Securitas

Quarterly Report • Jul 29, 2020

SECURITAS AB INTERIM REPORT

January–June 2020

APRIL–JUNE 2020

• • Total sales MSEK 26 556 (27 684)
• • Organic sales growth –4 percent (5)
• • Operating income before amortization MSEK 1 075 (1 377)
• • Operating margin 4.0 percent (5.0)
• • Items affecting comparability (IAC) MSEK –61 (–46), relating to IS/IT transformation programs
• • Earnings per share SEK 1.50 (2.18)
• • Earnings per share, before IAC, SEK 1.62 (2.27)
• • Cash flow from operating activities 248 percent (69)
• • Cost savings program initiated in the Group

JANUARY–JUNE 2020

• • Total sales MSEK 54 976 (54 428)
• • Organic sales growth –1 percent (6)
• • Operating income before amortization MSEK 2 161 (2 667)
• • Operating margin 3.9 percent (4.9)
• • Items affecting comparability (IAC) MSEK –106 (–66), relating to IS/IT transformation programs
• • Earnings per share SEK 3.11 (4.25)
• • Earnings per share, before IAC, SEK 3.32 (4.39)
• • Net debt/EBITDA 2.1 (2.9)

Comments from the President and CEO

• • Cash flow from operating activities 141 percent (33)
• • Significant impact and uncertainty related to the corona pandemic

Showing strength in a challenging time

Contents

January–June
summary 2
Group development 3
Development in
the Group's business
segments 5
Cash flow 8
Capital employed
and financing 9
Acquisitions 10
Changes in Group
Management 11
Other significant
events 11
Risks and
uncertainties 11
Parent Company
operations 12
Signatures of the
Board of Directors 13
Report of Review 14
Consolidated financial
statements 15
Segment overview 19
Notes 21
Parent Company 26
Financial
information 27

We had significant negative impact from the corona pandemic in the second quarter. The Group's organic sales growth was –4 percent (5) in the quarter and –1 percent (6) for the first six months. The extraordinary situation of the corona pandemic was reflected in all business segments, with the largest negative impact in Security Services Europe mainly from the rapid decline in the aviation business.

Security solutions and electronic security sales was flat in the second quarter to represent 21 percent of total Group sales, with the installation business within electronic security negatively impacted by the corona pandemic.

The Group's operating margin was 4.0 percent (5.0) in the second quarter and 3.9 percent (4.9) in the first six months. The decline derived from all business segments, predominantly due to the corona pandemic. The operating margin was supported by cost saving actions and government grants during the quarter, but hampered by increased provisioning. The price and wage balance was on par in the first six months.

The operating result, adjusted for changes in exchange rates, declined by 19 percent in the second quarter as well as in the first six months. Earnings per share, before items affecting comparability, amounted to SEK 3.32 (4.39).

The Group delivered a strong cash flow in the first six months, also when excluding the effects from the withdrawn dividend and corona-related government support measures. Our focus on cash management remains a key priority across all business segments.

Preparing for a strong future

Since the start of the corona pandemic, we have focused on four priorities: the health and safety of our employees, maintaining delivery of our services to our clients, cash flow and cost.

While we entered the second quarter at a turbulent moment for the world, we have seen some encouraging signs during the last few months as restrictions and closures eased. However, much uncertainty remains about the duration and long-term implications of the pandemic.

In light of the corona pandemic and uncertainty regarding the profitability of parts of the business, we have initiated a cost savings program. Assessing all parts of the business, we have identified improvement

areas that will contribute to the operating result of the business and will enable us to strengthen and accelerate the strategy execution throughout the Group. The program is expected to be executed over the next 12 months and based on our current assessment, the restructuring costs are estimated to be in the range of MSEK 350–500 and will be recognized over the course of the next 4 quarters as items affecting comparability. The payback period is about 2 years and the savings will have a positive impact starting in the fourth quarter 2020.

This has been a very challenging period for our clients and our people but our leaders and teams have been working relentlessly and the Securitas team has shown incredible resilience. All Securitas team members deserve strong recognition for their leadership and professionalism during these challenging times.

We remain focused on winning in the security services industry with our strong offering of protective services and solutions, while we keep investing in our strategic transformation to emerge as an even stronger company tomorrow.

Magnus Ahlqvist President and Chief Executive Officer

January–June summary

FINANCIAL SUMMARY

	Q2		Change, %		H1		Change, %		Full year	Change, %
MSEK	2020	2019	Total	Real	2020	2019	Total	Real	2019	Total
Sales	26 556	27 684	–4	–3	54 976	54 428	1	1	110 899	9
Organic sales growth, %	–4	5			–1	6			4
Operating income before amortization	1 075	1 377	–22	–19	2 161	2 667	–19	–19	5 738	8
Operating margin, %	4.0	5.0			3.9	4.9			5.2
Amortization of acquisition related intangible assets	–69	–70			–141	–136			–271
Acquisition-related costs	–63	–17			–80	–29			–62
Items affecting comparability*	–61	–46			–106	–66			–209
Operating income after amortization	882	1 244	–29	–26	1 834	2 436	–25	–25	5 196	16
Financial income and expenses	–137	–150			–281	–289			–578
Income before taxes	745	1 094	–32	–29	1 553	2 147	–28	–28	4 618	15
Net income for the period	545	794	–31	–29	1 133	1 554	–27	–27	3 362	11
Earnings per share, SEK	1.50	2.18	–31	–28	3.11	4.25	–27	–27	9.20	11
EPS before items affecting comparability, SEK	1.62	2.27	–29	–26	3.32	4.39	–24	–24	9.61	5
Cash flow from operating activities, %	248	69			141	33			85
Free cash flow	2 439	616			2 115	10			3 268
Net debt to EBITDA ratio	–	–			2.1	2.9			2.2

* Refer to note 6 on page 23 for further information.

ORGANIC SALES GROWTH AND OPERATING MARGIN DEVELOPMENT PER BUSINESS SEGMENT

		Organic sales growth			Operating margin
	Q2		H1			Q2	H1
%	2020	2019	2020	2019	2020	2019	2020	2019
Security Services North America	–2	5	0	5	5.6	6.3	5.4	6.0
Security Services Europe	–6	1	–3	3	3.6	5.0	3.6	5.0
Security Services Ibero-America	–1	16	4	17	3.9	4.6	4.2	4.6
Group	–4	5	–1	6	4.0	5.0	3.9	4.9

Group development

APRIL–JUNE 2020

Sales development

Sales amounted to MSEK 26 556 (27 684) and organic sales growth to –4 percent (5). All business segments were negatively impacted by the corona pandemic. Reduced service levels mainly within the aviation segment were partially offset by extra sales related to the corona pandemic. Extra sales in the quarter amounted to 17 percent (14) of total sales. Security Services North America showed organic sales growth of –2 percent (5), with the main negative impact from the business units Electronic Security and Critical Infrastructure Services but a strong increase of extra sales related to the corona pandemic. Security Services Europe declined to –6 percent (1), with significant corona-related impact from reduced airport security as well as the previously communicated contract terminations. Security Services Ibero-America had –1 percent (16), a decline primarily related to Spain and Peru.

Real sales growth, including acquisitions and adjusted for changes in exchange rates, was –3 percent (7).

Sales of security solutions and electronic security sales amounted to MSEK 5 684 (5 768) or 21 percent (21) of total sales in the second quarter. Real sales growth, including acquisitions and adjusted for changes in exchange rates, was 0 percent (12).

Operating income before amortization

Operating income before amortization was MSEK 1 075 (1 377) which, adjusted for changes in exchange rates, represented a real change of –19 percent (3). The operating income was supported by government grants and support of approximately MSEK 350 in the quarter, mostly within Security Services Europe. These grants relate primarily to partial unemployment support where there are increased cost levels from idle time. Furthermore, the operating income was supported by short-term cost saving actions during the quarter but hampered by increased levels of provisioning of MSEK 300 to reflect the increased risk in the business environment throughout the Group and relating primarily to employee benefits and collection of outstanding accounts receivable.

The Group's operating margin was 4.0 percent (5.0), a decline stemming from all business segments. The corona pandemic impacted all business segments to various extent, but with main negative impact from Security Services Europe. The operating margin was supported by short-term cost saving actions but hampered by increased levels of provisioning as mentioned above.

Operating income after amortization

Amortization of acquisition related intangible assets amounted to MSEK –69 (–70).

Acquisition related costs were MSEK –63 (–17). For further information refer to note 5.

Items affecting comparability were MSEK –61 (–46), related to the IS/IT transformation programs. For further information refer to note 6.

Financial income and expenses

Financial income and expenses amounted to MSEK –137 (–150).

Income before taxes

Income before taxes amounted to MSEK 745 (1 094).

Taxes, net income and earnings per share

The Group's tax rate was 26.8 percent (27.4). The tax rate before tax on items affecting comparability was 26.7 percent (27.3).

