019, organic growth for the domestic CIT and CMS operations was slightly lower than in the corresponding period in 2018. We are prioritizing measures that contribute to improved operating margins and that will have a long-term positive impact on our profitability. In the fourth quarter we continued reviewing our customer portfolio and refrained from entering into agreements that will not contribute to profitability improvement. This will have a short-term negative effect on organic growth.

In the fourth quarter the Group's operating margin (EBITA %) amounted to 13.0 percent (12.0). This was our best fourth quarter ever. The introduction of IFRS 16 had a positive effect of around 0.2 percentage points. In the USA a more profitable customer portfolio in combination with higher revenue from SafePoint and CMS, as well as efficiency improvement programs at the branches are the main reasons for the continued strong earnings. Development of the US provisions for medical and casualty claims was also positive during the quarter.

In Europe several countries are contributing through higher operating margins, and the acquisition of CPoR, completed just before year-end 2018, is also helping to raise profitability. The ongoing demonstrations and protests in France and Chile had a somewhat restraining effect on development of the operating margin during the quarter. In France integration of the operations we acquired from Prosegur in July is progressing at full speed. Once this process is completed , towards the end of

Loomis' financial targets Revenue

SEK 24 billion 2021

Annual dividend, %

40–60% of the Group's net income

Operating margin (EBITA), % 12–14%

2020, and synergies can be realized, we believe that it will be possible to improve margins for the French operations as a whole. However, until the synergies are achieved the acquired French operations will have a negative impact on the operating margin. Our German operations were impacted by the ongoing acquisition process and did not achieve the expected results during the quarter. These operations had a diluting effect on the operating margin but we believe that operating income will gradually improve in 2020.

We have a robust plan for reaching our financial and sustainability targets by 2021. Finally, I want to thank all employees, for the good contributions during the year, and all shareholders and other stakeholders for the strong support you have shown us in 2019.

Patrik Andersson

President and CEO

Group – Revenue and earnings

October – December 2019

Revenue for the quarter amounted to SEK 5,342 million (4,956). Real growth was 5 percent (8), of which organic growth made up 1 percent (3). The acquisition of CPoR in France in December 2018 and of Prosegur Cash's French operations in July 2019 had a positive impact on real growth. Sales also increased in several countries in the European segment, where above all Spain, Belgium, Turkey and operations in Argentina showed good growth. Demonstrations and protests in France and Chile have temporarily slowed the pace of organic growth. The growth rate for CIT and CMS in the USA was slightly lower than in the corresponding period in 2018 and is mainly explained by changes in the customer portfolio with Loomis refraining from entering into agreements that will not contribute to profitability improvements.

The operating income (EBITA) amounted to SEK 693 million (593) and the operating margin was 13.0 percent (12.0). At comparable exchange rates the income improvement was around SEK 88 million, of which the effect of IFRS 16 amounted to around SEK +13 million. The acquisition of CPoR has had a positive effect on the operating margin, while the acquisition of Prosegur Cash's French operations slowed the positive operating margin development. The operating margin in the USA was positively impacted by a more profitable customer portfolio, a greater share of sales relating to SafePoint, higher efficiency at local branches and the restructuring program that is under way in the International segment. Development of the US provisions for medical and casualty claims was also positive during the quarter.

The operating income (EBIT) for the quarter amounted to SEK 609 million (540), which includes amortization of acquisitionrelated intangible assets of SEK –26 million (–22) and acquisition-related costs of SEK –57 million (–18). Acquisition-related costs include a break-up fee of around SEK 20 million which Loomis was obliged to pay to the seller for the acquisition of Ziemann after it was stopped in the fourth quarter by the German competition authority. The fourth quarter of 2018 also included an item affecting comparability of SEK –13 million relating to restructuring of the International segment at the end of 2018.

Income before tax of SEK 552 million (515) includes a net financial expense of SEK –45 million (–18), of which the effect of IFRS 16 amounted to around SEK –26 million. The tax expense for the quarter amounted to SEK –145 million (–128), which represents a tax rate of 26 percent (25).

Earnings per share after dilution amounted to SEK 5.42 (5.14). The total effect on earnings per share as a result of IFRS 16 entering into force was SEK –0.12 in the fourth quarter this year.

January – December 2019

Revenue for the period amounted to SEK 21,044 million compared to SEK 19,168 million for the corresponding period the previous year. The acquisitions made in France and the acquisition in June 2018 in Chile had a positive impact on real growth of 5 percent (8). Organic growth was 2 percent (3). Growth continued in the European segment, with above all Spain, Belgium, Turkey and the operations in South America contributing. Growth in Turkey and Argentina is mainly attributable to increased CIT volumes. Growth in the USA, which was slightly lower than in the corresponding period the previous year, was mainly negatively affected in the beginning of 2019 by the ongoing restructuring of the international operations and by a slightly lower growth rate for CIT and CMS. Towards the end of the year growth was also negatively affected by certain contracts with lower profitability no longer being part of the customer portfolio.

The operating income (EBITA) amounted to SEK 2,601 (2,200) million and the operating margin improved to 12.4 percent (11.5). At comparable exchange rates the income improvement was around SEK 305 million, of which the effect of IFRS 16 amounted to around SEK +53 million. The restructuring programs in France and Sweden implemented in 2018 have had a positive effect on the operating margin for the period. More installed SafePoint units in the USA continue to improve profitability, but ongoing efficiency improvement projects at branches are also producing good results. The restructuring programs under way in 2019 within the international operations in the USA have also helped to raise the operating margin.

The operating income for the period (EBIT) amounted to SEK 2,422 million (2,158), which includes amortization of acquisitionrelated intangible assets of SEK –101 million (–83) and acquisition-related costs of SEK –101 million (–46). Loomis was obliged to pay a break-up fee of around SEK –20 million due to the Germany competition authority stopping the acquisition of Ziemann. The fee is included in acquisition-related costs. The 12-month period 2019 also includes an item affecting comparability of SEK 23 million (86), which mainly relates to reported capital gains of SEK 35 million from the divestment of the Artcare logistics and storage operations. For the corresponding period in 2018 a positive item affecting comparability of SEK 86 million was reported consisting mainly of a positive non-recurring item relating to the revaluation of the UK pension obligation of SEK 178 million, as well as impairment of goodwill in two operations within the European segment and costs relating to the restructuring of the International segment in 2018.

Income before tax of SEK 2,210 million (2,057) includes a net financial expense of SEK –178 million (–90), of which the effect of IFRS 16 amounted to around SEK –105 million. The tax expense for the period amounted to SEK –564 million (–519), which represents a tax rate of 26 percent (25).

Earnings per share after dilution amounted to SEK 21.88 (20.45). The total effect on earnings per share as a result of IFRS 16 entering into force in 2019 was SEK –0.52.

