Interim Report Q1 2019 - Falck

 
Interim Report Q1 2019 - Falck
Interim Report
Q1 2019
Interim Report Q1 2019 - Falck
Contents

MANAGEMENT’S REVIEW                 FINANCIAL STATEMENTS

Letter from the CEO             3   Primary statements     13
Quarterly highlights            4   Sections               19
Key figures                     5
Quarterly results               6
Performance by business unit    9
Management’s statement         12

Falck Interim Report Q1 2019                                    2
Management’s review

Letter from the CEO

Falck improves profitability and cash flow
- accelerates cultural turnaround
First quarter of 2019 continued the trajectory      Comprehensive self-cleaning programme              applying a zero-tolerance approach to ensure
from 2018 as underlying profitability and free      An important first step in the cultural            that quality and ethics always take priority at
cash flow improved on slightly lower revenue.       turnaround is our comprehensive self-cleaning      Falck.
This is confirmation of the financial and           programme, Clear, that we announce with
strategic turnarounds that we announced in          the release of this interim report. Falck          The ruling was an embarrassment to Falck.
November 2017.                                      has initiated this self-cleaning programme         We live from helping and being trusted by
                                                    following the ruling by the Danish Competition     people in urgent need and from meeting
The improved profitability is a result of the       Council on 30 January 2019 that Falck had          the expectations of public customers and
efficiency programme that was implemented           violated Danish competition law in 2014-15.        insurance companies. This is what our
in 2018 and continues into this year. In the                                                           employees take pride in and this is what our
quarter, we signed agreements for the               Falck has made significant changes since           customers and society expect from us.
divestment of clinics in Poland and Chile and       then. In 2017, Falck established a global
continued to invest in implementing global          compliance function, and in 2018, reintroduced     Through our initiatives and by operating in an
operating models that improve quality and           our Code of Conduct and conducted training         ethical and transparent manner, we believe
efficiencies in our key processes. We won and       in the Code of Conduct and in competition          we can rebuild this trust, move forward
started preparing for an important contract         law. Finally, Falck reintroduced its Falck Alert   from our current situation and successfully
for patient transport services in London,           whistleblower system to ensure that more           complete our triple turnaround. Financially
initiated an extended contract for ambulance        employees and partners raise their concerns        and strategically we have made good
services in Stockholm and started preparing         about potential irregularities or improper         progress. Our Clear self-cleaning programme
for the large ambulance contract in Alameda,        actions, aiming to create a culture of full        will reinforce and accelerate our cultural
California, which we will take over in July 2019.   transparency.                                      turnaround.

Progressing well on our financial and strategic     The Clear self-cleaning programme reinforces
turnarounds, we will now accelerate our             these initiatives by compensating parties who
cultural turnaround. The cultural turnaround        have suffered foreseeable and documented
aims at building the emergency response and         loss resulting from the conduct of Falck           Jakob Riis
healthcare category by being a great place to       that led to the ruling by the Competition          President and CEO
work, by exploring new ways of working with         Council, by carrying out an internal review
our customers and by always giving priority to      that identifies and deals with past or present
quality and ethics.                                 violations of our Code of Conduct, and by

Falck Interim Report Q1 2019                                                                                                                             3
Management’s review

Quarterly highlights
Revenue                                           EBITA
DKK million                                       DKK million
                                                                                             Key events in Q1 2019
4,000                                             400
           3,532    3,588       3,532   3,587                                                Revenue down by 1.5% in local currencies
                                                           327
3,000                                             300                                        • Revenue declined to DKK 3,532 million (DKK 3,588 million) due to divestments,
                                                                            250
                                                                                               contract pruning and a lower subscription volume.
                                                                  187               187
2,000                                             200

                                                                                             Underlying profitability up by 1.9 percentage points
1,000                                             100
                                                                                             • Underlying EBITA increased to DKK 250 million (DKK 187 million), yielding an
      0                                             0                                          underlying EBITA margin of 7.1% (5.2%), when adjusted for positive impact
          Q1 2019 Q1 2018   Q1 2019 Q1 2018              Q1 2019 Q1 2018   Q1 2019 Q1 2018     from the sale of office buildings in Denmark and the implementation of IFRS 16.
             Reported          Local currencies            Reported          Underlying        Improved EBITA was driven by continuing efficiency measures.
                                                                                             • Underlying EBITA margins improved across all business units with Ambulance at
                                                                                               7.4% (5.2%), Assistance at 19.4% (13.9%), Healthcare at 6.6% (3.9%) and Portfolio
                                                                                               Businesses at 6.3% (5.5%).

                                                                                             Free cash flow and economic profit improved, net debt reduced
Free cash flow                                    Economic profit                            • Free cash flow improved to DKK 683 million (DKK 307 million) due to a stronger
DKK million                                       DKK million                                  underlying performance and reduced investment in fixed assets. Interest and
                                                                                               amortisations on finance lease liabilities had a positive impact of DKK 144 million.
                                                                                             • Economic profit improved to negative DKK 355 million (negative at DKK 761 million)
800                                                 0

                                                                                                                                                                                       Numbers in brackets refer to Q1 2018
          683                                                                                  due to an increased underlying EBITA.
600                                               -200                                       • Net interest-bearing debt was reduced from DKK 5,260 million to DKK 4,369 million
                                                                                               (including lease liabilities of DKK 2,109 million related to the implementation of
                                                  -400    (355)
400
                   307                                                                         IFRS 16), through solid cash generation and conversion of shareholder loans into
                                                  -600
                                                                                               equity.
200

  0
                                                  -800            (761)                      Outlook for 2019 maintained
                                                         Q1 2019 Q1 2018
                                                                                             • For the full-year 2019, Falck expects to improve its operating profit (EBITA)
      Q1 2019 Q1 2018
                                                             Reported                          compared to 2018, on flat revenue.
           Reported
                                                                                             • 2019 results are expected to be negatively impacted by payment of a potential fine
                                                                                               and compensation claims for documented losses following the ruling by the Danish
                                                                                               Competition Council.

Falck Interim Report Q1 2019                                                                                                                                                       4
Management’s review

Key figures

DKK million                                                           Q1 2019   Q1 20181)   20181)

Income Statement
Revenue                                                                 3,532      3,588    14,043
Operating profit before other items (EBITA)                              327         187      275
Operating profit (EBIT)                                                  274         118       28
Net financial items                                                     (128)       (106)    (439)
Profit for the year from continuing operations                            87           2     (517)
Profit for the year from discontinued operations                            -          6     (398)

Balance sheet
Total assets                                                          14,516      14,052    12,337
Net operating assets                                                    9,063      7,772     7,233
Total equity                                                            4,596      3,087     2,207
Subordinated shareholder loans                                              -      2,059     2,220
Net interest-bearing debt                                               4,369      5,260     4,961

Cash flows and investments
Cash flows from operating activities                                     532         339      764
Free cash flow                                                           683         307      790
Investments in intangible assets and property, plants and equipment     (322)       (124)    (365)

Key figures
Economic profit                                                         (355)       (761)    (278)
EBITA margin (%)                                                          9.3        5.2       2.0
Cash conversion rate (%)                                                208.6      164.0     287.5   1) Excluding impact from the IFRS 16 reporting standards, cf. section 1.
                                                                                                     2) Equity ratio includes subordinated shareholder loans.
                   2)
Equity ratio (%)                                                         31.7       36.4      35.9
                                                                                                     In 2018, Falck Safety Services and Danish medical clinics were presented as
Net interest-bearing debt to EBITDA (factor)1)                           1.90       3.27      2.62   discontinued operations and assets classified as held for sale. See section 3 and 4.
FTEs                                                                  25,324      27,124    25,583   In general, the financial and non-financial data are stated excluding discontinued
                                                                                                     operations.

