Securitas AB (publ) (STO:SECU.B)

Investor Day 2018

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Sep 20, 2018

I hope you like it that is just to get you a little bit to give you a little bit of a flavor of who we are and how we're thinking. And so First of all, I think that this is a good industry to be in. When you look at the main drivers, Obviously, economic activity and economic prosperity is driving underlying demand in terms of security services. But we also see that there is an increasing emphasis on security and safety. So when we look at the industry, for the long term, we believe that there are really good growth opportunities. In our space. But there is also real innovation opportunity now. And this is thanks to technology advances, but it's also the opportunities that we see that are related to digitization and how we're using data and information. In a good way. And we are the leading player, and so I wanted to share with you as well just where we are and a few points from 3 different lenses, if you will. 1 is related to customers. Second one is related to our current position and offering. And then 3rd, last but not least, our great people and our teams. So let us look at the roughly 150,000 customers. And when we were preparing for this presentation, we said it will be good to actually give a number. But we also then struggle a little bit to define exactly what is that number because we have as you know a presence on a global level and, and and and we all primarily B2B Business. So this number that we are showing here, and the 150,000 This are our normal customers who are providing an ongoing service, which is more than just a stand alone monitoring service because we have 100 of 1000 of customers who are just providing a monitoring and an alarm connection. So this is obviously lower customers. If you then look at, okay, what's the average size of that customer, when if you take out auto sales, you end up around 1000000 or 1000000 plus SEK on an annual basis for that customer base. So a big part of the business is obviously then a lot of local customers, but we also see that with our footprint and also then a number of the global organizations are also seeing that there is a need and an opportunity for us to work with them on a cross border basis. So these are then customers that we define as global customers who will have a harmonized coordination across all geographies within the region or on a global level. And today, we serve around 140 customers in that category and many of the finest brands that you can think about. But when we look at our customers, what is critical for us, of course, is that we deliver quality and we always also try to deliver continuous improvement in terms of how we are delivering the services. So one of the good metrics that we are looking at is is the customer retention. And this is just to get the feel as well for how happy are the customers with the relationship and with the services that we provide to them. And this rate, in the last 12 months on that total portfolio is 92%. But we also had a number of countries where it's significantly higher than that. And I think that this is one of the critical points, of course, not just to gain new customers, but with the customer base that we have, we also believe that we are delivering good quality and we're also keeping the customers because we're driving improvement continuously. But I can obviously stand here and talk about customers, but I think it's also quite good to get the perspective from a So let me just show a brief video, a company called Ice Mobility, which is a long relationship that we have discussed in the U. S. And then to listen a little bit to what they say in terms of the relationship with Securitas. ICE Mobility has been a Securusoft on-site guarding client since 2014. As their security requirements grew, it became clear that integrated guarding would be a great fit, both in meeting their needs and providing the best value. The integrated guarding solution we developed for ICE that complements our on-site security with remote guarding and mobile guarding. The remote guarding services are provided during off hours and weekends from our Securitas operation center in Charlotte, North Carolina. The SOC uses ICE's existing video surveillance system integrated to the SoC's remote guarding software to perform custom designed tours of Isis's facility. The 3rd part of this solution uses our local secure task mobile guarding officers to provide a physical presence for alarm verification and response as needed. I think remote guarding is a great technology. I think any company that looking to maximize their resources when they need them to look into the technology because you're not missing out on anything. You still have that human element where something were to happen on-site and you actually need a physical guard, you have the patrols that could come whenever the remote guarding personnel actually tells you that there's trouble within the DC. The alarms are still active. We've gotten every bit of a service that we thought in terms of the secure monitoring that we're looking for. The executive team of ICE Mobility has a longstanding history with Securitas. They have always been our partner of record because like ICE, we have felt that they are very customer centric. They always go above and beyond for us. Everything that we had hoped for has happened It's a combination I think of a securitas personnel, securitas technology and then the processes they put in place. Has been a great one for us. This is not the first time that the executive team here has worked with Securitas. And the thing that I really enjoy about them and working with their leadership is as things change and new opportunities come up that we can either partner more closely or change the service offering, they are the ones bringing those ideas to I think this is a good example because it's a relationship that we've had for a long time, but, but also, when you listen to the customer, they're also emphasizing our dedication in terms of delivering, but also driving that development in a positive way over time. So let us look at our market position. We are without any doubt the leader in security services on a global level. And if you look at the position, we have a very strong position and team in North America. We have a strong position in Latin America very strong position in Europe. And we also have a faster growing presence as well in the Asia Pacific and Middle East and Africa. Regions. But we put at the bottom of this slide the power of presence. And I think this is an important concept that we will come back a few times during the morning today because this is really the precedence that we have. It's not just to have the footprint, but the quality that we have the on-site security officers, the mobile officers that are working closely connected to with our operations center. And this presence gives us an ability to respond. And I think this