Segment Europe – Revenue and operating income

	2019	2018	2019	2018
SEK m	Oct–Dec	Oct–Dec	Full year	Full year
Revenue	2,942	2,686	11,498	10,511
Real growth, %	8	9	8	8
Organic growth, %	1	1	2	–1
Operating income (EBITA)1)	358	333	1,429	1,238
Operating margin, %	12.2	12.4	12.4	11.8
Number of full-time employees	15,300	15,000	15,300	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 October – December 2019

Revenue for the quarter amounted to SEK 2,942 million (2,686). The real growth of 8 percent (9) was positively affected by revenue attributable to the acquisition of CPoR in France in December 2018 and of Prosegur Cash's French operations in July 2019. The organic growth was 1 percent (1). Spain, Belgium, Turkey and the operations in Argentina continued to show good organic growth. The political demonstrations and protests in France and Chile temporarily slowed the pace of organic growth. The Nordic region as a whole continued to report negative organic growth.

The operating income (EBITA) amounted to SEK 358 million (333) and the operating margin was 12.2 percent (12.4). The acquisition of CPoR in France, which was concluded just before the end of 2018, had a positive effect on the operating margin, while the acquisition of Prosegur Cash's French operations had a negative effect on the otherwise positive operating margin development. The political demonstrations and protests in France and Chile also had a negative effect on the operating margin. The ongoing restructuring programs at the branches continue to provide good results.

January – December 2019

Revenue for the period amounted to SEK 11,498 million (10,511) and organic growth was 2 percent (–1). Spain, Belgium, Turkey and the operations in South America continued to show good organic growth, but several other countries also contributed to the organic growth. The real growth of 8 percent (8) was positively affected by revenue generated by the acquired operations in Chile and France.

The operating income (EBITA) amounted to SEK 1,429 (1,238) million and the operating margin was 12.4 percent (11.8). The profitability improvement is largely due to the restructuring program implemented in Sweden and France in 2018. At the beginning of 2019 growth in France was, however, impeded slightly by the "yellow vest" demonstrations, and at the end of the year the political demonstrations and protests in France and Chile had a negative effect on the operating margin. The acquisition of CPoR in France was completed before the beginning of 2019. CPoR is operating with a higher operating margin than the European average and has therefore helped to improve profitability. The acquisition of Prosegur Cash's French operations had a negative effect on the operating margin. Efficiency improvement programs have been ongoing at the branches in 2019 and have made a positive contribution to development.

Segment USA – Revenue and operating income

	2019	2018	2019	2018
SEK m	Oct–Dec	Oct–Dec	Full year	Full year
Revenue	2,424	2,284	9,639	8,716
Real growth, %	1	6	2	7
Organic growth, %	2	5	3	7
Operating income (EBITA)1)	383	293	1,372	1,123
Operating margin, %	15.8	12.8	14.2	12.9
Number of full-time employees	9,700	10,200	10,100	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 October – December 2019

Revenue amounted to SEK 2,424 million (2,284) and organic growth was 2 percent (5). The real growth amounted to 1 percent (6). The growth rate for CIT and CMS in the USA was slightly lower than in the corresponding period in 2018 and is mainly explained by changes in the customer portfolio with Loomis refraining from entering into agreements that will not contribute to profitability improvements. During the quarter the increase in the number of SafePoint units installed was the main factor in the positive organic growth. Revenue for the quarter from SafePoint accounted for 15 percent (14) of the segment's total revenue. The change in fuel fees, which Loomis passes on to its customers, did not have a significant impact on organic growth for the quarter.

The share of revenue from CMS during the quarter amounted to 35 percent (33) of the segment's total revenue.

The operating income (EBITA) amounted to SEK 383 million (293) and the operating margin was 15.8 percent (12.8). Higher revenue from SafePoint, a more profitable customer portfolio, as well as efficiency improvement programs at the branches were the main reasons for the continued strong earnings. The restructuring program within the international operations has contributed to the positive development. Remeasurement of medical and casualty provisions had a positive impact on operating income. The remeasurements were made due to positive development in claims, which resulted in a change in the actuarial assumptions that are the basis for the assessment of the size of the provision. Adjusted for this non-recurring item the operating margin was 15.1.

January – December 2019

Revenue amounted to SEK 9,639 million (8,716) and organic growth was 3 percent (7). The real growth amounted to 2 percent (7). Higher revenue from ATM management and an increase in the number of installed SafePoint units explains much of the growth. Revenue for the period from SafePoint accounted for 14 percent (13) of the segment's total revenue. Growth was negatively affected during the period by the ongoing restructuring program within the international operations. The organic growth for the domestic CIT and CMS operations was also slightly lower than in the corresponding period in 2018. The change in fuel fees, which Loomis passes on to its customers, did not have a significant impact on organic growth for the period.

The share of revenue from CMS for the period amounted to 34 percent (33) of the segment's total revenue.

The operating income (EBITA) amounted to SEK 1,372 (1,123) million and the operating margin was 14.2 percent (12.9). Efforts to improve efficiency at the branches are having a positive effect on earnings and higher revenue from SafePoint and CMS is contributing to the higher profitability. The restructuring program within the international operations continues to have a positive effect on the operating margin.

Cash flow and liquidity

January – December 2019

Cash flow from operating activities, excluding effects from IFRS 16, amounted to SEK 2,057 million (2,013) in 2019, equivalent to 81 percent (91) of operating income (EBITA).

The period's net investments in fixed assets amounted to SEK –1,643 million (–1,449), which can be compared to depreciation (excluding the effects from IFRS 16) of SEK 1,265 million (1,183). Investments were mainly made in buildings, vehicles, machinery and equipment during the period. Investments in relation to depreciation for the period amounted to 1.3 (1.2). For the effects of IFRS 16, see Note 8.

The liquid funds of the Group at the end of the period were SEK 5,073 million (6,140), of which SEK 3,418 million (4,832) was inventory of cash and prepayments from customers related to the cash processing operations. Loomis has, during the fourth quarter 2019, changed the accounting and presentation of cash related to the cash processing operations, see Note 1.

Other events

Significant events during the period

In March 2019 there was a change in ownership of all of Loomis AB's 3,428,520 Class A shares. The transaction represented 4.6 percent of the capital and 32.3 percent of the votes in Loomis. The buyer subsequently 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 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 longer any issued Class A shares in the Company. The conversion took place based on the option provided to holders of Class A shares to request conversion of Class A shares to Class B shares. This provision was introduced into the Articles of Association at an extraordinary shareholders' meeting on September 5, 2018. As of March 29, 2019 the total number of shares and votes in the Company amount to 75,279,829.

The Annual General Meeting on May 8, 2019 voted in favor of the Board's proposal to introduce 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 allotment of these shares, the AGM voted in favor of Loomis AB entering 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 participants. The Incentive Scheme will enable around 350 key individuals within Loomis to become shareholders in Loomis AB over time. This will increase employee commitment to Loomis' development for the benefit of all shareholders.