Falck Interim Report Q1 2019                                                                                                                                                                5
Management’s review

Quarterly results
In the first quarter of 2019, profitability increased on lower                                     business as a part of the Healthcare business    At Falck’s general meeting in March 2019,
revenue. Free cash flow improved and net interest-bearing debt                                     unit, and this business is no longer presented   equity was increased by DKK 2,270 million from
                                                                                                   as discontinued operations.                      conversion of shareholder loans of DKK 2,269
was reduced following the conversion of shareholder loans to
                                                                                                                                                    million and capital injection of DKK 1 million.
equity.                                                                                            Net financial items increased by DKK 22          After the capital increase major shareholders
                                                                                                   million primarily due to implementation of the   of Falck are: Lundbeckfonden (59.15%), KIRKBI
                                                                                                   IFRS 16 reporting standards.                     (28.59%), TryghedsGruppen (11.94%).
Financial results                                However, reported EBITA was positively
                                                 impacted by a one-off gain of DKK 65 million      Free cash flow                                   Up until the conversion, interest amounted
Revenue                                          from the sale of office buildings in Denmark      Free cash flow was DKK 683 million (DKK          to DKK 50 million, and due to the conversion,
Reported revenue amounted to DKK 3,532           and by DKK 12 million due to changes in           307 million), driven by a stronger underlying    interest expenses in the remaining three
million (DKK 3,588 million), resulting in a      recognition of lease assets under the new         performance and reduced investment in fixed      quarters of the year will be lower. After the
revenue decline of 1.5% in local currencies      IFRS 16 reporting standards. Adjusted             assets in both Ambulance and Assistance.         conversion of shareholder loans to equity, net
compared to Q1 2018.                             for the one-off gain and IFRS standards           Part of the improvement related to the sale of   interest-bearing debt was reduced from DKK
                                                 implemented, underlying EBITA amounted to         office buildings in Denmark (DKK 89 million).    5,260 million to DKK 4,369 million (including
The decline in revenue was primarily caused      DKK 250 million (DKK 187 million), yielding an    Interest and amortisations on finance lease      lease liabilities of DKK 2,109 million related to
by contract pruning and divestments in           underlying EBITA margin of 7.1% (5.2%).           liabilities had a positive impact of DKK 144     the implementation of IFRS 16). Equity ratio
Ambulance and by a decline in the Assistance                                                       million. Adjusted for this, free cash flow was   was 31.7% (36.4%).
subscription portfolio.                          The EBITA increase was driven by efficiency       DKK 539 million.
                                                 gains across all business units and effective                                                      For covenant purposes, net interest-bearing
Cost of services                                 price management in the Ambulance business,       Economic profit                                  debt to EBITDA factor is calculated excluding
Cost of services decreased by DKK 124 million    though partly offset by costs related to the      Economic profit improved compared to             impact on finance leases related to the

                                                                                                                                                                                                            Numbers in brackets refer to Q1 2018
compared to Q1 2018 excluding non-recurring      establishment of a global operating model         Q1 2018 but was still negative at DKK 355        implementation of the IFRS 16 reporting
costs, resulting in a gross profit improvement   in IT.                                            million (negative at DKK 761 million). The       standards.
of DKK 3.5% compared to Q1 2018. Sales                                                             improvement was due to an increase in
and administrative costs decreased by DKK        Profit for the period                             underlying EBITA. Implementation of the          Operational results
18 million, however still negatively impacted    Profit for the period was DKK 87 million (DKK     IFRS 16 reporting standards impacted net
by the implementation of global operating        8 million), mainly due an improved underlying     operating assets by DKK 2,225 million.           Throughout the quarter, Falck continued to
models in Finance and IT.                        EBITA, partly offset by increased net financial                                                    win and renew contracts, including patient
                                                 items.                                            Equity and subordinated loans                    transport services for Imperial College
Operating profit                                                                                   In January 2019, TryghedsGruppen acquired        Healthcare, London, ambulance services
Reported operating profit before other items     In Q1 2019, Falck divested its clinics in Chile   the Falck shares owned by Liberatio (6.7%).      in Anaheim, California, and fire services
(EBITA) increased to DKK 327 million (DKK 187    and recognised a loss of DKK 10 million. Falck                                                     contracts in Denmark, the UK and the
million).                                        decided to keep the Healthcare staffing                                                            Netherlands.

Falck Interim Report Q1 2019                                                                                                                                                                            6
Management’s review

Effective from the end of Q1, Falck’s            DKK 500 million compared to 2018 and with          EBITA effect of efficiency programme                   Global Compact is in line with Falck’s overall
ambulance contract in Poland expired and will    full effect in 2020.                                                                                   focus to increase transparency, strengthen
not be prolonged, as the Polish government                                                           DKK                                                governance processes and accelerate focus on
                                                                                                    million
has decided to insource all ambulance            2019 initiatives are in the detailing phase and                                                        compliance.
business. In the quarter, Falck also signed an   significant effects are expected to derive           600                                               In March, Lars Vester Pedersen stepped down
agreement for the divestment of its Polish       from operational optimisation, reduction in                                                            as EVP of Assistance and member of the
                                                                                                      400
medical clinics, which are a non-core business   overhead costs and procurement initiatives.                                                            Executive Management team and will retire
area for Falck. Similarly, Falck divested its    Efficiency initiatives are being planned                                                               from Falck at the end of 2019. CEO Jakob Riis
                                                                                                      200
clinics in Chile.                                across business units as well as for the global                                                        has taken over as interim Head of Assistance
                                                 functions. Falck expects to see effects from            0                                              until a new EVP has been appointed.
Global operating models                          the 2019 initiatives materialising in the                    Q1     Q2     Q3       Q4          Q1
Falck is making progress to operate as one       beginning of Q3 2019. The efficiency initiatives             2018                               2019   Exiting the quarter, the number of full-time
company with the same values, mindset            carried out in 2018 continue to contribute                                                             employees (FTEs) was 25,324 (27,124). The
and business model. The roll-out of global       significantly to improving profitability as they                                                       reduction was caused partly by redundancies
operating models continued in the quarter.       are materialising.                                    Ambulance, supported by operational              following cost optimisation, partly by
                                                                                                       systems in fleet management, dispatch and        divestments and partly by the exiting of
In Ambulance, the first efficiency benefits      In Q1 2019, the efficiency programme had a            planning.                                        contracts.
were reaped from the global roll-out of the      positive impact on EBITA of DKK 130 million
fleet management system and the partial          and in total, the programme had increased          2) Reduction of overhead costs, primarily
roll-out of the global dispatch system.          EBITA by DKK 442 million exiting Q1 2019. The          through roll-out of global operating models
                                                 effects were partly a result of optimisation           in Finance, IT and HR and outsourcing of
In IT, the transformation process is more        initiatives where 1,200 full-time employees            transactional finance processes and IT

