Slide 1: Growing revenues but maintaining our focus on earnings and margins
The specialist in cash handling Growing revenues but maintaining our focus on earnings and margins Capital Markets Day – London September 25th 2014
Slide 2: Program
Program 13.00 Presentations, including: • Growing revenues but maintaining our focus on earnings and margins Jarl Dahlfors, President & CEO and Anders Haker, CFO • CMS and SafePoint driving growth in the US market Lars Blecko, VP Regional President USA Jarl Dahlfors Anders Haker Lars Blecko 14.40 Br
Slide 3: Cautionary Statement
Cautionary Statement This presentation contains, or may be deemed to contain, forward-looking statements. These statements relate to future events or our future financial performance, including, but not limited to, strategic plans, potential growth, planned operational changes, expected capital expe
Slide 4: Today´s agenda
Today´s agenda Delivering on our margin objectives Strong platform for future development Entering into a growth phase with New financial increased performance targets Taking advantage of regional Case studies to opportunities support new targets 4
Slide 5: Increasing our growth profile
Increasing our growth profile - Continued margin improvements Growth Profit Quality From 90% focus on profit margin... ….to a more balanced focus between profit margin, revenue growth and capital allocation Loomis model delivers a ”healthy” growth 5 5
Slide 6: A history of continuous improvements and reaching objectives
A history of continuous improvements and reaching objectives
Slide 7: Our strict focus on profitability has paid off…
Our strict focus on profitability has paid off… 12% 10% Target 2014 9,7% 9,8% 9,0% 8% 8,3% Target 2010 8,0% 7,0% 6% 6,6% 4% 2% 0% 2008 2009 2010 2011 2012 2013 2014 R12 Target remains, ”10% latest 2014” (excl VIA MAT) 7
Slide 8: …with EPS growth of 11% CAGR
…with EPS growth of 11% CAGR EPS, SEK, diluted 12 10 9,78 8 8,60 6 6,79 5,80 6,62 6,57 Equivalent to a CAGR of 11% 4 2 0 2008 2009 2010 2011 2012 2013 DPS, SEK 6 5 5,00 4 4,50 3 3,50 3,75 Equivalent to a CAGR of 17% 2 2,65 2,25 1 0 2009 2010 2011 2012 2013 2014 8
Slide 9: Earnings focus has led to modest growth
Earnings focus has led to modest growth Revenue, SEK m Ebita margin, % 14 000 14,0% 12 000 12,0% 10 000 10,0% 8 000 8,0% 6 000 6,0% 4 000 4,0% 2 000 2,0% 0 0,0% 2008 2009 2010 2011 2012 2013 2014* Revenue Ebita margin, % 9
Slide 10: Is cash usage important?
Is cash usage important?
Slide 11: Future cash growth is expected to be close to flat
Future cash growth is expected to be close to flat 130 Real GDP 120 110 Cash use 1 % CAGR* 100 90 80 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 *) Source:MPD 2014 11
Slide 12: No correlation between cash usage and profitability
No correlation between cash usage and profitability High Cash usage in % of total no of transactions Low Low High Operating margin 12
Slide 13: Outsourcing drives profitability
Outsourcing drives profitability High Outsourcing Low Low Profitabilty High 13
Slide 14: Strong global outsourcing trend
Strong global outsourcing trend Global outsourcing cycle Banking outsourcing IT Call centres BPO Growth rate 1990 2000 2010 Growth rate 1990 2000 2010 Source: Professor Arie Y. Lewin, Duke University ORN Source: Accenture 14
Slide 15: Long-term opportunities in emerging markets
Long-term opportunities in emerging markets Cash Handling Market Growth 2011-2016 Asia Pacific Middle East & Africa Latin/Central America Europe North America 0,0% 1,0% 2,0% 3,0% 4,0% 5,0% 6,0% 7,0% 8,0% 9,0% 10,0% Source: Freedonia 15
Slide 16: Launching new Financial targets
Launching new Financial targets
Slide 17: Launching new financial targets
Launching new financial targets - 2015-2017 New target Previous target Revenue SEK 17 bn by 2017 N/A Ebita margin 10-12% 10% at the latest 2014 Debt gearing Max 3.0 (net debt/ebitda) Max 2.5 (net debt/ebitda) Dividend 40-60% of net earnings 40-60% of net earnings 17
Slide 18: Revenue
Revenue Target: Reaching SEK 17 bn by 2017
Slide 19: Targeting SEK 17 bn in revenues 2017
Targeting SEK 17 bn in revenues 2017 SEK bn 18 17 16 Growth SEK 3 bn 15 CAGR 7% 14 13 12 11 10 2008 2009 2010 2011 2012 2013 2014 PF 2015 2016 2017 Combined organic and acquired growth Organically: • Underlying volume (+) • Outsourcing (+++) • Broadening service portfolio (+++) • Market share (+
Slide 20: Accretive acquisitions have been made
Accretive acquisitions have been made Acquired revenue, Ebita margin, % SEK m 1 800 12,0% 1 500 10,0% 1 200 8,0% 900 6,0% 600 4,0% 300 2,0% 0 0,0% 2008 2009 2010 2011 2012 2013 2014* Revenue - acquisitions Ebita margin, % * 2014 R12 Ebita margin 20
Slide 21: We always have a strategy to be #1 or #2
We always have a strategy to be #1 or #2 Austria 1 Slovenia 2 20 countries ~400 branch offices Czech Republic 2 Spain 2 21 000 employees Denmark 2 Sweden 1 Revenue SEK 13 bn Finland 2 Switzerland 1 USA 1 France 2 Turkey 3 Germany - UK 2 Brazil - Norway 1 Argentina 5 Portugal 3 Dubai - Slovakia 1 Hon
Slide 22: Margin
Margin Target: 10-12% N Managing cash in society.
