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Securitas

Annual Report Feb 9, 2012

2968_10-k_2012-02-09_cb402e15-4d8f-459c-a108-42aa8aaeb557.pdf

Annual Report

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Securitas AB

Full Year Report January–December 2011

OCTOBER–DECEMBER 2011

  • • Total sales MSEK 17,026 (15,718)
  • • Organic sales growth 2 percent (4)
  • • Operating margin 5.7 percent (6.7)
  • • Earnings per share SEK 1.32 (1.60)

JANUARY–DECEMBER 2011

  • • Total sales MSEK 64,057 (61,340)
  • • Organic sales growth 3 percent (1)
  • • Operating margin 5.3 percent (6.1)
  • • Earnings per share SEK 4.75 (5.71)
  • • Free cash flow/net debt 0.08 (0.24)
  • • Proposed dividend SEK 3.00 (3.00)

COMMENTS FROM THE PRESIDENT AND CEO

The organic sales growth in 2011 was 3 percent, and including acquisitions the real sales growth reached 11 percent. We have made 19 major acquisitions with annual sales of BSEK 4.5 and strengthened our presence in the United Kingdom, Belgium, Eastern Europe, in the government sector in the US and in various high growth markets in Latin America. We have also grown in the technology area and in the consulting and investigation market. The sales growth of 11 percent was the highest since 2002 but has strained the cash flow mainly due to working capital needs, but also due to the decrease in earnings compared to last year and a slight increase in Days of Sales Outstanding (DSO). In 2012 we will be restrictive on acquisitions until we have restored the financial target of free cash flow to net debt of 0.20.

The fourth quarter operating margin was burdened by further restructuring measures in Europe, in order to reduce the indirect cost base for 2012, and by full year adjustments and increases of payroll related taxes in the US as well as start up costs related to the large airport contract we have won in Canada. For the full year of 2011, the lower operating margin was primarily due to dilution from acquisitions, the loss of a few major contracts in Europe and the discrepancy between wage costs and price increases.

During 2011 we have grown substantially by acquisitions and taken significant restructuring and integration costs which we will benefit from in 2012. We are investing in new solutions and technology resources to bring added value to our customers, and at the same time we have reduced the overhead costs. After a difficult year in 2011, I sense optimism when entering 2012, in spite of an instable and unpredictable macro economic environment.

Contents

January–December
summary 2
Group development 3
Development in the Group's
business segments 5
Cash flow 9
Capital employed
and financing 10
Acquisitions and
divestitures 11
Other significant events 15
Risks and uncertainties 15
Parent Company
operations 16
Accounting principles 17
Review Report 18
Consolidated financial
statements 19
Segment overview 23
Notes 24
Parent Company 26
Definitions 26

Financial information .......... 27

Alf Göransson President and Chief Executive Officer

FINANCIAL SUMMARY

MSEK Q4 2011 Q4 2010 Total
change, %
FY 2011 FY 2010 Total
change, %
Sales 17,026 15,718 8 64,057 61,340 4
Organic sales growth, % 2 4 3 1
Real sales growth, including acquisitions, % 10 10 11 5
Operating income before amortization 978 1,056 –7 3,385 3,724 –9
Operating margin, % 5.7 6.7 5.3 6.1
Real change, % –6 7 –3 6
Income before taxes 687 834 –18 2,480 2,968 –16
Real change, % –15 0 –11 5
Net income 482 585 –18 1,739 2,081 –16
Earnings per share (SEK) 1.32 1.60 –18 4.75 5.71 –17

EARNINGS PER SHARE AND FREE CASH FLOW TO NET DEBT

Earnings per share amounted to SEK 4.75 (5.71), which was a decrease of –17 percent compared to last year. Adjusted for the strengthening of the Swedish krona during 2011 the earnings per share decreased –11 percent in real terms over previous year.

Free cash flow to net debt was 0.08 (0.24).

ANNUAL GENERAL MEETING 2012

Securitas Annual General Meeting will be held on Monday, May 7, 2012 at 16.00 p.m. CET at Konserthuset, Hötorget in Stockholm. Refer to www.securitas.com/Corporate Governance for more information regarding Securitas AGM 2012. Securitas Annual Report 2011 will be published on www.securitas.com on April 16, 2012.

PROPOSED DIVIDEND

The Board of Directors proposes a dividend for 2011 of SEK 3.00 (3.00) per share. The total proposed dividend amounts to 126 percent of free cash flow. Thursday, May 10, 2012 is proposed as record date for the dividend.

ORGANIC SALES GROWTH AND OPERATING MARGIN DEVELOPMENT PER BUSINESS SEGMENT

Organic sales growth Operating margin
Q4 FY Q4 FY
% 2011 2010* 2011 2010* 2011 2010* 2011 2010*
Security Services North America 3 3 4 –2 5.4 6.7 5.7 6.1
Security Services Europe –2 5 0 4 3.9 5.9 3.8 5.3
Mobile and Monitoring 2 3 3 2 12.7 13.2 11.9 12.4
Security Services Ibero-America 10 3 11 1 6.8 8.0 6.2 6.6
Group 2 4 3 1 5.7 6.7 5.3 6.1

* The comparatives have been restated due to operations moved between the segments Security Services Europe, Mobile and Monitoring and Security Services Ibero-America. Refer to note 7 on page 25 for quarterly information for 2010 and for the first quarter 2011.

Group development

Group quarterly sales development Group quarterly sales development

Group quarterly operating income development Group quarterly operating income development

OCTOBER–DECEMBER 2011

Sales and market development

Sales amounted to MSEK 17,026 (15,718) and organic sales growth was 2 percent (4). The positive organic sales growth in the quarter was driven mainly by Security Services North America and Security Services Ibero-America. An important contribution to the organic sales growth in Security Services North America was the contract with 32 airports in Canada worth MSEK 3,130 over a five and a half year period, effective as of November 1, 2011. The decline in organic sales growth in comparison to last year is due to the development in Security Services Europe, where the loss of a few major contracts early in the year still had a negative impact.

Real sales growth, including acquisitions and adjusted for changes in exchange rates, was 10 percent (10).

Operating income before amortization

Operating income before amortization was MSEK 978 (1,056) which, adjusted for changes in exchange rates, represented a decrease of –6 percent.

The Group's operating margin was 5.7 percent (6.7). The operating margin in Security Services North America decreased mainly as a consequence of full year adjustments and increased payroll taxes, and together with the start up costs for the Canadian airports this represented approximately –0.4 percent of the deviation in the quarter. Previous contract losses and the discrepancy between price and wage cost increases in Security Services Europe had a negative impact of –0.4 percent on the Group operating margin. The restructuring costs in the business segments Security Services Europe and Mobile and Monitoring were, from a Group perspective, to a large extent covered by the capital gain and extra dividend resulting from the sale of the shares in Securitas Direct AG in Switzerland.

Operating income after amortization

Amortization of acquisition related intangible assets amounted to MSEK –64 (–47).

Acquisition related costs impacted the quarter by MSEK –93 (–56). Restructuring and integration costs for Reliance Security Services and Chubb in the United Kingdom amounted to MSEK –48. With the fourth quarter all restructuring and integration costs for Reliance and Chubb have been taken. Further information is provided in note 4.

Financial income and expenses

Financial income and expenses amounted to MSEK –134 (–118). The finance net has been negatively impacted by the increase in net debt that took place mainly during the first nine months of 2011.

Income before taxes

Income before taxes was MSEK 687 (834). The real change was –15 percent.

Taxes, net income and earnings per share

The Group's tax rate was 29.9 percent (29.9).

Net income was MSEK 482 (585). Earnings per share amounted to SEK 1.32 (1.60).

Group development

JANUARY–DECEMBER 2011

Sales and market development

Sales amounted to MSEK 64,057 (61,340) and organic sales growth was 3 percent (1). A positive development was seen in Security Services North America, Mobile and Monitoring and Security Services Ibero-America. In North America the security market has been basically flat in 2011 which means that Security Service North America has gained market shares. In Security Services Europe, the majority of the countries showed positive organic sales growth, but primarily Belgium and the United Kingdom were negative due to a few large contract losses in the first half year of 2011. In Latin America the organic sales growth was 28 percent. In Spain the organic sales growth was also positive mainly because of a major guarding contract in the retail sector. Effective in the first quarter 2012, contracts with poor profitability worth approximately MSEK 450 (MEUR 50) in annual sales will be terminated in Spain. The same applies for a major contract with an automotive customer in the US worth approximately MSEK 515 (MUSD 80) annually. These terminations have no material impact on the operating income, but a positive effect on the operating margin.

Real sales growth, including acquisitions and adjusted for changes in exchange rates, was 11 percent (5).

Operating income before amortization

Operating income before amortization was MSEK 3,385 (3,724) which, adjusted for changes in exchange rates, represented a decrease of –3 percent.