                                                                                                                                                                                                           Numbers in brackets refer to Q1 2018
comprehensive than anticipated due to the        (FTEs) were made redundant throughout                  infrastructure.
complexity of Falck’s business and IT setup.     2018. The FTE reduction was carried out
In Q1, focus was on finalising the transition    across business units with approximately           3) Procurement initiatives including
of Falck’s infrastructure and IT services        45% in Ambulance, 30% in Assistance, 10% in            renegotiation of contracts and
to the external provider, HCL, as well as        Healthcare and 15% in global functions.                consolidation of vendors and products.
implementing a global IT operating model.
                                                 Falck’s efficiency programme builds on three       People and organisation
Efficiency programme                             pillars:                                           In January 2019, Falck became a signatory to
Entering Q1 2019, Falck announced that the                                                          the UN Global Compact, thereby formalising
efficiency and cost optimisation programme       1) Operational optimisation across business       its commitment to contribute to a socially,
will continue through 2019 with the ambition         units, notably the implementation of           environmentally and economically sustainable
of reducing Falck’s cost base by an additional       standardised global core processes in          development. The commitment to the UN

Falck Interim Report Q1 2019                                                                                                                                                                           7
Management’s review

Outlook 2019
For the full year 2019, Falck expects to
improve its operating profit (EBITA) compared       Ruling from the Danish Competition            Self-cleaning programme                      The Clear self-cleaning programme builds
to 2018, on flat revenue. The company will          Authorities                                                                                on the initiatives taken from 2016 up until
continue to prune its portfolio of unprofitable                                                   Following the ruling by the Danish           now.
contracts and services and to ensure effective      On 30 January 2019, Falck received a          Competition Council, Falck has initiated a
price management across its business.               ruling from the Danish Competition            comprehensive self-cleaning programme,       Falck has established a new executive
                                                    Council for having violated the Danish        Clear, to ensure transparency and a zero-    management team, and 80% of all top 30
Falck expects its efficiency and cost               competition rules in connection with the      tolerance and speak-up culture on ethics.    leaders have onboarded in 2017 or later.
optimisation programme to contribute                award and transfer of the ambulance
significantly to improving profitability in 2019,   operation contract in the Region of           The Clear self-cleaning programme            In 2017, Falck established a global
with significant impact from operational            Southern Denmark to a new provider            aims at:                                     compliance function, and in 2018,
optimisation, reduction of overhead costs as        (BIOS) in 2014-15.                                                                         reintroduced its Code of Conduct and
well as procurement initiatives.                                                                  •C
                                                                                                    ompensating parties who have              conducted training in the Code of
Costs related to Falck’s continuing                 Falck decided to refrain from appealing        suffered foreseeable and documented         Conduct and in competition law.
restructuring activities are expected to            the ruling, and the case was then referred     loss resulting from the conduct of Falck
continue into 2019. These include costs related     to SØIK (the State Prosecutor for Serious      that led to the ruling of the Competition   Finally, Falck reintroduced its Falck Alert
to divestments, transformation costs and            Economic and International Crime)              Council.                                    whistleblower system to ensure that
costs related to building global operating          for determination of a potential fine.                                                     more employees and partners raise their
models.                                             SØIK has not yet informed Falck of the        •C
                                                                                                    arrying out an internal review that       concerns about potential irregularities
                                                    expected timing for a decision in the case.    identifies and deals with past or present   or improper actions, aiming to create a
2019 results are expected to be negatively                                                         violations of the Code of Conduct.          culture of full transparency.
impacted by payment of a potential fine             BIOS and the Region of Southern
and compensation claims for documented              Denmark have expressed their intention        • Applying a zero-tolerance approach to
losses following the ruling by the Danish           or possibility to raise compensation claims     ensure that quality and ethics always
Competition Council. In the Q1 2019 reporting,      against Falck. However, Falck has not           take priority at Falck.
however, Falck has not recognised a provision       received any such claims yet.
for neither a fine nor compensation claims due
to uncertainty about the amount and timing.

Falck Interim Report Q1 2019                                                                                                                                                                 8
Management’s review

Performance by business unit

          Ambulance
Financial performance                                        price contracts in Denmark and Sweden.           Business update                                    Revenue
Profitability improved driven by efficiency                  The number of services in the US, which          Two important contracts were initiated in          DKK million
gains and effective price management.                        accounted for 70% of pay-on-use revenue in       the quarter: patient transport services for
                                                                                                                                                                                1,922   1,920            1,922    1,936
Revenue declined moderately due to                           the quarter, declined by 20% mainly due to       the Capital Region of Denmark and extended         2,000
                                                                                                                                                                                        100                       100
divestments and contract pruning.                            the exiting of non-profitable contracts and      ambulance services in Stockholm. In addition,      1,500

                                                             seasonal variations in trip patterns. In the     Falck signed a large contract on patient           1,000
                                                                                                                                                                  500
Revenue                                                      private subscription business, the number of     transport services with Imperial College
                                                                                                                                                                    0
Reported revenue was DKK 1,922 million                       subscribers was at level with Q1 2018, with      Healthcare in West London following an open                      Q1 2019 Q1 2018         Q1 2019 Q1 2018
(DKK 1,920 million), resulting in a decline                  at stable churn rate compensated by the          public tender, and preparations started for                          Reported                Adjusted
in revenue of 0.7% in local currencies. The                  acquisition of new subscribers.                  an extensive ambulance contract in Alameda,
decline in revenue was primarily caused by                                                                    California, which Falck will take over in July
the divestment of Falck’s Finnish ambulance                  Operating profit                                 2019.
business and contract pruning in the pay-on-                 Operating profit before other items (EBITA)                                                         EBITA
use business.                                                increased to DKK 143 million (DKK 100            Efficiency gains were reaped from the global       DKK million
                                                             million), yielding an EBITA margin of 7.4%       roll-out of the fleet management system,
                                                                                                                                                                                 143                     143
The exit from the ambulance business in                      (5.2%). The increase in EBITA across markets     covering the entire fleet of 4,300 operating         150
Finland in Q3 2018 impacted fixed contract                   was driven by efficiency gains across the        vehicles, and the partial roll-out of the global                          100                       100
                                                                                                                                                                  100
revenue negatively by 3.3%. The decline                      business and effective price management.         dispatch system, which by year-end 2018 had
                                                                                                                                                                   50
in revenue was partly offset by new fixed                                                                     reached 53% of front-end employees and will
                                                                                                                                                                    0
                                                             Efficiencies caused a margin increase of 3.5%    continue through 2019, when implementation
                                                                                                                                                                               Q1 2019 Q1 2018         Q1 2019 Q1 2018
                                                             on fixed contracts. In the US pay-on-use         of the resource planning system will also                            Reported                Underlying
Revenue by contract type                                     business, margin increased by 1.9% as a result   commence.
                                                             of the exiting of non-profitable contracts

