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Securitas Bond Investor Presentation, February 2017
Securitas - The Leader in Protective Services
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A World Leader in Protective Services
North-America
#1 position
18% market share
Europe
#1 position
19% market share
Latin-America
#2 position
14% market shareAMEA
growingpresence
17 countries
employees330,000
53 countries
2016 growth electronic security & solutions56%
The leading international security company, specializing in protective services
• On-site, mobile and remote guarding combined with electronic security services
• Well positioned in a rapidly changing security industry
• Responsible business for sustainable growth –CSR integral part of everyday work
2016 sales88 BSEK
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Market Drivers
UrbanizationInfrastructure development
Global tension DigitalizationSectors sensitive to disturbances
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”Detect the Crime Before it Happens”
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We Improve Customer Value
Traditional guarding
Future security industry
• Electronic security
• Mobile and remote guarding
• Professional risk analysis ValueValue
• Protective services
• Fire and safety
• Corporate risk management
• Big data
• Predictive security
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Clear Goals to Drive Performance
2016 2015 2014
EPS real change 9% 8% 8%
Free cash flow to net debt
0.13 0.22 0.18
Dividend in SEKAs % of net income
*3.7552%
3.552%
3.053%
Real growth electronic security and solutions
56% 38% 28%
1. Financial performance targetAnnual average increase in EPS of 10%
Incomestatement
Balancesheet
2. Financial stability targetFree cash flow to net debt above 0.20
Return toshareholders
3. Dividend policy 50 to 60% of net income
The future
4. Strategic developmentGrow electronic security and solutions at a high pace
Securitas Bond Investor Presentation, February 2017 6
*proposed dividend
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Operating income, BSEK
from 2.9 to 4.6
Sales, BSEK
from 51.5 to 88.2Avg. acquired growth 3%Avg. organic growth 3%
Growth of top-line
Income Statement – Main Drivers
Strong focus on price / wage throughout the company
Growth of electronic security and solutions changing revenue mix
Opportunity to leverage the cost structure
Investing into the execution of the strategy
Competitive environment
Supported by a strong performance culture and incentive structure
+
+
+
+
/
/
/
+
+
+
–
–
Growth of operating income
+
–
Performance during theperiod 2007-2016
A growing need for security
Supported by strategy of electronic security and solutions
Supported by acquisitions
Growing role of private security
Economical climate is OK
Well diversified business (geography and industries)
Good resilience for downturns
Competitive environment
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From 2.7 to 2.3 x EBITDA
Average of 2,2 x EBITDA
Average of 82%to adjusted income
Average of 88% to operating
income before amortization
Strong operating cash flows
Performance During the Period 2007-2016
Strong focus on DSO and AR Overdue
Organic growth
Investments into customer site equipment
Strong free cash flow Good financing in place
Stable tax rates
Controlled Net Debt Clear dividend policy
Selective acquisitions
+
–
–
+
+
+
/
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Executing on our Strategy
8%*
Guarding
solutions4%*
Guarding
* Operating margin
Security Solutions and Electronic Security – Sales
2014 : 6,5 BSEK (9% of total, +28%)
2015 : 9.3 BSEK (11,5% of total, +38%)
2016 : 14.1 BSEK (16% of total, +56%)
Guarding – Sales
2014: 63,7 BSEK2015: 71.6 BSEK2016: 74.1 BSEK
10%*
Security
solutions6%*
Specialized
guarding
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Security Solutions Reduces the # of Competitors
Security Solutions = adding skills and capabilities
One amongst
many
Fewer Few
Traditional guarding
+ Electronic security+ Mobile
guarding
+ Remoteguarding
+ Professional risk analysis
+ Investment into customer site+ Protective
services
� Strong balance sheet required
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Security Solutions Drives the ROCE
Example of a contract conversion: from manned guarding to security solutions KEUR Guarding Solution
Annual sales 400 386
Direct & indirect cost -380 -349
Operating income 20 37
Operating margin 5% 10%
Capital employed 116 176
as of % sales 29% 44%
Return on capital
employed
17% 21%
Reduce on-site guarding
Introduce remote monitoring and technology
Invest 60 KEUR capex = 15% of the first year’s sales
Sign 5 year contract
Depreciated over contract duration = 12 KEUR annual depreciation
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Selective Acquisitions
Clear Acquisition Strategy
Strategy Pre-Acquisition Acquisition Post-closingPost-acquisition
follow-up
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Highlights January – December 2016