The Group's operating margin was 5.3 percent (6.1). The total dilution from the acquisitions of Reliance Security Services and Chubb in the United Kingdom, along with Security Consultants Group in the USA, was –0.2 percent on the Group's operating margin. In Security Services Europe, the operating margin was negatively impacted mainly by the loss of a few large contracts earlier in the year and a discrepancy between price increases and wage cost increases, all together representing –0.4 percent on the Group's operating margin. The increase of payroll related taxes in Security Services North America had an impact of –0.1 percent for the full year.

The price adjustments in the Group were behind the total wage cost increases in 2011, the main reason being the negative deviation in France.

Operating income after amortization

Amortization of acquisition related intangible assets amounted to MSEK –218 (–164).

Acquisition related costs impacted the period by MSEK –194 (–90). Restructuring and integration costs for Reliance Security Services and Chubb in the United Kingdom amounted to MSEK –99 and transaction costs for the acquisition of Chubb of MSEK –11. Further information is provided in note 4.

Financial income and expenses

Financial income and expenses amounted to MSEK –493 (–502). The finance net has been negatively impacted by the increase in net debt that took place mainly during the first nine months of 2011.

Income before taxes

Income before taxes was MSEK 2,480 (2,968). The real change was –11 percent.

Taxes, net income and earnings per share

The Group's tax rate was 29.9 percent (29.9).

Net income was MSEK 1,739 (2,081). Earnings per share amounted to SEK 4.75 (5.71).

Share of Group quarterly sales

Security Services North America 35%

Share of Group quarterly operating income

Security Services North America 33%

Quarterly sales development Quarterly sales development

Quarterly operating income development Quarterly operating income development

Full Year Report, January–December 2011

Securitas AB

Security Services North America

Security Services North America provides specialized security services in the USA, Canada and Mexico and comprises 19 business units: one organization for national and global accounts, ten geographical regions and five specialty customer segments in the USA, plus Canada, Mexico and Pinkerton Consulting & Investigations (C&I). In total, there are 97 geographical areas, about 600 branch managers and approximately 100,000 employees.

5

Security Services North America October–December January–December
MSEK 2011 2010 2011 2010
Total sales 5,988 5,745 22,356 22,731
Organic sales growth, % 3 3 4 –2
Operating income before amortization 321 384 1,270 1,380
Operating margin, % 5.4 6.7 5.7 6.1
Real change, % –15 9 2 4

October–December 2011

Organic sales growth was 3 percent (3) in the fourth quarter, supported by the airport security contract in Canada. As of January 2012 a major contract in the automotive customer segment in the US worth approximately MSEK 515 (MUSD 80) annually has been terminated, while the contracts with this customer in Canada and Mexico have been retained. This termination has no material impact on the operating income, but a positive effect on the operating margin. The sales of specialized security solutions as percentage of total sales increased in the quarter compared to last year.

The operating margin was 5.4 percent (6.7). The main reason for the decline relates to timing of legislative tax adjustments and expiring Hiring Incentives to Restore Employment (HIRE) Act tax grants. A tax adjustment under The Federal Unemployment Tax Act (FUTA) was enacted in the fourth quarter which is intended to be recovered in the price increases for 2012. In addition a full year adjustment of State Unemployment Insurance (SUI) reconciliation was made. All these payroll tax related adjustments resulted in a negative impact of –0.9 percent in the fourth quarter. Startup costs relating to the award of the airport security contract in Canada affected the operating margin by –0.3 percent.

The U.S. dollar exchange rate had a slightly negative effect on the operating result in Swedish kronor. The real change was –15 percent in the fourth quarter.

January–December 2011

Organic sales growth was 4 percent (–2) in the period, driven by contract portfolio sales and extra sales. The sales of specialized security solutions as part of total sales amounted to 7 percent (4).

The operating margin was 5.7 percent (6.1). The acquisition of Security Consultants Group had a diluting impact of –0.1 percent. Start up costs relating to the airport security contract in Canada had a negative impact on the operating margin of –0.1 percent. The increase of payroll taxes as described above explains almost –0.2 percent of the operating margin decline.

The U.S. dollar exchange rate had a negative effect on the operating result in Swedish kronor. The real change was 2 percent in the period.

The client retention rate was 91 percent which is a slight improvement compared to last year. The employee turnover rate in the U.S. was 44 percent (39).

Share of Group quarterly sales

Security Services Europe 41%

Share of Group quarterly operating income

Quarterly sales development Quarterly sales development

Quarterly operating income development Quarterly operating income development

Security Services Europe

Security Services Europe provides specialized security services for large and medium-sized customers in 26 countries, while Aviation — part of the Security Services Europe business segment — provides airport security in 14 countries. Security Services Europe has a combined total of over 650 branch managers and more than 100,000 employees.

Security Services Europe October–December January–December
MSEK 2011 2010* 2011 2010*
Total sales 7,002 6,404 26,425 24,556
Organic sales growth, % –2 5 0 4
Operating income before amortization 272 376 1,003 1,300
Operating margin, % 3.9 5.9 3.8 5.3
Real change, % –27 9 –20 10

* The comparatives have been restated due to operations moved between the segments Security Services Europe, Security Services Ibero-America and Mobile and Monitoring. Refer to note 7 on page 25 for quarterly information for 2010 and for the first quarter 2011.

October–December 2011

Organic sales growth was –2 percent (5) in the fourth quarter. The organic sales growth was affected from the loss of a few important contracts in Belgium and in the United Kingdom as previously reported. Also, the fourth quarter 2010 was a strong comparative with high extra sales. The majority of the countries in the business segment had positive organic sales growth. In Aviation the Lyon airport contract was lost in the period.

The operating margin was 3.9 percent (5.9). Due to the weak performance in some European countries further cost reduction measures were taken in the fourth quarter. Restructuring costs of MSEK –56 were taken mainly in France and Sweden in order to reduce the indirect costs going forward. These one-off costs burdened the margin by –0.9 percent. The effect from the loss of a few important contracts in Belgium and in the United Kingdom during 2011 was –0.4 percent, acquisition related margin dilution was –0.2 percent and discrepancy between price and wage cost increases primarily in France and Sweden had a negative impact of –0.5 percent.

The euro exchange rate had a small negative impact on the operating income in Swedish kronor. The real change was –27 percent in the quarter.

January–December 2011

Organic sales growth was 0 percent (4) in the period. Most countries had positive organic sales growth, but the negative impact from mainly Belgium and the United Kingdom hampered the development.

The operating margin was 3.8 percent (5.3). Previously lost contracts had a negative effect by –0.5 percent and the dilution from the acquisitions of Reliance Security Services and Chubb in the United Kingdom amounted to –0.3 percent. Discrepancies between price and wage cost increases, primarily in France and Sweden, had a negative impact of –0.5 percent. Actions taken to restore the performance in Security Services Europe resulted in restructuring costs negatively impacting the operating margin by –0.2 percent.

The euro exchange rate had a slight negative impact on the operating income in Swedish kronor. The real change was –20 percent in the period.

The client retention rate was slightly below 90 percent. The employee turnover rate was 28 percent (28**).

Development in the Group's business segments

Share of Group quarterly sales

Mobile and Monitoring 9%

Share of Group quarterly operating income

Mobile and Monitoring 21%

Quarterly sales development

Quarterly operating income development Quarterly operating income development

Mobile and Monitoring

Mobile provides mobile security services for small and medium-sized businesses and residential sites, while Monitoring provides electronic alarm surveillance services. Mobile operates in 11 countries across Europe and has approximately 8,900 employees in 28 areas and about 220 branch managers. Monitoring, with approximately 900 employees, operates in 11 countries in Europe.

Mobile and Monitoring October–December January–December
MSEK 2011
2010*
2011 2010*
Total sales 1,577 1,518 6,149 5,961
Organic sales growth, % 2 3 3 2
Operating income before amortization 201 200 733 740
Operating margin, % 12.7 13.2 11.9 12.4
Real change, % 1 6 1 6

* The comparatives have been restated due to operations moved between the segments Security Services Europe and Mobile and Monitoring. Refer to note 7 on page 25 for quarterly information for 2010.

October–December 2011

Organic sales growth was 2 percent (3). In the Mobile operation, most countries had positive organic sales growth. In the Monitoring operation, all countries except Belgium, France and Spain had positive organic sales growth.

The operating margin was 12.7 percent (13.2). In the Mobile operation the operating margin was flat. There were negative impacts from fewer call outs, terminations and increased fuel costs, but these effects were offset by the final outcome of employee related accruals made during the year. In the Monitoring operation, restructuring costs of MSEK –12 impacted the operating margin negatively. Adjusted for these one off costs, the operating margin in the Monitoring operation improved.

The real change in operating income in the business segment was 1 percent in the quarter.