is something that I would just like you to keep in mind for some of the coming parts that we're going to discuss. So let us look then at our offering because when you look at our development, we have continuously trying to to improve the offering, and we started this journey to become a leader in protective services 5, 6 years ago. And this started with on-site guarding, with the mobile guarding and the monitoring, but then with the move towards protective services, we are now putting more emphasis on on electronic security and solutions, on fire and safety and also corporate risk management. So when you look at this offering today, It is definitely the strongest offering that anyone can bring to the customers. And we have had also, as you can see, a strong development when you look at the share of these protective services and solutions then going from 8% to 20% in this fairly recent time frame. But with our leadership in protective services, we also put a lot of emphasis on solutions. And solution is essentially when we are combining these different services into one packaged offering. That is what we define as a solution. And when you think about Securitas today and what is different with us versus any competitor, is that we are not only good at doing a risk analysis and understanding risk, but we also have a better offering than anyone else. So that means that we are ahead of all the competition in terms of the offering that we bring to the customers. But this is obviously built on a lot of capabilities. So one of those critical capabilities is our operations center. And the securitas operation centers that we have, this is really like the central nervous system or the entire operation where we are overseeing the total operations, all the activities that we are driving, but also then our officers that we have in the field. And through very advanced integration in terms of systems, we are also then able to act and respond very quickly to incoming alarms, for example, and then also be able to dispatch. So the operation centers, we have 44 today, in all the key markets, this play very important role now, but we also emphasize this asset because it will become even more important as we go forward when we have more of a technology driven and also then data driven type of operation. So the stock is important to us. Even more important, it's obviously our team. And, and we have and I make fairly bold statement here, but we firmly believe that we have the best team in the security services industry. I try to spend a lot of time with our customers, with our teams that we have in the front line. And also then deliberately tied to make sure that it's not only with the global partners, but also spending a lot of time with local customers because that is really what we see. The kind of the unfiltered view as well in terms of the work that we do. And we have many, many good people. And when I ask the customers, Why do you choose Securitas? The number one answer, which is almost always the response, is because of your people. So we believe that we have in our front line with our officers, but also then many, many strong leaders around the world. And that is the reason that we say the best team in the security services industry. I joined in 2015, the company, and I spent quite some time thinking about why and how have we been able to build this? This has not happened overnight it has been built over a very long period of time. And from my perspective, this is very much based on the values. That guide us in the small decisions, but in the day to day life, but also then in terms of how we develop the strategy. But it's also very much the way you're working. So the picture that you see here in the lower left hand corner is picture of the Securitas toolbox. And that was developed quite a long time ago, but it contains all the core beliefs that we believe are important in terms of how we actually manage and operate the business and the team relationships with customers, how we are building to really create value for the long term. And in the toolbox you will have key things such as flat organization, customer proximity, the ownership in terms of end to end operations that we have across our branches and areas and countries. So all of these kind of central concepts that are so important secured as we are working, or captured. So that, that essentially means that you will see a similar security task way of working and approaching Australia as you will see in Chile. And I think this is also one of the advantages that we have. Customers know what they can expect from us. And then one critical part related to this is related to ethics and compliance. And And this is good because we want to be a good company. So, so when I look at our 345,000 employees, it's compulsory for everyone to go through our ethics and value training, for example. And so so this is all related to the view from our owners and board and leadership and how we have really developed and built this business over time that we want to be a good company. And for that reason, put a lot of emphasis on ethics and on compliance. When I say that this is also good from a customer perspective because we work with many fine companies and fine brands all over the world and what is positive from my perspective is that we see an increasing emphasis on ethics and compliance from most of these companies. And so this is something that In some presentations, you would have it towards the mid or the end of the presentation, but quite often now we actually bring up this work that we are doing already to the front so that we also see that this is, who secured us are. So let us now look at the numbers because we also have a solid track record in terms of the top line performance, but also the the profitability development. And if you look at the top line, we've had solid growth as you can see in this timeframe from 2013 onwards. And we're growing significantly faster than the market. And I think that there are 2 main reasons why this is the case. First is that we are we have a better offer And in terms of the delivery that we actually bring to the customers, but we also see in a lot of the customer interaction that The customers really appreciate also the strategic view that we have in terms of how we believe that this industry is going to develop. And the journey that we are on in terms of becoming a stronger partner not only tomorrow but for the next 5, 10, 15 years. If you then look at the profitability, you'll also see a solid development in terms of, of the profitability. And I just wanted to emphasize as well that when we talk about The financial targets, Bart will give you all the details in terms of how we are performing, but we are fully committed to the financial targets that we have. And there, obviously, the earnings per share growth of 10% per year is one of those targets. And so to wrap this up, we have made this picture to give a little bit of a of an overview in terms of the