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All-time-high operating result and transformative technology acquisition

Our strategy, investments and actions are starting to generate results and leading to improved profitability across all segments in 2021.

The coronavirus pandemic was still present in our day-to-day operations as we closed 2021. We are coming out stronger as a company in 2021 thanks to having taken action early with a clear focus on four priorities – protecting the health and safety of our people, staying close to our clients, managing cost and maintaining our cash generation. Over the last year, we have sharpened the business further through focus on enhancing the client value proposition, profitability and the execution of our transformation programs, and we are managing the remaining effects of the pandemic with strong performance in all our business segments.

At the end of 2021, we were very excited to announce our largest acquisition in the company’s history. We have entered an agreement to acquire Stanley Security, a globally highly reputable electronic security solutions provider. We have built our electronic security platform through smaller acquisitions for some years now, but Stanley Security is a game-changer. A transformative acquisition, both for us as a company and for the security industry.

We believe that the future of security is built around the combination of global presence, connected technology and intelligent use of data, and together with Stanley Security, we will be perfectly positioned to win in this environment. Securitas strategy is to deliver comprehensive, scalable and innovative security solutions to meet the clients’ increasingly complex security needs. Stanley Security’s complementary offering of industry-leading tech-enabled security, is in perfect alignment with this strategy. In addition, the acquisition is a significant step towards Securitas achieving the ambition of doubling sales from higher margin security solutions and electronic security by 2023. We expect closing of the acquisition to take place in the first half of 2022.

2021 FINANCIAL DEVELOPMENT
The Group’s organic sales growth was 4 percent (0) with all business segments contributing. The gradual business recovery continued during the year, with commercial activity and sales momentum picking up throughout the Group, including airport security. Sales of security solutions and electronic security had a real sales growth of 8 percent (5) in 2021 and now represents 22 percent (22) of Group sales.

The operating result for the Group, adjusted for changes in exchange rates, increased by 28 percent (-10) and the operating margin improved to 5.6 percent (4.5). The improving business fundamentals and active portfolio management strengthened all business segments, and the costsavings program initiated during 2020 had a positive impact as well. Furthermore, we had lower levels of provisioning during 2021, compared to increased levels during 2020. The price and wage balance was successfully kept on par throughout the year. Going into 2022 we are well positioned to maintain this balance.

The Group delivered a strong operating cash flow, corresponding to 93 percent of operating income in 2021. The net debt to EBITDA ratio was 1.9 (2.1).

Based on the solid financial position the board proposes a dividend of SEK 4.40 per share for 2021, equal to a 10 percent increase versus 2020.

PROXIMITY TO CLIENTS
Fulfilling our clients’ security needs and giving them peace of mind to focus on their core business, is at the core of what we do. With the pandemic, the security needs of many clients have changed swiftly and we have done our utmost to be flexible and serve in the best possible way. The quality and adaptability of our services have been recognized by our clients and were reflected in a stable, high client retention of 90 percent in 2021.

PROTECTIVE SERVICES LEADERSHIP
We have continued to build our expertise in electronic security and security solutions during the year. We completed several important acquisitions that strengthen our position – Dansk Brandteknik in Denmark, Protection One in Germany, Tepe Güvenlik in Turkey and Supreme Security in the US.

With the acquisition of Stanley Security, we will be an exceptional player in the security industry on a global level. The profile of Securitas changes from a leading guarding company with electronic security and solutions capabilities, to a leading intelligent security solutions partner. Our combined offering is cutting edge and we will be in an outstanding position to deliver security and safety to clients and communities around the world. Overall in the Group, we saw positive developments in our electronic security and solutions business during 2021 despite some challenges related to shortage of components. Accelerating organic sales growth within electronic security and solutions is a priority going forward. The installation business within electronic security recovered well during 2021 as restrictions and lock-downs eased and we could access clients’ sites again.

DRIVING OUR TRANSFORMATION PROGRAMS
In North America we started to realize the operational and financial benefits from the implementation during 2021. We finalized this program at the end of 2021 and we will over the coming year continue to focus on benefit realization.

At the beginning of 2021 we launched transformation programs in Security Services Europe and Security Services Ibero-America. This is the last phase of transformation in the Group. These programs will modernize and digitize our business and enable to scale up the execution of the strategy and expand profitability. All transformation programs have clearly defined operating margin targets associated to them and the programs have progressed according to plan during 2021.

OUR PEOPLE
As one of the world’s largest employers, we employ many people in Securitas. We offer thousands of work opportunities all around the world, and our people benefit from working for a values- and purpose-driven company that offer good working conditions, fair wages and career opportunities. During the pandemic, our services have been classified as essential to society in many countries, which again shows what a vital part we play in society, now and in the long term.

We support the UN Global Compact and incorporate its ten principles into our daily work. Through our work, we also contribute to the fulfillment of the UN Sustainable Development Goals (SDGs) in the ones where we believe we can make the greatest positive impact.

EXCITING TIMES AHEAD
Going into 2022, we are preparing to close the acquisition of Stanley Security and transforming Securitas to a more advanced company with greatly enhanced technology capabilites. When Stanley Security is integrated and the transformation programs are fully implemented, we will have built a new Securitas – a modern, digitized and innovative security solutions partner for our clients. With the margin targets of the transformation programs, the higher margin profile of Stanley Security – paired with active portfolio management throughout the Group – we are building a structurally higher margin profile in Securitas in the years to come.

Finally, I would like to express my gratitude to the Securitas team for the outstanding work and contributions. I would also like to thank all shareholders for your trust in our company.

Stockholm, March 24, 2022

Magnus Ahlqvist
President and CEO
Securitas AB