Net income was MSEK 545 (794).

Earnings per share amounted to SEK 1.50 (2.18). Earnings per share before items affecting comparability amounted to SEK 1.62 (2.27).

JANUARY–JUNE 2020

Sales development

Sales amounted to MSEK 54 976 (54 428) and organic sales growth to –1 percent (6). All business segments were negatively impacted by the corona pandemic. Security Services North America showed organic sales growth of 0 percent (5), with the main negative impact from the business units Electronic Security and Critical Infrastructure Services. Security Services Europe declined to –3 percent (3), with significant corona-related impact from reduced airport security as well as the previously communicated contract terminations. Security Services Ibero-America had 4 percent (17), a decline primarily related to Spain and Peru.

Real sales growth, including acquisitions and adjusted for changes in exchange rates, was 1 percent (8).

Sales of security solutions and electronic security sales amounted to MSEK 11 832 (11 296) or 22 percent (21) of total sales in the first half year. Real sales growth, including acquisitions and adjusted for changes in exchange rates, was 5 percent (15).

Operating income before amortization

Operating income before amortization was MSEK 2 161 (2 667) which, adjusted for changes in exchange rates, represented a real change of –19 percent (7).

The Group's operating margin was 3.9 percent (4.9). The corona pandemic impacted all business segments to various extent, but with main negative impact from Security Services Europe. Furthermore, the operating margin was hampered by increased levels of provisioning to reflect the increased risk in the business environment primarily related to employee benefits and collection of outstanding accounts receivable. Continued strategy-related investments at the Group level, included under "Other" in the segment reporting, also impacted the Group's operating margin. Total price adjustments in the Group were on par with wage cost increases in the first half year.

Operating income after amortization

Amortization of acquisition related intangible assets amounted to MSEK –141 (–136).

Acquisition related costs were MSEK –80 (–29). For further information refer to note 5.

Items affecting comparability were MSEK –106 (–66), related to the IS/IT transformation programs. For further information refer to note 6.

Financial income and expenses

Financial income and expenses amounted to MSEK –281 (–289).

Income before taxes

Income before taxes amounted to MSEK 1 553 (2 147).

Taxes, net income and earnings per share

The Group's tax rate was 27.0 percent (27.6). The tax rate before tax on items affecting comparability was 27.0 percent (27.5).

Net income was MSEK 1 133 (1 554).

Earnings per share amounted to SEK 3.11 (4.25). Earnings per share before items affecting comparability amounted to SEK 3.32 (4.39).

Quarterly sales

Group quarterly operating income development Quarterly operating income development

Development in the Group's business segments

Security Services North America

Security Services North America provides protective services in the US, Canada and Mexico. The operations in the US are organized in four specialized units – Guarding, Electronic Security, Pinkerton Corporate Risk Management and Critical Infrastructure Services. Guarding includes on-site, mobile and remote guarding and the unit for global and national accounts, as well as Canada and Mexico. There are also specialized client segment units, such as aviation, healthcare, manufacturing and oil and gas.

	Q2		Change, %		H1		Change, %		Full year
MSEK	2020	2019	Total	Real	2020	2019	Total	Real	2019
Total sales	11 980	12 050	–1	–2	24 627	23 619	4	1	48 499
Organic sales growth, %	–2	5			0	5			4
Share of Group sales, %	45	44			45	43			44
Operating income before amortization	666	756	–12	–12	1 318	1 411	–7	–9	3 003
Operating margin, %	5.6	6.3			5.4	6.0			6.2
Share of Group operating income, %	62	55			61	53			52

April–June 2020

Organic sales growth was –2 percent (5), on a strong comparative. Reduced service levels due to the corona pandemic were partially offset by extra sales related to the corona pandemic. Extra sales in the quarter amounted to over 18 percent of total sales (14). The decline in organic sales growth was related to the business units Electronic Security and Critical Infrastructure Services and was mainly related to negative impact from the corona pandemic. In Electronic Security, the main impact derived from the installation business whereas Critical Infrastructure Services was impacted by the corona-related restrictions and lockdowns. Organic sales growth in Guarding was stable in the quarter, as the business unit was able to compensate temporary reduced portfolio sales with increased extra sales, both corona-related.

Security solutions and electronic security sales represented MSEK 2 035 (2 199) or 17 percent (18) of total sales in the business segment in the second quarter.

The operating margin was 5.6 percent (6.3), a decline primarily related to the sales decline in the business units Electronic Security and Critical Infrastructure Services. Cost saving measures have been taken to limit the negative leverage from the reduced sales. The operating margin in Guarding was supported from the corona-related change in business mix with increased share of extra sales. The operating margin was hampered by increased levels of provisioning to reflect the increased risk in the business environment related to employee benefits and collection of outstanding accounts receivable.

The Swedish krona exchange rate weakened against the US dollar, which had a slight positive effect on operating income in Swedish kronor. The real change was –12 percent (12) in the second quarter.

January–June 2020

Organic sales growth was 0 percent (5), on a strong comparative. The negative impacts from the corona pandemic accelerated in the second quarter mainly within the business units Electronic Security and Critical Infrastructure Services. Organic sales growth in Guarding was stable in the first half year, as the business unit was able to compensate temporary reduced portfolio sales with increased extra sales, both corona-related. The client retention rate was 92 percent (90), but does not include corona-related temporary reductions.

Security solutions and electronic security sales represented MSEK 4 339 (4 277) or 18 percent (18) of total sales in the business segment in the first half year.

The operating margin was 5.4 percent (6.0), a decline primarily related to the sales decline in the business units Electronic Security and Critical Infrastructure Services. The operating margin in Guarding was supported from the corona-related change in business mix with increased share of extra sales. The operating margin was hampered by increased levels of provisioning to reflect the increased risk in the business environment related to employee benefits and collection of outstanding accounts receivable.

The Swedish krona exchange rate weakened against the US dollar, which had a positive effect on operating income in Swedish kronor. The real change was –9 percent (13) in the first half year.

North America quarterly

Quarterly operating income

Security Services Europe

Security Services Europe provides protective services across Europe with operations in 27 countries, whereof 15 countries provide airport security. The full range of protective services includes on-site, mobile and remote guarding, electronic security, fire and safety services and corporate risk management. In addition there is a specialized unit for global client contracts.

	Q2		Change, %		H1		Change, %		Full year
MSEK	2020	2019	Total	Real	2020	2019	Total	Real	2019
Total sales	10 924	11 826	–8	–6	22 583	23 277	–3	–3	47 248
Organic sales growth, %	–6	1			–3	3			2
Share of Group sales, %	41	43			41	43			43
Operating income before amortization	395	586	–33	–31	813	1 153	–29	–29	2 582
Operating margin, %	3.6	5.0			3.6	5.0			5.5
Share of Group operating income, %	37	43			38	43			45

April–June 2020

Organic sales growth was –6 percent (1), mainly explained by the corona pandemic with significant negative impact on airport security. Extra sales was close to 19 percent (17) of total sales. Furthermore, the previously communicated contract losses in France, the UK and Norway hampered organic sales growth. A few countries had positive organic sales growth, predominantly Sweden.

Security solutions and electronic security sales represented MSEK 2 574 (2 582) or 24 percent (22) of total sales in the business segment.

The operating margin was 3.6 percent (5.0). The decline related primarily to the effects from the corona pandemic with significant impact from airport security. The negative impact and related idle time cost has to some extent been offset by corona-related government grants in several countries. The operating margin was hampered by increased levels of provisioning to reflect the increased risk in the business environment primarily related to the collection of outstanding accounts receivable. The operating margin was supported by France and by some of the Nordic countries.

The Swedish krona exchange rate strengthened against foreign currencies, primarily the Euro, which had a slight negative effect on operating income in Swedish kronor. The real change was –31 percent (0) in the second quarter.

January–June 2020

Organic sales growth was –3 percent (3). The decline was mainly explained by significant negative impact on airport security due to the corona pandemic that started in March. Lower installation sales within electronic security also burdened organic sales growth. Furthermore, the previously communicated contract losses in France, the UK and Norway hampered organic sales growth. A few countries had positive organic sales growth, predominantly Sweden. The client retention rate was 90 percent (91), but does not include corona-related temporary reductions.

Security solutions and electronic security sales represented MSEK 5 253 (5 098) or 23 percent (22) of total sales in the business segment.

The operating margin was 3.6 percent (5.0) and was primarily burdened by the effects of the corona pandemic with significant impact from airport security. The negative impact has to some extent been offset by corona-related government grants in several countries, primarily in the second quarter. The operating margin was hampered by increased levels of provisioning to reflect the increased risk in the business environment primarily related to the collection of outstanding accounts receivable. The operating margin was supported by France and by some of the Nordic countries.

