Coor Service Management Holding AB – Interim Report 25 August 2015

A second quarter on track

Second quarter 2015

• Net sales increased by 9 per cent in the second quarter, to SEK 1,786 (1,642) million.
• The operating profit (adjusted EBITA) improved by SEK 6 million to SEK 88 (82) million. The operating margin (adjusted EBITA margin) was 5.0 (5.0) per cent. EBIT was SEK -42 (11) million, mainly due to listing costs of 78 MSEK.
• Earnings after tax were SEK 128 (-69) million. The change compared with the previous year is due to the recognition of tax losses.
• Earnings per share were SEK -1.81 (-8.16). Adjusted for the new capital structure and one-off costs in conjunction with the listing, earnings per share amounted to SEK 1.97 (-0.72).
• Operating cash flow improved by SEK 153 million to SEK 45 (-108) million.

First half year 2015

• Net sales during the period grew by 15 per cent to SEK 3,634 (3,149) million.
• The operating profit (adjusted EBITA) improved by SEK 25 million to SEK 188 (163) million. The operating margin (adjusted EBITA margin) was 5.2 (5.2) per cent. EBIT was SEK 9 (26) million.
• Earnings after tax were SEK 140 (-107) million.
• Earnings per share were SEK -7.70 (-15.18). Adjusted for the new capital structure and one-off costs in conjunction with the listing, earnings per share amounted to SEK 2.10 (-1.12).
• The operating cash flow improved by SEK 139 million to SEK 14 (-125) million.
• The net addition to the contract portfolio during the period was approximately SEK 350 million in annual net sales.

CEO comments

Coor continued to perform well in the second quarter of the year, and the company is reporting earnings in line with plan. Revenues grew by 9 per cent over the quarter while our operating margin (adjusted EBITA) remained unchanged at 5.0 per cent compared with the same period the year before. Cash flow improved significantly, both year on year and quarter on quarter. We are entering the second half of the year with a strong financial position.

The main bright spots of the second quarter are the extension of our Nordic contract with Ericsson, one of our largest customers, and the new IFM contract that we signed with Frontica for services to Aker Solutions and other customers at Fornebu in Norway. Coupled with the new contracts that we concluded and extended in the first quarter, notably with AB Volvo (Sweden), Volvo Cars (Sweden) and Statoil (expanded IFM contract for five oil platforms outside Norway), this means that we achieved a very strong sales performance in the first six months, which will have a financial impact as contract deliveries commence in the second half of 2015.

The big increase in revenues in the second quarter is due to the new contracts that were signed in 2014, particularly the contract with Statoil in Norway, our largest to date, which was rolled out gradually, reaching full volume in September 2014. This contract will have a significant impact on sales growth in our Norwegian business until September 2015. However, due to the initially higher costs for the Statoil contract, our operating margin in Norway as expected was slightly lower in the second quarter compared with the first. In our Danish business, too, sales are up year on year and the operating margin is stable. Our Swedish business continues to report high margins, although sales are down slightly, chiefly due to the termination of a major cleaning contract following a public procurement in 2014.

In addition to our new contracts, one of the big events during the period was of course the listing of the company’s shares on Nasdaq Stockholm on 16 June, and I would like to take this opportunity to welcome all our new shareholders to Coor. A consequence of the listing is that we incurred transaction costs for the listing in the second quarter.

The economic outlook in the Nordic countries is still relatively good. We are seeing good overall demand, especially in the IFM segment but also for bundled FM services and single services. Activity in the FM market is especially strong in the oil and gas industry in Norway and in the public sector throughout the Nordic region. Some of our largest customers have announced cutbacks in their operations, which will have a negative impact on volumes in the latter half of 2015, primarily in the Swedish and Norwegian operations. Temporarily this will also have a negative impact on our operating margins, further weakening the seasonally weaker third quarter slightly.

On the whole the outlook for long-term sales and earnings growth in line with our targets are good. This means that over the course of an economic cycle we expect to achieve annual organic growth of 4 – 5 per cent and an annual operating margin (adjusted EBITA margin) of 5.5 per cent. With a continued focus on developing integrated facility management solutions for major customers coupled with initiatives in cleaning, company restaurant and property services, we are strengthening our position as the leading provider of FM services in the Nordic region. This means that we are in a good position to take advantage of the opportunities that arise in the Nordic FM market.

Stockholm, 25 August 2015

Mikael Stöhr
President and CEO,
Coor Service Management

The Interim Report is attached and available via the link at the end of this press release.

The information is disclosed pursuant to the Swedish Financial Instruments Trading Act. The information was submitted for publication on August 25, 2015 at 08:00 CET.

Invitation to Press and Analyst’s webcast
To participate in the webcast, please register via the following link http://edge.media-server.com/m/p/yoadp2yd before the meeting. If you wish to listen to the presentation via the telephone, please call +46 8 566 426 96 (Sweden), +47 235 002 53 (Norway), +45 823 331 76 (Denmark), +358 981 710 492 (Finland) or +44 203 428 14 09 (United Kingdom). The presentation and the on demand webcast will be published on our website www.coor.com/investors/reports and presentations after the meeting.

Coor Service Management (Coor) is a leading provider of facility management services in the Nordics, focusing on integrated and complex service undertakings (IFM). Coor offers specialist expertise in workplace services (soft FM), property services (hard FM) and strategic advisory services for development of customers’ service activities. Coor creates value by executing, leading, developing and streamlining its customers’ service activities, ensuring that they provide optimal support to the core business over time. Coor’s customer base includes many large and small companies and public-sector organisations across the Nordic region, including AB Volvo, Aibel, Det Norske Veritas, DR (Danish Radio), E.ON, Ericsson, EY, ICA, NCC, Politiet (Danish Police), Saab, Sandvik, SAS, Skanska, Statoil, TeliaSonera, Swedish Transport Administration, Vasakronan and Volvo Cars.

Coor was founded in 1998 and is listed on Nasdaq Stockholm since 2015. At 30 June 2015 the company had 6,600 employees based mainly in Sweden, Denmark, Norway and Finland, and annual sales of SEK 7,300 million (rolling twelve-month basis). Coor takes responsibility for the operations it conducts, in relation to its customers, employees and shareholders, as well as for its wider impact on society and the environment. Read more at www.coor.com

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