An extraordinary shareholders' meeting for Loomis AB was held on August 28, 2019. The meeting voted in favor of the Nomination Committee's proposal to elect Lars Blecko and Johan Lundberg as new members of the Board. The meeting also resolved that the fee for each board member decided upon at the Annual General Meeting on May 8, 2019 will continue to apply. For retiring and new board members the fee will be payable pro rata for the member's actual period of service in relation to the full period from the 2019 AGM until the end of the 2020 AGM. As the number of elected board members for the period up to the end of the 2020 AGM has been increased by one member, fees totaling around SEK 3,543,000 will be paid. This is an increase of around SEK 293,000 of the total board fees decided on at the AGM on May 8, 2019.

On July 19 Loomis announced the conclusions from investigations following the Danish media allegations. On May 8, 2019, a Danish journalist put forward allegations that a Loomis subsidiary had been providing currencies to foreign exchange offices in Denmark, of which some are suspected to be involved in money laundering. Loomis has not, at any time, been served suspicion from authorities relating to this matter but takes allegations about money laundering seriously, and therefore immediately launched an internal as well as two separate and independent external investigations.

The foreign exchange business in Denmark has been conducted by Loomis Foreign Exchange AS in Norway ("Loomis FX"). The foreign exchange business related to the Danish exchange offices constituted at the time less than 0.1 percent of the total revenue of the Loomis group. As of December 2018, Loomis FX has terminated all businesses with foreign exchange offices in Denmark.

The internal investigation has been carried out by the Group Risk Function at Loomis and the external independent investigations have been conducted by KPMG AB and Advokatfirmaet Erling Grimstad AS. The external investigations were performed to review Loomis FX's antimoney laundering (AML) framework and the compliance with relevant regulations as well as how these were followed in relation to, among other things, onboarding of new customers and monitoring of transactions during the period from 2016 to 2018, with a specific focus on foreign exchange offices in Denmark.

The policies and procedures of Loomis FX contain the most important aspects of AML, including know your customer (KYC) requirements. Deficiencies in relation to compliance with internal policies and procedures have, however, been identified and it has been concluded that the applied compliance standards could have been higher. Despite proactive work by Loomis FX, such as contacts with authorities and engagement of external experts, the deficiencies have in some cases led to the FX operations not being conducted satisfactorily. This relates to e.g. authorization, onboarding of customers, specific arrangements for, and monitoring of, high-risk customers as well as reporting of suspicious transactions and activities to the authorities. Loomis has therefore contacted the authorities concerned to share the conclusions from the investigations but also to inform about actions taken to strengthen the organization's AML policies, procedures and routines. Loomis has strengthened its organization and processes. Remediation work of the deficiencies identified in the investigations is ongoing. Based on current information, Loomis estimates that these issues do not have any significant effect on the Loomis Group's financial position and results. Further facts or findings may become evident during the implementation of the corrective actions and, if so, be dealt with appropriately.

On November 1, 2019 Loomis AB announced that Sara Björkman will take up the position as Chief Compliance Officer, which took place on January 31, 2020. Sara Björkman reports directly to the President and CEO and is a member of Loomis Group Management.

On December 18 Loomis communicated that the agreement announced on January 29, 2019 on the acquisition of the German cash handling company Ziemann Sicherheit Holding GmbH had been stopped by the German Federal Cartel Office (FCO). The communication on January 29, 2019 stated that the acquisition was contingent upon merger control clearance from the FCO. The concessions required by FCO were unexpectedly extensive. Loomis does not intend to appeal the decision by the FCO. Under the agreement Loomis was obliged to pay a break-up fee to the seller of EUR 2 million. The cost was recognized and reported in the fourth quarter of 2019 as an acquisition-related cost.

Acquisitions during 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 the shares in Prosegur Cash Holding France (PCF). PCF is primarily involved in domestic cash handling operations in France and has its head office in Lyon. PCF has around 630 employees and its net revenue in 2018 was around EUR 38.5 million. The acquired operations are reported in Segment Europe and were consolidated into Loomis as of closing of the transaction. The enterprise value amounted to around EUR 39 million. The transaction closed on July 22, 2019 at which time the purchase price was paid.

Other events during the period

In January 2019 it was announced that Loomis AB had signed a EUR 150 million five-year credit facility. This is a multi-currency revolving credit facility and matures in January 2024. The lead arrangers of the loan are Danske Bank A/S, Nordea Bank Apb and Crédit Lyonnais. The loan may be used to finance working capital and investments, and for other purposes. The agreement replaces a previous agreement of USD 100 million.

In February 2019 Loomis AB, through a wholly owned subsidiary, divested the art logistics and storage operations (Artcare) to Iron Mountain (Schweiz) AG. Artcare was acquired as part of VIA MAT in 2014 and was not part of Loomis' core business. The divested operations had revenue in 2018 of around CHF 5 million (equivalent to around SEK 45 million). Artcare was reported as part of Segment International. A capital gain before tax of around CHF 4 million, equivalent to SEK 35 million, was recognized and reported as an item affecting comparability in the first quarter of 2019.

On September 5, 2019 Loomis held a capital market day in London and demonstrated that the Company's financial targets are within reach. Loomis provided information about business performance in relation to the targets and the strategy launched in 2017 for the 2018–2021 period. The main themes were showing that Loomis is well on the way to reaching its 2021 financial targets and a presentation of additional growth opportunities beyond the Cash in Transit (CIT) and Cash Management Services (CMS) business areas. The opportunities include service offerings in physical foreign exchange (FX), ATM management and digital payment solutions.

In September 2019 Loomis issued bonds in the amount of SEK 1,750 million. The bonds have a 4-year maturity and the maturity date is September 18, 2023. The bonds carry a floating interest rate of three months' Stibor plus 1.15 percent and the proceeds will be used for operating activities and to refinance loans. The issue was implemented within the framework of the Loomis MTN program. Nordea Bank Apb is the arranger for the Loomis MTN program and was also the issuing institute in cooperation with Danske Bank A/S. The bonds are listed on NASDAQ OMX Stockholm.

In October 2019 it was announced that the members of Loomis AB's Nomination Committee ahead of the 2020 Annual General Meeting had been appointed. The following members were appointed:

• Hans Ek, appointed by SEB Fonder, Chairman of the Nomination Committee

• Bernard Horn, appointed by Polaris Capital Management
• Helen Fast Gillstedt, appointed by Handelsbanken Fonder
• Olivia Woo, appointed by Mawer Investment Management
• Marianne Nilsson, appointed by Swedbank Robur Fonder

The Company Chairman, Alf Göransson, has convened the Nomination Committee to its first meeting and will also be co-opted to the Committee. The Nomination Committee will prepare proposals to present to the 2020 Annual General Meeting for a chairman for the meeting, board members, Chairman of the Board, auditors, board fees and how they will be distributed between the Chairman and other members, fees for committee work, fees for the Company's auditors and any changes in the instructions for the Nomination Committee.