                                                                                                                                                                                                                                    Numbers in brackets refer to Q1 2018
                               Other                         and effective price management. Margins          The number of full-time employees (FTEs)
        Private                3%
        subscriptions***                                     for private subscriptions increased by 2%,       was reduced by 1,243, primarily as a result of
        8%
                                                             primarily due to effective price management      operational optimisation and divestments.          Key figures
                                                             with stable frequency of usage.
                                                                                                              In Q1, Falck launched an electric ambulance        DKK million             Q1 2019       Q1 2018          2018
  Pay-on-use                                  Fixed          Free cash flow                                   prototype, built on a Tesla car with fuel cells
  contracts**                                 contracts*
  35%                                         54%            Free cash flow increased to DKK 211 million      added to provide additional power to reliably      Revenue                   1,922         1,920       7,659
                                                                                                                                                                 EBITA                          143        100            192
                                                             (DKK 111 million). The development was           run medical equipment and sirens.
                                                                                                                                                                 EBITA margin (%)               7.4         5.2           2.5
                                                             primarily driven by improvement in underlying
                                                                                                                                                                 Free cash flow                 211        111            546
                                                             performance and lower investment in fixed
* primarily in Denmark, Sweden, Spain, Slovakia and Poland                                                                                                       Economic profit                (44)      (504)           (91)
                                                             assets but offset by lower cash collection in
** primarily in the US, the UK and Germany
                                                                                                                                                                 FTEs                     18,389        19,632      18,511
*** in Colombia-based Group EMI                              the US.

Falck Interim Report Q1 2019                                                                                                                                                                                                    9
Management’s review

Performance by business unit

          Assistance
Financial performance                                         The number of trips in the pay-on-use              Free cash flow                                    Revenue
Profitability improved driven by efficiency                   business declined by 17%, reaching normalised      Free cash flow was DKK 361 million (DKK           DKK million
initiatives and effective price management.                   levels compared to an extraordinarily high         263 million), driven by stronger underlying
Revenue declined due to a decline in the                      Q1 2018. The decline was partly offset by an       performance and lower investment in fixed          900            744     799            744      795

number of private subscriptions.                              increased revenue per trip.                        assets but offset by fewer prepaid public          600
                                                                                                                 firefighting contracts.                            300
Revenue                                                       In the fixed contract business for public
                                                                                                                                                                      0
Reported revenue was DKK 744 million (DKK                     firefighting, revenue was slightly lower than in   Business update                                                 Q1 2019 Q1 2018        Q1 2019 Q1 2018
799 million), resulting in a revenue decline                  Q1 2018 due to contract losses.                    In the quarter, Falck extended its contract                         Reported               Adjusted

of 6.4% in local currencies. The decline was                                                                     with the largest insurance company in Finland,
primarily due to a decline in the number                      Operating profit                                   OP, where Falck now handles car damage
of private subscriptions and loss of public                   Operating profit before other items (EBITA)        teleclaims on top of roadside assistance
firefighting contracts, partly offset by                      increased to DKK 144 million (DKK 111 million),    services. Within public firefighting, Falck       EBITA
effective price management.                                   yielding an EBITA margin of 19.4% (13.9%). The     entered into a new eight-year agreement           DKK million
                                                              increase was driven by efficiency initiatives      providing fire services to six Danish
The number of private subscriptions declined                  and low frequency of use.                          municipalities in eastern Zealand.                                144                    144
                                                                                                                                                                    150
                                                                                                                                                                                           111                     111
by 8%, as churn rate was not sufficiently
                                                                                                                                                                    100
compensated by the number of new                              Efficiency initiatives carried out in 2018         In order to increase customer satisfaction and
                                                                                                                                                                     50
subscribers. However, revenue per subscription                continued to contribute significantly to           reduce churn, Assistance implemented a new
                                                                                                                                                                      0
increased slightly.                                           improving profitability as they materialised,      customer experience strategy, which entails
                                                                                                                                                                                 Q1 2019 Q1 2018        Q1 2019 Q1 2018
                                                              most importantly the changed operating             designing consistent end-to-end customer                            Reported               Underlying
Revenue by contract type                                      model with increased use of franchisers and        journeys, clarifying responsibilities and
                                                              sub-contractors, better utilisation of call        establishing consistent monitoring routines. In

                                                                                                                                                                                                                                  Numbers in brackets refer to Q1 2018
                                                              centres and optimisation of the network of         addition, new business intelligence solutions
      Fixed contracts***
      14%                                                     Falck stations in Denmark.                         were built, which will provide better insights
                                                                                                                 and easier follow-up on KPIs. An important        Key figures
                                                              In the subscription business, costs went down      optimisation initiative was the merging of the
  Pay-on-use                                 Private          due to a decline in frequency by 16% caused by     Norwegian and Swedish assistance centres,         DKK million             Q1 2019      Q1 2018          2018
  contracts**                                subscriptions*   benign weather conditions in Denmark. In the       allowing more efficient coordination of
  26%                                        60%
                                                              pay-on-use business, EBITA was at the same         workload across the joint group of operators.     Revenue                       744       799           2,993
                                                                                                                                                                   EBITA                         144       111            415
                                                              level as in Q1 2018.
                                                                                                                                                                   EBITA margin (%)              19.4      13.9           13.9
                                                                                                                 The number of full-time employees (FTEs)
                                                                                                                                                                   Free cash flow                361       263            305
* primarily in Denmark and Sweden                                                                                was reduced by 328, primarily as a result of
** with insurfance and automotive companies in the Nordics                                                                                                         Economic profit                 66       (53)           37
                                                                                                                 operational optimisation.
    and Baltics
                                                                                                                                                                   FTEs                      1,594        1,922          1,728
*** long-term public firefighting contracts in Denmark

Falck Interim Report Q1 2019                                                                                                                                                                                                 10
Management’s review