January–December 2011

Organic sales growth was 3 percent (2). In the Mobile operation, the improvement in organic sales growth derived from countries such as Belgium and Norway. In the Monitoring operation, good organic sales growth was seen in Sweden, the Netherlands, Norway and Poland while Belgium, France and Spain showed negative organic sales growth.

The operating margin was 11.9 percent (12.4). In the Mobile operation the operating margin was negatively impacted by increased fuel costs and fewer call outs. In the Monitoring operation, restructuring costs of MSEK –15 due to organizational changes in Belgium, France, the Netherlands and Spain impacted the operating margin negatively. Due diligence costs related to a non-completed acquisition was another negative effect. Adjusted for these one off costs, the operating margin in the Monitoring operation improved.

The real change in operating income in the business segment was 1 percent in the period.

Development in the Group's business segments

Share of Group quarterly sales

Ibero-America 14%

Share of Group quarterly operating income

Security Services Ibero-America 16%

Quarterly sales development

Quarterly operating income development Quarterly operating income development

SECURITY SERVICES IBERO-AMERICA

Security Services Ibero-America provides specialized security services for large and mediumsized customers in seven countries in Latin America, Spain and Portugal. Security Services Ibero-America has a combined total of approximately 59,000 employees.

Security Services Ibero-America October–December January–December
MSEK 2011 2010* 2011 2010*
Total sales 2,325 1,987 8,747 7,968
Organic sales growth, % 10 3 11 1
Operating income before amortization 158 158 545 529
Operating margin, % 6.8 8.0 6.2 6.6
Real change, % 3 –12 10 –5

*Refer to note 7 on page 25 for quarterly information for 2010 and for the first quarter 2011.

October–December 2011

Organic sales growth was 10 percent (3) in the fourth quarter and all countries except Colombia and Portugal had positive organic sales growth. In Colombia, the negative organic sales growth relates to the termination of a few large contracts with poor profitability while in Portugal it's a consequence of the tough economic environment. In Argentina, successful price increases deriving from an inflationary environment translates into high organic sales growth. In Uruguay and Peru the portfolio volume growth is the dominating driver behind organic sales growth.

The operating margin was 6.8 percent (8.0). The operating margin improved in the Latin American countries, while it declined in Portugal and Spain due to difficult market conditions. Restructuring costs due to organizational changes in Portugal and Spain also impacted the margin negatively. This negative effect was partly offset by the release of a portion of the over-time provision made in Spain earlier years.

The currency exchange rates had a negative impact on the operating income in Swedish kronor. The real change was 3 percent in the quarter.

January–December 2011

Organic sales growth was 11 percent (1) in the period and positive organic sales growth was seen in all countries except Portugal. In Argentina, the organic sales growth is largely due to inflation, while in countries such as Uruguay and Peru the organic sales growth derives more from volume increase in the contract portfolio. Chile had good extra sales during the year. In Latin America the organic sales growth was 28 percent. In Spain the organic sales growth was also positive and mainly because of a major guarding contract in the retail sector. Effective in the first quarter 2012, contracts with poor profitability worth approximately MSEK 450 (MEUR 50) in annual sales will be terminated in Spain.

The operating margin was 6.2 percent (6.6). The operating margin improved in the Latin American countries, while Portugal and Spain declined due to difficult market conditions. The operating margin was also negatively affected by restructuring costs related to organizational changes in Portugal and Spain. This negative effect was partly offset by the release of a portion of the overtime provision made in Spain earlier years. Last year, the operating margin was also negatively affected by restructuring costs in Spain.

The currency exchange rates had a negative impact on the operating income in Swedish kronor. The real change was 10 percent in the period.

The client retention rate was 86 percent. The employee turnover rate was 40 percent.

Cash flow

Quarterly free cash flow Quarterly free cash flow

October–December 2011

Operating income before amortization amounted to MSEK 978 (1,056). Net investments in non-current tangible and intangible assets amounted to MSEK –88 (–65).

Changes in accounts receivable were MSEK 73 (234) for the fourth quarter. Days of sales outstanding (DSO) improved but was offset by impact from the sales growth. Changes in other operating capital employed were MSEK 142 (208).

Cash flow from operating activities amounted to MSEK 1,105 (1,433), equivalent to 113 percent (136) of operating income before amortization.

Financial income and expenses paid amounted to MSEK –59 (–53). Current taxes paid amounted to MSEK –218 (–209).

Free cash flow was MSEK 828 (1,171), equivalent to 130 percent (152) of adjusted income.

Cash flow from investing activities, acquisitions, was MSEK –550 (–712), including the positive cash flow related to the sale of the shares and extra dividend from Securitas Direct in Switzerland.

Cash flow from items affecting comparability was MSEK –11 (–5).

Cash flow from financing activities was MSEK –188 (–298).

Cash flow for the period was MSEK 79 (156).

January–December 2011

Operating income before amortization amounted to MSEK 3,385 (3,724). Net investments in noncurrent tangible and intangible assets amounted to MSEK –108 (–1). The weaker result in the period together with higher net investments has impacted the cash flow negatively compared to last year.

Changes in accounts receivable were MSEK –723 (–769). The main reason behind the increase in accounts receivable relates to sales growth. Days of sales outstanding (DSO) also increased slightly compared to last year.

Changes in other operating capital employed were MSEK –447 (313). Total sales growth and the negative impact on accounts receivable are normally expected to be offset by a positive cash flow effect due to a build up of accruals and liabilities in other capital employed. The most significant items being employee-related accrued expenses, withholding taxes on wages and salaries, VAT and to a lesser extent also accounts payable. The period is however impacted by a negative development in other capital employed as well as in accounts receivable.

Items contributing to this development is payroll timing in the Netherlands, where the impact was negative compared to last year. Furthermore, certain acquisitions have impacted the operating cash flow negatively as the purchase price has been adjusted for debt-like items subsequently settled after the acquisition date. Such impact has been seen in the United Kingdom (mainly VAT payments), France (settlement of accounts payable) and Serbia (payment of salaries). The period was also negatively impacted by the settlement with the US Army from the first quarter and other one off payments during 2011 negatively impacting other operating capital employed. Further actions have been taken to focus not only on the development of DSO but also the development of the other elements of operating capital employed. This includes adjusting the incentive scheme in all divisions.

Cash flow from operating activities amounted to MSEK 2,107 (3,267), equivalent to 62 percent (88) of operating income before amortization.

Financial income and expenses paid amounted to MSEK –475 (–521). Current taxes paid amounted to MSEK –764 (–735).

Free cash flow was MSEK 868 (2,011), equivalent to 39 percent (81) of adjusted income.

Cash flow from investing activities, acquisitions, was MSEK –1,882 (–1,359), including the positive cash flow related to the sale of the shares and extra dividend from Securitas Direct in Switzerland.

Cash flow from items affecting comparability was MSEK –23 (–63).

Cash flow from financing activities was MSEK 969 (–424).

Securitas AB Full Year Report, January–December 2011 Cash flow for the period was MSEK –68 (165).

Capital employed and financing

Net debt development

MSEK
Jan 1, 2011 –8,209
Free cash flow 868
Acquisitions –1,882
IAC payments –23
Dividend paid –1,095
Change in net debt –2,132
Translation and
revaluation –8
Dec 31, 2011 –10,349

Free cash flow/Net debt Free cash flow/net debt

Capital employed as of December 31, 2011

The Group's operating capital employed was MSEK 3,145 (2,587) corresponding to 5 percent of sales (4) adjusted for the full year sales figures of acquired units.

Acquisitions decreased operating capital employed by MSEK –413 during the year.

Acquisitions increased consolidated goodwill by MSEK 1,410. Adjusted for negative translation differences of MSEK –22, total goodwill for the Group amounted to MSEK 14,727 (13,339).

The annual impairment test of all Cash Generating Units (CGU), which is required under IFRS, took place during the third quarter 2011 in conjunction with the business plan process for 2012. None of the CGUs tested for impairment had a carrying amount that exceeded the recoverable amount. Consequently no impairment losses have been recognized in 2011. No impairment losses were recognized in 2010 either.

Acquisitions have increased acquisition related intangible assets by MSEK 705. After amortization of MSEK –218 and negative translation differences of MSEK –9, acquisition related intangible assets amounted to MSEK 1,574 (1,096).

The Group's total capital employed was MSEK 19,554 (17,147). The translation of foreign capital employed to Swedish kronor decreased the Group's capital employed by MSEK –78.

The return on capital employed was 17 percent (22).

Financing as of December 31, 2011

The Group's net debt amounted to MSEK 10,349 (8,209). Acquisitions and acquisition related payments increased the Group's net debt by MSEK 1,882, of which purchase price payments accounted for MSEK 1,603, assumed net debt for MSEK 99 and acquisition related costs paid accounted for MSEK 180. The Group's net debt increased by MSEK 15 due to the translation of net debt in foreign currency to Swedish kronor.

