SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018 SECURITAS - THE - - PowerPoint PPT Presentation

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SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018 SECURITAS - THE - - PowerPoint PPT Presentation

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SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018 SECURITAS - THE LEADER IN PROTECTIVE SERVICES SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018 A World Leader in Protective Services 55 countries Europe North-America #1 position

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SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

SECURITAS - THE LEADER IN PROTECTIVE SERVICES

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SLIDE 2

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

share

AMEA

growing

presence

17 countries

employees

345,000 55

countries growth in sales of security solutions and electronic security

19%

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 2017 sales

92 BSEK

2 SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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SLIDE 3

Market Drivers

Urbanization Infrastructure development Global tension Digitalization Sectors sensitive to disturbances

3 SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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SLIDE 4

”Detect the Crime Before it Happens”

4 SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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SLIDE 5

We Improve Customer Value

Traditional guarding Future security industry

  • Electronic security
  • Mobile and remote

guarding

  • Professional risk

analysis Value Value

  • Protective

services

  • Fire and safety
  • Corporate risk

management

  • Big data
  • Predictive

security

5 SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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SLIDE 6

Clear Goals to Drive Performance

2017 2016 2015 EPS real change 9% 9% 8% Free cash flow to net debt 0.19 0.13 0.22 Dividend in SEK As % of net income *4.00 52% 3.75 52% 3.5 52% Real growth electronic security and solutions 19% 56% 38%

  • 1. Financial performance target

Annual average increase in EPS of 10% Income statement Balance sheet

  • 2. Financial stability target

Free cash flow to net debt above 0.20 Return to shareholders

  • 3. Dividend policy

50 to 60% of net income The future

  • 4. Strategic development

Grow electronic security and solutions at a high pace

6

*proposed dividend

SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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SLIDE 7

Operating income, BSEK from 2.9 to 4.7 Sales, BSEK from 51.5 to 92.2

  • Avg. 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

  • perating income

+ –

Performance during the period 2007-2017

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

7 SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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SLIDE 8

From 2.7 to 2.1 x EBITDA Average of 2,2 x EBITDA Average of 81% to adjusted income Average of 88% to operating income before amortization

Strong operating cash flows

Performance During the Period 2007-2017

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

+ – – + + + /

8 SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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SLIDE 9

Security Solutions Reduces the # of Competitors

Security Solutions = adding skills and capabilities

One amongst many Fewer Few

Traditional guarding +Electronic security +Mobile guarding +Remote guarding +Professional risk analysis + Investment into customer site + Protective services  Strong balance sheet required

9 SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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SLIDE 10

10

  • Organic sales growth 5% (7) in FY, 6 percent (5) in Q4,

with strong market momentum throughout the Group, led by North America

  • Gradual recovery of organic sales growth in Europe

during the year. Within Ibero-America, Spain and Portugal had a good year. Mixed picture in Latin America

  • Operating margin 5.1% (5.2), mainly due to negative

leverage in a few countries in Europe during the first nine months. In Q4 5,3% (5,2) with improvement in Europe

  • EPS real change 4%. Adjusted for IAC real change

was 9 %

  • Proposed dividend SEK 4.00 (3.75)
  • Free cash flow to net debt ratio 0.19 (0.13)
  • Net debt to EBITDA ratio 2.1 (2.4)
  • Sales of security solutions and electronic security grew

19% and now represents 18% (16) of total sales

Highlights January - December

SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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SLIDE 11

Financial Highlights

MSEK Q4 2017 Q4 2016 Total change % Real change % 2017 2016 Total change % Real change % Sales 24 024 23 715 1 6 92 197 88 162 5 5 Organic sales growth, % 6 5 5 7 Operating income before amortization 1 264 1 241 2 8 4 677 4 554 3 4 Operating margin, % 5.3 5.2 5.1 5.2 Amortization and impairment