different strategic phases. And starting in the mid-80s, or the early 90s, there was a clear ambition to become a leader in security services and that is what you see in the lower part of this picture. And that is then related to very much to build very strong guarding operations. So we're talking on-site guarding when talking about mobile and remote guarding. And that is an ambition that we have also been able to realize and to deliver on. So when we say that we have a strong foundation, this is really a critical part. Then a few years ago, we set out the ambition to become a leader in protective services. And that is like I explained earlier, When we're then expanding the range of the offering from guarding services to include then electronic security solutions, fire and safety, and corporate risk management. And that is really the protective services phase. And that we are right in the middle of driving that. And Bart will share quite a lot of numbers and also then say share how are we actually progressing in that phase? And then the next one that we have then marked as 2020 and beyond is then related to our ambition to become the leader in intelligence. Security. And an intelligence security we're going to come back to and talk quite a lot about after the break. But it is very much about more data driven innovation and how we are able to use information in a good way to enhance security for the customers but also then to drive higher efficiency, so in terms of our way of operating. And you will see that these arrows are overlapping a little bit, and we have done that deliberately to also make a clear point that one phase is not replacing the other. The foundation is there and we're continuously working on how do we also improve in our foundation to deliver good quality, but also then the efficiency and value that we generate And then obviously, protective services, like I said, we are now in the middle of that. And we have many, many years that we still continue to drive and develop that part, but then obviously quite a lot of exciting opportunities related to intelligence security as well. So with that, I am happy to hand over now to Bart Adam to give you an overview in terms of the progress that we are making in the protective services journey. Welcome aboard. So now I click through here. This is your glass. And obviously, this is my glass. It says here on a small note, actually. Warm welcome to all of you. I see many familiar faces and also new faces in the audience here today. Thank you for joining us. And also warm welcome to the people out there on the webcast. Thank you for being with us here today. As Magnus said, no surprise, we will jump straight into the numbers now. And everything starts with defining clear goals. And we have been working towards these goals for the last yeah, 10 years, you could say. This has really been the guide for our decisions, our strategies and how we implement and execute on these strategies. I think it's a clear set of targets. It's easy to understand. It's not complicated. And at the same time, well balanced as well. It touches upon the basic dimensions of our company. It talks about the financial performance and the income statement. It talks about the financial stability related to the balance sheet. Then it also talks about how we will, reward our shareholders and then finally also how we want to develop the company strategically. 4 targets, and this is how we have performed on those. We have, EPS will change where we have been hovering around this 10% that we have set as a target. Free cash flow to net debt around 0.2. And you also notice that we have started to communicate more about net debt to EBITDA. And you can see here the numbers as well. And that has been quite stable around a little bit between 22.5, you could say. Why net debt to EBITDA, I think it's a bit easier to understand compared to the free cash flow to net debt, and it's also more commonly used. Dividend in Swedish kroner, it has never reduced. We have never skipped a dividend, and it has been gradually increased over the last 5 years. And then of course, the strategic target where we have been able to see double digit organic and acquired growth in the company over the last 5 years. I would like to take you now to some further granularity here On the sales side top line, we have moved the needle quite importantly from SEK 65,000,000,000 back in 2013, to 92 in 2017. And if you take the speed of Q2, if you would multiply that with 4, we would actually be on the SEK 100,000,000,000 level. That has been the result of both organic growth on average 4.2 in the period, acquired growth 1.4. And you can see there in the chart as well that we have been stepping up the sales growth. Back in 2012, 2013, we were a little bit internally focused and I have been gradually able to improve our external focus and implementing our strategy, especially if you then adjust for the refugee and terror related sales, back in which peaked back in 2016. If you look at the dotted line there on the chart, then you can see that it has been really a gradual step up. To the levels we have from top line to results, If you look at the operating income, it has moved from SEK3.3 billion to, yes, close to SEK4.7 with a stable operating margin. The operating margin has been between 5.05.2 throughout this period. And on the operating margin we have seen a little bit different dynamics in the divisions in the business segments. In North America, we have been seeing a growth from 5.1to5.9 throughout this period. Clearly driven by the implementation of the strategy, protective services, security solutions. Europe, we have seen some pressure there on the margin, It has been a bit more difficult to scale up there, totally the implementation of the strategy. We'll get back to that. And then Iberia and we have also been a little bit troubled there by what has happened in 2015, 'sixteen related to refugee and terror related sales. And then Ibero America where we were suffering in the beginning the period in from Spain, and that has also been reversed. And Spain is doing well as we have reported in our last quarters. So this has taken us from SEK3.3 1000000000 to SEK4.7000000000 and then This has, of course, then delivered further down in the income statement, an improvement, a vast improvement in our EPS from gradually stepped up to 7.83. From top line to results to bottom line EPS, what about cash flow? This is how we have been performing over the last 5 years. We have seen a steady return we have seen a steady generation of good cash flow You've noticed there that our operating cash flow as percentage of income throughout the period has been on average 82%. And has been around 1,000,000,000, you could say, peaking last year to 1,000,000,000. And then on free cash flow, you notice that that has been 73 percent of adjusted income. So throughout pretty good cash flow, while, of course, at the same time, we have been investing into our strategy. We have been investing into our transformation to customer site equipment into acquiring businesses as well. And I would like to give you some further detail on that now when looking at our operating capital employed. We have got quite some questions over the last months here, as you could say, on operating capital employed, and this It's a bit of a busy slide. I realize that, but I want to share you here with the details and the granularity below. Our operating capital employed has moved from SEK3. Something to SEK7. Something Billion. So quite a step up But of course, at the same time, our sales has gone as well from the earlier mentioned 65 to now a speed of around 100,000,000,000 based on Q2. As percentage of sales, still we have moved from 5% to 8%. So quite an important step up. And here you can see the drivers behind. One part is coming from the implementation of the strategy. 