Report o f the Board o f Direct ors The Boar d of Director s and the President of Securit as AB publ corpor ate re g is tr ation number 5563027241 with its re g is tered of fice in Stockholm hereb y submit the Annual R eport and consolidated financial s t atements for the 2012 financial y ear Securit as core business is inte gr ated securit y solutions and the main ser vice oferin g cate g ories are specializ ed guar din g mobile securit y ser vices monitorin g technical solutions and consultin g and in v es tigation ser vices Securit as is present in 52 countries in North America Europe L atin America the Middle Eas t Asia and Africa with more than 300 000 emplo y ees In 2012 the Securit as Group consis ted of the business se g m e n t s Securit y Ser vices North America Securit y Ser vices Europe M o b i l e and M onitorin g and Securit y Ser vices Ibero America In addition to these business se gments the Group conducts guar d i ng o p e r a tions in the Middle Eas t Asia and Africa which are included under the headin g Other in the se gment report in note 9 Due to oper ations bein g mo v ed bet w een the se gments Securit y Ser vices Europe M obile and M onitorin g and Securit y Ser vices Ibero America compar ativ es ha v e been res t ated belo w under the headin g De v elopment in the Group s business se gments as w ell as in the se gment report in note 9 for the se gments Securit y S e r v i c e s Europe M obile and M onitorin g and Securit y Ser vices Ibero America The or ganic sales gro wth in 2012 w as 0 percent due to w eak mark et conditions in man y mark ets and ne gativ e or ganic sales gro wth in F r ance Portugal and Spain The slo w do wn in or ganic and acquired sales gro wth has combined with s tron g focus on cash fo w and receiv ables contributed to the s tron g free cash fo w of M SEK 2 086 in the Group in 2012 This has resulted in a free cash fo w to net debt r atio of 021 thereb y w e ha v e achie v ed our fnancial t ar g et of at leas t 020 The oper atin g mar g in in Securit y Ser vices North America and Securit y Ser vices Europe has gr adually impro v ed durin g the y ear e v en thoug h Securit y Ser vices Europe and M obile and M onitor in g at y ear end w ere impacted b y items which can be cate g o riz ed as oneof adjus tments In addition the ma jor res tructurin g and cos t sa vin g s progr am that w as e x ecuted at hig h speed from midOctober until midDecember impacted the per formance ne gativ ely at the end of the y ear The cos t sa vin g s progr am in North America Europe and Spain w as in all material aspects fnaliz ed in December 2012 The res tructurin g cos t amounted to M SEK 458 and w as recogniz ed at the end of 2012 The sa vin g s are confrmed to be M SEK 370 in 2013 net of additional in v es tments in resources within tech nology and securit y solutions Securit as continues to increase the in v es tments in resources within technology and securit y solutions and in 2012 the sales of technology and securit y solutions represented appro ximately 6 percent of Group sales W e ha v e set a t ar g et to triple this share of sales which w e consider achie v able b y the end of 2015 Sales and mark et de v elopment Sales amounted to M SEK 66 458 64 057 and or ganic sales gro wth w as 0 percent 3 Or ganic sales gro wth w as supported b y the de v elopment in Securit y Ser vices Europe while Securit y Ser vices North America M obile and M onitorin g and Securit y Ser vices Ibero America had lo w er or ganic sales gro wth compared to las t y ear Or ganic sales gro wth in L atin America w as 21 percent The current macroeconomic climate is toug h in man y of the mature mark ets where Securit as oper ates which is refected in the lo w er or ganic sales gro wth in the Group and the securit y indus tr y is to a lar g e e xtent a mirror picture of the GDP de v elopment R eal sales gro wth includin g acquisitions and adjus ted for chan g es in e x chan g e r ates w as 4 percent 11 S ALE S J AN u AR y D ECE m BER M SEK 2012 2011 T ot al sales 66 458 64 057 4 Acquisitions div es titures 2 418 51 Currenc y chan g e from 2011 144 Or ganic sales 64 184 64 006 0 Oper atin g income before amortization Oper atin g income before amortization w as M SEK 3 085 3 385 which adjus ted for chan g es in e x chan g e r ates represented a decrease of 8 percent The Group s oper atin g mar g in w as 46 percent 53 In Securit y Ser vices North America the oper atin g mar g in declined mainly due to the de v elopment in feder al g o v ernment ser vices The oper atin g mar g in w as bur dened b y 01 percent due to a number of y ear end adjus tments and oneof cos ts in M obile and M oni torin g and to some e xtent Securit y Ser vices Europe L as t y ear the oper atin g mar g in w as also supported b y 01 percent from the sale of Securit as Direct A G in S witz erland The oper atin g mar g in in Securit y Ser vices Ibero America deterior ated due to the ne gativ e de v elopment in Spain The oper atin g mar g in in Securit y Ser vices Europe impro v ed supported b y a g ood de v elopment in countries such as Bel g ium F r ance and G erman y 57 Securit as Annual R eport 2012 Annual R eport R eport of the Boar d of Director s