The Swedish krona exchange rate strengthened against foreign currencies, primarily the Euro, which had a slight negative effect on operating income in Swedish kronor. The real change was –29 percent (4) in the first half year.

Security Services Ibero-America

Security Services Ibero-America provides protective services in nine Latin American countries as well as in Portugal and Spain in Europe. Airport security is offered in seven countries. The offered services include on-site, mobile and remote guarding, electronic security, fire and safety services and corporate risk management.

	Q2		Change, %		H1		Change, %		Full year
MSEK	2020	2019	Total	Real	2020	2019	Total	Real	2019
Total sales	3 044	3 306	–8	3	6 504	6 546	–1	8	13 099
Organic sales growth, %	–1	16			4	17			14
Share of Group sales, %	11	12			12	12			12
Operating income before amortization	120	151	–21	–1	272	304	–11	0	614
Operating margin, %	3.9	4.6			4.2	4.6			4.7
Share of Group operating income, %	11	11			13	11			11

April–June 2020

Organic sales growth was –1 percent (16), on a strong comparative that included double digit sales growth in Spain. Organic sales growth in Spain turned negative in the second quarter due to the effects from the corona pandemic as well as from the previously communicated reductions of short term security solutions contracts. The impact from the corona pandemic showed a mixed picture in Latin America, with significant negative impact from airport security in several countries. The negative organic sales growth in Peru deteriorated further in the second quarter, whereas price increases in Argentina supported organic sales growth. Extra sales was on a similar level in the quarter as the corresponding quarter in 2019.

Security solutions and electronic security sales represented MSEK 905 (918) or 30 percent (28) of total sales in the business segment, supported by the Techco Security acquisition in Spain in 2020.

The operating margin was 3.9 percent (4.6), negatively impacted primarily by the corona pandemic. The operating margin was to some extent supported by corona-related government grants and support in certain countries off-setting costs for idle time. The operating margin in Peru deteriorated further in the second quarter and the general environment in Argentina remains challenging. The operating margin was hampered by increased levels of provisioning to reflect the increased risk in the business environment primarily related to the collection of outstanding accounts receivable.

The Swedish krona exchange rate strengthened against the Argentinian peso and the Euro, which had a negative impact on operating income in Swedish kronor. The real change in the segment was –1 percent (–1) in the second quarter.

2 400 2 600 2 800 3 000 3 200 3 400 –5 0 5 10 15 20 Q2 Q3 Q4 Q1 Q2 MSEK % Ibero-America quarterly sales development 2019 2020 Organic sales growth, % Quarterly sales development

January–June 2020

Organic sales growth was 4 percent (17), on a strong comparative that included double digit sales growth in Spain. Organic sales growth in Spain was 0 percent in the first half year due to the effects from the corona pandemic as well as from the previously communicated reductions of short term security solutions contracts. The impact from the corona pandemic showed a mixed picture in Latin America, with significant negative impact from airport security in several countries. Peru had negative organic sales growth that deteriorated further in the second quarter, whereas price increases in Argentina supported organic sales growth. The client retention rate was 93 percent (91) but does not include corona-related temporary reductions.

Security solutions and electronic security sales represented MSEK 1 905 (1 803) or 29 percent (28) of total sales in the business segment, supported by the Techco Security acquisition in Spain in 2020.

The operating margin was 4.2 percent (4.6), and the decline related primarily to the corona pandemic. However, the operating margin was to some extent supported by corona-related government grants and support in certain countries during the second quarter. The operating margin in Peru was negative and the general environment in Argentina remains challenging. The operating margin was hampered by increased levels of provisioning to reflect the increased risk in the business environment primarily related to the collection of outstanding accounts receivable.

The Swedish krona exchange rate strengthened against the Argentinian peso and the Euro, which had a negative impact on operating income in Swedish kronor. The real change in the segment was 0 percent (10) in the first half year.

Quarterly operating income

Cash flow

April–June 2020

Cash flow from operating activities amounted to MSEK 2 669 (946), equivalent to 248 percent (69) of operating income before amortization.

The impact from changes in accounts receivable was MSEK 857 (–266), positively impacted by collections and by the lower organic sales growth. Changes in other operating capital employed were MSEK 741 (–45), positively impacted by the timing of payments relating to payroll taxes and value added tax in Europe and in North America of approximately MSEK 550. The timing is a result of various government support measures in relation to the corona pandemic that allows for the postponement of payments.

Free cash flow was MSEK 2 439 (616), equivalent to 338 percent (68) of adjusted income.

Cash flow from investing activities, acquisitions, was MSEK –74 (–233).

Cash flow from items affecting comparability amounted to MSEK –79 (–77). Refer to note 6 for further information.

Cash flow from financing activities was MSEK –679 (–1 083) due to a net decrease in borrowings.

Cash flow for the period was MSEK 1 607 (–777).

January–June 2020

Cash flow from operating activities amounted to MSEK 3 041 (879), equivalent to 141 percent (33) of operating income before amortization.

The impact from changes in accounts receivable was MSEK 203 (–399), positively impacted by collections and by the lower organic sales growth. Changes in other operating capital employed were MSEK 738 (–1 202), positively impacted by the timing of payments relating to payroll taxes

MSEK Jan–Jun 2020
Operating income before amortization	2 161
Net investments	–61
Change in accounts receivable	203
Change in other operating capital employed	738
Cash flow from operating activities	3 041
Financial income and expenses paid	–331
Current taxes paid	–595
Free cash flow	2 115

and value added tax in Europe and in North America of approximately MSEK 900. The timing is a result of various government support measures in relation to the corona pandemic that allows for the postponement of payments. The timing of the European payments are expected to be neutral on a full year basis while the North American cash flow will be positively impacted also in the full year with payments due in 2021 and into 2022.

Financial income and expenses paid was MSEK –331 (–344) and current taxes paid was MSEK –595 (–525).

Cash flow from operating activities include net investments in non-current tangible and intangible assets, amounting to MSEK –61 (–187). The net investments include capital expenditures in equipment for solution contracts and is the result of investments of MSEK –1 429 (–1 487) and reversal of depreciation of MSEK 1 368 (1 300).

Free cash flow was MSEK 2 115 (10), equivalent to 150 percent (1) of adjusted income.

Cash flow from investing activities, acquisitions, was MSEK –428 (–382), of which purchase price payments accounted for MSEK –438 (–362), assumed net debt for MSEK 49 (36) and acquisition related costs paid for MSEK –39 (–56).

Cash flow from items affecting comparability amounted to MSEK –139 (–143). Refer to note 6 for further information.

Cash flow from financing activities was MSEK 967 (–61) due to a net increase in borrowings.

Cash flow for the period was MSEK 2 515 (–576). The closing balance for liquid funds after translation differences of MSEK –63 was MSEK 6 400 (3 948 as of December 31, 2019).

Quarterly free cash flow Free cash flow Quarterly free cash flow

Capital employed and financing

Capital employed as of June 30, 2020

The Group's operating capital employed was MSEK 11 936 (13 100 as of December 31, 2019), corresponding to 11 percent of sales (12 as of December 31, 2019), adjusted for the full-year sales figures of acquired units. The translation of foreign operating capital employed to Swedish kronor decreased the Group's operating capital employed by MSEK 412.

The Group's total capital employed was MSEK 36 023 (37 140 as of December 31, 2019). The translation of foreign capital employed to Swedish kronor decreased the Group's capital employed by MSEK 672. The return on capital employed was 14 percent (15 as of December 31, 2019).

Financing as of June 30, 2020

The Group's net debt amounted to MSEK 15 932 (17 541 as of December 31, 2019). The net debt was positively impacted mainly by the free cash flow of MSEK 2 115, while it was negatively impacted mainly by payments for acquisitions of MSEK –428.

The net debt to EBITDA ratio was 2.1 (2.9). The free cash flow to net debt ratio amounted to 0.34 (0.14). The interest coverage ratio amounted to 8.7 (9.4).

On April 6, 2020, Securitas' existing MEUR 440 and MUSD 550 revolving credit facility (RCF) was early matured and replaced with a new facility with 10 key relationship banks. This new credit facility now comprises one tranche of MEUR 938 and matures in 2025 with the possibility to extend to 2027. Further information regarding financial instruments and credit facilities is provided in note 8.

Standard and Poor's rating for Securitas was affirmed at BBB/A-2 on April 30, 2020. The outlook was revised from positive to stable.

Shareholders' equity amounted to MSEK 20 091 (19 599 as of December 31, 2019). The translation of foreign assets and liabilities into Swedish kronor decreased shareholders' equity by MSEK 582. Refer to the statement of comprehensive income on page 15 for further information.

The total number of shares amounted to 365 058 897 (365 058 897) as of June 30, 2020. Refer to page 18 for further information.