1.4 actually out of the tree. That is the investments we have made into solution contracts into our customers, combined also with the growth of electronic security business. I mean, electronics security business as such requires more operating capital employed than the average guarding business. Why is that? Because basically you have inventory and work in progress that you have to finance. So the implementation of the strategy related to solution contracts and electronic security, 1.4 out of the tree. Then we have a growth component. And this is a bit technical to explain, but I will try my best. We have low employee related accrual countries, and we have higher employee employee related accruals countries. That's really hands together with the liabilities that you have sitting on your balance sheet towards your employees. And in certain countries, that is high. Higher liabilities because you accrue some things on your balance sheet that you pay out later in some countries that is lower. Like for instance, in the U. S, You have very little liabilities towards your employees at the end of the day because you pay outpace. It's much more cash based. Whereas if you compare to Europe, there you have to have more things sitting on your balance sheet that you will pay out later, vacation premiums, all of that. So we have been growing faster actually in these countries with low employee related accrual. In the balance sheet. So as we have been growing there faster compared to our average growth, that means that we have spent also more operating capital employed in those countries. And that, together then also with the fact that we have increased our organic growth, increase in organic growth will normally hit your balance sheet a bit faster. Then you see the upswing in your top line actually. And that means together then the fact that I try to explain here with this employee related accruals in combination with the accelerated growth is an effect of 0.9% out of the tree mentioned before. And then we have one final point here out of the tree, which is, how we have managed or defined benefit obligations in simple words, pension liabilities. Actually, you have been able to reduce those. And that is also one of our policies or strategies. We would like to reduce our defined benefit obligations. I think it's a practice of good housekeeping. We have been able to do that over the period, and I think that is a really good thing for the shareholder as well. It reduces risk, future risk, but at the same time, of course, it's not so good for operating capital employed because as you have mender less liabilities, you increase your operating capital employed. So in essence, a good thing for the company, which then if you look at the operating capital employed, it hits you a bit. With 0.4. So these are the main drivers. There are 2 other ones mentioned here on the slide. We have reduced deferred tax assets, but that has been offset by a few other things. And then we also have some pressure on customer payment terms, but that has been offset by our DSO projects, priorities in changing or processes around that. 2 other things to mention, I will not go into the details of that at least to have on your radar screen is IFRS. Both IFRS 15 and IFRS 16 have an impact on our operating capital employed. For IFRS 15, that is 0.3 actually has been, disclosed before all the details on that earlier this year. IFRS 16, that will actually come into play as of 2019, and we have not quantified yet the effects of that. Long explanation, but I wanted to have that with you in your mind. So I think it's fair to say that our strategy implementation has been successful based on the slides we have just seen. And you are familiar with the chart here that you see, with the steps there that you have, the step the step chart that you see on the slide. When you move from guarding, which is around 4% to 6% operating margin and you climb up the stairs, you will end up in 10% in security solutions and electronic security. So you could say we double the margins by going from guarding to security solutions and electronic security. The sales in these two main boxes, you could say, has moved from 16 guarding to 75.5 in 2017. And then in Solutions And Economic Security has moved from 5 to close to 17 last year. So you notice that we have had very good traction in the development of security solution and economic security. But at the same time, we had even more traction when it comes to money wise in the guarding side. And that to some extent has been a bit of a surprise as well compared to when we designed out on the outset, on the outset, the strategy, a very positive surprise. We like guarding business as well. It's a good business. To be in. Some further detail to that. We have been generating double digit real growth And you can see here year by year how that has developed. How we have moved the needle from actually it was 6% in 2012, to now more than 20% 2018. Has been a bit of different dynamics in different divisions, different business segments in North America we started from basically 0 in the dark blue there. And you can see that they have ended now on 15% of sales in 2017. And I say ended, but that is, of course, not correct because they will continue to develop. Europe has started there from 10% and has moved gradually to around 20. Ibera America was in the lead from the beginning and has been able to move further down as well up to close to 25% of sales. So different dynamics in different divisions. And we often get the question also, but how are you doing in your countries? How far can you take this? Where are you? And that is what I would like to share with you and give you some further insight on that in the next slide. Here, we have there put 2013 compared to 2017. And In 2013, we had 36 countries there in the bucket of 0% to 10%. So 36 of our countries, of our operating entities had basically close to no security solutions and electronic security. That's actually somewhere between 0% 10%. So they had to start from almost nothing you could say. In the meantime, if you move then to the