March Securitas Bond Investor Presentation

Transcription

1 March 2016 Securitas Bond Investor Presentation

2 Content Securitas in Brief Business Strategy Business Area Overview Financial Highlights and Debt Overview Securitas Bond Investor Presentation March

3 Securitas in Brief

4 A World Leader in Security We are the leading international security company, specializing in protective services Well positioned in a rapidly changing security industry On-site, mobile and remote guarding combined with electronic security services #1 market position in North America and Europe operating in 53 countries globally 2015 total sales: ~ 81 BSEK (security solutions and technology: 9.3 BSEK) Responsible business for sustainable growth CSR integral part of everyday work Securitas Bond Investor Presentation March

5 53 Countries and over 320,000 Employees Security Services North America (2015) Sales, MSEK Operating margin, % 5.6 Employees Security Services Europe (2015) Sales, MSEK Operating margin, % 5.7 Employees Security Services Ibero-America (2015) Sales, MSEK Operating margin, % 4.5 Employees New Markets Employees The presentation currency of the Group is Swedish Krona, SEK. FX rate EUR/SEK: as of December 31, Securitas Bond Investor Presentation March

6 ... in a Changing World Cost of manpower Increasing demand for security solutions The speed and the security of transfer of data, images and videos Cost of technology Securitas Bond Investor Presentation March

7 A New Security Market is Emerging Traditional guarding growing in-line with GDP Rapid growth of technology driven security solutions in mature markets Customers looking for complete, cost efficient security solutions Increasing complexity and scale of customers security requirements A heightened sense of terror alert is becoming more widespread in western economies Large scale migration from developing countries into Europe is creating extra demand for private security to help ensure the safety and welfare of the migrants and their families. Securitas Bond Investor Presentation March

8 A Complete Integrated Security Solutions Service Remote guarding Interface On-site guarding Securitas Cloud On-site guards Mobile guards Remote video solutions Monitoring Video management Intelligent cameras Physical tools Securitas Bond Investor Presentation March

9 Financial Overview Sales & Income Sales, MSEK Organic sales growth, % Acquired sales growth = Real sales growth, % Operating income Operating margin, % Debt ratios Free Cash Flow/Net Debt 0.24x 0.08x 0.21x 0.22x 0.18x 0.22x Interest Coverage 7.4x 6.1x 5.0x 7.9x 10.4x 13.1x Net Debt Equity Ratio * Restated for IAS19 revised Note : Ratio calculations are outlined in Securitas Annual Report Note 3. Securitas Bond Investor Presentation March

10 Cash flow MSEK Q Q Operating income before amortization Investments in non-current tangible and intangible assets Reversal of depreciation Net investments in non-current assets Change in accounts receivable Change in other operating capital employed Cash flow from operating activities Cash flow from operating activities, % Financial income and expenses paid Current taxes paid Free cash flow As % of adjusted income Free cash flow to net debt The net investments include capex in security solution contracts, reflecting our strategy to increase sales of security solutions and technology. These investments affect free cash flow and are depreciated over the contract period. Securitas Bond Investor Presentation March

11 A Strong Credit Investment Rationale Predictable debt service underpinned by stable cash flows Contract business provide for good and long customer relations No dependency on large customers Services provided to most sectors in society including governments, utilities, financial, travel, logistics and industrial Customer base widely dispersed geographically, diversification spreads risks Very high customer retention rates Strong brand and premium position in business Commitment to financial policies in line with solid investment grade rating Growth opportunities can be pursued without compromising credit profile Strong financial flexibility based on strong drivers Flexible cost base Capex needs are low, with the exception of technological acquisitions that are in line with the strategy Liquidity secured through cash flow stability and unutilised committed credit lines Securitas Bond Investor Presentation March

12 Business Strategy

13 Taking the next step: Securitas Vision 2020 Securitas is in the forefront of the transformation in the security industry We are fine-tuning our Group strategy to become even stronger in the years ahead Continue to pursue organic growth in solutions and technology, and acquisition opportunities Coordinate investments within IT and Securitas Operation Centers Expand mobile patrol explore new channels More focus on fire and safety and corporate risk management The leading international security company specializing in Protective services based on people, technology and knowledge Securitas Bond Investor Presentation March

