Securitas Bond Investor Presentation, February Securitas - The Leader in Protective Services

Transcription

1 Securitas Bond Investor Presentation, February 2017 Securitas - The Leader in Protective Services

2 A World Leader in Protective Services North-America #1 position 18% market share Europe #1 position 19% market share 53 countries 330,000 employees 88 BSEK 2016 sales 56% 2016 growth electronic security & solutions Latin-America #2 position 14% market share AMEA growing presence 17 countries 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 Securitas Bond Investor Presentation, February

3 Market Drivers Global tension Digitalization Sectors sensitive to disturbances Urbanization Infrastructure development Securitas Bond Investor Presentation, February

4 Detect the Crime Before it Happens Securitas Bond Investor Presentation, February

5 We Improve Customer Value Big data Predictive security Traditional guarding Value Electronic security Mobile and remote guarding Professional risk analysis Protective services Fire and safety Corporate risk management Future security industry Value Securitas Bond Investor Presentation, February

6 Clear Goals to Drive Performance Income statement 1. Financial performance target Annual average increase in EPS of 10% Balance sheet Return to shareholders The future 2. Financial stability target Free cash flow to net debt above Dividend policy 50 to 60% of net income 4. Strategic development Grow electronic security and solutions at a high pace EPS real change 9% 8% 8% Free cash flow to net debt Dividend in SEK As % of net income Real growth electronic security and solutions * % *proposed dividend % % 56% 38% 28% Securitas Bond Investor Presentation, February

7 Income Statement Main Drivers Performance during the period Growth of top-line Sales, BSEK from 51.5 to 88.2 Avg. acquired growth 3% Avg. organic growth 3% / / / 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 Growth of operating income Operating income, BSEK from 2.9 to 4.6 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 Securitas Bond Investor Presentation, February

8 Performance During the Period Strong operating cash flows Average of 88% to operating income before amortization Strong focus on DSO and AR Overdue Organic growth Investments into customer site equipment Strong free cash flow Average of 82% to adjusted income / Good financing in place Stable tax rates Controlled Net Debt From 2.7 to 2.3 x EBITDA Average of 2,2 x EBITDA Clear dividend policy Selective acquisitions Securitas Bond Investor Presentation, February

9 Executing on our Strategy Guarding Sales 2014: 63,7 BSEK 2015: 71.6 BSEK 2016: 74.1 BSEK Security Solutions and Electronic Security Sales 2014 : 6,5 BSEK (9% of total, 28%) 2015 : 9.3 BSEK (11,5% of total, 38%) 2016 : 14.1 BSEK (16% of total, 56%) 10%* 4%* Guarding 6%* Specialized guarding 8%* Guarding solutions Security solutions Securitas Bond Investor Presentation, February * Operating margin

10 Security Solutions Reduces the # of Competitors One amongst many Traditional guarding Fewer Mobile guarding Electronic security Few Remote guarding Professional risk analysis Investment into customer site Protective services Strong balance sheet required Security Solutions = adding skills and capabilities Securitas Bond Investor Presentation, February

11 Security Solutions Drives the ROCE Example of a contract conversion: from manned guarding to security solutions Reduce on-site guarding Introduce remote monitoring and technology Sign 5 year contract Invest 60 KEUR capex = 15% of the first year s sales Depreciated over contract duration = 12 KEUR annual depreciation KEUR Guarding Solution Annual sales Direct & indirect cost Operating income Operating margin 5% 10% Capital employed as of % sales 29% 44% Return on capital employed 17% 21% Securitas Bond Investor Presentation, February

12 Selective Acquisitions Clear Acquisition Strategy Strategy Pre-Acquisition Acquisition Post-closing Post-acquisition follow-up Securitas Bond Investor Presentation, February

13 Highlights January December 2016 Organic sales growth 7% (5) in the year and 5% (7) in Q4 Operating margin 5.2% (5.1) EPS real change 9% Proposed dividend SEK 3.75 (3.50), 52% of net income 56% (38) growth of security solutions and electronic security sales, now at BSEK 14.1 of total sales We believe we can continue to grow security solutions and electronic security sales at a high pace in the coming years

14 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 acquisitionrelated assets Acquisition-related costs Operating income after amortization Financial income and expenses Income before taxes Net income for the period Earnings per share (SEK)

15 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 and for premises in the US Change in accounts receivable affected by increased DSO s and from strong organic sales growth Change in other operating capital employed affected by a one time extra pension payment Free cash flow affected by higher taxes paid, due to higher taxable income Measures are being taken to improve the cash flow in 2017 Securitas Bond Investor Presentation, February

16 Net Debt Development MSEK Net debt Jan 1, Free cash flow Acquisitions IAC payments -17 Dividend paid Change in net debt Revaluation 23 Translation -451 Net debt Dec 31,

17 Capital Structure 31 December 2016 Summary of Capital Structure MSEK EURO USD OTHER TOTAL Total Capital Employed Net Debt Equity Debt/Equity Ratio 8,273 14,787 4,879 27,939-3,565-7,885-1,981-13,431 4,706 6,902 2,879 14, Securitas Bond Investor Presentation, February

18 Strong Financing in Place 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 Ample headroom in place No financial covenants BBB, stable outlook Securitas Bond Investor Presentation, February

19 Strong Financing in Place Recent funding activity. RCF USD 1.1 bn extended to 2022 with existing 12 banks: BBVA Citibank Commerzbank Danske DNB ING KBC Nordea RBS SEB Societe Generale Unicredit MEUR 350 Bond issued in March 2016, maturity March Coupon is 1.25%. EUR 287 m swapped into fixed USD for 6 years. Securitas Bond Investor Presentation, February

20 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. 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 Securitas is committed to solid Investment Grade rating S&P Forecast 2016* 2016 Adjusted FFO/ Debt 27% Adjusted Debt / EBITDA 2.8x *published May 2016 Securitas Bond Investor Presentation, February

21 Integrity Vigilance Helpfulness securitas.com Securitas Bond Investor Presentation, Interim February Report January-March