other corner of the slide here or of the graph, We see that now today, we have 13 countries, which have more than 30% of their sales in security solutions and electronic security. So that is quite development that we have seen. We have already 3 countries, which have more than 40%, which are in the bucket 40% to 50%. Since there is no bucket more than 50%, it means that no one is there. But at the same time, you also notice that we still have 16 countries in the 0 to 10. And that is also what we have tried to explain. This is not just an easy change. This is not an easy I go from here to there. This is a transformation. Some countries have been better at executing on that. Some countries have been less good for different reasons, but this is the picture that we get. So there's still a lot of opportunity left as well. The goal is, of course, that we gradually move the countries to operating entities in the higher buckets as we will go forward. Turning back to the operating margin there. You are familiar with this chart I just showed it a minute ago These are key drivers. These are this is a key statement. I mean, we double the margin when we go from guarding to security solutions. But at the same time, there are other key margin drivers as well, and that is what I would like to share with you right now. Here you can see them. We are mentioned there on the slide in 6 different key drivers for our performance at the end of the day. It's not only security solutions, of course, it's other things as well. And those things as a starting point in the lower corner there, the maturity of the services market. How do the customers recognize the value that we can bring to them in a particular country. And that differs quite a bit from country to country. It's, it hangs together with What type of people are we able to recruit? How can we train them? What type of services can we bring to our customers? What is the trust that our customers put in our industry. In countries where that is high, that is obviously a good driver for our margin. Because that means that we are trusted by our customers to deliver them sophisticated services, more content services day by day. And content means value means margin. Then within that landscape in a country, we of course have our own competitive positioning. That, thanks together with our geographical footprint, how well do we cover the country, with the strength of our local teams, with the strength of our processes, with the strength of our systems, all of that will decide on our own competitive positioning in a certain country. Then we have the development of protective services. As Magnus has showed you, we have moved from guarding and we have gradually increased or included other type of services and start to focus more and more on those as well, mobile remote services, fire and safety, corporate risk management, all of that electronic security. So how far have we come in developing those services in a particular country? Have worked a lot on that. We have still a lot to do, still a lot of opportunity left here, but that will also decide on or margin at the end of the day, together, of course, with the question on how far have we come in developing security solution electronic security, which is an important driver as well. Then to other key elements, price wage, And it must be key because you asked me all the question all the time. And that is extremely important that we manage that correctly that we are on top of that in the countries. And then of course, we have our cost efficiency, both on the indirect level and on the direct level, how do we manage our costs? All of these elements, these drivers will decide or operating margin in a country. So then comes the next question. How are your countries doing? Where is the margin? And this is a picture then that you see here on the slide, and I will try to explain that to you. If we take our countries, which have less than 2% operating margin, they end up together and we take the sales of that Together, we have SEK 5,800,000,000 of sales in those countries. So countries with less than 2% margin SEK 5,800,000,000. And then we gradually move into the different boxes in the bandwidth 2% to 4% operating margin. We have SEK 14,700,000,000 The vast majority is what you could expect as well in the middle, of course, in the 4% to 6% bandwidth 38 6% to 8%, SEK 19,000,000,000. And we also notice that we have actually countries, if we add the sales together there, 14,000,000,000, which has an operating margin of more than 8%. And that is if you work on those different drivers That is when you move 10 countries to the next bucket. And this is, of course, our entire strategy. Our entire strategy is to move through these different drivers, countries from one bucket to the next bucket. Coming back then to the question on our strategy of security solutions and electronic security, I would like to show them and share with you the next slide. What have we done here? We have basically plotted the entities that you saw on the previous slide in two dimensions. On the horizontal axis, you see how far we have come in implementing security solutions and electronic security as a percentage of total sales in that country or region. On the horizontal sorry, on the vertical axis, we have then plotted the operating margin of the same entity. And then you get this picture. And then we have asked the system to calculate for us the regression line. And this is what you So you notice here that there's a positive correlation between how far we have come in developing security solution, electronic security, and the operating margin in a particular country. This is the picture for emerging markets, and we have done the same thing for mature markets why it's a different picture because it has to it has a bit of different dynamics in the different drivers there. So why we're choosing to to make 2 pictures. And in mature markets, this is the picture. So it's the same draft. It's Same axis. And again, we have plotted the different entities. And also here, you notice the positive correlation between how far we have come in implementing this security solution strategy in relation to the operating margin. And the final slide on this is then we have taken our top 15 markets, which is of course from a final result perspective, the most important, the most critical one. And here, we see that the same is evident in NAND. Or top 15 markets. And you can see there that the margin, the regression line, somewhere, starts a bit below 6 5% to 6% and ends up a bit above 8% actually. So this is then the impact, as I said, from implementing our strategy one of the main drivers we have chosen to drive the operating margin in our countries. The strategy has been built on organic implementation, meaning recruiting people, meaning training people, meaning a lot of different activities that has been organized in the different countries around the world. At the same time, we also said that we would support a