A dividend of MSEK 1,095 (1,095) was paid to the shareholders in May 2011.

The free cash flow to net debt ratio amounted to 0.08 (0.24).

The main capital market instruments drawn as of the end of December 2011 were nine bonds issued under the Group's Euro Medium Term Note Program. These comprised the 6.50 percent MEUR 500 Eurobond loan maturing in 2013, and eight floating rate notes (FRN's). Four of these FRN's are denominated in SEK, totalling MSEK 3,000 and maturing between the fourth quarter 2012 and the fourth quarter 2014. Another three FRN's are denominated in USD, one for MUSD 62, one for MUSD 50 and one for MUSD 40. The MUSD 50 FRN was issued in the fourth quarter 2011 and matures in the fourth quarter 2018. The remaining MUSD 102 of these loans mature in 2015. There is also a MEUR 45 FRN maturing in 2014.

Since year end, a new FRN for MSEK 600 and a fixed rate bond for MSEK 400 were issued on January 19, 2012. Both have 3 year maturities.

In addition to the above, Securitas has access to committed bank financing through a Revolving Credit Facility (RCF) which was signed with 12 Swedish and international banks in January 2011. The RCF comprises two respective tranches of MUSD 550 and MEUR 420 (MUSD 1,100 in total), and matures in 2016. At the end of the year there was a total of MUSD 150 drawn on the facility, leaving MUSD 950 equivalent available and undrawn.

There is another MUSD 100 RCF maturing in 2012. This is used for issuance of letters of credit only.

The Group also has access to uncommitted bank borrowings and a MSEK 5,000 Swedish Commercial Paper Program for short-term borrowing needs.

Securitas has ample liquidity headroom under the committed credit facilities in line with established policies, which combined with the strong free cash flow generation means that the future liquidity requirements for the Company's operations are met.

Further information on the credit facilities as of December 31, 2011 is provided in note 8.

The interest cover ratio amounted to 6.1 (7.4).

Shareholders' equity amounted to MSEK 9,205 (8,938). The translation of foreign assets and liabilities into Swedish kronor decreased shareholders' equity by MSEK –93 after taking into account net investment hedging of MSEK 36 and MSEK –129 before net investment hedging. Refer to the statement of comprehensive income on page 19 for further information.

Securitas AB Full Year Report, January–December 2011 The total number of outstanding shares amounted to 365,058,897 as of December 31, 2011.

10

ACQUISITIONS AND DIVESTITURES JANUARY–DECEMBER 2011 (MSEK)

Company Business
segment 1)
Included/
divested
from
Acquired/
divested
share 2)
Annual
sales 3)
Enter -
prise
value 4) Goodwill Acq.
related
intangible
assets
Opening balance 13,339 1,096
Interseco, the Netherlands 7) Other Jan 1 100 59 20 36 10
Adria Ipon Security,
Bosnia and Herzegovina 7) 8)
Security Services
Europe
Jan 1 85 16 14 9 8
Seguridad y Turismo
Segutouring, Ecuador 7)
Security Services
Ibero-America
Feb 1 100 39 8 4 10
Chubb Security Personnel,
the United Kingdom
Security Services
Europe
Apr 1 100 1,192 322 196 89
Seguricorp, Chile 7) Security Services
Ibero-America
Apr 1 100 297 140 69 57
Consultora Videco, Argentina 7) Security Services Ibero-America Apr 1 100 320 134 251 115
Security Consultants Group,
the USA 7)
Security Services
North America
Apr 15 100 681 192 138 18
Assistance Sécurité
Gardiennage, France 7)
Security Services
Europe
Jun 1 - 128 20 - 25
Al Sharika Al Muatfawika
Likhadamat Al Amin Wa Al
Himaya, Jordan
Other Jun 1 509) 28 11 5 7
Zvonimir Security, Croatia 7) 8) Security Services
Europe
Aug 1 85 89 48 41 14
Sensormatic Guvenlik Group,
Turkey 7) 8)
Security Services
Europe
Sep 1 51 264 123 189 64
Chubb Guarding Services,
Singapore
Other Sep 28 100 67 33 16 16
Sistem FTO, Serbia Security Services
Europe
Sep 29 100 126 34 52 7
Orbis Security Solutions,
South Africa 7)
Other Oct 1 100 90 31 25 20
Cobelguard, Belgium Security Services
Europe
Oct 1 100 625 355 199 103
Securitas Direct AG,
Switzerland (divestiture)
Other Oct 21 50 –64 –73 –10 -
Ave Lat Sargs, Latvia 7) 8) Security Services
Europe
Nov 1 65 40 9 12 7
Europinter & ECSAS
Gardiennage, France
Mobile and
Monitoring
Nov 1 100 101 14 9 8
Fuego Red, Argentina 7) Security Services
Ibero-America
Nov 1 100 29 14 29 3
CSS Internacional, Costa Rica 7) Security Services Ibero-America Dec 1 100 97 44 45 12
Other acquisitions 5) 7) 188 209 95 112
Total acquisitions and divestitures January–December 2011 4,412 1,702 1,4106) 705
Amortization of acquisition related intangible assets - –218
Exchange rate differences –22 –9
Closing balance 14,727 1,574

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: Security Professionals and Security Management, Moore, Akal, National Security Protective Services, Hamilton, Paragon, Navicus, Omniwatch and Northern Investigative Associates, USA, Atlantis Securité, Canada, Guardias Blancas, Mexico, Seccredo, Other Sweden, Creab (contract portfolio), Services Sweden, Pro Security (contract portfolio) and QSS (contract portfolio), Mobile Sweden, Stjernevagt (contract portfolio), Mobile Denmark, CDSS ApS, Services Denmark, APSP (contract portfolio), APSG, Apri Bering (contract portfolio), Pole Protection Provence (contract portfolio), SPR Sécurité (contract portfolio), Agence Privé 3I Sécurité (contract portfolio) and VIF, Mobile France, Metod Localisation, Azur Security, Eryma (contract portfolio) and VIF (contract portfolio), Alert Services France, Reliance Security Services, Services UK, Nikaro, Mobile UK, WOP Protect, Services Switzerland, GPDS (contract portfolio) and EMC (contract portfolio), Mobile Belgium, Automatic Alarm, Alert Services Belgium, Optimit, Other Belgium, Nordserwis.pl and Purzeczko, Services Poland, Agency of Security Fenix, Services Czech Republic, Cobra, Romania, Guardian Security, Montenegro, Alarm West Group, Bosnia and Herzegovina, Securityring, Greece, GMCE Gardiennage and CMDT, Morocco, Socovig, Colombia, Forza and Ubiq, Peru, Pedro Valdivia Seguridad and Protec Austral, Chile, European Safety Concepts and ESC and SSA Guarding Company, Thailand, Guardforce, Hong Kong, Legend Group, Singapore, Claw Protection Services and Piranha Security, South Africa. Related also to deferred considerations paid in the USA, Sweden, France, Switzerland, Belgium, Poland, Bosnia and Herzegovina, Turkey, Morocco, Argentina, Colombia, Peru, Chile, Hong Kong, Singapore and South Africa.
  • 6) Goodwill that is expected to be tax deductible amounts to MSEK 573.
  • 7) 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 and payments made from previously recognized deferred considerations was MSEK 327. Total deferred considerations, short-term and long-term, in the Group's balance sheet amount to MSEK 606.
  • 8) No non-controlling interests have been accounted for since Securitas has an option to buy the remaining shares and the seller has an option to sell the remaining shares. Consequently, 100 percent of the company is consolidated.
  • 9) Acquired share is 50 percent plus one of the shares.

All acquisition calculations are finalized no later than one year after the acquisition is made. Transactions with non-controlling interests are specified in the statement of changes in shareholders' equity on page 21. Transaction costs and revaluation of deferred considerations can be found in note 4 on page 24.

Interseco, the Netherlands

Securitas has acquired all shares in the security consulting company Interseco in the Netherlands. Interseco has approximately 50 employees and focuses on advising and assisting their customers to detect and gain control of crime risks.

Adria Ipon Security, Bosnia and Herzegovina

Securitas has acquired 85 percent of the shares in the security services company Adria Ipon Security in Bosnia and Herzegovina. The agreement includes an option of acquiring the remaining 15 percent. Adria Ipon Security has approximately 200 employees.

Seguridad y Turismo Segutouring, Ecuador

Securitas has acquired all shares in the security services company Seguridad y Turismo Segutouring in Ecuador. The company has approximately 900 employees and is mainly operating in guarding services.

Chubb Security Personnel, the United Kingdom

Securitas has acquired all shares in the security services company Chubb Security Personnel in the United Kingdom. With 5,000 employees, Chubb Security Personnel is a leading manned guarding security services provider in the United Kingdom. The company has a well diversified contract portfolio with a stable customer portfolio within guarding. The acquisition has been approved by the United Kingdom Office of Fair Trading.