Performance by business unit

          Healthcare                                                                                                   Portfolio Businesses
Financial performance                                     Business update                                    Portfolio Businesses consist of the two service    Free cash flow improved to DKK 17 million
Reported revenue was DKK 638 million (DKK                 During the quarter, a healthcare service           areas Industrial Fire Services and Global          (negative at DKK 32 million), mainly driven by
642 million), resulting in an increase in revenue         agreement with the Volvo Group was initiated       Assistance.                                        lower investment in fixed assets and improved
of 1.6% in local currencies.                              with Falck taking over Volvo’s internal                                                               cash collection in Global Assistance.
                                                          occupational healthcare service.                   Financial performance
The increase in revenue was primarily due to                                                                 Reported revenue was DKK 291 million (DKK          Business update
increased activity in Denmark and Norway,                 After a challenging 2018 with negative             290 million), resulting in a flat revenue growth   Industrial Fire Services won and renewed a
partly offset by a decrease in physical                   earnings, Q1 2019 showed early signs that          in local currencies.                               number of contracts in the quarter. These
treatments on pay-on-use contracts in Sweden.             the turnaround in Healthcare is progressing,                                                          include two contracts for security services
                                                          though there is also a positive impact from        Revenue was positively impacted by new             in the UK, a new 10-year contract for the
Operating profit before other items (EBITA)               seasonality in the first quarter of the year.      contracts in Industrial Fire Services and          emmtec Industry & Businesspark in the
increased to DKK 42 million (DKK 25 million),                                                                increased activity in Global Assistance, and       Netherlands and rescue operations for the
yielding an underlying EBITA margin of 6.6%               Efficiency and cost optimisation initiatives are   negatively by the divestment of Falck Fire         Red Bull Air Race events.
(3.9%).                                                   being implemented throughout the business.         Academy in the Netherlands in Q3 2018.
                                                          These include improved utilisation in the                                                             Global Assistance went live with a
The increase in EBITA was driven by efficiency            external Healthcare network, digitisation          Operating profit before other items (EBITA)        comprehensive duty-of-care membership
gains in Denmark and Sweden but offset by                 of processes, optimisation of back-office          was DKK 18 million (DKK 16 million), yielding      with a new corporate customer and entered
increased costs in Norway.                                functions as well as standardised contracts        an EBITA margin of 6.3% (5.5%).                    into a new agreement with a large Northern
                                                          and improved contract management.                                                                     European company on worldwide medical
Free cash flow was DKK 18 million (DKK 7                                                                     Increase in EBITA was driven by new business       assistance to 14,000 employees.
million). Cash flow was positively impacted               In Q1, Falck decided to keep the Healthcare        and efficiency initiatives in both service areas
by stronger underlying performance, partly                staffing business as a part of the Healthcare      but partly offset by divestment of Falck Fire
offset by lower prepayments, predominantly                business unit, and this business is no longer      Academy in the Netherlands in Q3 2018.

                                                                                                                                                                                                                   Numbers in brackets refer to Q1 2018
in Denmark.                                               presented as discontinued operations.

Key figures                                                                                                  Key figures

DKK million             Q1 2019       Q1 2018    2018                                                        DKK million         Q1 2019    Q1 2018     2018

Revenue                        638       642     2,466                                                       Revenue                 291       290     1,162
EBITA                           42        25     (115)                                                       EBITA                    18        16        43
EBITA margin (%)               6.6        3.9     (4.6)                                                      EBITA margin (%)        6.3        5.5       3.7
Free cash flow                  18          7       9                                                        Free cash flow           17        (32)      92
Economic profit                (82)       (82)   (102)                                                       Economic profit         (10)       (36)     (15)
FTEs                       2,347        2,656    2,452                                                       FTEs                  2,703      2,766    2,726

Falck Interim Report Q1 2019                                                                                                                                                                                  11
Management’s review

Management’s statement
The Board of Directors and the Executive       The interim report has been prepared in            liabilities and financial position as at 31 March   Group, the financial results for the period and
Committee have today considered and            accordance with IAS 34 ”Interim Financial          2019 and of the results of the Group’s              the Group’s financial position.
approved the interim report of Falck A/S for   Reporting” as adopted by the EU and                operations and cash flows for the financial
the period 1 January 2019 – 31 March 2019.     additional requirements under the Danish           period 1 January – 31 March 2019.                   Besides what has been disclosed in the interim
The interim report has not been audited or     Financial Statements Act.                                                                              report, no changes in the Group’s most
reviewed by the company’s independent                                                             Furthermore, in our opinion, the Management’s       significant risks and uncertainties have
auditors.                                      In our opinion, the interim financial statements   review includes a fair review of developments       occurred relative to the disclosures made in the
                                               give a true and fair view of the Group’s assets,   in the operations and financial position of the     2018 Annual Report.

Copenhagen, 6 May 2019

Executive Committee:

Jakob Riis                                     Tor Magne Lønnum                                   Jakob Bomholt
President and CEO                              CFO                                                EVP, Ambulance

Board of Directors:

Peter Schütze                                  Lene Skole                                         Lars Frederiksen
Chairman                                       Deputy Chairman

Niels Smedegaard                               Dorthe Mikkelsen                                   Søren Thorup Sørensen

Vagn Flink Møller Pedersen                     Henrik Villsen Andersen                            Allan Rensgaard

Falck Interim Report Q1 2019                                                                                                                                                                            12
Financial statements

Income
statement
DKK million                                               Section   Q1 2019    Q1 2018      2018

Revenue                                                        2      3,532      3,588    14,043
Cost of services                                                     (2,721)    (2,845)   (11,380)

Gross profit                                                           811        743      2,663
Sales and administrative expenses                                     (563)      (581)     (2,473)
Other operating income and expenses, net                                79         25         85

Operating profit before other items (EBITA)                            327        187        275
Restructuring costs                                                       -        (11)       (14)
Amortisation of customer contracts                                      (53)       (58)     (233)

Operating profit (EBIT)                                                274        118         28
Gains/losses from divestments of enterprises                            (10)        (2)       (56)
Income after tax from associates and joint arrangements                   -          -          1
Financial income                                                          2          7        34
Financial expenses                                                    (130)      (113)      (473)

Profit before tax                                                      136         10       (466)

Income taxes                                                            (49)        (8)       (51)

Profit for the period from continuing operations                        87           2      (517)

Profit for the period from discontinued operations             3          -          6      (398)

Profit for the period                                                   87           8      (915)

Profit for the period attributable to:
Shareholders in Falck A/S                                               73           5      (888)
Non-controlling interests                                               14           3        (27)

Total                                                                   87           8      (915)

Falck Interim Report Q1 2019                                                                         13
Financial statements

Statement of
comprehensive income
DKK million                                                   Section   Q1 2019    Q1 2018    2018

Profit for the period                                                       87           8    (915)

Actuarial adjustment of pension provisions                                    -          1       1

Items that will not be reclassified to the income statement                   -          1       1

Exchange rate adjustment                                                    51         (21)    (24)
Value adjustment of currency hedging instruments                             (9)         3      (3)
Value adjustment of interest hedging instruments                             4           5     25
Tax on other comprehensive income                                            (7)       19      (17)

Items that may be reclassified to the income statement                      39           6     (19)

Other comprehensive income                                                  39           7     (18)

Total comprehensive income                                                 126         15     (933)

Total comprehensive income attributable to:
­Shareholders in Falck A/S                                                 112         18     (906)
Non-controlling interests                                                   14          (3)    (27)

Total                                                                      126         15     (933)

Falck Interim Report Q1 2019                                                                          14
Financial statements

Statement of cash flows
DKK million                                                               Section   Q1 2019    Q1 2018    2018