Capital employed and financing Net debt to EBITDA ratio

MSEK Jun 30, 2020
Operating capital employed	11 936
Goodwill	22 252
Acquisition related intangible assets	1 513
Shares in associated companies	322
Capital employed	36 023
Net debt	15 932
Shareholders' equity	20 091
Financing	36 023

Net debt development

MSEK
Jan 1, 2020	–17 541
Free cash flow	2 115
Acquisitions	–428
Items affecting comparability	–139
Lease liabilities	–31
Change in net debt	1 517
Revaluation	2
Translation	90
Jun 30, 2020	–15 932

Net debt to EBITDA ratio

Acquisitions

ACQUISITIONS JANUARY–JUNE 2020 (MSEK)

Company	Business segment1)	Included from	Acquired share2)	Annual sales3)	Enter - prise value4)	Goodwill	Acq. related intangible assets
Opening balance						22 157	1 563
Techco Security, Spain6)	Security Services Ibero-America	Jan 8	100	520	149	112	34
Fredon Security, Australia6)	Other	Jan 9	100	240	154	152	66
Other acquisitions5, 6)		–	–	23	86	36	9
Total acquisitions January–June 2020				783	389	300	109
Amortization of acquisition related intangible assets						–	–141
Translation differences and remeasurement for hyperinflation						–205	–18
Closing balance						22 252	1 513

1) Refers to business segment with main responsibility for the acquisition.

2) Refers to voting rights for acquisitions in the form of share purchase agreements. For asset deals no voting rights are stated.

3) Estimated annual sales.

4) Purchase price paid plus acquired net debt but excluding any deferred considerations.

5) Related to other acquisitions for the period and updated previous year acquisition calculations for the following entities: Global Elite Group, Iverify (step acquisition), the US, Cezzam, France, DAK, Turkey, SCI Proteccion Contra Incendios, Spain, Blueprint (contract portfolio) and Staysafe, Australia. Related also to deferred considerations paid in the US, Sweden, the UK, Germany, France, Turkey, Portugal and Australia.

6) Deferred considerations have been recognized mainly based on an assessment of the future profitability development in the acquired entities for an agreed period. The net of new deferred considerations, payments made from previously recognized deferred considerations and revaluation of deferred considerations in the Group was MSEK 26. Total deferred considerations, short-term and long-term, in the Group's balance sheet amount to MSEK 453.

All acquisition calculations are finalized no later than one year after the acquisition is made. Transactions with noncontrolling interests are specified in the statement of changes in shareholders' equity on page 18. Transaction costs and revaluation of deferred considerations can be found in note 5 on page 23.

Techco Security, Spain

Securitas reinforces its leadership position within the electronic security market in Spain through the acquisition of Techco Security, a leading electronic security company. Techco Security offers a comprehensive range of integrated security services including installation, maintenance and remote guarding services as well as access control, electronic alarm surveillance and fire protection, and supports clients through two operations centers in Madrid and Barcelona. The company has approximately 520 employees with

a strong footprint across Spain and Portugal. The acquisition was closed and consolidated into Securitas as of January 8, 2020.

Fredon Security, Australia

Securitas has acquired Fredon Security, founded in 2012 as a division within Fredon Group, an Australian engineering and building services company. Fredon Security is specialized in high-end electronic security solutions including system design, engineering, installation, commissioning and maintenance. The company has approximately 110 employees with a strong footprint across Australia's key geographical markets; Melbourne, Canberra, Brisbane, Perth and Sydney, where it is headquartered. Through strong organic growth the company has established a robust market position in the technology, commercial and government client segments. The acquisition was consolidated into Securitas as of January 9, 2020.

Changes in Group Management

Aimé Lyagre, COO and CTO Security Services Europe, has decided to leave Securitas. This role is not replaced and the responsibilities will be split between Henrik Zetterberg, who remains COO Security Services Europe and a member of Group Management but with expanded responsibilities across Europe, and Thomas Lundstedt who joined Securitas as European Solution Leader in April 2020. The role of President Aviation will no longer be part of Group Management. These changes were effective July 1, 2020. All other Group Management members continue in their present roles.

Other significant events

For critical estimates and judgments, provisions and contingent liabilities refer to the 2019 Annual Report and to note 11 on page 25. If no significant events have occurred relating to the information in the Annual Report, no further comments are made in the Interim Report for the respective case.

Cost savings program initiated in the Group

Securitas is initiating a cost savings program in the Group, with the largest part in Europe. The program is expected to be executed over the next 12 months and based on the current assessment, the restructuring costs are estimated to be in the range of MSEK 350-500 and will be recognized over the course of the next 4 quarters as items affecting comparability. The payback period is about 2 years and the savings will have a positive impact starting in the fourth quarter 2020.

Competition authority investigation in Belgium

Securitas is aware that competition authorities are conducting investigations into the security sector in Belgium and is cooperating fully. The Group currently assesses that the result or the financial position of the Group will not be materially affected by this investigation.

Withdrawn dividend proposal and unchanged board fees

In accordance with the revised proposal of the Board, the AGM 2020 resolved that no dividend should be distributed for the financial year 2019. Further, the AGM 2020 resolved, in accordance with the revised proposal of the Nomination Committee, that the current board fees remained unchanged until the next Annual General Meeting.

Risks and uncertainties

Risk management is necessary for Securitas to be able to fulfill its strategies and achieve its corporate objectives. Securitas' risks fall into three main categories; contract and acquisition risks, operational assignment risks and financial risks. Securitas' approach to enterprise risk management is described in more detail in the Annual Report for 2019.

In the preparation of financial reports, the Board of Directors and Group Management are required to make estimates and judgments. These estimates and judgments impact the statement of income and balance sheet as well as disclosures such as contingent liabilities. The actual outcome may differ from these estimates and judgments under different circumstances and conditions.

Securitas as well as other companies are currently facing the challenge of the corona pandemic. As disclosed in this interim report, the corona pandemic has negatively impacted the Group's result, and poses an additional challenge when making estimates and judgments. Securitas sees reductions in sales due to reductions in regular service levels mostly related to the aviation segment. These reductions are causing costs for idle time to some extent supported by government

grants. It is currently unclear when regular services levels will return to normal levels and to what extent any costs will be further supported by government grants. Many government grants and other relief measures has also been introduced in a short time frame and include requirements that need to be fulfilled in order to be eligible for the grants. This adds new elements to the judgment in preparing the statement of income and balance sheet as well as disclosures. Further, increased risks are noticed related to the general macro economic environment, throughout the Group and mostly related to employee benefits and collection of outstanding accounts receivable. Further it is unclear what type of impact the corona pandemic will have on the mid term economical development of the different markets and geographies in which we operate.

For the forthcoming six-month period, the financial impact of the corona pandemic as well as certain items affecting comparability, provisions and contingent liabilities, as described in the Annual Report for 2019 and, where applicable, under the heading "Other significant events" above, may vary from the current financial estimates and provisions made by management. This could affect the Group's profitability and financial position.

Parent Company operations

The Group's Parent Company, Securitas AB, is not involved in any operating activities. Securitas AB consists of Group Management and support functions for the Group.

January–June 2020

The Parent Company's income amounted to MSEK 542 (581) and mainly relates to license fees and other income from subsidiaries.

Financial income and expenses amounted to MSEK 69 (2 371). The decrease compared with last year is mainly explained by lower dividends received from subsidiaries. Income before taxes amounted to MSEK 283 (2 446).

As of June 30, 2020

The Parent Company's non-current assets amounted to MSEK 47 126 (46 157 as of December 31, 2019) and mainly comprise shares in subsidiaries of MSEK 44 580 (43 911 as of December 31, 2019). Current assets amounted to MSEK 6 610 (5 944 as of December 31, 2019) of which liquid funds accounted for MSEK 2 808 (1 596 as of December 31, 2019).

Shareholders' equity amounted to MSEK 29 577 (29 276 as of December 31, 2019). The Parent Company's liabilities and untaxed reserves amounted to MSEK 24 159 (22 825 as of December 31, 2019) and mainly consist of interest-bearing debt.

For further information, refer to the Parent Company's condensed financial statements on page 26.

Signatures of the Board of Directors

The Board of Directors and the President and CEO certify that the interim report gives a true and fair overview of the Parent Company's and Group's operations, their financial position

and results of operations, and describes significant risks and uncertainties facing the Parent Company and other companies in the Group.

Stockholm, July 29, 2020

Marie Ehrling Chairman

Carl Douglas Ingrid Bonde Vice Chairman Director

Director Director Director

John Brandon Anders Böös Fredrik Cappelen

Sofia Schörling Högberg Dick Seger Director Director

Susanne Bergman Israelsson Åse Hjelm Jan Prang Employee Representative Employee Representative Employee Representative

Magnus Ahlqvist President and Chief Executive Officer

Report of Review

(Translation of Swedish Original)

Review report over Interim Financial Statements (Interim report) prepared in accordance with IAS 34 and Chapter 9 of the Swedish Annual Accounts Act.

