Coor Service Management Holding AB – Interim Report January–September 2015

Continued growth and strong results in Norway.

Third quarter 2015

Net sales increased by 5 per cent in the third quarter, to SEK 1,806 (1,728) million. Organic growth excluding currency fluctuations amounted to 6per cent.
The operating profit (adjusted EBITA) decreased by SEK 4 million to SEK 75 (79) million. Excluding currency fluctuations, earnings decreased by SEK 2 million. The operating margin (adjusted EBITA margin) was 4.2 (4.6) per cent. EBIT was SEK 17 (-11) million.

Earnings after tax were SEK 16 (-57) million. The improvement compared with the previous year was mainly due to reduced financial expenses.

Earnings per share were SEK 0.2 (-8.1). After adjustments for the effects of the new capital structure,earnings per share were SEK 0.2 (-0.6).

Operating cash flow was SEK -8 (140) million. Excluding the outflows related to the listing, the operating cash flow was SEK 64 (140) million. The third quarter was also affected by the favourable level of working capital in the year's second quarter.

The period January–September 2015

Net sales during the period grew by 12 per cent to SEK 5,440 (4,877) million. Currency fluctuations had no impact on net sales during the period.

The operating profit (adjusted EBITA) improved by SEK 22 million to SEK 264 (242) million. Excluding currency fluctuations, earnings increased by SEK 24 million. The operating margin (adjusted EBITA margin) was 4.8 (5.0) per cent. EBIT was SEK 26 (15) million.

Earnings after tax were SEK 156 (-164) million. The change compared with the previous year is mainly due to lower financial expenses, as well as because tax losses are recognised during the second quarter.

Earnings per share were SEK -4.2 (-23.3). After adjustments for the effects of the new capital structure and nonrecurring costs in connection with the listing, earnings per share were SEK 2.3 (-1.7).

Operating cash flow was SEK 6 (15) million. Excluding outflows related to the listing, the operating cash flow was SEK 125 (15) million.

CEO comments

Coor continues to deliver a strong organic growth of 6 percent in the third quarter and 12 percent for the period from January to September.

The operating margin (adjusted EBITA margin) for the third quarter was 4.2 per cent and 4.8 per cent for the period from January to September. The third quarter has always been the weakest quarter in terms of margins for the Group as a whole. Despite this margins have greatly improved in Norway, as well as in Denmark and Finland.

Our underlying cash flow continues to be strong, and in the last twelve months we have reduced operating capital by SEK 91 million and have cash conversion of 111 per cent. During the third quarter the cash flow was affected by large outflows related to the listing.

Continued growth is driven by Norway and Denmark

During the third quarter we have continued to win new contracts and extend some major existing contracts. The important contract extensions during the quarter include the contract with the Danish Police service. We deliver integrated facility management (IFM) to 210 police stations all over Denmark under this agreement. Another important contract extension was with Sweden's largest property company Vasakronan, where we deliver IFM to Vasakronan and bundled FM services to their tenants.

During the period we have successfully signed a new Norwegian IFM contracts with Frontica Business Solutions (for services to Aker Solutions in Fornebu) and Statoil (for services to five oil platforms in the North Sea). In addition, on 7 October we announced a large extension of the IFM contract with Aker Solutions in Norway.

The pressure from low oil prices in the Norwegian oil and gas industry continues to drive an interesting and expansive market for Coor and our effective IFM solutions. As the market leader in IFM solutions in the Nordic countries, we are well positioned to continue to help the Norwegian oil industry to find the next level of outsourced efficiency.

Strengthened margins in all countries except Sweden

During the third quarter profitability was strong in all countries except for Sweden.For the Group as a whole and Sweden in particular, the third quarter has always been the weakest quarter in terms of margins. This is due to the fact that July and August are holiday months, which means that there are fewer additional orders of services that provide a higher margin and that there are fewer diners in Coor's restaurants. This seasonal effect was offset during the third quarter of 2014 by large additional orders in a single Swedish contract, which partly explains the difference between this year's third quarter and the third quarter of 2014.

As we announced after the second quarter, the cutbacks in the operations at one of our larger customers in Sweden were implemented during the third quarter. This will affect us negatively during the second half year 2015 until we have adjusted our cost mass.

On the other hand, Norwegian operations deliver a significant margin improvement during the quarter, which is driven by larger contract volumes that have existed for a longer period of time. This is an effect of our structured integration work with large contract volumes during the last twelve months. The strengthened margins in Denmark and Finland are mainly driven by efficiency measures which were implemented in a number of existing contracts.

Strong cash conversion rolling 12 months

Our underlying cash flow is very strong. During the last twelve months we have reduced operating capital by SEK 91 million and we have cash conversion of 111 per cent. Efforts to generate high cash flows have always been central to us at Coor, and when we are able to combine a reduction in working capital with organic growth we create a good platform for large dividends to our shareholders in the future.

Good market prospects

In a turbulent world our home markets in the Nordic region continue to be stable with underlying GDP growth in all of the Nordic countries except Finland. Market prospects for outsourced FM services continue to be favourable. We are witnessing a stable demand and high activity levels in all markets and are in a good position to achieve continued growth with good cash flow.

The PDF version of the report is found here

Stockholm, 5 November, 2015

Mikael Stöhr
President and CEO, Coor Service Management

The information is disclosed pursuant to the Swedish Financial Instruments Trading Act. The information was submitted for publication on November 5, 2015 at 08:00 CET.

Invitation to press and analyst presentation

On 5 November at 10:00 CET, Coor's CEO and CFO will present the company's development during the third quarter in a webcast. To participate in the webcast please register via the following link http://edge.media-server.com/m/p/5589hwda before the meeting. If you would like to listen to the presentation via the phone, please call +46 8 566 426 96 (Sweden), +47 235 002 53 (Norway), +358 981 710 492 (Finland) or +44 203 428 14 09 (England). The presentation material as well as a recording of the webcast will be published on the company's website after the presentation.

Please find more information, images etc. at www.coor.com or contact

Thomas Backteman, IR, Coor Service Management
+46 70 831 11 66, thomas.backteman@coor.com

Olof Stålnacke, CFO, Coor Service Management
+46 10 559 59 20, olof.stalnacke@coor.com

Mikael Stöhr, CEO and President, Coor Service Management
+46 10 559 59 35, mikael.stohr@coor.com

Åsvor BrynnelCommunications and Sustainability Manager, Coor Service Management
+46 10 559 54 04, asvor.brynnel@coor.com