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Coor Service Management Holding AB – Year-End Report January – December 2015

A strong conclusion to a strong year

Fourth quarter 2015

  • Net sales increased by 4 per cent in the fourth quarter, to SEK 2,042 (1,967) million. Organic growth excluding currency fluctuations amounted to 6 per cent.
  • Operating profit (adjusted EBITA) amounted to SEK 110 (112) million. Excluding currency fluctuations, operating profit was unchanged. The operating margin (adjusted EBITA margin) was 5.4 (5.7) per cent.
  • EBIT was SEK 56 (-97) million. Profit/loss after tax was SEK 45 (-147) million.
  • Earnings per share were SEK 0.5 (-10.9). After adjustments for the effects of the new capital structure, earnings per share were SEK 0.5 (-1.4).
  • Operating cash flow was SEK 268 (260) million. Excluding the outflows related to the listing, operating cash flow was SEK 286 (260) million.
  • The Board of Directors proposes a dividend for 2015 of SEK 2.00 per share.

Full year 2015

  • Net sales increased by 9 per cent during the year, to SEK 7,482 (6,844) million. Organic growth amounted to 10 per cent.
  • Operating profit (adjusted EBITA) improved by SEK 20 million to SEK 374 (354) million. Excluding currency fluctuations, operating profit increased by SEK 24 million. The operating margin (adjusted EBITA margin) was 5.0 (5.2) per cent.
  • EBIT was SEK 82 (-82) million. Profit/loss after tax was SEK 201 (-311) million.
  • Earnings per share were SEK -3.6 (-34.2). After adjustments for the effects of the new capital structure and non-recurring costs in connection with the listing, earnings per share were SEK 2.7 (-3.2).
  • Operating cash flow was unchanged compared with the previous year and amounted to SEK 274 (274) million. Excluding the outflows related to the listing, operating cash flow was SEK 411 (274) million.
  • Net debt at year-end was SEK 947 (2,673) million. The leverage was 2.2 (6.6).

CEO´s comments:

2015 was a good year for Coor. We delivered strong organic growth, stable operating profit and a strong cash flow. We have extended 90 per cent of the customer contracts we negotiated during the year and continued to launch innovative service solutions with a high degree of technological content for our customers. The Board of Directors proposes a dividend for 2015 of SEK 2 per share.

In conjunction with Coor's IPO in June 2015, we explained in many settings that an investment in Coor is an investment in a market-leading service company with growth potential, a strong cash flow and low level of tied-up capital. These circumstances form the grounds for long-term, stable shareholder dividends. Our customer value is directly linked to the value we create for our shareholders. In the fourth quarter, we delivered growth in sales and profit, at the same time as strengthening our margins compared with the two preceding quarters. Operating cash flow also saw improvement during the quarter. In summary, we can report a strong conclusion to a strong year.

Strong organic growth
Sales grew organically by 6 per cent during the fourth quarter to SEK 2,042 (1,967) million, and sales for the full year were SEK 7,482 (6,844) million, corresponding to organic growth of all of 10 per cent. This is significantly more than is exhibited by the market as a whole, and well in excess of our target of 4-5 per cent organic growth per year.

The most substantial growth was seen in the Norwegian operations, but Sweden and Denmark also provided positive contributions. Growth has primarily been driven by the large number of new contracts we initiated in 2014 and 2015, not least the large IFM contract signed with Statoil on-shore in 2014, while increased sales to existing customers in the fourth quarter were also a contributing factor. The most noteworthy of the new contracts we signed during the financial year 2015 include the contracts with Statoil off-shore and Frontica Business Solutions/Aker Solutions in Norway.

I would also like to emphasize the large number of existing contracts we extended and expanded as one of the highlights of the year. A full 90 per cent of the contract volume negotiated during the year, totalling almost SEK 2.9 billion, has been extended. Large customers that have chosen to continue and, in some cases, expand their collaboration with Coor include Ericsson, the Danish Police, AB Volvo, Volvo Car Group, Saab AB, Borealis and Vasakronan.

Stable profitability with numerous new and renegotiated contracts
Operating profit for the full year amounted to SEK 374 (354) million, an increase of 6 per cent compared with previous year. The operating margin improved on the two preceding quarters and amounted to 5.4 (5.7) per cent in the fourth quarter. An important explanation behind the difference between this quarter and the previous year is the decrease in pension rebates in Sweden compared with recent years. Discounting for this effect, the Group's operating margin in the fourth quarter would be in line with the previous year.

Coor's target is to generate an average operating margin of approximately 5.5 per cent over the course of an economic cycle. For the full year 2015, the operating margin was 5.0 (5.2) per cent, which should be considered relative to the high number of new and renegotiated contracts that we have managed during the year. These contracts usually build up to full profitability during their first 6 to 18 months. The underlying profitability in our contracts is stable, and maturing contract volumes will constitute a solid base for our work to strengthen margins during the coming years.

Strong cash conversion
Cash flow remains strong and working capital has been reduced by SEK 69 million during the year, which together give a cash conversion of 104 per cent for the full year 2015 (refer to Note 9 for further information). A stable cash flow is a strategic priority for us at Coor, as it forms the basis for converting our customer value to shareholder value, in the form of long-term, stable dividends.

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 we are in a good position to achieve continued growth with good cash flows.

Stockholm, 24 February, 2016

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 February, 24, 2015 at 07:30 CET.

Invitation to press and analyst presentation

On 24 February at 10:00 CET, Coor's President and CFO will present the Company's development during the fourth quarter in a webcast. To participate in the webcast, please register via the following link http://edge.media-server.com/m/p/6mhz6b46 prior to the meeting. If you would like to listen to the presentation via telephone, please call +46 8 566 426 90 (Sweden), +47 235 002 52 (Norway), +45 354 455 75 (Denmark), +358 981 710 491 (Finland) or +44 203 008 98 01 (England). The presentation material as well as a recording of the webcast will be published on the Company's website www.coor.se/investerare/rapporterochpresentationer following 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, Coor Service Management +46 10 559 59 35 mikael.stohr@coor.com
Åsvor Brynnel Communications and Sustainability Manager,
Coor Service Management
+46 10 559 54 04 asvor.brynnel@coor.com

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 December 31, 2015, the company had 6,400 employees based mainly in Sweden, Denmark, Norway and Finland, and annual sales of SEK 7,480 million. 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