PASSION for SERVICE Annual and Sustainability Report 2019 Coor Service Management Holding AB CONTENTS INTRODUCTION 1 Coor’s vision 2 Highlights of the year 6 Chief Executive’s review GOALS AND STRATEGY 8 Goals 12 Strategy MARKET AND OFFERING 14 Market overview 16 Industry trends 18 Coor’s offering 22 Meet our customers OPERATIONS 25 Coor in the Nordic Region 26 Coor Sweden 27 Coor Norway 28 Coor Denmark 29 Coor Finland SUSTAINABILITY 30 Social sustainability 34 Environmental sustainability COOR AS AN INVESTMENT 36 Interview with Coor’s CFO 37 Coor’s shareholders 38 Share information STATUTORY ANNUAL REPORT 41 Directors’ Report 47 Proposed appropriation of retained earnings 48 Risks and risk management 50 Consolidated financial statements 54 Notes to the consolidated financial statements 82 Parent company financial statements 84 Notes to the parent company financial statements 87 Declaration of the Board of Directors 88 Auditor’s Report CORPORATE GOVERNANCE 94 Corporate Governance Report 103 Auditor’s opinion 104 Presentation of the Board of Directors 106 Presentation of management SUSTAINABILITY NOTES 108 Sustainability notes 110 Materiality analysis 111 Sustainability data 117 Auditor’s opinion 118 GRI index OTHER 120 Five-year summary 121 Selected KPIs 124 Definitions 125 Specific shareholder information This annual report covers the activities of Coor Service Management Holding AB, corp. ID no. 556742-0806. INTRODUCTION – COOR’S VISION – A VISION THAT SHOWS THE WAY Coor aims to create the happiest, healthiest and most prosperous workplace environments in the Nordic region. We strive tirelessly to build the teams and full-service solutions that enable our customers to do what they do best. COOR | ANNUAL AND SUSTAINABILITY REPORT 2019 – 1 – INTRODUCTION – HIGHLIGHTS OF THE YEAR – 2019 – CONTINUED GROWTH AND INCREASED OPERATING PROFIT In 2019, Coor delivered its best annual profits to date. OPERATING ORGANIC ADJUSTED EBITA CASH FLOW GROWTH 549 591 5 SEK MILLION SEK MILLION PER CENT NET SALES BY TYPE OF CONTRACT 61% 39% Integrated FM (IFM) FM services NET SALES BY SERVICE CATEGORY 65% 35% Workplace services Property services SUMMARY OF RESULTS, GROUP 2019 2018 Net sales, SEK million 10,313 9,489 Organic growth, % 5 10 Acquired growth, % 2 10 FX effects, % 1 3 Adjusted EBITA, SEK million 549 490 Adjusted EBITA margin, % 5.3 5.2 EBIT, SEK million 299 219 Profit after tax, SEK million 169 104 Operating cash flow, SEK million 591 354 Earnings per share, SEK 1.8 1.1 Number of employees (FTE) at year-end 9,296 9,082 Dividend, SEK 2.20 1) 4.00 1) The dividend is subject to approval by the Annual General Meeting on 28 April 2020. COOR | ANNUAL AND SUSTAINABILITY REPORT 2019 – 2 – INTRODUCTION – HIGHLIGHTS OF THE YEAR – NET SALES IN 2019 BY COUNTRY ANNUAL NET SALES SEK m 12,000 10,000 8,000 10,313 6,000 SEK MILLION 4,000 2,000 0 2015 2016 2017 2018 2019 Sweden 50% Norway 25% Denmark 18% Finland 7% Private sector Public sector COOR | ANNUAL AND SUSTAINABILITY REPORT 2019 – 3 – INTRODUCTION – HIGHLIGHTS OF THE YEAR – PROGRESS ON MANY FRONTS The past year has been an eventful one with many new and extended contracts in our customer portfolio. The acquisition of Norrlands Miljövård has added new skilled employees in our cleaning segment and expanded our geographic reach. Other highlights include our continued focus on innovation, Coor receiving an award for its efforts in energy optimisation and our expanded contract with the Danish Police. TRIPLE BOTTOM LINE Q1 OBJECTIVES Coor’s commitment to sustainability is based on a “triple bottom line” approach, which consists of three dimensions. In February 2019, Coor’s Board of Directors approves a set of long­term objectives for these three dimensions – commercial, social and environmental sustainability. These goals provide a clear direction for Coor’s continued sustainability management activities. STRONG INVESTOR EXTENDED CONTRACT IFM CONTRACT Q1 INTEREST Q2 WITH DANISH POLICE Q2 WITH ICA Coor issues a senior unsecured bond of Coor extends and expands its IFM con­ Coor signs a new IFM contract with ICA SEK 1,000 million. The bond attracts tract with the Danish Police until 2025, worth around SEK 160 million annually. strong interest from investors and the with an option to extend for a further three The contract runs for five years with an issue is heavily oversubscribed. years. The contract covers a broad integra­ option to extend. ted service delivery to the Danish Police, the Prosecution Authority, and the Prison and Probation Service. The estimated annual volume exceeds SEK 420 million. COOR SOCIETY SMART BUILDING ACQUISITION OF Q2 Q3 Q3 PROGRAM SOLUTIONS NORRLANDS MILJÖVÅRD Coor continues to emphasise social Coor’s innovation work continues with Coor acquires the Swedish cleaning sustainability through the Coor Society the introduction of Smart Building firm Norrlands Miljövård AB. The Program. Through various activities Solutions, a new focus area with services company