Introduction

We have reviewed this report for the period January 1, 2020 to June 30, 2020 for Securitas AB. The Board of Directors and the CEO and President are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily

of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.

Stockholm, July 29, 2020 PricewaterhouseCoopers AB

Patrik Adolfson Madeleine Endre Authorised Public Accountant Authorised Public Accountant Auditor in charge

Consolidated financial statements

STATEMENT OF INCOME

MSEK	Apr–Jun 2020	Apr–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Dec 2019
Sales	26 271	27 134	54 287	53 329	109 560
Sales, acquired business	285	550	689	1 099	1 339
Total sales2)	26 556	27 684	54 976	54 428	110 899
Organic sales growth, %3)	–4	5	–1	6	4
Production expenses	–22 070	–22 882	–45 763	–44 995	–91 588
Gross income	4 486	4 802	9 213	9 433	19 311
Selling and administrative expenses	–3 435	–3 443	–7 097	–6 793	–13 637
Other operating income2)	11	9	20	17	34
Share in income of associated companies	13	9	25	10	30
Operating income before amortization	1 075	1 377	2 161	2 667	5 738
Operating margin, %	4.0	5.0	3.9	4.9	5.2
Amortization of acquisition related intangible assets	–69	–70	–141	–136	–271
Acquisition related costs5)	–63	–17	–80	–29	–62
Items affecting comparability6)	–61	–46	–106	–66	–209
Operating income after amortization	882	1 244	1 834	2 436	5 196
Financial income and expenses7, 8)	–137	–150	–281	–289	–578
Income before taxes	745	1 094	1 553	2 147	4 618
Net margin, %	2.8	4.0	2.8	3.9	4.2
Current taxes	–215	–318	–466	–623	–1 200
Deferred taxes	15	18	46	30	–56
Net income for the period	545	794	1 133	1 554	3 362
Whereof attributable to:
Equity holders of the Parent Company	546	795	1 134	1 553	3 357
Non-controlling interests	–1	–1	–1	1	5
Earnings per share before and after dilution (SEK)	1.50	2.18	3.11	4.25	9.20
Earnings per share before and after dilution and before items affecting comparability (SEK)	1.62	2.27	3.32	4.39	9.61

STATEMENT OF COMPREHENSIVE INCOME

MSEK	Apr–Jun 2020	Apr–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Dec 2019
Net income for the period	545	794	1 133	1 554	3 362
Other comprehensive income for the period
Items that will not be reclassified to the statement of income
Remeasurements of defined benefit pension plans net of tax	99	–29	37	5	31
Total items that will not be reclassified to the statement of income9)	99	–29	37	5	31
Items that subsequently may be reclassified to the statement of income
Remeasurement for hyperinflation net of tax7)	10	20	26	42	79
Cash flow hedges net of tax	23	56	–41	17	36
Cost of hedging net of tax	32	15	42	19	12
Net investment hedges net of tax	471	–126	–150	–358	–346
Other comprehensive income from associated companies,
translation differences	–20	–2	–13	18	14
Translation differences	–2 061	–37	–419	730	405
Total items that subsequently may be reclassified to
the statement of income9)	–1 545	–74	–555	468	200
Other comprehensive income for the period9)	–1 446	–103	–518	473	231
Total comprehensive income for the period	–901	691	615	2 027	3 593
Whereof attributable to:
Equity holders of the Parent Company	–899	692	619	2 025	3 587
Non-controlling interests	–2	–1	–4	2	6

Notes 2–9 refer to pages 21–25.

STATEMENT OF CASH FLOW

Operating cash flow MSEK	Apr–Jun 2020	Apr–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Dec 2019
Operating income before amortization	1 075	1 377	2 161	2 667	5 738
Investments in non-current tangible and intangible assets	–676	–780	–1 429	–1 487	–3 010
Reversal of depreciation	672	660	1 368	1 300	2 690
Change in accounts receivable	857	–266	203	–399	–239
Change in other operating capital employed	741	–45	738	–1 202	–277
Cash flow from operating activities	2 669	946	3 041	879	4 902
Cash flow from operating activities, %	248	69	141	33	85
Financial income and expenses paid	–41	–55	–331	–344	–443
Current taxes paid	–189	–275	–595	–525	–1 191
Free cash flow	2 439	616	2 115	10	3 268
Free cash flow, %	338	68	150	1	83
Cash flow from investing activities, acquisitions and divestitures	–74	–233	–428	–382	–574
Cash flow from items affecting comparability 6)	–79	–77	–139	–143	–303
Cash flow from financing activities	–679	–1 083	967	–61	–1 699
Cash flow for the period	1 607	–777	2 515	–576	692

Cash flow MSEK	Apr–Jun 2020	Apr–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Dec 2019
Cash flow from operations	2 981	1 259	3 294	1 225	5 747
Cash flow from investing activities	–468	–753	–1 280	–1 357	–2 534
Cash flow from financing activities	–906	–1 283	501	–444	–2 521
Cash flow for the period	1 607	–777	2 515	–576	692

Change in net debt MSEK	Apr–Jun 2020	Apr–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Dec 2019
Opening balance	–19 294	–19 290	–17 541	–14 513	–14 513
Cash flow for the period	1 607	–777	2 515	–576	692
Change in lease liabilities	63	44	–31	–3 415	–3 332
Change in loans	679	–523	–967	–1 545	93
Change in net debt before revaluation and translation differences	2 349	–1 256	1 517	–5 536	–2 547
Revaluation of financial instruments8)	72	91	2	45	60
Translation differences	941	–5	90	–456	–541
Change in net debt	3 362	–1 170	1 609	–5 947	–3 028
Closing balance	–15 932	–20 460	–15 932	–20 460	–17 541

Notes 6 and 8 refer to pages 23–24.

CAPITAL EMPLOYED AND FINANCING

MSEK	Jun 30, 2020	Jun 30, 2019	Dec 31, 2019
Operating capital employed	11 936	14 293	13 100
Operating capital employed as % of sales	11	13	12
Return on operating capital employed, %	40	43	50
Goodwill	22 252	22 070	22 157
Acquisition related intangible assets	1 513	1 523	1 563
Shares in associated companies	322	484	320
Capital employed	36 023	38 370	37 140
Return on capital employed, %	14	13	15
Net debt	–15 932	–20 460	–17 541
Shareholders' equity	20 091	17 910	19 599
Net debt equity ratio, multiple	0.79	1.14	0.89

BALANCE SHEET

MSEK	Jun 30, 2020	Jun 30, 2019	Dec 31, 2019
ASSETS
Non-current assets
Goodwill	22 252	22 070	22 157
Acquisition related intangible assets	1 513	1 523	1 563
Other intangible assets	1 915	1 664	1 813
Right-of-use assets	3 438	3 594	3 489
Other tangible non-current assets	3 437	3 627	3 546
Shares in associated companies	322	484	320
Non-interest-bearing financial non-current assets	1 806	1 812	1 799
Interest-bearing financial non-current assets	421	485	437
Total non-current assets	35 104	35 259	35 124
Current assets
Non-interest-bearing current assets	22 864	24 153	22 984
Other interest-bearing current assets	164	125	134
Liquid funds	6 400	2 694	3 948
Total current assets	29 428	26 972	27 066
TOTAL ASSETS	64 532	62 231	62 190

MSEK	Jun 30, 2020	Jun 30, 2019	Dec 31, 2019
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Attributable to equity holders of the Parent Company	20 078	17 884	19 569
Non-controlling interests	13	26	30
Total shareholders' equity	20 091	17 910	19 599
Equity ratio, %	31	29	32
Long-term liabilities
Non-interest-bearing long-term liabilities	341	336	361
Long-term lease liabilities	2 606	2 717	2 610
Other interest-bearing long-term liabilities	13 598	16 427	17 216
Non-interest-bearing provisions	2 408	2 605	2 484
Total long-term liabilities	18 953	22 085	22 671
Current liabilities
Non-interest-bearing current liabilities and provisions	18 775	17 616	17 686
Current lease liabilities	922	920	944
Other interest-bearing current liabilities	5 791	3 700	1 290
Total current liabilities	25 488	22 236	19 920
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	64 532	62 231	62 190

CHANGES IN SHAREHOLDERS' EQUITY

	Jun 30, 2020			Jun 30, 2019			Dec 31, 2019
MSEK	Attributable to equity holders of the Parent Company	Non controlling interests	Total	Attributable to equity holders of the Parent Company	Non controlling interests	Total	Attributable to equity holders of the Parent Company	Non controlling interests	Total
Opening balance January 1, 2020 / 2019	19 569	30	19 599	17 632	25	17 657	17 632	25	17 657
Total comprehensive income for the period	619	–4	615	2 025	2	2 027	3 587	6	3 593
Transactions with non-controlling interests	–	–13	–13	–	–1	–1	–	–1	–1
Share based incentive schemes	–110	–	–1101)	–167	–	–167	–44	–	–44
Dividend paid to the shareholders of the Parent Company	–	–	–	–1 606	–	–1 606	–1 606	–	–1 606
Closing balance June 30 / December 31, 2020 / 2019	20 078	13	20 091	17 884	26	17 910	19 569	30	19 599

1) Refers to a swap agreement in Securitas AB shares of MSEK –110, hedging the share portion of Securitas share based incentive scheme 2019.

