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  • Annual Report

    2016

    Contributing to a Safer Society

  • CEO statement 2–4

    Strategy 5–13

    Strategy: Securitas' service offering 6–7

    Strategy: creating value for our customers 8–9

    Strategy: creating value for our shareholders 10–11

    Strategy: growth 12–13

    Operations 14–17

    Overview – business segments 14

    Security Services North America 16

    Security Services Europe 16

    Security Services Ibero-America 17

    Africa, Middle East and Asia 17

    Securitas’ responsibilities 18–25

    Corporate governance and management 26–45

    Corporate governance 26–33

    Securitas management model – Toolbox 27

    Compliance with the Code 31

    Board of Directors 32–33

    Group Management 34–35

    Enterprise risk management (ERM) and internal control 36–44

    Auditors 45

    Auditor’s report on Corporate Governance Statement 45

    Annual Report 46–131

    Securitas’ financial model 46–47

    Report of the Board of Directors 49–57

    Consolidated financial statements 58–64

    Notes and comments to the consolidated financial statements 65–115

    Five-year overview 114–115

    Parent Company financial statements 116–118

    Notes and comments to the Parent Company financial statements 119–125

    Signatures of the Board of Directors 126

    Auditor’s report 127–131

    Quarterly data 132–133

    The Securitas share 134–135

    Financial information and invitation to the Annual General Meeting 136

    This is a translation of the original Swedish Annual Report. In the event of differences between the English translation and the Swedish original, the Swedish Annual Report shall prevail.

  • Organic sales growth was 7  percent.

    Organic sales growth, %

    Size Securitas employs more than 335 000 people in 53 countries. In 2016, total sales amounted to MSEK 88 162 and operating income before amortization to MSEK 4 554.

    Read more on page 14.

    Markets Securitas operates in 53 countries throughout North America, Europe, Latin America, Africa, the Middle East and Asia. Securitas is organized into three business segments: Security Services North America, Security Services Europe and Security Services Ibero-America.

    Read more on pages 16–17.

    * Includes AMEA.

    Financial targets Securitas has two financial targets. The first target is related to the income statement; an annual average increase in earnings per share of 10 percent. The second target is related to the balance sheet; a free cash flow to net debt ratio of at least 0.20.

    Read more on pages 46–47 and 71–73.

    The free cash flow to net debt ratio decreased from 0.22 to 0.13.

    0 %

    3%

    7 %

    5 %

    1%

    14 15 1612 13

    SizeSize

    65 700 66 458

    80 860 70 217 88 162

    Markets

    Security Services North America 41%

    Security Services Europe 45%

    Security Services Ibero-America 12%

    Other* 2%

    Financial targets

    4.11* 5.67 6.67

    7.245.07

    14 15 1612 13

    3.22

    Financial targets

    0.13

    0.22

    0.21

    0.22

    0.18

    14 15 1612 13

    Security Services in North America and Europe represent 86 percent of total sales.

    Markets in which Securitas conducts operations: Argentina, Austria, Belgium, Bosnia and Herzegovina, Cambodia, Canada, Chile, China, Colombia, Costa Rica, Croatia, the Czech Republic, Denmark, Ecuador, Egypt, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Jordan, Latvia, Luxembourg, Mexico, Montenegro, Morocco, the Netherlands, Norway, Peru, Poland, Portugal, Romania, Saudi Arabia, Serbia, Singapore, Slovakia, South Africa, South Korea, Spain, Sri Lanka, Sweden, Switzerland, Thailand, Turkey, the United Arab Emirates, the UK, Uruguay, the US and Vietnam.

    The share At year-end, the closing price of the Securitas share on Nasdaq Stockholm was SEK 143.40, corresponding to a market capitalization of MSEK 49 891 (45 229). The share price increased by 10 percent in 2016, compared with the OMX Stockholm Price index, which increased by 6 percent. Earnings per share amounted to SEK 7.24 (6.67) in 2016. The Board proposes that a dividend of SEK 3.75 (3.50) per share be paid to shareholders.