In December 2019 Loomis AB issued three bond loans with SEK (Swedish Export Credit Corporation) totaling EUR 100 million. The bonds have a maturity of 5–7 years, EUR 34 million maturing in December 2024, EUR 33 million in December 2025 and EUR 33 million in December 2026. The bonds have a floating interest rate. The proceeds were used to refinance a previous bond of SEK 1,000 million which matured in December 2019. The bonds with SEK were not issued under the Loomis MTN program.

Events after the end of the period

On January 17, 2020 it was announced that Loomis AB, through the wholly owned subsidiary Loomis Sverige AB (Loomis Sweden) had entered into an agreement to acquire all of the shares in the limited liability company Nokas Värdehantering AB (Nokas Värdehantering), a subsidiary of Nokas Kontandthåntering AS in Norway. The enterprise value, i.e. the purchase price payable on a debt free basis, is around SEK 80 million. Nokas Värdehantering has around 220 employees and its net revenue over the 12-month period ending in September 2019 was around SEK 215 million. The company's current operating margin, EBITA%, is negative.

The acquired operations will be reported within Segment Europe and consolidated into Loomis' accounts as of the closing of the transaction. Nokas Värdehantering and Loomis Sweden are both payment institutions under the supervision of the Swedish Financial Supervisory Authority (SFSA) and Loomis Sweden must therefore undergo an ownership assessment performed by the SFSA. The acquisition will be completed on condition that the SFSA approves Loomis Sweden as the owner. The purchase price is payable on closing.

Financial reports in brief

CONSOLIDATED STATEMENT OF INCOME

	Note	2019	2018	2019	2018
SEK m		Oct–Dec	Oct–Dec	Full year	Full year
Revenue, continuing operations		5,140	4,745	20,411	18,300
Revenue, acquisitions		201	211	633	868
Total revenue	3,4	5,342	4,956	21,044	19,168
Production expenses		–3,816	–3,625	–15,210	–14,127
Gross income		1,526	1,331	5,833	5,041
Selling and administration expenses		–833	–738	–3,233	–2,841
Operating income (EBITA)1)		6937)	593	2,6017)	2,200
Amortization of acquisition-related intangible assets		–26	–22	–101	–83
Acquisition-related costs and revenue		–57	–18	–1012)	–462)
Items affecting comparability		–2	–13	233)	864)
Operating income (EBIT)		609	540	2,422	2,158
Net financial items		–457)	–18	–1787)	–90
Loss on monetary net assets/liabilities		–12	–7	–34	–11
Income before taxes		552	515	2,210	2,057
Income tax		–145	–128	–564	–519
Net income for the period5)		407	387	1,646	1,538
KEY RATIOS
Real growth, %		5	8	5	8
Organic growth, %		1	3	2	3
Operating margin (EBITA), %		13.07)	12.0	12.47)	11.5
Tax rate, %		26	25	26	25
Earnings per share before and after dilution, SEK6)		5.427)	5.14	21.887)	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 – December 2019 consist of transaction costs of SEK –50 million (–21), restructuring costs of SEK –30 million (–7) and integration costs of SEK –21 million (–18). Of the transaction costs of SEK –50 million, SEK –12 million is for acquisitions in progress for the period January – December 2019, SEK –3 million is for completed acquisitions and SEK –35 million pertains to discontinued acquisitions.

3) The item affecting comparability of SEK 23 million relates to reported capital gains of SEK 35 million from the divestment of the fine art storage and logistics operations, and costs of SEK –12 million related to the allegations of money laundering put forward in the spring of 2019.

4) The item affecting comparability of SEK 86 million consists primarily of a positive non-recurring item of SEK 178 million relating to a revaluation of the UK pension obligation, impairment of goodwill relating to two operations within the European segment in 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 23.

7) For information regarding the IFRS 16 impact, see Note 8.

STATEMENT OF COMPREHENSIVE INCOME

	2019	2018	2019	2018
SEK m	Oct–Dec	Oct–Dec	Full year	Full year
Net income for the period	407	387	1,646	1,538
Other comprehensive income
Items that will not be reclassified to the statement of income
Actuarial gains and losses after tax	292	–67	–87	99
Items that may be reclassified to the statement of income
Exchange rate differences1)	–479	5	421	651
Hedging of net investments, net of tax	65	–6	–74	–139
Other comprehensive income and expenses for
the period, net after tax	–123	–68	260	612
Total comprehensive income for the period2)	285	319	1,906	2,150

1) Includes effects of hyperinflation in Argentina. As of December 31, 2019 the consumer price index in Argentina, National CPI, was 284.1 with the base period as December 2016. The SEK/ARS rate as of December 31, 2018 was 0.2373 and as of December 31, 2019, 0.1554.

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

BALANCE SHEET

Note	2019	2018
SEK m	Dec 31	Dec 31
ASSETS
Fixed assets
Goodwill 5	7,094	6,533
Acquisition-related intangible assets 5	478	515
Other intangible assets	208	168
Tangible fixed assets	5,822	5,358
Right-of-use assets 8	2,911	–
Other non-interest-bearing fixed assets	817	506
Interest-bearing financial fixed assets1)	565	500
Total fixed assets	17,893	13,580
Current assets
Non-interest-bearing current assets2)	3,536	3,173
Interest-bearing financial current assets1)	61	37
Liquid funds 6	5,073	6,140
Total current assets	8,670	9,351
TOTAL ASSETS	26,563	22,931
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity 10	9,592	8,422
Long-term liabilities
Interest-bearing long-term lease liabilities 8	2,313	–
Other interest-bearing long-term liabilities	6,711	5,092
Non-interest-bearing provisions	1,117	812
Total long-term liabilities	10,141	5,904
Current liabilities
Tax liabilities	199	171
Non-interest-bearing current liabilities	3,022	2,936
Liabilities, cash processing operations	3,021	4,440
Interest-bearing current lease liabilities 8	560	–
Other interest-bearing current liabilities	29	1,058
Total current liabilities	6,831	8,605
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	26,563	22,931
KEY RATIOS
Return of shareholders' equity, %	17	18
Return of capital employed, % 7	153)	17
Equity ratio, %	36	37
Net debt 7	7,3323)	4,305
Net debt/EBITDA	1.653)	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) During the fourth quarter of 2019, Loomis changed the reporting of inventory of cash at the cash processing operations, see Note 1. The comparative figures have been adjusted as a result of this change.

3) For information excluding the IFRS 16 impact, see Note 8.

