Securitas : Interim report Jan-March 2023

Interim Report

Q1 2023 | January-March 2023

Securitas ABInterim Report Q1 2023 | January-March 2023

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37 751

Total sales, MSEK

5.8%

Operating margin

1.66

Earnings per share, SEK

January-March

2023

• Total sales MSEK 37 751 (28 598)
• Organic sales growth 12 percent (4)
• Operating income before amortization MSEK 2 180 (1 452)
• Operating margin 5.8 percent (5.1)
• Items affecting comparability (IAC) MSEK -281(-134), relating to the previously announced transformation programs and the acquisition of STANLEY Security
• Earnings per share before and after dilution SEK 1.66 (1.91)*
• Earnings per share before and after dilution, before IAC, SEK 2.03 (2.14)*
• Reported net debt/EBITDA 3.8 (2.0), adjusted net debt/EBITDA ratio 3.6 **
• Cash flow from operating activities 9 percent (-9)

• Number of shares outstanding has been adjusted for the rights issue completed on October 11, 2022. For further information refer to Data per share on page 19.
• Includes STANLEY Security's 12 months adjusted estimated EBITDA.

CONTENTS
Comments from the President and CEO	3	Changes in Group Management	13
January-March summary	4	Risks and uncertainties	14
Group development	6	Parent Company operations	15
Development in the Group's business segments	7	Consolidated financial statements	16
Cash flow	10	Segment overview	20
Capital employed and financing	11	Notes	21
Acquisitions and divestitures	12	Parent Company	29
Other significant events	13	Financial information	30

Securitas ABInterim Report Q1 2023 | January-March 2023

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Comments from

the President and CEO

"Strong momentum in technology and solutions"

We are in the process of shaping a security solutions company at the forefront with world-leading technology and expertise, and began the year with 12 percent (4) organic sales growth and

continued­ strong margin ­momentum together with STANLEY Security. Our high-margin technology and ­solutions business grew strongly at 13 percent, excluding STANLEY Security, demonstrating that we are on track to become the most attractive ­security solutions partner for our clients.

North America recorded accelerated growth in the business unit Guarding as a significant client contract has been renewed and expanded with the effect impacting the first quarter of 2023.

For the Group, organic sales growth in the security services business line was primarily­ supported by Aviation and solid price increases, keeping the price and wage balance intact in the first quarter.

Our operating margin improved­ to

5.8 percent (5.1), which is the ­strongest operating margin so far in a first quar- ter. The development was driven by the technology and solutions business supported by healthy margins in

the STANLEY Security ­acquisition.

Our integration­ and value creation processes with STANLEY Security are progressing well. We have realized strong cost benefits and results in our Technology business primarily­ in North America. We see significant­ client interest in our strengthened offering

leading to good commercial opportun­ ities ahead.

Within our security services business we maintain our sharp focus on quality and actively managing lower profit­ ability contracts and we continue

to realize operating margin benefits fromthetransform ation program in North America. In Europe, our performance is below expectations due to increased costs related to labor shortage, contract start-up costs in Aviation and negative cost leverage.

The Group's operating cash flow

­improved to 9 percent (-9) of the operating result. The first quarter is normally weaker from a cash flow ­perspective, but we remain confident regarding our cash ­generation ability.

EXECUTING ON OUR STRATEGY Leadership in technology and solutions and digital capabilities are top priorities in our strategic execution. Together with STANLEY Security we are now number two in the global security technology market and we have a unique solutions offering. The transformation programs we have implemented in North America and are implementing in Europe and Ibero-Americafunda­ mentally shift our ­digital capabilities as a company, digitalizing­ our client, people, operational­ and financial processes end-to-end.This creates major opportunities to develop and commercialize innovative solutions to our clients, supporting our ambition to

become a 10 percent operating margin company over time.

The transformation program in North America has now become an integral part of the day-to-day operations with good margin improvements as a result. In Europe we continue to execute

the corresponding program although with some delay as mentioned ­earlier as we calibrate our efforts with

the STANLEY Security ­integration program to optimize costs and benefits. The parallel program in Ibero-America is on track.

The macroeconomic environment remains uncertain, but I am ­confident that we are well prepared to ­continue delivering high-value services even during more challenging times.