strategy with acquisitions. And this is a picture connected to that. You remember maybe that 5 years ago, we said we will tune down on guarding acquisitions. And it's not because there's something wrong with guarding acquisitions. It's because we basically wanted to focus our capabilities or capacity on acquiring electronic security companies in order to support this journey of security solutions and electronic security. So we said that 5 years ago, and I think we have executed on that. If you see here, we have spent SEK4.7 billion in enterprise value over the last 5 years then in acquiring electronic security companies. Compared to SEK 560,000,000 in guarding companies. Sales wise, 1,000,000,000 in electronic security and 1,000,000,000 in guarding. Oh, I'm sorry. I'm sorry for the confusion. I will go backwards a little bit. So acquisitions have been part of our strategy and here you can see that we have been acquiring SEK4.7 billion in electronic security and then SEK5 1,000,000 in guarding. As I said, there's nothing wrong with guarding companies, but we do have a very strong guarding footprint already. We will probably do a guarding acquisition here and there if there is a good opportunity if we want to extend a bit of footprint in further countries but the main focus has been and will continue to be on, on, electronic security companies. Sales wise, SEK5.3 billion acquired in technology, billion in guarding. And then of course, when you look at the full time equivalent, it shifts the picture because guarding is much more labor intensive then of course, the electronic security and solution part. We have capability to further acquire companies and integrate them. I think many companies try to outspell an acquisition strategy, but we have it's in our DNA to do acquisitions. And that DNA, we have been able to shift that then from acquiring guarding companies to acquiring more technology based companies. Acquisitions would not happen without having solid financing in place. And that is the next thing I would just like to mention to you. I will not go into details all the details of this slide. But in essence, we have a BBB stable outlook rating from Standard And Poor's and resample rating headroom in this rating. So we could leverage much more the balance sheet within that same rating actually. Then we have significant undrawn committed funding facilities available close to SEK 9,000,000,000 and then we have no financial covenants. And when you look at the chart basically also or large maturities only come up as of 2021. So we have a good profile here. This is backed up by a strong banking group and Some of you are here, I would like to thank you also for your commitment to our company. And you know that we are committed to you as well. So This is what I would like to share with you for today. I hope I have been able to provide you some further insights I'm a bit afraid you will bombard me with many more questions after this session. But anyhow, we are here to help you out and your help, and we will provide you further detail, of course, or further explanation to the details provided here. I think it's fair to say we have been creating value and we are creating value. If you look back at where we were 2013, we made a bold statement in a way we said, we will take tech from 6% to 18. And in all honesty, that looked like mountain, which was very difficult to climb. But we made the statement and it has been the driver for making the changes we have been able to make through this period. So at that point in time, you could say it was about building, starting to build a tech platform. We have moved the needle to now 20%. I think the major difference is that on top of the development you have seen financially, at the same time, we have no platform in place from which we can further build on and leverage for the future. That is also why I think Magnus has trying to explain to you. We have a strong base in guarding. We are in the transformation journey still of moving it to protect the services and solutions. We are in the middle of that journey. A lot of opportunity left still. A lot of things to do as well. And then there was a further horizon also out there, but that is for after the break. I think I have said more or less everything I wanted to say. There's a break now. So it's always good if you can announce a break. Also for the people in the webcast out there, we will leave you now. But, there's an opportunity here to meet some of my colleagues as well. And I would like to introduce them now to name is Anders Gustafsson. As about said, I'm responsible for the development and deployment of our standardized video solutions. I have a friend with me. He's on the leave. You can see him somewhere in the room moving around. And what we will talk about in this station is actually how we make cameras, implement moving cameras. So that creates new challenges. You have the drones flying cameras, you have robots, and you also have body worn. So welcome to me to have a discussion on that can help us take in further steps. Thank you, Anders. And then we move to Ulivar Yes. Hello. My name is Oliva Birkaboo. I'm a fire chief in Norway. Here, you can try to which in reality in firefighting. So I hope you come to this town and try it. We can fight the fire in the hotel room. So you can try something new. Welcome. Thank you, Olivia. And then we have Stefan in the back. Hello. So I'm Stefan also on R and D manager for mobility solutions. You will find me in the hallway where I show a face recognition. Also, happily speak about sensors and analytics in general. Very good. Thank you so much. So now, it's like 9:30 and the idea that we will have a 20 minute break, so we will be back then 10 minutes to 10 in this room and on the webcast. Thank you very much. Okay. So welcome back, everyone. For those of you who are in the room, I hope that you had an opportunity to to experience some of the demos. If you haven't done so, they will be available also after we are wrapping up here at 11 today. And I think it's important because it is a good opportunity to get the flavor of some of the things that we are able to do leveraging technology. So now we're going to turn the attention over to strategy. And, I think one thing that we have established Bart and myself in the first part is that we have a strong foundation. And we are in a very good position to, to lead the development of the security services industry in the years ahead. But when I started at the beginning of this year, in the new role, we decided that from a group management perspective, we're going to review the strategy where we are, but also then looking at how are we delivering now versus 2020? So that was really the strategy that we launched in 2015. How are we doing in terms of our delivery towards our 2020 objectives? But then the second part of that strategy is then more focused on how are we shaping the strategy beyond 2020. And I will, I will capture these two points now in the next couple of slides. So what is important right now in terms of delivery of 2020? There are three areas that are important for us in terms of focus in the next 12 to 24 months. And one of those is related to the customer engagement and the customer value proposition. 