CHANGE IN CONSOLIDATED SHAREHOLDERS' EQUITY

	2019	2018
SEK m	Full year	Full year
Opening balance	8,422	7,037
Effect of change in accounting principle IFRS 15	–	–15
Effect of IAS 29	–	2
Opening balance adjusted in accordance with new accounting principle	8,422	7,024
Actuarial gains and losses after tax	–87	99
Exchange rate differences1)	421	651
Hedging of net investments, net of tax	–74	–139
Total other comprehensive income	260	612
Net income for the period	1,646	1,538
Total comprehensive income2)	1,906	2,150
Dividend paid to Parent Company's shareholders	–750	–677
Share-related remuneration	14	–76
Non-controlling interest	0	1
Closing balance	9,592	8,422

1) Includes effects of hyperinflation in Argentina. As of December 31, 2019 the consumer price index in Argentina, National CPI, was 284.1 with the base period as December 2016. The SEK/ARS rate as of December 31, 2018 was 0.2373 and as of December 31, 2019, 0.1554.

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

CONSOLIDATED STATEMENT OF CASH FLOWS

Note	2019	2018	2019	2018
SEK m	Oct–Dec	Oct–Dec	Full year	Full year
Operations
Income before taxes	552	515	2,210	2,057
Items not affecting cash flow	582	360	2,138	1,273
Financial items received	13	13	36	31
Financial items paid	–96	–55	–247	–132
Income tax paid	–102	–129	–641	–472
Change in accounts receivable	81	161	–150	–6
Change in other operating capital employed and other items	–230	240	17	85
Cash flow from operations	801	1,105	3,362	2,835
Investing activities
Investments in fixed assets	–549	–437	–1,709	–1,464
Disposals of fixed assets	24	1	66	15
Divestments of operations	0	–	38	–
Acquisitions of operations	–22	–1,050	–384	–1,403
Cash flow from investing activities	–547	–1,486	–1,989	–2,852
Financing activities
Dividend paid	–	–	–750	–677
Change in interest-bearing net debt excluding liquid funds	–130	141	–341	–296
Issuance of bonds	1,045	–	2,795	–
Amortization of bonds	–1,000	–	–1,000	–
Change in commercial papers issued and other long-term borrowing	–147	757	–1,753	1,447
Cash flow from financing activities	–232	898	–1,049	473
Cash flow for the period	21	517	325	456
Liquid fund at beginning of the period	1,679	794	1,308	839
Translation differences in liquid funds	–46	–4	22	13
Liquid funds at end of period 6	1,655	1,308	1,655	1,308

CONSOLIDATED STATEMENT OF CASH FLOWS EXCLUDING THE IFRS 16 IMPACT, ADDITIONAL INFORMATION

	2019	2018	2019	2018
SEK m	Oct–Dec	Oct–Dec	Full year	Full year
Operating income (EBITA)1)	680	593	2,548	2,200
Depreciation1)	324	298	1,265	1,183
Change in accounts receivable	81	161	–150	–6
Change in other operating capital employed and other items1)	–235	240	37	85
Cash flow from operating activities before investments	850	1,292	3,700	3,462
Investments in fixed assets, net	–525	–436	–1,643	–1,449
Cash flow from operating activities	325	856	2,057	2,013
Financial items paid and received1)	–56	–42	–106	–101
Income tax paid	–102	–129	–641	–472
Free cash flow	167	686	1,310	1,439
Cash flow effect of items affecting comparability	–11	0	–12	–1
Divestment of operations	0	–	38	–
Acquisition of operations	–22	–1,050	–384	–1,403
Acquisition-related costs and revenue, paid and received2)	–24	–16	–75	–52
Dividend paid	–	–	–750	–677
Change in interest-bearing net debt excluding liquid funds1)	14	141	155	–296
Issuance of bonds	1,045	–	2,795	–
Amortization of bonds	–1,000	–	–1,000	–
Change in commercial papers issued and other long-term borrowing	–147	757	–1,753	1,447
Cash flow for the period	21	517	325	456
KEY RATIOS
Cash flow from operating activities as % of operating income (EBITA)1)	48	144	81	91
Investments in relation to depreciation1)	1.6	1.5	1.3	1.2
Investments as a % of total revenue	9.8	8.8	7.8	7.6

1) Excluding the IFRS 16 impact.

2) 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 IFRS Interpretations Committee (formerly IFRIC).

This interim report has been prepared according to IAS 34 Interim Financial Reporting. The interim report is on pages 1–27, and the pages 1–10 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 except for adjusted reporting of inventories of cash at the cash processing operations.

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 further details of the impact on the financial statements for 2019. See Note 8.

Changed reporting of cash at the cash processing operations

Loomis' operations involve the transportation of cash and other valuables based on customer contracts in place. If stipulated in the customer contract, the transported cash is processed at Loomis' cash centers. The cash that is received by Loomis is on consignment unless otherwise agreed with the customer. Consignment stocks of cash are accounted for by the other parties and not by Loomis.

In cases where Loomis, according to the customer contract, assumes ownership of the cash received, it is reported as inventory of cash. These inventories are financed by specific credit facilities and prepayments from customers. The credit facilities and prepayments are only used for this purpose.

CASH PROCESSING OPERATIONS:

	2019	2018	2018
SEK m	Dec 31	Dec 31	Jan 1
Inventory of cash1)	2,384	3,250	1,478
Prepayments from customers	1,034	1,582	914
Liabilities related to prepayments from customers and liabilities to customers	–1,694	–2,799	–1,599
Credit facility related to cash processing operations	–1,327	–1,641	–707
Funds within cash processing opera tions (net)	397	392	85

1) Excluding consignment stocks of money.

In previous financial statements these credit facilities and prepayments were reported net of the inventory of cash they were intended to finance. Any cash remaining in the inventory of cash which Loomis has assumed ownership represents the funds that Loomis has physically transported to the vault from its own liquid funds. Inventory of cash were previously reported as "Other current receivables" in the balance sheet as they are not available to Loomis according to internal guidelines and are used solely to finance customer transactions.

Loomis has reassessed the method of applying net reporting in the balance sheet and is now reporting these items gross. Inventory of cash as well as prepayments from customers and receivables from customers are reported in the balance sheet as liquid funds. Credit facilities relating to cash processing operations as well as liabilities relating to prepayments from customers and liabilities to customers are reported in the balance sheet on the line "Liabilities, cash processing operations". The change was made retroactively and the reclassification of previous periods is presented below:

December 31, 2018 Reported	Reclassifica tion	December 31, 2018 Adjusted
1,308	4,832	6,140
500	–392	1081)
–	4,440	4,440

1) Included in Non-interest-bearing current assets.

SEK m	January 1, 2018 Reported	Reclassifica tion	January 1, 2018 Adjusted
Current assets
Liquid funds	839	2,392	3,230
Other current receivables	169	–85	84
Current liabilities
Liabilities, cash processing operations	–	2,307	2,307

The reclassification has had no impact on Loomis' net debt. Interest expense for the above-mentioned credit facilities is still reported under "Production expenses" and not as a net financial expense as it relates to financing of operating activities/inventory of cash. The adjustment has therefore had no impact on operating income, operating margin or earnings per share before and after dilution.