Slide 23: Ebita margin will continue to increase
Ebita margin will continue to increase - potentially impacted by M&A 14% 12% EBITA 10%-12% 10% 8% 6% 4% 2% 0% 2008 2009 2010 2011 2012 2013 2014 R12 2015 2016 2017 Many branches with unfinished improvement programs Continued mix shift in line of business (proportionally less CIT) 23
Slide 24: We know how to handle cash efficiently
We know how to handle cash efficiently %, margin 12 1,1 3,6 0,1 10 1,5 9,7 8 6 6,6 4 2 0 2008 Efficiency Cost of risk Overhead Depreciation on 2013 capex Loomis model with a few focus areas Best practice sharing Bench marking (monthly KPI ranking) Measure, Monitor, Manage 24
Slide 25: Increasing no. of performing branches
Increasing no. of performing branches 100% 90% 22% 17% 30% 28% 27% 26% 25% 80% 70% 60% 50% 40% 78% 83% 70% 72% 73% 74% 75% 30% 20% 10% 0% 2008 2009 2010 2011 2012 2013 2014 JUNE - YEAR TO DATE Performing Non-performing Once the Loomis model is fully implemented ~10% is underperforming Very stabl
Slide 26: Gearing
Gearing Target: Net debt/EBITA max 3.0
Slide 27: Increased gearing supports growth plans
Increased gearing supports growth plans Net Debt / EBITDA 3,50 3,00 Revised level 2,50 2,00 1,50 1,00 0,50 0,00 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Net Debt / EBITDA Acquisitions and dividends have temporarily increased ge
Slide 28: Stable capital expenditure
Stable capital expenditure Capex/Total Revenue 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 2009 2010 2011 2012 2013 Main components Vehicle replacements and security equipment SafePoint expansion Upgrades of branch facilities 28
Slide 29: Modern branches in US support growth projects
Modern branches in US support growth projects Old CMS facility, Houston Branch New CMS facility, Houston Branch Increased CMS revenue is a primary growth opportunity in US and requires secure and cost efficient processes 29
Slide 30: Dividend
Dividend Target: 40-60% of net earnings
Slide 31: Maintaining dividend target of 40-60% of net earnings
Maintaining dividend target of 40-60% of net earnings – history shows stability 2009 2010 2011 2012 2013 Accumulated EBITA 837 882 912 1 019 1 099 4 749 Operating cash flow before cap ex 1 592 1 645 1 540 1 607 1 677 8 061 Capital expenditures -803 -708 -840 -747 -720 -3 818 Capex to depreciation ra
Slide 32: Growing revenues but maintaining focus on earnings and margins
Growing revenues but maintaining focus on earnings and margins Strong platform for future developments History of continuous improvements and reaching our objectives Increased focus on growth Continued activities to build revenue and improve margins even further Focus on shareholder returns New fina
Slide 33: Launching new financial targets
Launching new financial targets - 2015-2017 New target Priorities • CMS in USA • SafePoint in USA SEK 17 bn by 2017 • International Services Revenue • Continued development in value-added services • M&A • Fewer underperforming ”branches” Ebita Margin 10-12% • Business mix ”less CIT more CMS and LIS”