Operating profit (EBIT)                                                                274        118       28
Depreciation, amortisation and impairment                                              179        115      662
Amortisation of customer contracts                                                      53         58      233
Profit before depreciation, amortisation and impairment (EBITDA)                       506        291      923
Change in net working capital                                                          223        133      117
Transactions with associates                                                            (14)         3      23
Reversal of profit from divestment of non-current assets, net                           (78)        (5)    (34)
Net interest paid                                                                       (55)       (55)   (120)
Income tax paid                                                                         (50)       (28)   (145)
Cash flows from operating activities                                                   532        339      764
Purchase of property, plant and equipment                                             (312)        (58)   (257)
Sale of property, plant and equipment                                                  368           9     126
Purchase of intangible assets                                                           (10)       (66)   (108)
Acquisition of subsidiaries, non-controlling interests and operations                     -         (9)    (55)
Divestment of subsidiaries, non-controlling interests and operations                      5         (2)       -
Investments in associates                                                                 -          -       (8)
Cash flows from hedging of net investments                                                9        15       33
Cash flows from investing activities                                                    60       (111)    (269)
Transactions with shareholders                                                            1          -        -
Transactions with non-controlling interests                                               -         (4)    (15)
Interest-bearing debt raised                                                            24           -        -
Repayment of interest-bearing debt                                                    (534)      (448)    (756)
Cash flows from financing activities                                                  (509)      (452)    (771)
Cash flows from continuing operations                                                   83       (224)    (276)
Cash flows from discontinued operations                                        3          -          3     213
Change in cash and cash equivalents                                                     83       (221)     (63)
Cash and cash equivalents at 1 January                                                1,138      1,077    1,077
Exchange rate adjustment                                                                  3         (6)      (9)
Change in cash and cash equivalents                                                     83       (221)     (63)
Cash and cash equivalents related to assets classified as held for sale                   -         (6)    133
Cash and cash equivalents at the end of the period                                    1,224       844     1,138

Falck Interim Report Q1 2019                                                                                       15
Financial statements

Balance sheet
                                                         31 March   31 March   31 December                                                                          31 March   31 March   31 December
DKK million                                    Section       2019       2018          2018   DKK million                                                  Section       2019       2018          2018

Assets                                                                                       Equity and liabilities
Goodwill                                                    6,436      6,460         6,424   Share capital                                                              133         81            81
Other intangible assets                                      952       1,346         1,008   Other reserves                                                            (348)      (464)          (387)
Property, plant and equipment                               3,190      1,389         1,098   Retained earnings                                                         4,463      3,047         2,182
Investments in associates and joint ventures                  51         55            64    Equity attributable to Falck A/S                                          4,248      2,664         1,876
Deferred tax assets                                          151        170           170
                                                                                             Non-controlling interests                                                  348        423           331
Other receivables                                             49         41            50
                                                                                             Total equity                                                              4,596      3,087         2,207
Total non-current assets                                  10,829       9,461         8,814
                                                                                             Subordinated shareholder loans                                                -      2,059         2,220
Inventories                                                   28         76            24    Loans                                                                     4,973      3,916         3,756
Contract assets                                              520        574           479    Deferred tax                                                               228        238           230
Trade receivables                                           1,539      1,596         1,489   Provisions                                                                  94        116            99
Income tax receivable                                         44         18            29    Other payables                                                               4          9            10
Other receivables                                            332        341           364
                                                                                             Total non-current liabilities                                             5,299      6,338         6,315
Cash and cash equivalents                                   1,224       844          1,138
                                                                                             Loans                                                                      620        240           123
Total current assets                                        3,687      3,449         3,523
                                                                                             Trade payables                                                             845        796           820
Assets classified as held for sale                  4           -      1,142             -
                                                                                             Income taxes                                                               106        117            97
Total assets                                              14,516     14,052         12,337   Provisions                                                                 250        263           244
                                                                                             Contract liabilities                                                      1,440      1,575         1,204
                                                                                             Other payables                                                            1,360      1,306         1,327

                                                                                             Total current liabilities                                                 4,621      4,297         3,815

                                                                                             Total liabilities                                                         9,920    10,635         10,130

                                                                                             Liabilities relating to assets classified as held for sale        4           -       330              -

                                                                                             Total equity and liabilities                                            14,516     14,052         12,337

Falck Interim Report Q1 2019                                                                                                                                                                         16
Financial statements

Statement of changes in equity
                                                                                     Currency                               Non-
                                                              Share    Hedging     translation   Retained             controlling
2019 DKK million                                             capital    reserve        reserve   earnings    Total      interests   Equity

Equity at 1 January 2019                                         81        (10)          (377)      2,182    1,876           331    2,207
Change in accounting policies                                      -          -              -          -        -              -        -
Adjusted equity at 1 January 2019                                81        (10)          (377)      2,182    1,876           331    2,207

Exchange rate adjustment                                           -          -            51           -      51               -      51
Value adjustment of currency hedging instruments                   -         (9)             -          -       (9)             -       (9)
Value adjustment of interest hedging instruments                   -         4               -          -       4               -       4
Tax on other comprehensive income                                  -         1             (8)          -       (7)             -       (7)

Other comprehensive income                                         -         (4)           43           -      39               -      39
Profit for the period                                              -          -              -        73       73             14       87

Total comprehensive income                                         -        (4)            43         73      112             14      126

Capital increase                                                 52           -              -      2,218    2,270              -   2,270
Change in non-controlling interests’ ownership share               -          -              -         (1)      (1)            3        2
Adjustment of provision for acquisition of non-controlling
interests relating to acquisitions after 1 January 2010            -          -              -         (9)      (9)             -       (9)

Total transactions with owners                                   52           -              -      2,208    2,260             3    2,263

Total equity movements in 2019                                   52         (4)            43       2,281    2,372            17    2,389

Total equity at 31 March 2019                                   133        (14)          (334)      4,463    4,248           348    4,596

Falck Interim Report Q1 2019                                                                                                                  17
Financial statements

Statement of changes in equity                                                                                  (Continued)

                                                                                     Currency                               Non-
                                                              Share    Hedging     translation   Retained             controlling
2018 DKK million                                             capital    reserve        reserve   earnings    Total      interests   Equity

Equity at 1 January 2018                                         81        (27)          (443)      3,091    2,702           428    3,130
Change in accounting policies                                      -          -              -        (41)    (41)              -     (41)
Adjusted equity at 1 January 2018                                  -        81            (27)      3,050    2,661           428    3,089

Exchange rate adjustment                                           -          -           (21)          -     (21)              -     (21)
Value adjustment of currency hedging instruments                   -         3               -          -       3               -       3
Value adjustment of interest hedging instruments                   -         5               -          -       5               -       5
Acturial adjustment of pension provisions                          -          -              -          1       1               -       1
Tax on other comprehensive income                                  -         (2)           21           -      19               -      19

Other comprehensive income                                         -         6               -          1       7               -       7
Profit for the period                                              -          -              -          5       5              3        8