Even though inventories of cash are disposable deposits, they are entirely separated from Loomis' other liquid funds and cash flow, and according to internal guidelines they are not used in Loomis' other operations or business. In the cash-flow statement inventories if cash are therefore reported net against the above-mentioned credit facilities and prepayments from customers. The reclassification in the balance sheet has therefore no impact on the Group's cash flow.

Reconciliation of liquid funds according to the consolidated balance sheet as of December 31 (after the above reclassification) against liquid funds in the Group's cash flow statement is as follows:

	2019	2018	2017
SEK m	Dec 31	Dec 31	Dec 31
Liquid funds according to the Group's balance sheet	5,073	6,140	3,230
– Adjusted for inventory of cash at the cash processing operations	–2,384	–3,250	–1,478
– Adjusted for prepayments from custo mers	–1,034	–1,582	–914
Liquid funds according to the Group's cash flow statement	1,655	1,308	839

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 are described 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 and other criminal activity.
• 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 during 2019 impacted certain geographic areas negatively, and it cannot be ruled out that Loomis' revenue and earnings for 2020 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 the 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 or 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" in Note 1 of this report, 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.

NOTE 3 – REVENUE DISTRIBUTION

		Elimina					Elimina
	Europe	USA	tions	Total	Europe	USA	tions	Total
SEK m		Oct–Dec 2019 Oct–Dec 2018
Cash in transit (CIT)	1,764	1,477	–	3,242	1,651	1,432	–	3,083
Cash management services (CMS)	810	847	–	1,657	785	755	–	1,541
International1)	209	82	–	291	191	86	–	277
Other1)	147	4	–	151	52	4	–	55
Revenue, internal	11	14	–25	–	7	7	–15	–
Total revenue	2,942	2,424	–25	5,342	2,686	2,284	–15	4,956
Timing of revenue recognition, external
At a point in time	388	74	–	462	437	81	–	517
Over time	2,544	2,336	–	4,880	2,242	2,196	–	4,439
Total external revenue	2,932	2,410	–	5,342	2,679	2,277	–	4,956

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

		Elimina				Elimina
	Europe	USA	tions	Total	Europe	USA	tions	Total
SEK m		Jan–Dec 2019			Jan–Dec 2018
Cash in transit (CIT)	6,856	5,946	–	12,802	6,473	5,489	–	11,962
Cash management services (CMS)	3,172	3,288	–	6,460	3,000	2,849	–	5,850
International1)	812	333	–	1,145	748	320	–	1,068
Other1)	619	17	–	636	272	15	–	288
Revenue, internal	39	53	–92	–	19	42	–60	–
Total revenue	11,498	9,639	–92	21,044	10,511	8,716	–60	19,168

Timing of revenue recognition, external

Total external revenue	11,459	9,585	–	21,044	10,493	8,674	–	19,168
Over time	9,893	9,274	–	19,167	8,938	8,370	–	17,309
At a point in time	1,566	311	–	1,877	1,554	304	–	1,858

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

REVENUE PER SIGNIFICANT GEOGRAPHICAL MARKET

SEK m	Oct–Dec 2019	Oct–Dec 2018	Jan–Dec 2019	Jan–Dec 2018
USA	2,424	2,284	9,639	8,716
France	835	644	3,166	2,550
Spain	424	384	1,632	1,472
UK	396	389	1,562	1,556
Other countries and eliminations	1,262	1,254	5,047	4,873
Total revenue	5,342	4,956	21,044	19,168

NOTE 4 – SEGMENT OVERVIEW

As a result of restructuring, Segment International is no longer a separate segment. The purpose of the restructuring program is 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 the USA and Europe respectively and to create future comparability.

SEGMENT OVERVIEW STATEMENT OF INCOME

	Europe	USA	Other1)	Eliminations	Total
SEK m	Jan–Dec 2019	Jan–Dec 2019	Jan–Dec 2019	Jan–Dec 2019	Jan–Dec 2019
Revenue, continuing operations	10,866	9,638	–	–92	20,411
Revenue, acquisitions	632	1	–	–	633
Total revenue	11,498	9,639	–	–92	21,044
Production expenses	–8,490	–6,835	–	114	–15,210
Gross income	3,008	2,804	–	22	5,833
Selling and administrative expenses	–1,578	–1,432	–200	–22	–3,233
Operating income (EBITA)	1,429	1,372	–200	–	2,601
Amortization of acquisition-related intangible assets	–81	–20	–	–	–101
Acquisition-related costs	–57	–	–44	–	–101
Items affecting comparability	352)	–	–122)	–	232)
Operating income (EBIT)	1,327	1,352	–256	–	2,422
Net financial items	–	–	–178	–	–178
Loss on monetary net assets/liabilities	–	–	–34	–	–34
Income before taxes	1,327	1,352	–469	–	2,210

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

2) The item affecting comparability of SEK 23 million relates to reported capital gains of SEK 35 million from the divestment of the fine art logistics and storage operations, Artcare, and costs of SEK –12 million related to the allegations of money laundering put forward in the spring 2019.

SEGMENT OVERVIEW STATEMENT OF INCOME

	Europe	USA	Other1)	Eliminations	Total
SEK m	Jan–Dec 2018	Jan–Dec 2018	Jan–Dec 2018	Jan–Dec 2018	Jan–Dec 2018
Revenue, continuing operations	9,664	8,696	–	–60	18,300
Revenue, acquisitions	847	21	–	–	868
Total revenue	10,511	8,716	–	–60	19,168
Production expenses	–7,882	–6,336	–	91	–14,127
Gross income	2,629	2,381	–	31	5,041
Selling and administrative expenses	–1,391	–1,258	–160	–31	–2,841
Operating income (EBITA)	1,238	1,123	–160	–	2,200
Amortization of acquisition-related intangible assets	–67	–16	–	–	–83
Acquisition-related costs	–29	–1	–15	–	–46
Items affecting comparability	862)	–	–	–	862)
Operating income (EBIT)	1,227	1,106	–176	–	2,158
Net financial items	–	–	–90	–	–90
Loss on monetary net assets/liabilities	–	–	–11	–	–11
Income before taxes	1,227	1,106	–276	–	2,057

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

2) The item affecting comparability of SEK 86million consists 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 in the second quarter.