DATA PER SHARE

SEK	Apr–Jun 2020	Apr–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Dec 2019
Share price, end of period	125.55	162.90	125.55	162.90	161.45
Earnings per share before and after dilution1, 2, 3)	1.50	2.18	3.11	4.25	9.20
Earnings per share before and after dilution and before items affecting comparability1, 2, 3)	1.62	2.27	3.32	4.39	9.61
Dividend	–	–	–	–	– 5)
P/E-ratio after dilution and before items affecting comparability	–	–	–	–	17
Share capital (SEK)	365 058 897	365 058 897	365 058 897	365 058 897	365 058 897
Number of shares outstanding1, 3)	364 933 897	364 933 897	364 933 897	364 933 897	364 933 897
Average number of shares outstanding1, 3, 4)	364 933 897	365 049 282	364 933 897	365 054 063	364 993 486

1) There are no convertible debenture loans. Consequently there is no difference before and after dilution regarding earnings per share and number of shares.

2) Number of shares used for calculation of earnings per share includes shares related to the Group's share based incentive schemes that have been hedged through swap agreements.

3) On June 24, 2019, 125 000 shares were repurchased.

4) Used for calculation of earnings per share.

5) Withdrawn dividend proposal of SEK 4.80 on April 28, 2020.

Segment overview April–June 2020 and 2019

APRIL–JUNE 2020

	Security Services	Security Services	Security Services
MSEK	North America	Europe	Ibero-America	Other	Eliminations	Group
Sales, external	11 980	10 924	3 044	608	–	26 556
Sales, intra-group	0	0	0	0	0	–
Total sales	11 980	10 924	3 044	608	0	26 556
Organic sales growth, %	–2	–6	–1	–	–	–4
Operating income before amortization	666	395	120	–106	–	1 075
of which share in income of associated companies	1	–	–	12	–	13
Operating margin, %	5.6	3.6	3.9	–	–	4.0
Amortization of acquisition related intangible assets	–20	–37	–4	–8	–	–69
Acquisition related costs	–14	–1	–43	–5	–	–63
Items affecting comparability	–29	–7	0	–25	–	–61
Operating income after amortization	603	350	73	–144	–	882
Financial income and expenses	–	–	–	–	–	–137
Income before taxes	–	–	–	–	–	745

APRIL–JUNE 2019

	Security Services	Security Services	Security Services
MSEK	North America	Europe	Ibero-America	Other	Eliminations	Group
Sales, external	12 050	11 826	3 306	502	–	27 684
Sales, intra-group	0	0	0	1	–1	–
Total sales	12 050	11 826	3 306	503	–1	27 684
Organic sales growth, %	5	1	16	–	–	5
Operating income before amortization	756	586	151	–116	–	1 377
of which share in income of associated companies	–1	–	–	10	–	9
Operating margin, %	6.3	5.0	4.6	–	–	5.0
Amortization of acquisition related intangible assets	–16	–40	–8	–6	–	–70
Acquisition related costs	–1	–12	–	–4	–	–17
Items affecting comparability	–23	–13	0	–10	–	–46
Operating income after amortization	716	521	143	–136	–	1 244
Financial income and expenses	–	–	–	–	–	–150
Income before taxes	–	–	–	–	–	1 094

Segment overview January–June 2020 and 2019

JANUARY–JUNE 2020

	Security Services	Security Services	Security Services
MSEK	North America	Europe	Ibero-America	Other	Eliminations	Group
Sales, external	24 627	22 583	6 504	1 262	–	54 976
Sales, intra-group	0	0	0	1	–1	–
Total sales	24 627	22 583	6 504	1 263	–1	54 976
Organic sales growth, %	0	–3	4	–	–	–1
Operating income before amortization	1 318	813	272	–242	–	2 161
of which share in income of associated companies	2	–	–	23	–	25
Operating margin, %	5.4	3.6	4.2	–	–	3.9
Amortization of acquisition related intangible assets	–42	–76	–8	–15	–	–141
Acquisition related costs	–19	–2	–51	–8	–	–80
Items affecting comparability	–69	–9	–1	–27	–	–106
Operating income after amortization	1 188	726	212	–292	–	1 834
Financial income and expenses	–	–	–	–	–	–281
Income before taxes	–	–	–	–	–	1 553

JANUARY–JUNE 2019

	Security Services	Security Services	Security Services
MSEK	North America	Europe	Ibero-America	Other	Eliminations	Group
Sales, external	23 616	23 277	6 546	989	–	54 428
Sales, intra-group	3	0	0	2	–5	–
Total sales	23 619	23 277	6 546	991	–5	54 428
Organic sales growth, %	5	3	17	–	–	6
Operating income before amortization	1 411	1 153	304	–201	–	2 667
of which share in income of associated companies	–7	–	–	17	–	10
Operating margin, %	6.0	5.0	4.6	–	–	4.9
Amortization of acquisition related intangible assets	–32	–79	–15	–10	–	–136
Acquisition related costs	–9	–16	–	–4	–	–29
Items affecting comparability	–32	–16	–1	–17	–	–66
Operating income after amortization	1 338	1 042	288	–232	–	2 436
Financial income and expenses	–	–	–	–	–	–289
Income before taxes	–	–	–	–	–	2 147

NOTE 1 Accounting principles

This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The interim report comprises pages 1–27 and pages 1–14 are thus an integrated part of this financial report.

Securitas' consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union, the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's standard RFR 1 Supplementary Accounting Rules for Groups. The most important accounting principles under IFRS, which is the basis for the preparation of this interim report, can be found in note 2 on pages 75 to 81 in the Annual Report for 2019. The accounting principles are also available on the Group's website www.securitas.com under the section Investors – Financial data – Accounting Principles.

The Parent Company's financial statements are prepared in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's standard RFR 2 Accounting for Legal Entities. The most important accounting principles used by the Parent Company can be found in note 42 on page 131 in the Annual Report for 2019.

Adoption and impact of new and revised IFRS 2020

Amendments to IFRS 9 Financial instruments related to hedge accounting came into effect as of January 1, 2020. The purpose of the amendments is to reduce the effects on hedge accounting following the IBOR-reform and they should be applied to all hedge relationships that are directly affected by the IBOR-reform. Securitas chose to early-adopt these amendments as from January 1, 2019. The amendments are assessed to have no impact on the Group's financial statements.

None of the other published standards and interpretations that are mandatory for the Group's financial year 2020 are assessed to have any impact on the Group's financial statements.

Introduction and effect of new and revised IFRS 2021 and onwards

The effect on the Group's financial statements from standards and interpretations that are mandatory for the Group's financial year 2021 or later remain to be assessed.

Usage of key ratios not defined in IFRS

For definitions and calculations of key ratios not defined in IFRS, refer to notes 3 and 4 in this interim report as well as to note 3 in the Annual Report 2019.

NOTE 2 Revenue

MSEK	Apr–Jun 2020	%	Apr–Jun 2019	%	Jan–Jun 2020	%	Jan–Jun 2019	%	Jan–Dec 2019	%
Guarding services1)	20 234	77	21 223	77	41 813	76	41 747	77	84 887	77
Security solutions and electronic
security	5 684	21	5 768	21	11 832	22	11 296	21	23 290	21
Other1)	638	2	693	2	1 331	2	1 385	2	2 722	2
Total sales	26 556	100	27 684	100	54 976	100	54 428	100	110 899	100
Other operating income	11	0	9	0	20	0	17	0	34	0
Total revenue	26 567	100	27 693	100	54 996	100	54 445	100	110 933	100

1) Comparatives have been restated for business that relates to risk management services.

Guarding services

This comprises on-site and mobile guarding, which is services with the same revenue recognition pattern. Revenue is recognized over time, as the services are rendered by Securitas and simultaneously consumed by the customers. Such services cannot be reperformed.

Security solutions and electronic security

This comprises two broad categories regarding security solutions and electronic security.

Security solutions are a combination of services such as on-site and/or mobile guarding and/or remote guarding. These services are combined with a technology component in terms of equipment owned and managed by Securitas and used in the provision of services. The equipment is installed at the customer site. The revenue recognition pattern is over time, as the services are rendered by Securitas and simultaneously consumed by the customers. A security solution normally constitutes one performance obligation.