Seguricorp, Chile

Securitas has acquired all shares in the security services company Seguricorp in Chile. The company has approximately 3,750 employees and has nationwide coverage in guarding services. The company has a strong position in the customer segment mining industry. With this acquisition, Securitas will be the market leader in security services in Chile.

Consultora Videco, Argentina

Securitas has acquired all shares in the security services company Consultora Videco in Argentina. The company has approximately 2,240 employees and is operating in the area of Buenos Aires.

Security Consultants Group, the USA

Paragon Systems, a subsidiary of Pinkerton's Government Services within the Securitas Group, has acquired all shares in the security services company Security Consultants Group in the USA. With this acquisition, Securitas expands in the primary government security services market in the USA. The company has approximately 2,000 employees and specializes in providing high level, armed security officer services to various U.S. Government agencies and facilities.

Assistance Sécurité Gardiennage, France

Securitas has acquired the commercial business contracts and assets of the security services company Assistance Sécurité Gardiennage (ASG) in France. ASG, a subsidiary of the French Group Assystem, has approximately 400 employees. The company is specialized in security services to the energy sector.

Al Sharika Al Muatfawika Likhadamat Al Amin Wa Al Himaya, Jordan

Securitas has acquired 50 percent plus one of the shares in the security services company Al Sharika Al Muatfawika Likhadamat Al Amin Wa Al Himaya in Jordan. The company has approximately 800 employees, which makes it the second largest security services company in Jordan.

Zvonimir Security, Croatia

Securitas has acquired 85 percent of the shares in the security services company Zvonimir Security in Croatia. The agreement includes an option of acquiring the remaining 15 percent. Zvonimir Security is one of the leading security services companies in Croatia with approximately 1,000 employees. The company offers mainly guarding and mobile services and operates across Croatia.

Sensormatic Guvenlik Group, Turkey

Securitas has acquired 51 percent of the shares in Sensormatic Guvenlik Group in Turkey. The agreement includes an option of acquiring the remaining 49 percent. Sensormatic is one of the leading technical security services companies in Turkey. The company has approximately 180 employees.

Chubb Guarding Services, Singapore

Securitas has acquired all shares in the security services company Chubb Guarding Services in Singapore. Chubb Guarding Services is one of the top 5 leading guarding companies in Singapore and has approximately 600 employees.

Sistem FTO, Serbia

Securitas has acquired all shares in the security services company Sistem FTO in Serbia. Sistem FTO has approximately 3,200 employees. With this acquisition, Securitas becomes the market leader in security services in Serbia.

Orbis Security Solutions, South Africa

Securitas has acquired all shares in the security services company Orbis Security Solutions in South Africa. Orbis Security Solutions has approximately 1,500 employees.

Cobelguard, Belgium

Securitas has acquired all shares in the security services company Cobelguard in Belgium. Cobelguard has approximately 1,600 employees.

Securitas Direct AG, Switzerland (divestiture)

Securitas AB has sold its 50 percent of the shares in Securitas Direct AG, Switzerland. The sale resulted in a capital gain for Securitas of MSEK 20, and in addition an extraordinary dividend of MSEK 29 was received. The buyer of the shares is the Swiss security services company Securitas AG, who owns the other 50 percent of the shares in Securitas Direct AG.

Ave Lat Sargs, Latvia

Securitas has acquired 65 percent of the shares in the security services company Ave Lat Sargs in Latvia. There is an agreement to acquire the remaining 35 percent of the shares in 2014. Ave Lat Sargs is one of the largest security services companies in Latvia. The company has 280 employees. Ave Lat Sargs is mainly operating within guarding, technical security solutions and monitoring.

Europinter & ECSAS Gardiennage, France

Securitas has acquired all shares in the French security services companies Europinter & ECSAS Gardiennage. Europinter & ECSAS Gardiennage have 125 employees. The companies are specialized in Mobile security services.

Fuego Red, Argentina

Securitas has acquired all shares in the technical security solutions company Fuego Red in Argentina. Fuego Red has 65 employees. The company is focused on fire detection systems, and has also technical maintenance services of video solutions and access control. The acquisition of Fuego Red strengthens Securitas market leader position in Argentina. It also makes it possible to develop and integrate technical solutions and electronic security products in a higher degree in the offerings to the customers.

CSS Internacional, Costa Rica

Securitas has acquired all shares in the security services company CSS Internacional in Costa Rica. CSS Internacional is one of the three largest security services companies in Costa Rica. CSS Internacional has 1,000 employees. The company has national coverage in guarding services.

ACQUISITIONS AFTER THE FOURTH QUARTER

MPL Beveiligingsdiensten, the Netherlands

Securitas has acquired the security services company MPL Beveiligingsdiensten in the Netherlands. Enterprise value is estimated to MSEK 44 (MEUR 4.9). MPL Beveiligingsdiensten has annual sales of approximately MSEK 99 (MEUR 11) and approximately 180 employees and is operating both within specialized guarding and mobile services.

Protect, Croatia

Securitas has acquired 85 percent of the shares in the security services company Protect in Croatia. There is an agreement to acquire the remaining 15 percent of the shares in 2013. Enterprise value of the acquired 85 percent of the shares is estimated to MSEK 53 (MHRK 43). Protect has annual sales of approximately MSEK 73 (MHRK 60) and approximately 600 employees. The company is mainly operating in guarding services.

Other significant events

For critical estimates and judgments and items affecting comparability and contingent liabilities refer to pages 92–93 and pages 125–126 in the Annual Report 2010. 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.

Risks and uncertainties

Risk management is necessary in order for Securitas to be able to fulfill its strategies and achieve its corporate objectives. Securitas' risks fall into three main categories; contract risk, operational assignment risk and financial risks. Securitas approach to enterprise risk management is described in more detail in the Annual Report for 2010.

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. Actual results may differ from these estimates and judgments under different circumstances and conditions.

For the forthcoming twelve-month period, the financial impact of certain items affecting comparability and contingent liabilities, as described in the Annual Report for 2010 and if applicable above under the heading "Other significant events", may vary from the current financial estimates and provisions made by management. This could affect the Groups profitability and financial position.

Parent Company operations

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

January–December 2011

The Parent Company's income amounted to MSEK 846 (955) and mainly relates to administrative contributions and other income from subsidiaries.

Financial income and expenses amounted to MSEK 1,607 (1,321*). Income before taxes amounted to MSEK 2,101 (1,821).

As of December 31, 2011

The Parent Company's non-current assets amounted to MSEK 38,709 (40,659) and mainly comprise shares in subsidiaries of MSEK 37,853 (40,027). Current assets amounted to MSEK 8,111 (4,021) of which liquid funds amounted to MSEK 5 (2).

Shareholders' equity amounted to MSEK 23,343 (22,392).

A dividend of MSEK 1,095 (1,095) was paid to the shareholders in May 2011.

The Parent Company's liabilities amounted to MSEK 23,477 (22,288) and mainly consist of interest-bearing debt.

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

Accounting principles

In general

This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act.

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 83 to 89 in the Annual Report for 2010. The accounting principles are also available on the Group's website www.securitas.com under the section Investor Relations— Financials — 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 39 on page 131 in the Annual Report for 2010.

There have been no other changes than the change described below in the Group's or the Parent Company's accounting principles compared to the accounting principles described in note 2 and note 39 in the Annual Report for 2010.

New segment structure

As of the second quarter 2011, Securitas has created a fourth business segment, Security Services Ibero-America. The new business segment comprises the guarding activities in Argentina, Chile, Colombia, Ecuador, Peru, Portugal, Spain, Uruguay and Costa Rica as of December 1, 2011. The operations within Aviation as well as Mobile and Monitoring in Portugal and Spain are not affected by the reorganization.

Group contributions paid

The Swedish Financial Reporting Board's statement UFR 2 Group contributions and capital contributions has been withdrawn and replaced by guidance in RFR 2 Accounting for Legal Entities. Securitas AB has consequently changed its accounting principle for group contributions paid. The effect on the restated comparative year 2010 is that group contributions paid have impacted other financial income and expenses, net with MSEK –497.4. The tax effect on these group contributions are no longer accounted for in retained earnings. Instead the tax effect has impacted deferred taxes in the income statement with MSEK 130.8. Consequently, net income for the year 2010 has decreased by MSEK –366.6 while retained earnings have increased with the same amount. There is thus no change in total shareholders' equity.

Stockholm, February 9, 2012

Alf Göransson President and Chief Executive Officer

Review report

Translation of the Swedish original

Report of Review of Interim Financial Information prepared in accordance with IAS 34 and chapter 9 of the Annual Accounts Act.