SEGMENT OVERVIEW STATEMENT OF INCOME, ADDITIONAL INFORMATION

	2019	2018	2019	2018
SEK m	Oct–Dec	Oct–Dec	Full year	Full year
Europe
Operating income (EBITA)	358	333	1,429	1,238
Operating margin (EBITA), %	12.2	12.4	12.4	11.8
USA
Operating income (EBITA)	383	293	1,372	1,123
Operating margin (EBITA), %	15.8	12.8	14.2	12.9
Other 1)
Revenue	–	–	–	–
Operating income (EBITA)	–47	–34	–200	–160
Eliminations
Revenue	–25	–14	–92	–60
Operating income (EBITA)	–	–	–	–
Group total
Operating income (EBITA)	693	593	2,601	2,200
Operating margin (EBITA), %	13.0	12.0	12.4	11.5

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

SEGMENT OVERVIEW BALANCE SHEET

	2019	2018
SEK m	Dec 31	Dec 31
Europe
Assets	11,234	9,007
Liabilities	3,009	2,612
USA
Assets	9,965	7,517
Liabilities	1,012	998
Other 1)
Assets	5,364	6,407
Liabilities	12,950	10,899
Shareholder's equity	9,592	8,422
Group total
Assets	26,563	22,931
Liabilities	16,971	14,509
Shareholder's equity	9,592	8,422

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

NOTE 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. Completion of the transaction was contingent upon merger control clearance. In December the German competition authority announced that it was stopping the acquisition of Ziemann.

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 took place July 22, 2019.

In addition to the above acquisitions, two smaller acquisitions of assets and liabilities were implemented in the second quarter of 2019. The total purchase price for these acquisitions was around SEK 44 million and the total annual revenue amounts to around SEK 45 million.

As the completed acquisitions are not considered material, no complete disclosures according to IFRS 3 are being provided.

ACQUISITIONS

	Consolidated as of	Segment	Acquired share1) %	Annual revenue SEK m	Number of employees	Purchase price SEK m	Goodwill SEK m	Acquisition related intangible assets SEK m	Other acquired net assets SEK m
Opening balance, January 1, 2019							6,533	515
Acquisition of Prosegur Cash Holding France4)	July	Europe	100	4112)	630	3523)	2966)	27	29
Other acquisitions5)	June	Europe	n/a	45	150	443)	336)	18	–7
Total acquisitions January – December 2019							329	45	22
Adjustment of preliminary acqui sition analysis7)						–29	–13	3	–18
Amortization of acquisition related intangible assets								–101
Exchange rate differences							244	15
Closing balance December 31, 2019							7,094	478

1) Refers to share of votes. In acquisitions of assets and liabilities, no share of votes is indicated.

2) Annual revenue translated to SEK million on the acquisition date.

3) The enterprise value on the acquisition date amounted to around SEK 411 million for Prosegur and around SEK 43 million for other acquisitions.

4) The acquisition analysis is preliminary and subject to final adjustment no later than one year from the acquisition date.

5) The acquisition analysis is preliminary and subject to final adjustment no later than one year from the acquisition date. Complete IFRS 3 disclosures and not disclosed

since the completed acquisitions are not deemed to materially impact the Group's statement of income or financial position.

6) Goodwill arising in connection with the acquisition is primarily attributable to market and synergy effects. Any impairment is not tax deductible.

7) Adjustments of preliminary acquisition analyses from the previous year for the following units: Compañía Chilena de Valores S.A. (CCV) and CPoR Devises.

NOTE 6 – LIQUID FUNDS

	2019	2018
SEK m	Dec 31	Dec 31
Liquid funds	5,073	6,140
– Adjusted for inventory of cash at the cash processing operations	–2,384	–3,250
– Adjusted for prepayments from customers	–1,034	–1,582
Liquid funds excluding funds for cash processing activities	1,655	1,308

NOTE 7 – CAPITAL EMPLOYED AND FINANCING

	2019	2018
SEK m	Dec 31	Dec 31
Operating capital employed	9,238	5,771
Goodwill	7,094	6,533
Acquisition-related intangible assets	478	515
Other capital employed	114	–93
Capital employed	16,924	12,727
Net debt	7,3322)	4,305
Shareholders' equity	9,592	8,422
Key ratios
Return on capital employed, %	151)	17
Return on equity, %	17	18
Equity ratio, %	36	37
Net debt/EBITDA	1.651)	1.27

1) In the third quarter Loomis prepared long-term business plans and in connection with this process, an impairment test was carried out to determine if impairment was indicated in any of the Group's cash-generating units. None of the cash-generating units had a book value exceeding its recoverable amount, and therefore no goodwill impairment has been recorded in the third quarter. This assessment remains the same as of the fourth quarter and there is thus no indication of any impairment and no impairment test was carried out in the fourth quarter.

2) For information regarding the IFRS 16 impact, see Note 8.

NET DEBT

	2019	2018
SEK m	Dec 31	Dec 31
Liquid funds excluding funds for cash processing activities	1,655	1,308
Interest-bearing financial fixed assets	565	500
Interest-bearing financial current assets	61	37
Interest-bearing lease liabilities	–2,873	–
Other interest-bearing long-term liabilities	–6,711	–5,092
Other interest-bearing current liabilities	–29	–1,058
Net debt	–7,332	–4,305

NOTE 8 – 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. In addition, the increased lease liability is negatively impacting net financial expense. See also the tables below.

Right-of-use assets, which are reported on a separate line in the balance sheet, amounted to SEK 2,911 million as of December 31, 2019. Buildings account for 76 percent of total right-of-use assets. The lease liability as of December 31, 2019 totaled SEK 2,873 million, of which the long-term lease liability amounts to SEK 2,313 million and the short-term lease liability to SEK 560 million. The long-term and short-term lease liabilities are recognized as interest-bearing long-term lease liabilities and interest-bearing shortterm lease liabilities respectively in the balance sheet.

During 2019 the costs relating to short-term leases (lease term of 12 months or less) amounted to SEK 34 million and leases for which the underlying asset has a low value (<USD 5,000) amounted to SEK 11 million.

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

	Including IFRS 16	Excluding IFRS 16
	Dec 31, 2019	Dec 31, 2019
Net debt	7,332	4,549
Net debt/EBITDA	1.65	1.19
Return on capital employed, %	15	18

	Including IFRS 16	Excluding IFRS 16	Including IFRS 16	Excluding IFRS 16
SEK m	Oct–Dec 2019	Oct–Dec 2019	Jan–Dec 2019	Jan–Dec 2019
Operating income, EBITDA	1,169	1,003	4,435	3,813
Depreciation	476	324	1,834	1,265
Operating income, EBITA	693	680	2,601	2,548
Operating margin, EBITA, %	13.0	12.7	12.4	12.1
Net financial items	–45	–19	–178	–73
Net income for the period	407	417	1,646	1,685
Earnings per share	5.42	5.54	21.88	22.40
Investments in relation to depreciation	1.1	1.6	0.9	1.3

NOTE 9 – TRANSACTIONS WITH RELATED PARTIES

Transactions between Loomis and related parties are described in Note 7 on page 96 of the 2018 Annual Report. As previously communicated in connection with the Extraordinary General Meeting on August 28, 2019, board member Lars Blecko provides consulting services to Loomis Armored US LLC. pursuant to an existing agreement between Loomis Armored US LLC and a company owned by him. There have been no transactions with related parties during the period that have materially impacted the Company's earnings and financial position.