2nd one is that we continue to strengthen our protective services leadership And the third one is we have fairly high ambitions in terms of things that we want to do. So we also have a big emphasis on modernization and efficiency because one thing or one change that we are going through right now is is going from working very much on a local level to work in a direction where we're building more synergies on a global level. And that is very much in the areas of ISIT and technology. So let us look at the customer engagement and the customer value proposition first. I think that I have already commented on some of the strengths that we have. So we'll focus now more on the areas where we see opportunity for us to improve and in some cases, also a strong need to improve. And the first one here is related to what we call customers' interest in and engagement. So in terms of the work with the customers, we have always had as one of the core philosophies of Securitas customer proximity. And this is obviously to be close to our customers in our branches and in all the ways that we are engaging. But when we talk about electricity and engagement, we are now expanding the range of services to protective services. So this also means that we need to become better in terms of how we are engaging with the customer. And if you simplify that, that is very much about who are we working with? How do we win these customers and then how do we develop these relationships and the services over time? So that is one important area. 2nd one is related to the different segments. And we have a very good press when you look at the aviation segment today, and we have a good capability with our aviation team. That's a dedicated team focused on our aviation business and capability on a global level. But we also see in a lot of the discussions with global customers but also local that the more targeted understanding of the needs in the different segments will help us to also bring more value to those different segments and that can then be anything ranging from or data centers or if we're looking at, harbors, for example, the needs are quite different, but with technology and with our protective services offering, we're becoming smarter when we take a more focused approach on the segments to also be able to deliver, knowledge and also solutions that are better for the customers. And the last one, I touched upon earlier in the morning that is related to global customers because we have this very good strength in terms of our presence. And we also see a number of customers that are really looking for engaging with a quality provider across a broader footprint. And when we talk about that, it's not only the cross border as but it's also an increasing demand in terms of delivering not just the good on-site guarding capability but also expanding to more protective services in our offering that we can bring to the customer. So that could be, for example, that we are doing good guarding, but that we're also implementing technology solutions across different geographies. And that's something that is still very early days. But we see that there is a demand, there is a need from the customers and we believe that we are well placed to tap into that and to deliver that value as well. And when we talk about the customers, we always start with a risk analysis. And, and this is, a competence that we have been building up for many, many years. So we do the risk analysis, and that is one of the most important points of input in terms of the security solution that we then develop. But now what we are doing with the risk analysis something that has historically been very much a local practice. We are now digitizing this so that we are basically enabling data capture from a local level to global, but then also funneling all the knowledge back to our people in the front line who are working with the customers. So we're going to take a look now at the video, looking at the securitas digitized way in terms of doing risk analysis. When you own or operate any kind of physical today, preventing bad things from happening is one of your main responsibility. Risk priority may change businesses evolve and even protective solutions we put in place have an impact on the situation itself. The fact is the things that can happen on the likelihood of them have happening varies from place to place. Still, we're expected to protect all these people and assets in an efficient and affordable way. That is where to 31,000 for risk management comes in. It's a framework for dealing with all the different elements involved, starting from identifying the opportunities and risks, It guides our analyzes and leads to allocating the right resources for mitigating the risk that has been identified. Results are what matters, and putting your analysis to work happens through a cycle for implementation on one hand, a constant monitoring review on the other. Let me show you how we do this. We start by choosing from a predefined database called the risk value chains and choose the segment we want to work in. I will select this 1. And open up the library of areas that are common to this segment, here we also have the possibility to customize areas if needed. I will select this one. And from the risk library, we choose the risks that are more relevant here based on our experience, and benchmarking. I will select these 3. Each risk has its own probability and impact. So we select the risks that we have identified in this area. All the input helps us decide on the probability how likely is this to happen? And impact. If this particular incident should happen, how severe is it? Let's say, Yeah. All this feeds into the risk matrix, which shows your risk according to impact probability The risks goes in here, from low impact, low probability to high impact, high probability. The result we share as a comprehensive document containing an executive summary, risk matrix and the full risk assessment with all the images notes by area and risk. Securitas solutions help protect people, homes, and businesses. We make it simple and are built into constant evolve with our customer needs. And doing this by integrating data in a standard based way is what we believe to be the new face of security. Great. So what Ryanet now showed is a practice that we have been doing more on a manual and more pen and paper based approach in the past. And we're now digitizing that so that we're able to capture all the information, but we're also then creating a feedback so that for every risk analysis that we do, we become a little bit smarter based then on similar, similar objects, similar characteristics. This is a picture showing the, the security equation. And when you're looking