� Organic sales growth 7% (5) in the year and 5% (7) in Q4
� Operating margin 5.2% (5.1)
� EPS real change 9%
� Proposed dividend SEK 3.75 (3.50), 52% of net income
� 56% (38) growth of security solutions and electronic security
sales, now at BSEK 14.1 of total sales
� We believe we can continue to grow security solutions and
electronic security sales at a high pace in the coming years
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Financial Highlights
MSEK
Q4
2016
Q4
2015Total
change %
Real
change % 2016 2015Total
change %
Real
change %
Sales 23 715 21 031 13 10 88 162 80 860 9 11
Organic sales growth, % 5 7 7 5
Operating income before amortization 1 241 1 133 10 6 4 554 4 089 11 13
Operating margin, % 5.2 5.4 5.2 5.1
Amortization and impairment of acquisition-
related assets -87 -73 -288 -275
Acquisition-related costs -47 -8 -113 -29
Operating income after amortization 1 107 1 052 5 1 4 153 3 785 10 11
Financial income and expenses -105 -80 -389 -309
Income before taxes 1 002 972 3 -1 3 764 3 476 8 9
Net income for the period 704 671 5 0 2 646 2 444 8 9
Earnings per share (SEK) 1.92 1.83 5 0 7.24 6.67 9 9
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Cash flow
MSEK Q4 2016 Q4 2015 2016 2015
Operating income before amortization 1 241 1 133 4 554 4 089
Investments in non-current tangible
and intangible assets -409 -332 -1 658 -1 329
Reversal of depreciation 337 280 1 229 1 072
Net investments in non-current assets -72 -52 -429 -256
Change in accounts receivable -297 -47 -1 039 -707
Change in other operating capital employed 285 76 -47 274
Cash flow from operating activities 1 157 1 110 3 039 3 399
Cash flow from operating activities, % 93 98 67 83
Financial income and expenses paid -33 -42 -301 -322
Current taxes paid -260 -261 -1 017 -914
Free cash flow 864 807 1 721 2 163
As % of adjusted income 94 117 52 78
Free cash flow to net debt -- -- 0.13 0.22
The net investments
include capex in security
solution contracts and for
premises in the US
Change in accounts
receivable affected by
increased DSO’s and from
strong organic sales growth
Change in other operating
capital employed affected
by a one time extra pension
payment
Free cash flow affected by
higher taxes paid, due to
higher taxable income
Measures are being taken to improve the cash flow in 2017 Securitas Bond Investor Presentation, February 2017 15
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Net Debt Development
16
MSEK
Net debt Jan 1, 2016 -9 863
Free cash flow 1 721
Acquisitions -3 566
IAC payments -17
Dividend paid -1 278
Change in net debt -3 140
Revaluation 23
Translation -451
Net debt Dec 31, 2016 -13 431
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Capital Structure 31 December 2016
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8,273 14,787 4,879 27,939
- 3,565 - 7,885 - 1,981 - 13,431
4,706 6,902 2,879 14,487
0.76 1.14 0.69 0.93
Summary of Capital Structure
MSEK EURO USD OTHER
Debt/Equity Ratio
Total Capital Employed
Net Debt
Equity
TOTAL
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Strong Financing in Place
� Ample headroom in place � No financial covenants� BBB, stable outlook
Securitas Bond Investor Presentation, February 2017
Main principles for funding strategy: to support the group’s long term strategic goals
• To be well balanced and diversified in terms of external funding sources via bank, bond and commercial paper markets
• To be cost efficient
• To be well balanced in terms of maturity of financing
• To be based on long term relationships with financing counterparts
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Strong Financing in Place
• Recent funding activity.
• RCF USD 1.1 bn extended to 2022 with existing 12 banks:
• BBVA
• Citibank
• Commerzbank
• Danske
• DNB
• ING
• KBC
• Nordea
• RBS
• SEB
• Societe Generale
• Unicredit
• MEUR 350 Bond issued in March 2016, maturity March 2022. Coupon is 1.25%. EUR 287 m swapped into fixed USD for 6 years.
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S&P RatingCredit Strengths and Challenges
Business Risk
• Securitas is the world's second-largest security services provider by total revenues.
• Wide geographic coverage and well diversified customer base
• Competitive and fragmented industry with low entry barriers leading to modest EBITDA margins.
Financial Risk
• Low capital expenditure (capex) requirements.
• “Exceptional" liquidity position.
• Stretched balance sheet due to debt-financed acquisitions.
• Financial Risk Profile “Significant”
Swedish
Agency Long - term Short - term Short - term Outlook
S&P BBB A2 K2 Stable
Securitas Bond Investor Presentation, February 2017 20
S&P Forecast 2016* 2016
Adjusted FFO/ Debt 27%
Adjusted Debt / EBITDA 2.8x
*published May 2016• Securitas is committed to solid Investment Grade rating
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Interim Report January-March 2010
Integrity | Vigilance | Helpfulness
securitas.com
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