Our unique offering and ­client value proposition have strengthened, enabling higher growth within technology and solutions as well as signifi­ cant operating­ margin enhancement opportunities­ going forward. As part of our ­strategy, we will continue to assess our business mix and presence to further sharpen our performance­ and position as the leading technology and solutions company in the market.

Magnus Ahlqvist

President and CEO

Securitas ABInterim Report Q1 2023 | January-March 2023

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January-March summary

ACQUISITION OF STANLEY SECURITY The acquisition of STANLEY Security has a significant impact on Securitas' reporting that should be considered when reading this report.

STANLEY Security was consolidated­

as of July 22, 2022, and is ­consequently­ ­included in the first quarter 2023

income­ statement. There are no income items relating to STANLEY Security in the first quarter compara­ tives except for transaction­ costs ­incurred by the Group prior to the date of acquisition­. In the January-­­Decem­ ber 2022 income statement STANLEY Security is included from the date of consolidation.

FINANCIAL SUMMARY

STANLEY Security is according to Securitas' definition of organic sales growth excluded from the ­calculation­ of this key ratio during the first

12 months from July 22, 2022. When organic sales growth for STANLEY Security is referred to, this is an estimate of how the acquired business is growing organically but this contri­ bution is excluded from Securitas' organic sales growth. Real sales growth includes the contribution from STANLEY Security as acquired sales are included in the determination of this key ratio.

In the balance sheet STANLEY Security is included as of March 31, 2023, but not

in the first quarter 2022 comparative. STANLEY Security is included in the balance sheet as of December 31, 2022.

STANLEY Security is included in the operating and free cash flow in

the first quarter 2023, but not in the first quarter 2022 comparative. In the full year 2022 operating and free cash flow the contribution­ from STANLEY Security is attributable to the period July 22 to December 31, 2022.

In our segment reporting STANLEY Security is included in Securitas North America and Securitas Europe.

			Q1		Change, %			Full year		Change, %
MSEK		2023	2022		Total	Real	2022		Total
Sales		37 751	28 598	32	26	133 237	24
Organic sales growth, %		12	4				7
Operating income before amortization	2 180	1 452	50	42	8 033	34
Operating margin, %		5.8	5.1				6.0
Amortization of acquisition-­related intangible assets	-154	-61					-414
Acquisition-related costs		-1	-10					-49
Items affecting comparability1)		-281	-134					-1 086
Operating income after amortization	1 744	1 247	40	31	6 484	38
Financial income and expenses		-428	-95					-758
Income before taxes		1 316	1 152	14	5	5 726	32
Net income for the period		963	841	15	5	4 316	38
Earnings per share before and after dilution, SEK2)	1.66	1.91		-13	-20	9.20	29
EPS before and after dilution, before items affecting ­comparability, SEK2)	2.03	2.14		-5	-12	10.77	24
Cash flow from operating activities,­	%	9	-9				71
Free cash flow		-627	-687				3 422
Net debt to EBITDA ratio		3.8	2.0				4.0

1. Refer to note 7 on page 25 for further information.
2. Number of shares outstanding has been adjusted for the rights issue completed on October 11, 2022. For further information refer to Data per share on page 19.

Securitas ABInterim Report Q1 2023 | January-March 2023

January-March summary

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ORGANIC SALES GROWTH AND OPERATING MARGIN DEVELOPMENT PER BUSINESS SEGMENT*

	Organic sales growth		Operating margin
		Q1			Q1
%	2023	2022	2023	2022
Securitas North America	7	-2	7.6	6.4
Securitas Europe	13	8	5.1	5.0
Securitas Ibero-America	23	12	5.8	5.8
Group	12	4	5.8	5.1

* The business segments have been renamed as of May 3, 2023.

FINANCIAL SUMMARY PER BUSINESS LINE

					Operating						% of Group
					income before						operating
	Sales,		Real sales		amortization,		Operating	% of Group		income before
	MSEK		growth, %		MSEK		margin, %	sales		amortization
Business line	Q1 2023		Q1 2023		Q1 2023		Q1 2023	Q1 2023		Q1 2023
Security services	24 944	11	1 077	4.3		66	49
Technology and solutions	12 021	77*	1 216	10.1		32	56
Risk management services and costs for Group functions	786		-		-113		-	2		-5
Group	37 751	26	2 180	5.8		100	100

* Excluding STANLEY Security real sales growth was 13 percent in the first quarter.

For further information regarding the revenue from the Group's business lines, refer to note 3.