Introduction

We have reviewed this report for the period January 1, 2011 to December 31, 2011 for Securitas AB. The board of directors and the President and CEO 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 Swedish Standard on Review Engagements SÖG 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, February 9, 2012 PricewaterhouseCoopers AB

Peter Nyllinge Authorised Public Accountant

statement of income

MSEK Oct–Dec 2011 Oct–Dec 2010 Jan–Dec 2011 Jan–Dec 2010 Jan–Dec 2009
Sales 15,680.7 14,800.3 58,995.6 59,097.5 61,216.7
Sales, acquired business 1,345.2 917.9 5,061.5 2,242.3 1,450.0
Total sales 17,025.9 15,718.2 64,057.1 61,339.8 62,666.7
Organic sales growth, %1) 2 4 3 1 –1
Production expenses –14,068.8 –12,721.9 –52,977.4 –50,076.0 –50,983.9
Gross income 2,957.1 2,996.3 11,079.7 11,263.8 11,682.8
Selling and administrative expenses –2,044.9 –1,942.0 –7,766.9 –7,551.3 –7,933.5
Other operating income 2) 67.3 4.4 74.3 12.7 11.3
Share in income of associated companies 3) –1.5 –2.6 –2.4 –1.0 –4.1
Operating income before amortization 978.0 1,056.1 3,384.7 3,724.2 3,756.5
Operating margin, % 5.7 6.7 5.3 6.1 6.0
Amortization of acquisition related intangible assets –64.3 –47.4 –218.2 –164.3 –138.3
Acquisition related costs 4) –93.2 –56.5 –193.5 –89.6 –5.9
Operating income after amortization 820.5 952.2 2,973.0 3,470.3 3,612.3
Financial income and expenses 5) –133.7 –117.9 –493.0 –502.3 –589.8
Income before taxes 686.8 834.3 2,480.0 2,968.0 3,022.5
Net margin, % 4.0 5.3 3.9 4.8 4.8
Current taxes –210.0 –169.9 –680.1 –735.7 –715.4
Deferred taxes 4.7 –79.4 –61.3 –151.5 –189.1
Net income for the period 481.5 585.0 1,738.6 2,080.8 2,118.0
Whereof attributable to:
Equity holders of the Parent Company 481.7 585.5 1,735.7 2,083.1 2,116.2
Non-controlling interests –0.2 –0.5 2.9 –2.3 1.8
Earnings per share before dilution (SEK) 1.32 1.60 4.75 5.71 5.80
Earnings per share after dilution (SEK) 1.32 1.60 4.75 5.71 5.80

statement of comprehensive income

MSEK Oct–Dec 2011 Oct–Dec 2010 Jan–Dec 2011 Jan–Dec 2010 Jan–Dec 2009
Net income for the period 481.5 585.0 1,738.6 2,080.8 2,118.0
Other comprehensive income
Actuarial gains and losses and effects of minimum funding requirement net of tax –110.2 30.9 –270.3 –117.9 16.2
Cash flow hedges net of tax 6.0 22.0 3.2 53.2 56.8
Net investment hedges 113.8 61.2 36.1 361.0 254.9
Translation differences –304.9 –74.9 –129.2 –1,232.2 –1,073.8
Other comprehensive income for the period 6) –295.3 39.2 –360.2 –935.9 –745.9
Total comprehensive income for the period 186.2 624.2 1,378.4 1,144.9 1,372.1
Whereof attributable to:
Equity holders of the Parent Company 186.9 624.8 1,376.1 1,147.6 1,370.8
Non-controlling interests –0.7 –0.6 2.3 –2.7 1.3

Notes 1–6 refer to pages 24–25.

statement of cash flow

Operating cash flow MSEK Oct–Dec 2011 Oct–Dec 2010 Jan–Dec 2011 Jan–Dec 2010 Jan–Dec 2009
Operating income before amortization 978.0 1,056.1 3,384.7 3,724.2 3,756.5
Investments in non-current tangible and intangible assets –320.5 –288.6 –1,009.8 –901.9 –950.7
Reversal of depreciation 233.0 224.2 902.0 900.7 927.5
Change in accounts receivable 72.5 233.7 –722.6 –768.4 197.6
Change in other operating capital employed 142.0 208.0 –446.9 312.8 –556.4
Cash flow from operating activities 1,105.0 1,433.4 2,107.4 3,267.4 3,374.5
Cash flow from operating activities, % 113 136 62 88 90
Financial income and expenses paid –58.7 –53.4 –475.1 –521.7 –481.6
Current taxes paid –218.5 –208.6 –763.9 –735.1 –728.2
Free cash flow 827.8 1,171.4 868.4 2,010.6 2,164.7
Free cash flow, % 130 152 39 81 88
Cash flow from investing activities, acquisitions –549.7 –712.0 –1,882.0 –1,359.0 –757.7
Cash flow from items affecting comparability –11.2 –5.3 –23.7 –62.5 –12.0
Cash flow from financing activities –188.3 –297.9 968.9 –424.5 –2,775.5
Cash flow for the period 78.6 156.2 –68.4 164.6 –1,380.5
Cash flow MSEK Oct–Dec 2011 Oct–Dec 2010 Jan–Dec 2011 Jan–Dec 2010 Jan–Dec 2009
Cash flow from operations 1,072.8 1,419.2 1,674.5 2,784.7 3,069.3
Cash flow from investing activities –805.9 –965.1 –2,711.8 –2,195.6 –1,674.3
Cash flow from financing activities –188.3 –297.9 968.9 –424.5 –2,775.5
Cash flow for the period 78.6 156.2 –68.4 164.6 –1,380.5
Change in net debt MSEK Oct–Dec 2011 Oct–Dec 2010 Jan–Dec 2011 Jan–Dec 2010 Jan–Dec 2009
Opening balance –10,724.6 –8,685.4 –8,208.9 –8,387.7 –9,412.6
Cash flow for the period 78.6 156.2 –68.4 164.6 –1,380.5
Change in loans 188.3 297.9 –2,064.1 –670.7 1,716.8
Change in net debt before revaluation and translation differences 266.9 454.1 –2,132.5 –506.1 336.3
Revaluation of financial instruments 5) 8.1 27.9 7.5 67.6 76.7
Translation differences 100.8 –5.5 –14.9 617.3 611.9
Change in net debt 375.8 476.5 –2,139.9 178.8 1,024.9
Closing balance –10,348.8 –8,208.9 –10,348.8 –8,208.9 –8,387.7

Note 5 refers to page 24.

capital employed and financing

MSEK Dec 31, 2011 Sep 30, 2011 Dec 31, 2010 Sep 30, 2010 Dec 31, 2009
Operating capital employed 3,144.6 3,551.2 2,586.5 3,098.0 2,623.4
Operating capital employed as % of sales 5 5 4 5 4
Return on operating capital employed, % 118 113 143 130 135
Goodwill 14,727.4 14,645.3 13,338.8 12,816.7 13,558.3
Acquisition related intangible assets 1,574.1 1,381.7 1,096.5 890.0 894.9
Shares in associated companies 108.2 113.6 125.6 126.2 132.1
Capital employed 19,554.3 19,691.8 17,147.4 16,930.9 17,208.7
Return on capital employed, % 17 18 22 22 22
Net debt –10,348.8 –10,724.6 –8,208.9 –8,685.4 –8,387.7
Shareholders' equity 9,205.5 8,967.2 8,938.5 8,245.5 8,821.0
Net debt equity ratio/multiple 1.12 1.20 0.92 1.05 0.95

balance Sheet

MSEK Dec 31, 2011 Sep 30, 2011 Dec 31, 2010 Sep 30, 2010 Dec 31, 2009
ASSETS
Non-current assets
Goodwill 14,727.4 14,645.3 13,338.8 12,816.7 13,558.3
Acquisition related intangible assets 1,574.1 1,381.7 1,096.5 890.0 894.9
Other intangible assets 330.5 296.2 272.4 258.3 278.4
Tangible non-current assets 2,361.8 2,330.6 2,283.9 2,196.1 2,377.2
Shares in associated companies 108.2 113.6 125.6 126.2 132.1
Non-interest bearing financial non-current assets 2,045.3 2,045.8 1,737.7 1,796.9 1,995.7
Interest bearing financial non-current assets 189.5 199.7 205.7 208.3 160.8
Total non-current assets 21,336.8 21,012.9 19,060.6 18,292.5 19,397.4
Current assets
Non-interest bearing current assets 12,802.6 13,154.5 11,169.5 11,132.7 10,819.5
Other interest bearing current assets 19.6 10.1 68.3 111.2 81.9
Liquid funds 2,507.4 2,440.5 2,586.9 2,424.9 2,497.1
Total current assets 15,329.6 15,605.1 13,824.7 13,668.8 13,398.5
TOTAL ASSETS 36,666.4 36,618.0 32,885.3 31,961.3 32,795.9
MSEK Dec 31, 2011 Sep 30, 2011 Dec 31, 2010 Sep 30, 2010 Dec 31, 2009
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Attributable to equity holders of the Parent Company 9,202.9 8,962.3 8,935.4 8,240.3 8,812.7
Non-controlling interests 2.6 4.9 3.1 5.2 8.3
Total shareholders' equity 9,205.5 8,967.2 8,938.5 8,245.5 8,821.0
Equity ratio, % 25 24 27 26 27
Long-term liabilities
Non-interest bearing long-term liabilities 532.1 624.3 282.3 245.2 193.8
Interest bearing long-term liabilities 8,576.8 9,396.6 7,202.6 7,776.8 8,357.5
Non-interest bearing provisions 3,122.6 2,851.3 2,564.8 2,509.8 2,626.2
Total long-term liabilities 12,231.5 12,872.2 10,049.7 10,531.8 11,177.5
Current liabilities
Non-interest bearing current liabilities and provisions 10,740.9 10,800.3 10,029.9 9,531.0 10,027.4
Interest bearing current liabilities 4,488.5 3,978.3 3,867.2 3,653.0 2,770.0
Total current liabilities 15,229.4 14,778.6 13,897.1 13,184.0 12,797.4