14 Our largest acquisition in 15 years Acquisition of Diebold Electronic Security operation in North America, the third largest electronic security company in the US Large, coast-to-coast service organization, monitored customers and sites services A game changer for our offering in North America, combining guarding with mobile, monitoring and technology 12-month sales MSEK Purchase price MSEK Transaction costs approximately MSEK 60 in 2016 Great strategic fit and timing and in line with our Group vision 2020 of being the leading international company, specializing in Protective services The acquisition was finalized on February 1, from which point it was consolidated in Securitas Securitas Bond Investor Presentation March

15 Executing on our strategy Guarding - Sales 2014: 63,7 BSEK 2015: 71,6 BSEK Security Solutions & Technology - Sales 2014: 6,5 BSEK 2015: 9,3 BSEK 4%* Guarding 6%* Specialized guarding 8%* Guarding solutions 10%* Security solutions * Operating Margin Securitas Bond Investor Presentation March

16 Business Area Overview

17 Security Services North America Sales Development 2015 Organic sales growth 4% (3) Organic sales growth was primarily driven by the five guarding regions Good organic sales growth in Pinkerton Corporate Risk Management and in Mobile patrol operation Our growth estimated to be slightly ahead of US market growth, supported by our strategy of increasing sales of security solutions and technology Net impact on organic sales growth in Security Services North America in 2015 due to ACA was approximately 1% 17 Securitas Bond Investor Presentation March

18 Security Services North America Income Development 2015 The operating margin was 5.6% (5.3) Our strategy of increasing sales of security solutions and technology had positive margin impact The margin improvement also relates to the leverage effect from good organic sales growth and positive difference between price adjustments and wage related cost increases 18 Securitas Bond Investor Presentation March

19 Security Services Europe Sales Development 2015 Organic sales growth 4% (2), exceptionally strong in Q4 showing 8% (3) In Q4, the increased security needs due to terrorism alerts and the refugee situation impacted organic sales growth in primarily France, Belgium, Germany and Sweden Strong organic sales growth in Turkey due to many installations and good extra sales Organic sales growth is supported by our strategy of security solutions and technology resulting in a growth pace ahead of the European market s growth pace 19 Securitas Bond Investor Presentation March

20 Security Services Europe Income Development 2015 Operating margin 5.7% (5.9) The decline is mainly due to Sweden, where increased social costs had a negative impact The full year negative impact on operating result in 2015 was MSEK -24 and is for 2016 estimated to MSEK -50 The operating margin in Q4 was burdened by costs relating to the exceptionally high level of extra sales 20 Securitas Bond Investor Presentation March

21 Security Services Ibero-America Sales Development 2015 Organic sales growth 13% (8), driven by Argentina, Chile, Colombia and Spain In Latin America the organic sales growth was 26%, despite a considerable slowdown in the macro economy Our growth rate in the Ibero-American security market is supported by our strategy of security solutions and technology Securitas Bond Investor Presentation March

22 Security Services Ibero-America Income Development 2015 Operating margin 4.5% (4.3) in the period, mainly driven by the improvement in Spain The operating margin improvement was hampered by Peru and Portugal Securitas Bond Investor Presentation March

23 Financial Highlights and Debt Overview

24 Highlights January - December Organic sales growth 5% (3), Q4 exceptionally strong 7% (5) Operating margin 5.1% (5.0), driven by SSNA (Security Services North America) Price/wage balance approximately on par EPS real change 8% Free Cash Flow to net debt ratio 0.22 (0.18) Proposed dividend SEK 3.50 (3.00) Security solutions and technology sales grew 38% (28) in 2015, amounting to BSEK 9.3 (6.5) We believe we can continue to grow security solutions and technology sales at a high pace in the coming years Acquisition of Diebold Electronic Security in North America finalized on February 1 Securitas Bond Investor Presentation March