NOTE 10 – NUMBER OF SHARES AS OF DECEMBER 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 11 – CONTINGENT LIABILITIES, GROUP

	2019	2018
SEK m	Dec 31	Dec 31
Securities and guarantees	2,0141)	1,7071)
Other contingent liabilities	–	–
Total contingent liabilities	2,014	1,707

1) Excluding intra-group contingent liabilities. The amount as per December 31, 2018 has been adjusted.

OTHER INFORMATION – KEY RATIOS

	2019	2018	2019	2018
	Oct–Dec	Oct–Dec	Full year	Full year
Real growth, %	5	8	5	8
Organic growth, %	1	3	2	3
Total growth, %	8	14	10	11
Gross margin, %	28.6	26.9	27.7	26.3
Selling and administration expenses in % of total revenue	–15.6	–14.9	–15.4	–14.8
Operating margin (EBITA), %	13.02)	12.0	12.42)	11.5
Tax rate, %	26	25	26	25
Net margin, %	7.6	7.8	7.8	8.0
Return of shareholders' equity, %	17	18	17	18
Return of capital employed, %	152)	17	152)	17
Equity ratio, %	36	37	36	37
Net debt (SEK m)	7,3322)	4,305	7,3322)	4,305
Net debt/EBITDA	1.652)	1.27	1.652)	1.27
Cash flow from operating activities as % of operating income (EBITA)3)	48	144	81	91
Investments in relation to depreciation3)	1.1	1.5	0.9	1.2
Investments as a % of total revenue	9.8	8.8	7.8	7.6
Earnings per share before and after dilution, SEK1)	5.422)	5.14	21.882)	20.45
Shareholders' equity per share before and after dilution, SEK	127.51	111.95	127.51	111.95
Cash flow from operating activities per share after dilution, SEK	10.64	14.69	44.69	37.69
Dividend per share, SEK	–	–	10.00	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 8.

3) Excluding the IFRS 16 impact.

Parent Company

PARENT COMPANY SUMMARY STATEMENT OF INCOME

	2019	2018
SEK m	Full year	Full year
Revenue	631	516
Operating income (EBIT)	374	310
Income after financial items	733	834
Net income for the period	692	880

The Parent Company's revenue consists mainly of license fees and other revenue from subsidiaries. The decrease in net income is due to lower dividends from subsidiaries.

PARENT COMPANY SUMMARY BALANCE SHEET

	2019	2018
SEK m	Dec 31	Dec 31
Fixed assets	11,571	11,160
Current assets	1,671	1,283
Total assets	13,242	12,444
Shareholders' equity1)	5,158	5,209
Liabilities	8,084	7,234
Total shareholders' equity and liabilities	13,242	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
SEK m	Dec 31	Dec 31
Guaranteed committed bank facilities	4,401	4,221
Other contingent liabilities	44	39
Total contingent liabilities	4,444	4,260

Definitions

Use of key ratios not defined in IFRS

The Loomis Group's accounts are prepared in accordance with IFRS. See page 15 for more information on accounting principles. Only a few key ratios are defined in IFRS. As of the beginning of the second quarter of 2016 Loomis is applying the new guidelines for Alternative Performance Measures issued by ESMA (European Securities and Markets Authority). Briefly, an alternative performance measure is a financial measurement of historical or future earnings development, financial position or cash flow not defined or specified in IFRS. To assist management and other

stakeholders in their analysis of the Group's performance, Loomis is reporting certain performance measures not defined by IFRS. Group Management believes that this data will facilitate an analysis of the Group's performance. This data supplements the IFRS information and does not replace the performance measures defined in IFRS. Loomis' definitions of measures 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 dilution	Net income for the period in relation to the average number of outstanding shares during the period. Calculation for: Oct–Dec 2019: 407/75,226,032 x 1,000,000 = 5.42. Oct–Dec 2018: 387/75,226,032 x 1,000,000 = 5.14. Jan–Dec 2019: 1,646/75,226,032 x 1,000,000 = 21.88. Jan– Dec 2018: 1,538/75,226,032 x 1,000,000 = 20.45.
Earnings per share after dilution	Calculation for: Oct–Dec 2019: 407/75,226,032 x 1,000,000 = 5.42. Oct–Dec 2018: 387/75,226,032 x 1,000,000 = 5.14. Jan–Dec 2019: 1,646/75,226,032 x 1,000,000 = 21.88. Jan– Dec 2018: 1,538/75,226,032 x 1,000,000 = 20.45.
Cash flow from operations per share	Cash flow for the period from operations in relation to the number of shares after dilution.
Investments in relation to depreciation	Investments in fixed assets, net, for the period, in relation to depreciation (excluding the IFRS 16 impact).
Investments as a % of total revenue	Investments in fixed assets, net, for the period, as a percentage of total revenue.
	Shareholders' equity per share Shareholders' equity in relation to the number of shares after dilution.
Cash flow from operating activities as % of operating income (EBITA)	Operating income, EBITA, (excluding IFRS 16), adjusted for depreciation (excluding IFRS 16), change in accounts receivable and other items (excluding IFRS 16) as well as net investments in fixed assets as a percentage of operating income, EBITA, (excluding IFRS 16).
Return on equity, %	Net income for the period as a percentage of the closing balance of shareholders' equity.
	Return on capital employed, % Operating income (EBITA) as a percentage of the closing balance of capital employed.
Equity ratio, %	Shareholders' equity as a percentage of total assets.
Capital employed	Shareholders' equity with the addition of net debt. Calculation as per December 31, 2019: 9,592 + 7,332 = 16,924. December 31, 2018: 8,422 + 4,325 = 12,727.
Net debt	Interest-bearing liabilities less interest-bearing assets and liquid funds excluding funds for cash processing activities.
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.

Stockholm, February 5, 2020

Patrik Andersson President and CEO Board member

Review Report

Introduction

We have reviewed the interim report for Loomis AB (publ) for the period January 1 – December 31, 2019. The Board of Directors and the President are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the 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 International Standard on Review Engagements ISRE 2410, Review of Interim Financial Information 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 has a

different focus and is substantially less in scope than an audit conducted in accordance with ISA and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not, in all material respects, prepared for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.

Stockholm, February 5, 2020

Deloitte AB

Peter Ekberg Authorized Public Accountant

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 2019 of SEK 21 billion. Loomis is listed on Nasdaq Stockholm Large-Cap list.

Telephone conference and audio cast

A telephone conference will be held on February 5, 2020 at 09:00 a.m. (CET).

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, 1039047.

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 meeting

Interim report	January – March	May 6, 2020
Interim report	January – June	July 24, 2020
Interim report	January – September	November 5, 2020

Loomis' Annual Report for 2019 will be available at www.loomis.com in April 2020. Loomis' Annual General meeting will be held on May 6, 2020 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 08.00 a.m. (CET) on February 5, 2020.