V olumerelated factor s The fr s t t w o k e y fgures New sales of con tr acts and Net chan g e of contr act portfolio relate to the de v elopment of the cus tomer con tr act portfolio New sales are newly signed con tr acts that will increase the monthly fx ed sales Net chan g e in the cus tomer contr act portfolio refer s to new s t arts a newly signed contr act that has s t arted plus increased sales in e xis tin g con tr acts less terminated cus tomer contr acts and reduced sales in e xis tin g contr acts Price chan g es are measured separ ately and added to Net chan g e to determine the period s closin g balance of the contr act portfolio The closin g balance is the tot al v alue of monthly in v oicin g on our monthly fx ed contr acts at the closin g date for the current period The t able belo w is an e xample illus tr atin g the det ails of the contr act portfolio V alue change in opening port f olio Openin g balance 100 New s t arts 15 Increases 5 T erminations 12 R eductions 4 Net chan g e 4 4 Price chan g e 3 3 Closin g balance 107 7 The thir d k e y fgure t ak en from the s t atement of income is T ot al sales which in addition to con tr act based sales includes short term assignments Efcienc y related factor s The efcienc y related k e y fgures pro vide mana g er s with tools to monitor ser vice efcienc y and cos t trends The fourth and ffth k e y fgures are Gross mar g in which is defned as tot al sales less direct e xpenses as a percent a g e of tot al sales and Indirect e xpenses which pert ain to the or ganization and include sales and adminis tr ativ e e xpenses cos ts of br anch area and re g ional countr y ofces Gross income less indirect e xpenses equals oper atin g income before amortization of acquisitionrelated int an g ible assets and acquisitionrelated cos ts When this is e xpressed as a percent a g e of tot al sales it indicates the Group s oper atin g mar g in which in Securit as fnancial model comes before acquisitionrelated items Capit alusa g erelated factor s In g ener al Securit as oper ations are not capit al intensiv e Accounts receiv able tie up the mos t capit al The sixth k e y fgure is D a ys of sales outs t andin g DSO Pa yment terms and efec tiv e collection procedures are decisiv e in deter minin g ho w much capit al is tied up in accounts receiv able These fgures are follo w ed up on an on g oin g basis at all le v els in the or ganization SECURIT AS M ODEL F OR FINANCIAL K E Y FIGURE S GROUP SECURIT Y SER VICE S M OBILE AND M ONIT ORING V olumerelated factor s New sales New sales New s t arts Gross mar g in on new sales T erminations T erminations Gross mar g in on terminations New cancelled connections M onitorin g Net chan g e Net chan g e Price chan g e Price chan g e Or ganic sales gro wth Or ganic sales gro wth Or ganic sales gro wth Acquired sales gro wth R eal sales gro wth T ot al sales T ot al sales T ot al sales Efcienc y related factor s Emplo y ee turno v er Emplo y ee turno v er W a g e cos t increase W a g e cos t increase Prospects visited M obile Cos t per sale or der A v er a g e contr act siz e M obile Pa y back time dur ation Gross mar g in Gross mar g in Indirect e xpenses Indirect e xpenses Oper atin g mar g in Oper atin g mar g in Oper atin g mar g in Income before t ax Earnin g s per share Capit alusa g erelated factor s D a ys of sales outs t andin g D a ys of sales outs t andin g Oper atin g capit al emplo y ed as of sales Oper atin g capit al emplo y ed as of sales Oper atin g capit al emplo y ed as of sales Cash fo w from oper atin g activities as of oper atin g income before amortization Cash fo w from oper atin g activities as of oper atin g income before amortization Cash fo w from oper atin g activities as of oper atin g income before amortization F ree cash fo w R eturn on capit al emplo y ed R eturn on capit al emplo y ed R eturn on capit al emplo y ed F ree cash fo w in relation to net debt 51 Securit as Annual R eport 2012 G o v ernance and mana g ement M ana g ement and fnancial control