has around 500 employees and across the entire organisation, such as aimed primarily at property owners. annual sales of approximately SEK 250 language courses, help with homework First out is Coor SmartDrone. The drones million. The acquisition increases Coor’s and assistance in joining the labour are used for thermography and 3D geographic coverage in Sweden and adds market, Coor helps to promote sustain­ modelling of properties, enabling more to the company’s skills base in cleaning able development. efficient maintenance and energy use. services. COOR | ANNUAL AND SUSTAINABILITY REPORT 2019 – 4 – INTRODUCTION – HIGHLIGHTS OF THE YEAR – NEW CFO AND IR EXTENDED CONTRACT SATISFIED EMPLOYEES! Q3 DIRECTOR Q4 WITH AKER SOLUTIONS Q4 Klas Elmberg takes over as CFO and IR Coor extends its IFM contract with In the annual employee survey, Director. Klas Elmberg was previously Aker Solutions. Coor has been delivering Coor achieves its highest customer Vice President and CFO of Coor’s integrated facility management services satisfaction score to date. The Swedish business. to Aker Solutions since 2015 and now ex­ partici pation rate was also the tends its contract to 2025. The contract highest ever. is expected to generate annual sales of around SEK 130 million. EXTENDED CONTRACT AWARD FOR ENERGY ACCIDENT RATE Q4 Q4 Q4 WITH VOLVO CARS OPTIMISATION DOWN Coor’s IFM contract with Volvo Cars Coor receives the Energy Efficiency Coor continues its efforts in HSEQ is extended to 2022. This means that Leadership Award 2019 for its efforts in (health and safety), with good results Coor will continue to provide IFM energy optimisation. The award is given – accident rates are down across the services to Volvo Cars’ production and jointly to Coor and its partner IQ Energy whole Nordic region in 2019. This was administrative sites in Sweden and at the annual British Energy Saving a key f ocus area for management during Belgium. The deal is worth over Tech nology conference in London. the year and notable activities included SEK 200 million annually. training and the introduction of game­ based learning in Norway. COOR | ANNUAL AND SUSTAINABILITY REPORT 2019 – 5 – INTRODUCTION – CHIEF EXECUTIVE’S REVIEW – PASSION AND A CLEAR STRATEGY BRING SUCCESS The past year was a highly successful one for Coor – through a clear strategy and a genuine passion for service, we succeeded in exceeding our previous highs in terms of performance. It is time for me to sum up another year, Coor also has a stated goal of expanding IMPROVED SUSTAINABILITY and once again I am pleased to note that its single FM business, mainly in MANAGEMENT we have succeeded in exceeding our property services, cleaning and food & Sustainability is one of Coor’s main strong performance figures from the last beverages, as these services form focus areas. For us, the concept includes few years. Coor has never had a higher the basis in most customer contracts. business, social as well as environmental customer satisfaction rating, or such dimensions. Over the past few years, we committed employees, and has never THE ULTIMATE PROOF have strengthened our focus on sustain- been bigger or generated higher profits. The large number of new, extended and ability. In practice, this means that we Yet despite all this, I still believe we have expanded contracts that we signed in have continued our already extensive a great deal left to be done. Coor’s Nordic 2019 is the ultimate proof that we have sustainability activities, with the differ- home market offers major opportunities succeeded in our efforts. During the ence that we now also define clear and for expansion, partly because a large year, Coor renegotiated contracts worth measurable targets for our social and share of the market is not outsourced a total of nearly SEK 2 billion. In environmental sustainability activities, and partly because more companies are the past three years, Coor has had an in the same way as we have always done looking to move to an IFM set-up. We overall retention rate of 93 per cent. for our business activities. To put these also see significant development potential For the sixth year running, we had some sustainability goals into a global context, in our single service business. of the Nordic region’s most satisfied we have chosen to link them to eight of customers, according to the customer the UN’s 17 Sustainable Develop ment A CLEAR STRATEGY satisfaction survey that we conduct Goals (SDGs). Coor has succeeded in creating the annually. Our extended IFM contracts For Coor, sustainability is not a separate market’s strongest offering through a clear included those with the Danish Police, issue, but rather something that inspires long-term strategy with three components: Aker Solutions, Saab and Volvo Cars. everything we do, and a growing number to stay in the Nordic region, to grow in Coor also signed several new contracts of employees, customers and investors are IFM and to grow in single services.