Changes in Shareholders' Equity

Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
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, 2011/2010/2009 8,935.4 3.1 8,938.5 8,812.7 8.3 8,821.0 8,500.6 6.7 8,507.3
Total comprehensive income for the period 1,376.1 2.3 1,378.4 1,147.6 –2.7 1,144.9 1,370.8 1.3 1,372.1
Transactions with non-controlling interests - –2.8 –2.8 - –2.5 –2.5 - 0.3 0.3
Share based incentive scheme –13,41) - –13,41) 70.3 - 70.3 - - -
Dividend paid to the shareholders of
the Parent Company –1,095.2 - –1,095.2 –1,095.2 - –1,095.2 –1,058.7 - –1,058.7
Closing balance December 31, 2011/2010/2009 9,202.9 2.6 9,205.5 8,935.4 3.1 8,938.5 8,812.7 8.3 8,821.0

1) Refers to a swap agreement in Securitas AB shares of MSEK -67.1, hedging the share portion of Securitas share based incentive scheme 2010 and share based remuneration for the Group's participants in the share based incentive scheme 2011 of MSEK 53.7.

Full Year Report, January–December 2011

SEK Oct–Dec 2011 Oct–Dec 2010 Jan–Dec 2011 Jan–Dec 2010 Jan–Dec 2009
Share price, end of period 59.40 78.65 59.40 78.65 70.05
Earnings per share before dilution 1) 1.32 1.60 4.75 5.71 5.80
Earnings per share before dilution and before items affecting comparability 1) 1.32 1.60 4.75 5.71 5.80
Dividend - - 3.003) 3.00 3.00
P/E-ratio after dilution and before items affecting comparability - - 13 14 12
Share capital (SEK) 365,058,897 365,058,897 365,058,897 365,058,897 365,058,897
Number of shares outstanding 2) 365,058,897 365,058,897 365,058,897 365,058,897 365,058,897
Average number of shares outstanding 2) 365,058,897 365,058,897 365,058,897 365,058,897 365,058,897

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

2) There are no convertible debenture loans. Consequently there is no difference between number of shares before and after dilution.

3) Proposed dividend.

January–december 2011

Security
Services
Security
Services
Mobile
and
Security
Services
MSEK North America Europe Monitoring Ibero-America Other Eliminations Group
Sales, external 22,356 26,334 5,911 8,747 709 - 64,057
Sales, intra-group - 91 238 - - –329 -
Total sales 22,356 26,425 6,149 8,747 709 –329 64,057
Organic sales growth, % 4 0 3 11 - - 3
Operating income before amortization 1,270 1,003 733 545 –166 - 3,385
of which share in income of associated
companies - - - - –2 - –2
Operating margin, % 5.7 3.8 11.9 6.2 - - 5.3
Amortization of acquisition related
intangible assets –34 –70 –47 –58 –9 - –218
Acquisition related costs –14 –131 –25 –20 –4 - –194
Operating income after amortization 1,222 802 661 467 –179 - 2,973
Financial income and expenses - - - - - - –493
Income before taxes - - - - - - 2,480

January–december 2010

Security
Services
Security
Services
Mobile
and
Security
Services
MSEK North America Europe 1) Monitoring 1) Ibero-America 1) Other 1) Eliminations Group
Sales, external 22,731 24,481 5,711 7,968 449 - 61,340
Sales, intra-group - 75 250 - - –325 -
Total sales 22,731 24,556 5,961 7,968 449 –325 61,340
Organic sales growth, % –2 4 2 1 - - 1
Operating income before amortization 1,380 1,300 740 529 –225 - 3,724
of which share in income of associated
companies
- - - - –1 - –1
Operating margin, % 6.1 5.3 12.4 6.6 - - 6.1
Amortization of acquisition related
intangible assets
–27 –40 –44 –50 –3 - –164
Acquisition related costs –16 –48 –6 –9 –11 - –90
Operating income after amortization 1,337 1,212 690 470 –239 - 3,470
Financial income and expenses - - - - - - –502
Income before taxes - - - - - - 2,968

1) Comparatives have been restated due to operations moved between the segments Security Services Europe and Mobile and Monitoring. Security Services Europe has further been adjusted for the guarding operations in Portugal and Spain moved to the new segment Security Services Ibero-America. The segment Other has been restated due to the guarding operations in Argentina, Chile, Colombia, Ecuador, Peru, and Uruguay moved to the new segment Security Services Ibero-America. Refer to note 7 for restated segment information per quarter and accumulated 2010 as well as per Q1 2011.

Note 1 Organic sales growth

The calculation of organic sales growth (and the specification of currency changes on operating income and income before taxes) is specified below:

Oct–Dec Oct–Dec Oct–Dec Jan–Dec Jan–Dec Jan–Dec
Sales, MSEK 2011 2010 % 2011 2010 %
Total sales 17,026 15,718 8 64,057 61,340 4
Acquisitions/divestitures –1,345 –20 –5,062 –20
Currency change from 2010 323 - 4,229 -
Organic sales 16,004 15,698 2 63,224 61,320 3
Oct–Dec Oct–Dec Oct–Dec Jan–Dec Jan–Dec Jan–Dec
Operating income, MSEK 2011 2010 % 2011 2010 %
Operating income 978 1,056 –7 3,385 3,724 –9
Currency change from 2010 10 - 215 -
Currency adjusted operating income 988 1,056 –6 3,600 3,724 –3
Oct–Dec Oct–Dec Oct–Dec Jan–Dec Jan–Dec Jan–Dec
Income before taxes, MSEK 2011 2010 % 2011 2010 %
Income before taxes 687 834 –18 2,480 2,968 –16
Currency change from 2010 21 - 171 -
Currency adjusted income before taxes 708 834 –15 2,651 2,968 –11

Note 2 Other operating income

Other operating income 2011 mainly comprises dividend of MSEK 29.3 from the Group's disposed joint venture Securitas Direct S.A. in Switzerland and a capital gain from the disposal of this company of MSEK 20.3. It also comprises trade mark fees from Securitas Direct AB of MSEK 10.1 and other items MSEK 14.6. Other operating income 2010 and 2009 consists in its entirety of trade mark fees from Securitas Direct AB.

Note 3 Share in income of associated companies

Securitas recognizes share in income of associated companies depending on the purpose of the investment.

· Associated companies that have been acquired to contribute to the operations (operational) are included in operating income before amortization.

· Associated companies that have been acquired as part of the financing of the Group (financial investments) are included in income before taxes as a separate line within the finance net. Currently, Securitas has no associated companies recognized as financial investments.

Associated companies classified as operational:

MSEK Oct–Dec 2011 Oct–Dec 2010 Jan–Dec 2011 Jan–Dec 2010 Jan–Dec 2009
Walsons Services PVT Ltd –1.9 –2.6 –4.3 –1.8 –4.1
Long Hai Security 0.4 0.0 1.9 0.8 0.0
Facility Network A/S 1) - - - - 0.0
Share in income of associated companies included in operating income
before amortization –1.5 –2.6 –2.4 –1.0 –4.1

1) Facility Network A/S was divested during 2009.

Note 4 Acquisition related costs

MSEK Oct–Dec 2011 Oct–Dec 2010 Jan–Dec 2011 Jan–Dec 2010 Jan–Dec 2009
Restructuring and integration costs –65.8 –29.6 –135.3 –48.3 –5.9
Transaction costs 1) –25.9 –26.9 –65.1 –41.3 -
Revaluation of deferred considerations 2) –1.5 - 6.9 - -
Acquisition related costs –93.2 –56.5 –193.5 –89.6 –5.9

1) Expensed from 2010 in accordance with IFRS 3 (revised).