  • f acquisition-related assets
  • 72
  • 87
  • 255
  • 288

Acquisition-related costs

  • 28
  • 47
  • 48
  • 113

Operating income after amortization 1 164 1 107 5 12 4 374 4 153 5 6 Financial income and expenses

  • 94
  • 105
  • 376
  • 389

Income before taxes 1 070 1 002 7 13 3 998 3 764 6 7 Net income for the period 644 704

  • 9
  • 2

2 737 2 646 3 4 Earnings per share (SEK) 1.76 1.92

  • 8
  • 2

7.49 7.24 3 4 EPS before IAC (SEK)* 2.10 1.92 9 16 7.83 7.24 8 9

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* EPS before items affecting comparability, consisting in its entirety of one-off tax effects amounting to MSEK -123.4 from the revaluation of US net deferred tax assets due to the US tax reform enacted in December 2017.

SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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Cash Flow

The net investments include capex in security solutions contracts

MSEK Q4 2017 Q4 2016 2017 2016 Operating income before amortization 1 264 1 241 4 677 4 554 Investments in non-current tangible and intangible assets

  • 514
  • 409
  • 1 704
  • 1 658

Reversal of depreciation 356 337 1 361 1 229 Net investments in non-current assets

  • 158
  • 72
  • 343
  • 429

Change in accounts receivable 57

  • 297
  • 449
  • 1 039

Change in other operating capital employed 650 285

  • 48
  • 47

Cash flow from operating activities 1 813 1 157 3 837 3 039 Cash flow from operating activities, % 143 93 82 67 Financial income and expenses paid

  • 40
  • 33
  • 425
  • 301

Current taxes paid

  • 267
  • 260
  • 1 122
  • 1 017

Free cash flow 1 506 864 2 290 1 721 As % of adjusted income 157 94 68 52 Free cash flow to net debt

  • 0.19

0.13

12 SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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Net Debt Development

MSEK Net debt Jan 1, 2017

  • 13 431

Free cash flow 2 290 Acquisitions

  • 304

Dividend

  • 1 369

Change in net debt 617 Revaluation

  • 29

Translation 510 Net debt Dec 31, 2017

  • 12 333
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Executing on our Strategy

Guarding – sales, BSEK 2014: 63.7 2015: 71.6 2016: 74.1 2017: 75.5 Security solutions and electronic security – sales, BSEK 2014 : 6.5 (9% of total, +28%) 2015 : 9.3 (11.5% of total, +38%) 2016 : 14.1 (16% of total, +56%) 2017 : 16.7 (18% of total, +19%) Guarding

4%*

Specialized guarding

6%*

Guarding solutions

8%*

Security solutions

10%*

14

*Operating margin

SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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Selective Acquisitions Clear Acquisition Strategy

Strategy Pre-Acquisition Acquisition Post-closing Post-acquisition follow-up

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Capital Structure

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8,935 13,459 5,192 27,585

  • 3,674 - 6,386 - 2,273 -12,333

5,259 7,072 2,919 15,250 0.70 0.90 0.78 0.81 Summary of Capital Structure MSEK EURO USD Total Capital Employed Net Debt OTHER Equity Debt/Equity Ratio TOTAL

SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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Strong Financing in Place

 Ample headroom in place  No financial covenants  BBB, stable outlook

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

17 SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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Strong Financing in Place

– Recent funding activity. – RCF USD 1.1 bn extended to 2022 with existing 12 banks: BBVA ING Citibank KBC Commerzbank Nordea Danske HSBC DNB SEB Societe Generale Unicredit – MEUR 350 Bond issued in February 2017, maturity February 2024. Coupon is 1.125%. EUR 175 m swapped into floating EUR for 7 years.

18 SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

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S&P Rating Credit 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

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  • Securitas is committed to solid Investment Grade rating

SECURITAS BOND INVESTOR PRESENTATION, FEBRUARY 2018

S&P Forecast* 2017 Adjusted FFO/Debt 28% Adjusted Debt/EBITDA 2.6x

*published July 2017

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SLIDE 20

THANK YOU