Electronic security consists of the sale of alarm installations comprising design and installation (time, material and related expenses). Revenue is recognized as per the contract, either upon completion of the conditions in the contract, or over time based on the percentage of completion. Remote guarding (in the form of

alarm monitoring services), that is sold separately and not as part of a security solution, is also included in this category. Revenue recognition is over time as this is also a service that is rendered by Securitas and simultaneously consumed by the customers. The category further includes maintenance services, that are either performed upon request (time and material) with revenue recognition at a point in time (when the work has been performed), or over time if part of a service level contract with a subscription fee. Finally there is also a to a limited extent product sales (alarms and components) without any design or installation. The revenue recognition is at a point in time (upon delivery).

Other

Other comprises mainly corporate risk management services that are either recognized over time or at a point in time as well as other ancillary business.

Other operating income

Other operating income consists in its entirety of trade mark fees for the use of the Securitas brand name.

Revenue per segment

The disaggregation of revenue by segment is shown in the table below. Total sales agree to total sales in the segment overviews.

		Security Services North America		Security Services Europe		Security Services Ibero-America		Other	Eliminations		Group
MSEK	Apr–Jun 2020	Apr–Jun 2019	Apr–Jun 2020	Apr–Jun 2019	Apr–Jun 2020	Apr–Jun 2019	Apr–Jun 2020	Apr–Jun 2019	Apr–Jun 2020	Apr–Jun 2019	Apr–Jun 2020	Apr–Jun 2019
Guarding services1)	9 307	9 158	8 350	9 244	2 139	2 388	438	434	0	–1	20 234	21 223
Security solutions and electronic security	2 035	2 199	2 574	2 582	905	918	170	69	–	–	5 684	5 768
Other1)	638	693	–	–	–	–	–	–	–	–	638	693
Total sales	11 980	12 050	10 924	11 826	3 044	3 306	608	503	0	–1	26 556	27 684
Other operating income	–	–	–	–	–	–	11	9	–	–	11	9
Total revenue	11 980	12 050	10 924	11 826	3 044	3 306	619	512	0	–1	26 567	27 693

1) Comparatives have been restated for business that relates to risk management services.

Note 2, cont.

	North America	Security Services	Europe	Security Services	Ibero-America	Security Services	Other		Eliminations		Group
MSEK	Jan–Jun 2020	Jan–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Jun 2020	Jan–Jun 2019
Guarding services1)	18 957	17 957	17 330	18 179	4 599	4 743	928	873	–1	–5	41 813	41 747
Security solutions and electronic security	4 339	4 277	5 253	5 098	1 905	1 803	335	118	–	–	11 832	11 296
Other1)	1 331	1 385	–	–	–	–	–	–	–	–	1 331	1 385
Total sales	24 627	23 619	22 583	23 277	6 504	6 546	1 263	991	–1	–5	54 976	54 428
Other operating income	–	–	–	–	–	–	20	17	–	–	20	17
Total revenue	24 627	23 619	22 583	23 277	6 504	6 546	1 283	1 008	–1	–5	54 996	54 445

1) Comparatives have been restated for business that relates to risk management services.

NOTE 3 Organic sales growth and currency changes

The calculation of real and organic sales growth and the specification of currency changes on operating income before and after amortization, income before taxes, net income and earnings per share are specified below. The impact from remeasurement for hyperinflation due to the application of IAS 29 is included in currency change.

MSEK	Apr–Jun 2020	Apr–Jun 2019	Apr–Jun %	Jan–Jun 2020	Jan–Jun 2019	Jan–Jun %
Total sales	26 556	27 684	–4	54 976	54 428	1
Currency change from 2019	406	–		–220	–
Currency adjusted sales growth	26 962	27 684	–3	54 756	54 428	1
Acquisitions/divestitures	–285	–		–689	–4
Organic sales growth	26 677	27 684	–4	54 067	54 424	–1
Operating income before amortization	1 075	1 377	–22	2 161	2 667	–19
Currency change from 2019	35	–		–4	–
Currency adjusted operating income before amortization	1 110	1 377	–19	2 157	2 667	–19
Operating income after amortization	882	1 244	–29	1 834	2 436	–25
Currency change from 2019	36	–		–3	–
Currency adjusted operating income after amortization	918	1 244	–26	1 831	2 436	–25
Income before taxes	745	1 094	–32	1 553	2 147	–28
Currency change from 2019	32	–		2	–
Currency adjusted income before taxes	777	1 094	–29	1 555	2 147	–28
Net income for the period	545	794	–31	1 133	1 554	–27
Currency change from 2019	22	–		1	–
Currency adjusted net income for the period	567	794	–29	1 134	1 554	–27
Net income attributable to equity holders of the Parent Company	546	795	–31	1 134	1 553	–27
Currency change from 2019	22	–		1	–
Currency adjusted net income attributable to equity holders of the Parent Company	568	795	–29	1 135	1 553	–27
Average number of shares outstanding	364 933 897	365 049 282		364 933 897	365 054 063
Currency adjusted earnings per share	1.56	2.18	–28	3.11	4.25	–27

NOTE 4 Definitions and calculation of key ratios

The calculations below relate to the period January–June 2020.

Interest coverage ratio

Operating income before amortization (rolling 12 months) plus interest income (rolling 12 months) in relation to interest expenses (rolling 12 months). Calculation: (5 232 + 34) / 605 = 8.7

Free cash flow as % of adjusted income

Free cash flow as a percentage of adjusted income (operating income before amortization adjusted for financial income and expenses, excluding revaluation of financial instruments, and current taxes). Calculation: 2 115 / (2 161 – 281 – 1 – 466) = 150%

Free cash flow in relation to net debt

Free cash flow (rolling 12 months) in relation to closing balance net debt. Calculation: 5 373 / 15 932 = 0.34

Net debt to EBITDA ratio

Net debt in relation to operating income after amortization (rolling 12 months) plus amortization of acquisition related intangible assets (rolling 12 months) and depreciation (rolling 12 months). Calculation: 15 932 / (4 594 + 276 + 2 758) = 2.1

Operating capital employed as % of total sales

Operating capital employed as a percentage of total sales adjusted for the full-year sales of acquired entities. Calculation: 11 936 / 109 480 = 11%

Return on operating capital employed

Operating income before amortization (rolling 12 months) plus items affecting comparability (rolling 12 months) as a percentage of the average balance of operating capital employed.

Calculation: (5 232 – 249) / ((11 936 + 13 100) / 2) = 40%

Return on capital employed

Operating income before amortization (rolling 12 months) plus items affecting comparability (rolling 12 months) as a percentage of closing balance of capital employed. Calculation: (5 232 – 249) / 36 023 = 14%

Net debt equity ratio

Net debt in relation to shareholders' equity. Calculation: 15 932 / 20 091 = 0.79

NOTE 5 Acquisition related costs

MSEK	Apr–Jun 2020	Apr–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Dec 2019
Restructuring and integration costs	–60	–10	–71	–12	–18
Transaction costs	–2	–6	–7	–15	–24
Revaluation of deferred considerations	–1	–1	–2	–2	65
Step acquisitions	–	–	–	–	–85
Total acquisition related costs	–63	–17	–80	–29	–62

For further information regarding the Group's acquisitions, refer to the section Acquisitions.

NOTE 6 Items affecting comparability

MSEK	Apr–Jun 2020	Apr–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Dec 2019
Recognized in the statement of income
IS/IT transformation programs	–61	–46	–106	–66	–209
Total recognized in the statement of income before tax	–61	–46	–106	–66	–209
Taxes	15	10	28	16	57
Total recognized in the statement of income after tax	–46	–36	–78	–50	–152
Cash flow impact
IS/IT transformation programs	–68	–40	–116	–63	–171
Cost savings program, Security Services Europe	–11	–37	–23	–80	–132
Total cash flow impact	–79	–77	–139	–143	–303

NOTE 7 Remeasurement for hyperinflation

The impact on the consolidated statement of income and other comprehensive income from IAS 29 Financial reporting in Hyperinflationary economies is illustrated below. The index used by Securitas for the remeasurement of the financial statements is the consumer price index with base period January 2003.

EXCHANGE RATES AND INDEX

	Jun 30, 2020	Jun 30, 2019	Dec 31, 2019
Exchange rate SEK/ARS	0.13	0.22	0.16
Index	19.44	13.44	17.15

NET MONETARY GAIN RECOGNIZED IN THE CONSOLIDATED STATEMENT OF INCOME

MSEK	Apr–Jun 2020	Apr–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Dec 2019
Financial income and expenses	3	3	6	10	25
Total monetary gain	3	3	6	10	25

NOTE 8 Financial instruments and credit facilities

Revaluation of financial instruments

Revaluation of financial instruments is recognized in the statement of income on the line financial income and expenses. Revaluation of cash flow hedges (and the subsequent recycling into the statement of income) is recognized in other comprehensive income on the line cash flow hedges. Cost of hedging (and the subsequent recycling into the statement of income) is recognized on the corresponding line in other comprehensive income.

