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 556302–7241, 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 0.21, thereb y w e ha v e achie v ed our fnancial t ar g et of at leas t 0.20. 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 one-of 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 mid-October until mid-December 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 4.6 percent (5.3). 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 -0.1 percent due to a number of y ear -end adjus tments and one-of 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 0.1 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