Total comprehensive income                                         -         6               -          6      12              3       15

Dividend                                                           -          -              -          -        -            (3)       (3)
Change in non-controlling interests’ ownership share               -          -              -          5       5             (5)        -
Adjustment of provision for acquisition of non-controlling
interests relating to acquisitions after 1 January 2010            -          -              -        (14)    (14)              -     (14)

Total transactions with owners                                     -          -              -         (9)      (9)           (8)     (17)

Total equity movements in 2018                                     -         6               -         (3)      3             (5)      (2)

Total equity at 31 March 2018                                    81        (21)          (443)      3,047    2,664           423    3,087

Falck Interim Report Q1 2019                                                                                                                  18
Financial statements

Section 1
Accounting policies

Falck A/S is a public limited liability company      and support the way Falck is managed.            is determined based on the non-cancellable         The table below summaries the impact of IFRS
domiciled in Denmark. The interim report             Comparative figures are changed accordingly.     period of the lease and management                 16.
includes the consolidated financial statements                                                        judgement.
of Falck A/S and its subsidiaries (Falck).           Implementation of new accounting standards,
                                                     amendments and interpretations                   Falck has applied the modified retrospective
The interim report has been presented in             The following accounting standards, amend-       approach, meaning that comparative figures
accordance with IAS 34 “Interim Financial            ments (IAS and IFRS) and interpretations have    for 2018 have not been restated.
Reporting” as adopted by the EU and                  been implemented from 1 January 2019:
additional requirements in accordance with the       • IFRS 16 “Leases”                               The impact of IFRS 16
Danish Financial Statements Act.                     • IFRIC 23 “Uncertainty over income tax         At 1 January 2019, Falck recognised lease
                                                        treatments”                                   assets under Property, plant and equipment
The interim report does not contain all the          • Amendment to IFRS 9 “Financial instruments”   of DKK 2,383 million of which DKK 158 million
information required for the annual report and       • Amendment to IAS 28 “Investments in           was reclassified from Finance leased assets
should therefore be read in conjunction with           Associates and Joint Ventures”                 under IAS 17. DKK 29 million was reclassified
the 2018 Annual Report. No interim report has                                                         from prepayments to leased assets as part of
been prepared for the parent company.                Apart from the impact from IFRS 16, the          the transition to IFRS 16. A corresponding lease
                                                     adoption of new standards, amendments and        liability of DKK 2,313 million was recognised
Apart from the adoption of IFRS 16 “Leases”,         interpretations has not affected the interim     under loans of which DKK 117 million was
the accounting policies are consistent with          report for 2019.                                 reclassified from Finance leased liabilities
those applied in the 2018 Annual Report, to                                                           under IAS 17.
which reference is made.                             IFRS 16 Leases
                                                     As of 1 January 2019, Falck has adopted IFRS     In Q1 2019, EBITA was impacted positively by
Definitions of financial highlights and key ratios   16 “Leases” which replaces IAS 17 “Leases”.      DKK 12 million due to a reduction in Cost of
can be found in Section 1.4 of the 2018 Annual                                                        sales and Sales and administrative expenses of
Report.                                              The adoption of IFRS 16 has resulted in all      DKK 111 million partly off-set by depreciations
                                                     leased buildings and vehicles being recognised   of DKK 99 million. The full-year effect on EBITA
Change in presentation of the Income                 in the balance sheet as lease assets with a      is estimated to be a positive impact of DKK 65
statement                                            corresponding lease liability except for low-    million based on the current leasing portfolio.
The classification in the Income statement           value assets and short-term leases.              In Q1 2019, the impact from IFRS 16 on Profit
is changed as of 1 January 2019 from a                                                                before tax was negative of DKK 15 million.
presentation by the “nature of expense” to a         The lease assets are depreciated over the        Deferred tax assets increased by DKK 3 million
presentation by the “function of expense”. Falck     term of the lease and payments are allocated     in Q1 2019 related to IFRS 16.
has changed the classification to better reflect     between amortisations on the lease liabilities
                                                     and interest expenses. The term of the lease

Falck Interim Report Q1 2019                                                                                                                                                                        19
Financial statements

Section 1
Accounting policies (continued)
                                                                 1 January 2019                               31 March 2019

                                                     Previous                           New       Previous                          New
                                                   accounting          IFRS 16    accounting    accounting         IFRS 16    accounting
DKK million                                           policies     adjustment        policies      policies    adjustment        policies

Income statement
Cost of services                                             -               -              -       (2,731)             10        (2,721)

Gross profit                                                 -               -              -          801              10           811

Sales and administrative expenses                            -               -              -         (565)              2          (563)

Operating profit before other items (EBITA)                  -               -              -          315              12           327

Net financial items                                          -               -              -         (101)            (27)         (128)

Profit before tax                                            -               -              -          151             (15)          136

Income taxes                                                 -               -              -          (52)              3           (49)

Profit for the period from continuing operations             -               -              -           99             (12)           87

Assets

Property, plant and equipment                           6,425           2,225          8,650         1,064           2,126         3,190

Deferred tax assets                                       170                -           170           148               3           151

Other receivables, current                                 50             (29)            21           364             (32)          332

Total assets                                           12,337           2,196         14,533        12,418           2,097        14,516

Equity and liabilities

Equity                                                  2,207                -         2,207         4,608             (12)        4,596

Loans, non-current                                      3,756           1,707          5,463         3,340           1,633         4,973
Loans, current                                            123             489            612           144             476           620

Total equity and liabilities                           12,337           2,196         14,533        12,418           2,097        14,516

Falck Interim Report Q1 2019                                                                                                            20
Financial statements

Section 2
Segment and revenue information

                                                                                                                   Group and other
Q1 2019 Business units                        Ambulance    Assistance   Healthcare    Portfolio Businesses   activities/eliminations    Total    Comments
                                                                                                                                                 Management has defined Falck’s business
Income statement                                                                                                                                 segments based on the reporting presented
Revenue                                            1,922         744          638                     291                       (63)    3,532    to the Group Executive Management, and
Depreciation, amortisation and impairment           (52)         (20)           (3)                    (3)                     (101)     (179)   which forms the basis for the Management’s
Operating profit before other items (EBITA)         143          144            42                     18                       (20)     327     strategic decisions.

