Interim Report Q2 2010

higher than average margins and inefficiencies and redundancy costs, in total -0.3 percent - The acquisition of Reliance diluting by -0.3 percent - Di...

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May 4, 2011

January – March 2011

Alf Göransson, President and CEO Interim Report January-March 2011

Highlights Q1



The positive organic sales trend from Q4 2010 continued in Q1 2011

• •

The security market in North America recovering well. In Europe, the price pressure is high and contract losses exceptional

• •

Organic sales growth 3% (-1), real sales growth including acquisitions 10%

Operating margin 4.8% (5.5)

8 major acquisitions in 2011, adding approximately MSEK 2,700 in sales and 14,500 employees

Interim Report January-March 2011

Financial Highlights

MSEK

Q1 2011

Sales

14,775

14,870

3

-1

1

10

1

5

Operating income before amortization

712

818

Operating margin, %

4.8

5.5

6.1

-3

5

6

527

643

-9

1

Net income

370

450

-18

2,081

-2

Earnings per share (SEK)

1.01

1.24

-19

5.71

-2

Organic sales growth, % Real sales growth, incl. acq. %

Real change, % Income before taxes Real change, %

Interim Report January-March 2011

Q1 Total 2010 change % -1

-13

-18

FY Total 2010 change % 61,340

3,724

2,968

-2

-1

-2

5

3

Security Services North America – Sales Development Q1 •

Improved organic sales growth 4% (-5)



The sales of specialized solutions as percentage of total sales has increased in the quarter

Interim Report January-March 2011

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Security Services North America – Income Development Q1 •

The operating margin 5.3% (5.4)



The operating margin in the core business flat



The consolidation of Paragon Systems had a diluting impact of -0.1 percent in the quarter The real change improvement was 8% in the first quarter

Interim Report January-March 2011

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Security Services Europe – Sales Development Q1 • Organic sales growth 1% (1) • Most countries had positive organic sales growth and Spain is no longer negative • As reported in 2010, two major contracts were lost in Q1 with an annual impact of -2 percent on organic sales growth • Another major contract, worth 36 MEUR with the European Commission, was lost as of April 1 • The price pressure in the security market remains difficult

Interim Report January-March 2011

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Security Services Europe – Income Development Q1 • •

Operating margin 4.2% (5.2*) The negative development is explained by - The loss of major contracts with higher than average margins and inefficiencies and redundancy costs, in total -0.3 percent - The acquisition of Reliance diluting by -0.3 percent - Discrepancies between price and wage cost increases of -0.4 percent The remedy is to continue with the specialization and added value strategy, to prioritize profitability when managing the price/wage balance and reduce overhead costs where major contracts are lost

* Restated due to operations moved between the segments Security Services Europe and Mobile and Monitoring.

Interim Report January-March 2011

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Mobile and Monitoring – Sales Development Q1 • Organic sales growth 2% (2) • In Mobile, positive organic sales growth in most countries. • Most countries in the Monitoring operation had positive organic sales growth

Interim Report January-March 2011

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Mobile and Monitoring – Income Development Q1 • Operating margin 10.4% (11.4*) • The operating margin in Mobile negatively affected by fewer call outs and increased fuel costs • In Monitoring, the operating margin was affected by restructuring costs in Belgium and Spain due to the negative sales growth

* Restated due to operations moved between the segments Security Services Europe and Mobile and Monitoring.

Interim Report January-March 2011

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Cash flow

MSEK

Q1 2011

Q1 2010

FY 2010

FY 2009

712

818

3,724

3,756

-217

-221

-902

-951

219

228

901

928

Change in accounts receivable

-258

-291

-769

198

Change in other operating capital employed

-647

185

313

-556

Cash flow from operating activities

-191

719

3,267

3,375

Cash flow from operating activities, %

-27

88

88

90

Financial income and expenses paid

-61

-86

-521

-482

Current taxes paid

-109

-109

-735

-728

Free cash flow

-361

524

2,011

2,165

As % of adjusted income

-78

101

81

88

Free cash flow to net debt

0.13

0.35

0.24

0.26

Operating income before amortization Investments in non-current tangible and intangible assets Reversal of depreciation

Interim Report January-March 2011

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Net Debt Development

MSEK Net debt January 1, 2011 Free cash flow

-361

Acquisitions

-137

IAC payments Change in net debt Translation and revaluation Net debt March 31, 2011 Interim Report January-March 2010 2011

-8,209

-7 -505 330 -8,384 11

Summary Q1

• The security market is recovering, organic sales growth 3% (-1) • Real sales growth including acquisitions 10% • Operating margin 4.8% (5.5), negatively affected by the margin development in Security Services Europe and Mobile and Monitoring • 8 major acquisitions in 2011, adding app. MSEK 2,700 in sales and 14,500 employees • Securitas has operations in 45 countries with 280,000 employees and targets to be in 60 countries within 3 years

Interim Report January-March 2011

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How to improve EPS 10% in average annually?

Organic sales growth

Interim Report January-March 2011

Acquisitions

Improving the operating margin

13

How to improve EPS 10% in average annually?

Manage the machine Booming

Recession

+ Leverage

+ Cut costs

- Unbilled

+ Unbilled

+ Pricing

- Volume chase

- Recruitment

- Bad debt

+ Inflation

+ Acquisitions

Interim Report January-March 2011

Improve the operating margin year on year

Develop the core business • Focus on security / specialization and segmentation • Add value • Solutions, technology and innovations

14

Solution – One partner to manage and deliver a complete Security Program Physical Security Solutions

Customizing a solution that meets Client’s needs

Technology Solutions Security

Interim Report January-March 2011

Consulting & Investigation Solutions

15

Questions and Answers

Interim Report January-March 2011

Integrity | Vigilance | Helpfulness

securitas.com Interim Report January-March 2010 2011

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