    Read more on pages 134–135.

    The share

    US 10%

    UK 11%

    Luxembourg 6%

    Switzerland 1%

    Rest of world 8% Sweden 64%

    Shareholders per country, votes.

    Swedish shareholders held 64 percent of the votes.

    Earnings per share rose from SEK 6.67 to SEK 7.24, an increase of 9 percent.

    * Adjusted for items affecting comparability and impairment losses.

  • Technology Technology is strengthening

    Securitas’ delivery of security services and solutions. Providing our customers

    with the right technology, in combination with our people and their knowledge,

    makes security more effective and more cost efficient.

    People Our more than 335 000 employees

    are committed to strengthening our customers’ security. Unity and co-operation

    are key to ensuring that we think globally and act locally, provide security according to

    our customers’ needs and are engaged in the communities in which we operate.

    Shareholder value increases steadily as Securitas

    utilizes technology in its solutions. This enables enhanced security

    for our customers and higher operating margins.

    See page 10.

    Utilizing large data volumes in combination with real-time

    analysis of incidents is becoming increasingly important. However, its ultimate application lies in Securitas

    being able to predict and prevent incidents from happening.

    See page 13.

    Intelligent cameras can analyze situations and alert

    security officers when suspicious behavior is identified. This allows

    Securitas' mobile patrol to quickly handle the incident.

    See page 6.

    Creating added customer value by providing services in addition

    to security is a growing part of our offering. Cameras, for example, can be

    used to count people in a cashier environment, helping the business to

    streamline its operations. See page 8.

    Securitas – shaping global security of tomorrow

  • Knowledge Group-wide access to in-depth

    knowledge and experience enables us to lead the transformation of the security

    industry. Sharing of knowledge, enhanced by further digitization of Securitas’ opera-

    tions, means that we can provide our customers with superior real-time analytics

    and solutions for predictive security.

    Fire and safety services incorporate planning and preparation, evacuation

    procedures and drills as well as fire-fighting services and lifesaving. See page 12.

    Attracting and retaining our most valuable assets – our

    employees – is crucial to Securitas’ success. This includes a thorough

    onboarding process and con - ti nuous education.

    See page 19.

    Securitas Operation Centers coordinate and manage all of our

    operations. Technology, people and knowledge are combined to ensure that the right security measures are in place and that customer requests

    are handled appropriately. See page 6.

    Securitas – shaping global security of tomorrow

  • Securitas is leading the ongoing transformation of the security industry from traditional guarding to a much broader spectrum of protective services. Our progress is based on efficiently integrating technology, people and knowledge – combining on-site, mobile and remote guarding with electronic security solu- tions, fire and safety, and corporate risk management. Our focus on achieving our long-term financial goals while delivering superior customer value in our daily operations is proving successful. Securitas’ results for 2016 demonstrate that we are able to combine the two; earnings per share increased with 9 percent compared with 2015. 2016 was our strongest year to date.

    Year 2017 represents a milestone in Securitas’ efforts to drive the security industry forward. It marks a shift toward digitizing our core operations. This means all new customer contracts and all renew-als across most markets will be operated and reported in a digital format, directed by our Securitas Operation Centers (SOC). In 2018, we expect all data at all customer sites to be reported in a digital format.

    This strategy entails significant changes in terms of how we deliver security. In addition to imple- menting fully integrated systems, capitalizing on the opportunities presented by digitization is one of Securitas’ principal priorities.

    Detecting crime before it happens As the transition to Group-wide digital systems continues, Securitas is moving closer to achieving its vision for 2020. Our short and medium-term actions are well under way, with internal projects to address SOC consistency and IT infrastructure, as well as strategic acquisitions in electronic secu- rity completed during the year. Securitas’ focus is now shifting to the next phase of our long-term ambition – predictive security.

    Securitas’ strengthened ability to report, analyze and utilize large volumes of data will pro