The amount disclosed in the specification of change in net debt is the total revaluation before tax in the table below.

MSEK	Apr–Jun 2020	Apr–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Dec 2019
Recognized in the statement of income
Revaluation of financial instruments	2	0	1	–1	–1
Deferred tax	–	–	–	–	–
Impact on net income	2	0	1	–1	–1
Recognized in the statement of comprehensive income
Cash flow hedges	30	71	–52	21	45
Cost of hedging	40	20	53	25	16
Deferred tax	–15	–20	0	–10	–13
Total recognized in the statement of comprehensive income	55	71	1	36	48
Total revaluation before tax	72	91	2	45	60
Total deferred tax	–15	–20	0	–10	–13
Total revaluation after tax	57	71	2	35	47

Fair value hierarchy

The methods and assumptions used by the Group in estimating the fair value of the financial instruments are disclosed in note 7 in the Annual Report 2019. Further information regarding the accounting principles for financial instruments is disclosed in note 2 in the Annual Report 2019.

There have been no transfers between any of the the valuation levels during the period.

MSEK	Quoted market prices	Valuation techniques using observable market data	Valuation techniques using non-observable market data	Total
June 30, 2020
Financial assets at fair value through profit or loss	–	11	–	11
Financial liabilities at fair value through profit or loss	–	–25	–453	–478
Derivatives designated for hedging with positive fair value	–	148	–	148
Derivatives designated for hedging with negative fair value	–	–274	–	–274
December 31, 2019
Financial assets at fair value through profit or loss	–	13	–	13
Financial liabilities at fair value through profit or loss	–	–14	–425	–439
Derivatives designated for hedging with positive fair value	–	213	–	213
Derivatives designated for hedging with negative fair value	–	–194	–	–194

Financial instruments by category – carrying and fair values

For financial assets and liabilities other than those disclosed in the table below, fair value is deemed to approximate the carrying value. A full comparison of fair value and carrying value for all financial assets and liabilities is disclosed in note 7 in the Annual Report 2019. .

	Jun 30, 2020		Dec 31, 2019
MSEK	Carrying value	Fair value	Carrying value	Fair value
Long-term loan liabilities	10 551	10 570	14 194	14 475
Short-term loan liabilities	3 712	3 717	–	–
Total financial instruments by category	14 263	14 287	14 194	14 475

SUMMARY OF CREDIT FACILITIES AS OF JUNE 30, 2020

Type	Currency	Facility amount (million)	Available amount (million)	Maturity
EMTN FRN private placement	USD	40	0	2020
EMTN FRN private placement	USD	40	0	2021
EMTN FRN private placement	USD	60	0	2021
EMTN FRN private placement	USD	40	0	2021
EMTN Eurobond, 2.625% fixed	EUR	350	0	2021
EMTN Eurobond, 1.25% fixed	EUR	350	0	2022
EMTN Eurobond, 1.125% fixed	EUR	350	0	2024
EMTN FRN private placement	USD	50	0	2024
EMTN FRN private placement	USD	105	0	2024
EMTN Eurobond, 1.25% fixed	EUR	300	0	2025
Multi Currency Revolving Credit Facility	EUR (or equivalent)	938	938	2025
Commercial Paper (uncommitted)	SEK	5 000	3 300	n/a

NOTE 9 Deferred tax on other comprehensive income

MSEK	Apr–Jun 2020	Apr–Jun 2019	Jan–Jun 2020	Jan–Jun 2019	Jan–Dec 2019
Deferred tax on remeasurements of defined benefit pension plans	–25	10	–8	–3	–11
Deferred tax on cash flow hedges	–7	–15	11	–4	–9
Deferred tax on cost of hedging	–8	–5	–11	–6	–4
Deferred tax on net investment hedges	–128	34	41	97	94
Total deferred tax on other comprehensive income	–168	24	33	84	70

NOTE 10 Pledged assets

MSEK	Jun 30, 2020	Jun 30, 2019	Dec 31, 2019
Pension balances, defined contribution plans	138	119	124
Total pledged assets	138	119	124

NOTE 11 Contingent liabilities

MSEK	Jun 30, 2020	Jun 30, 2019	Dec 31, 2019
Guarantees	–	–	–
Guarantees related to discontinued operations	15	16	16
Total contingent liabilities	15	16	16

For critical estimates and judgments, provisions and contingent liabilities, refer to note 4 and note 38 in the Annual Report 2019 as well as to the section Other significant events in this report.

Parent Company

STATEMENT OF INCOME

MSEK	Jan–Jun 2020	Jan–Jun 2019
License fees and other income	542	581
Gross income	542	581
Administrative expenses	–295	–306
Operating income	247	275
Financial income and expenses	69	2 371
Income after financial items	316	2 646
Appropriations	–33	–200
Income before taxes	283	2 446
Taxes	–15	–142
Net income for the period	268	2 304

BALANCE SHEET

MSEK	Jun 30, 2020	Dec 31, 2019
ASSETS
Non-current assets
Shares in subsidiaries	44 580	43 911
Shares in associated companies	112	112
Other non-interest-bearing non-current assets	943	759
Interest-bearing financial non-current assets	1 491	1 375
Total non-current assets	47 126	46 157
Current assets
Non-interest-bearing current assets	1 047	654
Other interest-bearing current assets	2 755	3 694
Liquid funds	2 808	1 596
Total current assets	6 610	5 944
TOTAL ASSETS	53 736	52 101
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Restricted equity	7 737	7 737
Non-restricted equity	21 840	21 539
Total shareholders' equity	29 577	29 276
Untaxed reserves	701	687
Long-term liabilities
Non-interest-bearing long-term liabilities/provisions	324	296
Interest-bearing long-term liabilities	13 580	17 189
Total long-term liabilities	13 904	17 485
Current liabilities
Non-interest-bearing current liabilities	1 136	1 161
Interest-bearing current liabilities	8 418	3 492
Total current liabilities	9 554	4 653
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	53 736	52 101

Financial information

PRESENTATION OF THE INTERIM REPORT

Analysts and media are invited to participate in a telephone conference on July 29, 2020 at 2:30 p.m. (CET) where President and CEO Magnus Ahlqvist and CFO Bart Adam will present the report and answer questions. The telephone conference will also be audio cast live via Securitas website. To participate in the telephone conference, please dial in five minutes prior to the start of the conference call:

US:	+1 631 913 1422
Sweden:	+46 8566 426 51
UK:	+44 333 3000 804

Please use the following pin code for the telephone conference: 621 490 78#

To follow the audio cast of the telephone conference via the web, please follow the link www.securitas.com/investors/webcasts.

A recorded version of the audio cast will be available at www.securitas.com/investors/webcasts after the telephone conference.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Micaela Sjökvist, Head of Investor Relations. +46 761167443

FINANCIAL INFORMATION CALENDAR

November 3, 2020, app. 1.00 p.m. (CET) Interim Report January–September 2020

February 4, 2021, 8.00 a.m. (CET) Full Year Report January–December 2020

For further information regarding Securitas IR activities, refer to www.securitas.com/investors/financial-calendar

ABOUT SECURITAS

Securitas has a leading global and local market presence with operations in 56 countries. Our operations are organized in three business segments: Security Services North America, Security Services Europe and Security Services Ibero-America. We also have operations in Africa, the Middle East and Asia, which form the AMEA division. Securitas serves a wide range of clients of all sizes in a variety of industries and segments. Security solutions based on client-specific needs are built through different combinations of on-site, mobile and remote guarding, electronic security, fire and safety, and corporate risk management. Securitas clients' are found in all different industries and they are of all sizes. We adapt our security solutions based on the risks and needs of each client through increased client engagement and continuously enhanced knowledge. Securitas is listed in the Large Cap segment at Nasdaq Stockholm.

Group strategy

At Securitas, we are leading the transformation of the security industry by putting our clients at the heart of our business. We solve our clients' security needs by offering qualified and engaged people, in-depth expertise and innovation within each of our protective services, the ability to combine services into solutions and by using data to add further intelligence. To execute on our strategy to become the intelligent protective services partner, we are focusing on four areas: empowering our people, client engagement, protective services leadership and innovation, and efficiency.

Group financial targets

Securitas has three financial targets:

• An annual average increase in earnings per share of 10 percent
• Net debt to EBITDA ratio of on average 2.5
• An operating cash flow of 70 to 80 percent of operating income

Securitas has also set a strategic transformation ambition – to double our security solutions and electronic security sales by 2023, compared with 2018.

This is information that Securitas AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 1:00 p.m. (CET) on Wednesday, July 29, 2020.

Securitas AB (publ.)

P.O. Box 12307, SE-102 28 Stockholm, Sweden Visiting address: Lindhagensplan 70 Telephone: +46 10 470 30 00. Fax: +46 10 470 31 22 Corporate registration number: 556302–7241 www.securitas.com