2) Refers to revaluation of deferred considerations and aquisition related option liabilities in accordance with IFRS 3 (revised) from 2010.

Note 5 Revaluation of financial instruments

MSEK Oct–Dec 2011 Oct–Dec 2010 Jan–Dec 2011 Jan–Dec 2010 Jan–Dec 2009
Recognized in the statement of income
Revaluation of financial instruments –0.1 –1.8 3.1 –4.5 –0.4
Deferred tax 0.0 0.5 –0.8 1.2 0.1
Impact on net income –0.1 –1.3 2.3 –3.3 –0.3
Recognized in the statement of comprehensive income
Cash flow hedges 8.2 29.7 4.4 72.1 77.1
Deferred tax –2.2 –7.7 –1.2 –18.9 –20.3
Cash flow hedges net of tax 6.0 22.0 3.2 53.2 56.8
Total revaluation before tax 8.1 27.9 7.5 67.6 76.7
Total deferred tax –2.2 –7.2 –2.0 –17.7 –20.2
Total revaluation after tax 5.9 20.7 5.5 49.9 56.5

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

Securitas AB

Full Year Report, January–December 2011

Note 6 Tax effects on other comprehensive income

MSEK Oct–Dec 2011 Oct–Dec 2010 Jan–Dec 2011 Jan–Dec 2010 Jan–Dec 2009
Deferred tax on actuarial gains and losses 47,0 –32.4 136,3 48.8 –7.2
Deferred tax on cash flow hedges –2,2 –7.7 –1,2 –18.9 –20.3
Deferred tax on net investment hedges –40,6 –21.8 –12,9 –128.8 –91.0
Deferred tax on other comprehensive income 4,2 –61.9 122,2 –98.9 –118.5

Note 7 Security Services Europe, Mobile and Monitoring and Security Services Ibero-America per quarter

The tables below show Security Services Europe and Mobile and Monitoring adjusted for operations moved between the segments per quarter and accumulated 2010. Security Services Europe has further been adjusted per quarter and accumulated 2010 as well as quarter 1 2011 for the guarding operations in Portugal and Spain moved to the new segment Security Services Ibero-America. The table Security Services Ibero-America below shows segment data for the new segment Security Services Ibero-America per quarter and accumulated 2010 as well as per quarter 1 2011. The table Other below shows restated segment data for the segment Other, due to the guarding operations in Argentina, Chile, Colombia, Ecuador, Peru and Uruguay moved to the new segment Security Services Ibero-America.

Security Services Europe
MSEK Q1 2010 Q2 2010 H1 2010 Q3 2010 9M 2010 Q4 2010 FY 2010 Q1 2011
Total sales 6,027 6,077 12,104 6,048 18,152 6,404 24,556 6,096
Organic sales growth, % 2 3 2 4 3 5 4 2
Operating income before
amortization 291 285 576 348 924 376 1,300 233
Operating margin, % 4.8 4.7 4.8 5.8 5.1 5.9 5.3 3.8
Mobile and Monitoring
MSEK Q1 2010 Q2 2010 H1 2010 Q3 2010 9M 2010 Q4 2010 FY 2010
Total sales 1,478 1,473 2,951 1,492 4,443 1,518 5,961
Organic sales growth, % 2 1 2 3 2 3 2
Operating income before
amortization 168 155 323 217 540 200 740
Operating margin, % 11.4 10.5 10.9 14.5 12.2 13.2 12.4
Security Services Ibero-America
MSEK Q1 2010 Q2 2010 H1 2010 Q3 2010 9M 2010 Q4 2010 FY 2010 Q1 2011
Total sales 2,002 1,998 4,000 1,981 5,981 1,987 7,968 1,917
Organic sales growth, % –1 0 0 1 0 3 1 7
Operating income before
amortization 127 123 250 121 371 158 529 109
Operating margin, % 6.3 6.2 6.3 6.1 6.2 8.0 6.6 5.7
Other
MSEK Q1 2010 Q2 2010 H1 2010 Q3 2010 9M 2010 Q4 2010 FY 2010 Q1 2011
Total sales 83 100 183 121 304 145 449 156
Operating income before
amortization –57 –55 –112 –51 –163 –62 –225 –56

Note 8 Summary of credit facilities as of December 31, 2011

Type Currency Facility amount
(million)
Available amount
(million)
Maturity
EMTN FRN private placement USD 50 0 2018
Multi Currency Revolving Credit Facility USD (or equivalent) 1,100 950 2016
Multi Currency Revolving Credit Facility USD (or equivalent) 100 11 2012
EMTN FRN private placement SEK 1,000 0 2012
EMTN FRN private placement SEK 1,000 0 2013
EMTN Eurobond, 6.50% fixed EUR 500 0 2013
EMTN FRN private placement EUR 45 0 2014
EMTN FRN private placement SEK 500 0 2014
EMTN FRN private placement SEK 500 0 2014
EMTN FRN private placement USD 62 0 2015
EMTN FRN private placement USD 40 0 2015
Commercial Paper (uncommitted) SEK 5,000 2,175 n/a

Parent Company

STATEMENT OF INCOME

MSEK Jan–Dec 2011 Jan–Dec 2010
Administrative contribution and other revenues 846.1 955.4
Gross income 846.1 955.4
Administrative expenses –352.7 –455.2
Operating income 493.4 500.2
Financial income and expenses1) 1,607.1 1,321.0
Income before taxes 2,100.5 1,821.2
Taxes1) –7.5 –75.7
Net income for the period 2,093.0 1,745.5

1) 2010 has been restated since Group contributions paid have been accounted for as a financial expense due to a change of accounting principle. Refer to the section Accounting principles for further information.

Balance sheet

MSEK Dec 31, 2011 Dec 31, 2010
ASSETS
Non-current assets
Shares in subsidiaries 37,852.7 40,026.8
Shares in associated companies 112.1 112.1
Other non-interest bearing non-current assets 197.3 189.0
Interest bearing financial non-current assets 547.2 331.3
Total non-current assets 38,709.3 40,659.2
Current assets
Non-interest bearing current assets 4,947.3 929.5
Other interest bearing current assets 3,158.6 3,089.5
Liquid funds 5.4 2.2
Total current assets 8,111.3 4,021.2
TOTAL ASSETS 46,820.6 44,680.4
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Restricted equity 7,727.7 7,727.7
Non-restricted equity 15,615.7 14,664.6
Total shareholders' equity 23,343.4 22,392.3
Long-term liabilities
Non-interest bearing long-term liabilities/provisions 128.4 138.5
Interest bearing long-term liabilities 8,430.2 7,155.7
Total long-term liabilities 8,558.6 7,294.2
Current liabilities
Non-interest bearing current liabilities 755.9 1,118.5
Interest bearing current liabilities 14,162.7 13,875.4
Total current liabilities 14,918.6 14,993.9
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 46,820.6 44,680.4

Definitions

Interest coverage ratio

Operating income before amortization (rolling 12 months) plus interest income (rolling 12 months) in relation to interest expenses (rolling 12 months).

Free cash flow, %

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).

Free cash flow in relation to net debt

Free cash flow (rolling 12 months) in relation to closing balance net debt.

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.

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.

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.

Net debt equity ratio, multiple

Net debt in relation to shareholders' equity.

Financial information

PRESENTATION OF THE full year REPORT

Analysts and media are invited to participate in a telephone conference on February 9, 2012 at 14:30 p.m. (CET) where Securitas CEO Alf Göransson will present the report and answer questions. The telephone conference will also be audio cast live via Securitas web. No information meeting will take place at Securitas headquarters at Lindhagensplan in Stockholm.

To participate in the telephone conference, please dial in five minutes prior to the start of the conference call:

The United States: +1866 458 4087
Sweden: +46(0)8 505 598 53
United Kingdom: +44(0)203 043 2436

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

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

For further information, please contact:

Micaela Sjökvist, Head of Investor Relations, + 46 10 470 3013 Gisela Lindstrand, Senior Vice President Corporate Communications and Public Affairs, + 46 10 470 3011

Financial information calendar

Securitas will release financial information for 2012 as follows:

January–March 2012: May 7, 2012

January–June 2012: August 8, 2012

January–September 2012: November 7, 2012

Securitas is a knowledge leader in security, focusing on providing security solutions to fit each customer's needs in 50 countries in North America, Europe, Latin America, Asia, Middle East and Africa. Everywhere from small stores to airports, our 300,000 employees are making a difference.

Securitas AB

P.O. Box 12307 SE-102 28 Stockholm Sweden Tel +46 10 470 3000 Fax +46 10 470 3122 www.securitas.com Visiting address: Lindhagensplan 70

Corporate registration number 556302–7241 Securitas AB discloses the information provided herein pursuant to the Securities Markets Act and/or the Financial Instruments Trading Act. The information was submitted for publication at 13.00 p.m. (CET) on Thursday, February 9, 2012.

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