Balance sheet                                                                                                                                    The performance of the business segments
Total assets                                      4,780         3,929        2,071                   1,135                    2,601    14,516    is evaluated on the basis of operating profit
Investments in intangible assets                                                                                                                 before other items (EBITA).
and property, plant and equipment                    46            6             1                      3                       266      322
                                                                                                                                                 Group and other activities include Group
Key ratios                                                                                                                                       staff functions not directly attributable to the
EBITA margin (%)                                   7.4%        19.4%          6.6%                   6.3%                          -    9.3%     business units, eliminations and adjustment for
                                                                                                                                                 lease accounting (IFRS 16 Leases). The business
                                                                                                                                                 units report according to the old leasing
                                                                                                                   Group and other               standard (IAS 17) and not according to IFRS 16.
Q1 2018 Business units                        Ambulance    Assistance   Healthcare    Portfolio Businesses   activities/eliminations    Total

Income statement
Revenue                                           1,920          799          642                     290                       (63)   3,588
Depreciation, amortisation and impairment           (65)         (36)           (9)                    (5)                         -     (115)
Operating profit before other items (EBITA)         100           111          25                      16                       (65)     187

Balance sheet
Total assets                                       5,183        4,156        2,069                   1,256                    1,388    14,052
Investments in intangible assets
and property, plant and equipment                    79            9            11                     25                          -     124

Key ratios
EBITA margin (%)                                   5.2%        13.9%         3.9%                    5.5%                          -     5.2%

Falck Interim Report Q1 2019                                                                                                                                                                     21
Financial statements

Section 3
Discontinued operations

Profit for the period from discontinued operations                                           Gains/losses from divestments of discontinued operations
DKK million                                                     Q1 2019   Q1 2018    2018    DKK million                                                     Q1 2019   Q1 2018   2018

Revenue                                                               -      223     653     Consideration received                                                -         -   537

Cost of services                                                      -      (149)   (434)   Deferred payment                                                      -         -    50

Gross Profit                                                          -       74     219     Sales price for discontinued operations                               -         -   587

Sales and administrative expenses                                     -       (54)   (163)   Net assets divested                                                   -         -   (902)

Other operating income and expenses, net                              -         1       2    Reclassification of exchange rate adjustment from
                                                                                             divestment of discontinued operations                                 -         -   (102)
Operating profit before other items (EBITA)                           -       21      58
                                                                                             Transaction costs                                                     -         -    (15)
Net financial items                                                   -       (15)     (3)
                                                                                             Loss on divestments of discontinued operations                        -         -   (432)
Profit before tax                                                     -         6     55
                                                                                             Net assets divested
Income taxes                                                          -         -     (21)
                                                                                             Assets
Profit for the period                                                 -         6     34
                                                                                             Goodwill                                                              -         -   415
Loss on divestment of discontinued operations                         -         -    (432)   Other intangible assets                                               -         -    30
Profit for the period from discontinued operations                    -         6    (398)   Property, plant and equipment                                         -         -   335
                                                                                             Deferred tax assets                                                   -         -    41
                                                                                             Current assets                                                        -         -   246
Cash flows from discontinued operations
DKK million                                                     Q1 2019   Q1 2018    2018    Cash and cash equivalents                                             -         -   118

                                                                                             Liabilities
Cash flows from operating activities                                  -       (10)    21
                                                                                             Non-controlling interests                                             -         -    (49)
Cash flows from investing activities                                  -       (20)   (144)
                                                                                             Deferred tax                                                          -         -     (8)
Cash flows from financing activities                                  -       33      (68)
                                                                                             Provisions                                                            -         -    (28)
Cash consideration from divestment of discontinued operations         -         -    404
                                                                                             Current liabilities                                                   -         -   (198)
Cash flows from discontinued operations                               -         3    213
                                                                                             Net assets divested                                                   -         -   902
                                                                                             Loss on divestment of discontinued operations                         -         -   (330)
                                                                                             Sales price receivable                                                -         -    (50)
                                                                                             Adjustment for cash and cash equivalents divested                     -         -   (118)

                                                                                             Cash consideration from divestment of discontinued operations         -         -   404

Falck Interim Report Q1 2019                                                                                                                                                        22
Financial statements

Section 3                                                                                      Section 4
Discontinued operations (continued)                                                            Assets classified as held for sale

Comments                                                                                       Assets classified as held for sale

In Q1 2019, Falck decided to keep the             In Q3 2018, Falck divested Falck Safety                                                                              31 March     31 March    31 December
                                                                                               DKK million                                                                 2019         2018           2018
Healthcare staffing business as a part of         Services and its Danish medical clinics. A
the Healthcare business unit. As a result, the    loss on the divestments of DKK 432 million   Intangible assets                                                              -          434              -
staffing business is no longer presented as       was recognised in profit from discontinued   Property, plant and equipment                                                  -          307              -
discontinued operations.                          operations.                                  Deferred tax assets                                                            -           58              -
                                                                                               Inventories                                                                    -            2              -
The comparative figures for 2018 for the                                                       Contract assets                                                                -             -             -
income statement, statement of cash flows                                                      Trade receivables                                                              -          154              -
and balance sheet have been restated.                                                          Income tax receivable                                                          -           12              -
                                                                                               Other receivables                                                              -           39              -
In 2018, discontinued operations included Falck                                                Cash and cash equivalents                                                      -          136              -
Safety Services and Danish medical clinics
                                                                                               Assets classified as held for sale                                             -        1,142              -
and associated businesses (Falck Lægehuse,
Sirculus and Vikteam).                                                                         Deferred tax                                                                   -           33              -
                                                                                               Loans                                                                          -           25              -
                                                                                               Trade payables                                                                 -           71              -
                                                                                               Income taxes                                                                   -            4              -
                                                                                               Provisions                                                                     -          122              -
                                                                                               Contract liabilities                                                           -             -             -
                                                                                               Other payables                                                                 -           75              -

                                                                                               Liabilities relating to assets classified as held for sale                     -          330              -

                                                                                               Net assets classified as held for sale                                         -          812              -

                                                                                               Comments
                                                                                               Assets and liabilities classified as held for sale           In Q3 2018, Falck divested Falck Safety
                                                                                               relate to Falck Safety Services and Danish                   Services and its Danish medical clinics and
                                                                                               medical clinics and associated businesses                    associated businesses (Falck Lægehuse,
                                                                                               (Falck Lægehuse, Sirculus and Vikteam), which                Sirculus and Vikteam). See section 3.
                                                                                               are disclosed as discontinued operations.

Falck Interim Report Q1 2019                                                                                                                                                                              23
Financial statements

Section 5
Contingent liabilities

On 30 January 2019, Falck received a ruling       the case. BIOS and the Region of Southern
from the Danish Competition Council for           Denmark have expressed their intention
having violated the Danish competition rules in   or possibility to raise compensation claims
connection with the award and transfer of the     against Falck. However, Falck has not received
ambulance operation contract in the Region of     any such claims yet. Falck has not recognised
Southern Denmark to a new provider (BIOS) in      a provision for neither a fine nor compensation
2015. Falck decided to refrain from appealing     claims in the Q1 2019 reporting due to
the ruling, and the case was then referred to     uncertainty about the amount and timing.
SØIK for an investigation and determination
of a potential fine. SØIK has not yet informed
Falck of the expected timing for a decision in

Section 6
Events after the reporting date

No events have occurred after the balance
sheet date affecting Falck’s financial
position at 31 March 2019.

Falck Interim Report Q1 2019                                                                        24
Financial statements

          Falck A/S
          Sydhavnsgade 18
          2450 Copenhagen SV
          Denmark

          Tel.: +45 70 33 33 11
          www.falck.com
          www.falck.dk
          CVR no. 33 59 70 45
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