25 Financial Highlights MSEK Q Q Total change % Real change % Total change % Real change % Sales Organic sales growth, % Operating income before amortization Operating margin, % Amortization and impairment of acquisition related assets Acquisition related costs Operating income after amortization Financial income and expenses Income before taxes Net income for the period Earnings per share (SEK) The increase of the full year tax rate of 29.7% (28.8) is due to the strengthening of the USD exchange rate and its impact on the income of the Group, and further on a one-off revaluation of deferred tax assets due to new tax rates in France and Norway. Securitas Bond Investor Presentation March

26 Funding Strategy and Financial Targets 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 Financial targets Financial stability target free cash flow to net debt above 0.20x Financial performance target an annual average increase in Earnings Per Share (EPS) of 10 percent Securitas should be able to sustain a dividend level of approximately 50% - 60% of net income Securitas Bond Investor Presentation March

27 Debt Maturity Profile and Liquidity Overview 2015 RCF 440 MEUR and 550 MUSD matures MEUR in Eurobonds maturing 2017, 2018 and Private Placements 315 MUSD equivalent maturing MSEK Swedish Commercial Paper program SEK 250m o/s at year end. No financial covenants Policy: short term liquidity reserve > 5 % of sales Securitas Bond Investor Presentation March

28 S&P Rating Credit Strengths and Challenges Swedish Agency Long - term Short - term Short - term Outlook S&P BBB A2 K2 Stable Business Risk Securitas is the world's second-largest security services provider by total revenues. The security services market is relatively resilient to the economic cycle. Competitive and fragmented industry with low entry barriers leading to modest EBITDA margins. Successful track record of integrating acquisitions. Financial Risk Low capital expenditure (capex) requirements. "Strong" liquidity position. Stretched balance sheet due to debt-financed acquisitions. Financial Risk Profile Significant Securitas Bond Investor Presentation March

29 Integrity Vigilance Helpfulness securitas.com Securitas Bond Investor Presentation March

30 Appendix

31 Ten largest shareholders as of December 31, 2015 Largest Shareholders at December 31, 2015 Series A shares Series B shares % of Capital % of Votes Gustaf Douglas via companies and family 12,642,600 27,190, Melker Schörling via company and family 4,500,000 15,241, AMF 0 11,558, Prudential Assurance Co Ltd 0 10,715, SEB Investment Management 0 9,954, Swedbank Robur Funds 0 9,566, Banque Internationale Luxembourg S.A. 0 8,001, Clearstream Banking S.A. 0 7,653, CBNY Norges Bank 0 7,090, Handelsbanken Funds 0 5,947, Total, ten largest shareholders 17,142, ,919, Total, rest of owners 0 234,996, Total as of December 31, ,142, ,916, Securitas Bond Investor Presentation March

32 Capital Employed and Financing MSEK Dec 31, 2015 Dec 31, 2014 Operating Capital Employed Operating Capital Employed as % of sales 6 6 Return on operating capital employed, % Goodwill Acquisition related intangible assets Shares in associated companies Capital employed Return on Capital employed, % Net Debt Shareholders equity Net Debt equity ratio/multiple Securitas Bond Investor Presentation March

33 Summary Balance Sheet MSEK Dec 31, 2015 Dec 31, 2014 ASSETS Total non current assets Total current assets TOTAL ASSETS SHAREHOLDERS EQUITY AND LIABILITIES Total shareholders equity Total long-term liabilities Total current liabilities TOTAL SHAREHOLDERS EQUITY AND LIABILITIES Securitas Bond Investor Presentation March

34 Group Cash Position December 2015 Summary MSEK Cash on hand Available under O/D 15 Available under 2016 RCF Total Less Commercial Paper Net Available Funding Net Available Funding / annual sales (SEK 64bn) 13.62% Net Available Funding excludes subsidiaries cash held locally (Dec. Figure) 665 Policy: short term liquidity reserve > 5 % of sales Securitas Bond Investor Presentation March

35 Net Debt Development MSEK Net debt Jan 1, Free cash flow Acquisitions -147 IAC payments -27 Dividend paid Change in net debt 894 Revaluation 1 Translation -336 Net debt Dec 31, Securitas Bond Investor Presentation March

36 Integrity Vigilance Helpfulness securitas.com Securitas Bond Investor Presentation March