at the mix between guards, physical security, on-site and remote, that is essentially the different components of service that we provide based on the risk analysis. And then obviously we have an optimal solution which is then the results because it's based on the risk analysis that we do this. In the video, what you see now is that We are now digitizing this to be able to capture the information so that when we do this, for example, at an airport hotel outside of Heathrow, for example. Number 1, when we go into that airport hotel, we are bringing knowledge from 100 of other hotels with similar characteristics we bring more value into the customer meeting and even the first engagement. But then once we have done the risk analysis, we designed the solution and with more data driven feedback as well in terms of the risk assessment to the risk situation at the specific location, we are now then also thanks to digitalizing this able to drive faster response as well in terms of the optimal security solution. So so this is quite a big shift, and that's why I'm spending time on it, but it is when you look at, from a customer perspective, what does this really mean? Well, it means that we are coming in with more knowledge. We're capturing that knowledge on a global level through a standardization, but that we then also feed that back. So we enabled all the thousands of branch managers that we have and the people who are engaging with our customers to come in with more knowledge also then in that early engagement with the customer or when we're looking at how do we develop this over time? So so this is this is exciting and and it's also something that we believe will generate significant, customer value. And like I said, when we have this feedback loop as well. We show that because this is constantly then building more knowledge, the more risk analysis we do are adding more knowledge and we become smarter as well and we bring more value to the customer. Shifting then to our protective how do we continue to now strengthen this? Bart has shown the progress in terms of our journey towards protective services. And And one of the most important focus areas for us now is we now have a recipe and a formula. We know what we are doing but we also want to accelerate these sales and also then the share of solutions that we bring. And that is because we add more value We have higher customer satisfaction when we do solutions, but it will obviously also help us to create higher value financially as well for the company. How do we do that? Well, one important part is through the customer engagement. Like I said, we're working quite a lot on how do we become better in terms of of the customer engagement through the entire cycle. We're also then standardizing a lot more around specific services. So Andreas, for example, who has been presenting here some of our remote video solutions that a good example of standardized services that we are now bringing and rolling those out to make it easier to bring really good quality and service and solution to the customer and to do that at the bigger scale. We continue with the acquisitions focus, which is primarily electronic security related. And then obviously, the other part is also about leadership because we are all quite convinced we're on the right path and we're doing the right things, but it's also fairly sizable organization and we have hundreds of thousands of customers as we have shown before. It is also important for me and the entire team that we drive the understanding, but also then the commitment and that every leader is also really driving this change and keeping pushing the transformation. So those are some of the key points that we do to accelerate the solution selling as we go forward. But we're also then in the strategy work where we by the way we're just in the middle of that we're going to come back next to when we have the full, strategy set for for more of an extensive session. But but one other asset of the strategy work that we are also putting quite a lot of emphasis on is also to build specialized knowledge in the different protective services. So like Bart and I have commented earlier, we like guarding. It is a good business, but we continue to also need to look at this big base and and and, foundation that we have, how do we become better every day in the guarding? How do we provide better service the customer, but how do we also make sure that we protect the value, in the guarding as well? Because that is really the foundation. And that approach we're now taking to all the different protective services. And one of the critical areas I mentioned earlier in the morning is the Securitas operation center. And because this, when we have a more technology based and more data driven operation, will become even more important function in our total offering and operations. So we're now going to look at how do we operate securitas operation center and what is also then the different activities and the value that we bring there to our customers. And this case, I should mention, is one example, and it's from the Netherlands. Welcome to the Securitas Operation Center, one of the Netherlands most advanced monitoring and alarm receiving centers. From here, Securitas controls its preventative security solutions. Through coordinated actions by customer services, operations and support, and data analytics. Customer services takes care of all daily customer contacts, Our specialists handle over 45,000 interventions a month. Ranging from new customer initiatives and general queries to in-depth technical support requests. In order to secure our excellent service, comprehensive key performance indicators are monitored in real time. The operations and support department guarantees our customer's professional remote services, 247. Securitas remote services, supports facilities processes, such as remote entry and exit management, corrective maintenance. A response and callout service 4 outside office hours, and it manages ARO organizations. Every month, over 72,000 actions are swiftly dealt it at operation center, and is only accessible via a secure filter. Homes, offices, cars, and other objects belonging to both businesses and private customers are guarded from the control room. We deal with over 1000000 interventions per month. The high security room monitors high risk objects, such as homes, buildings, and cargo. But we also monitor people, with our personal position alarm and track and trace systems. Each customer has their own specific security needs. On top of increased priority, we always act according to highly specific follow-up protocols. The Video Monitoring Center provides for active video monitoring services. Here, we verify and follow-up alerts from smart cameras and other remote sensors. We immediately respond to unusual activity based on real time data and human behavior. The dispatch department plays a key role and handles all communication between the operation center and our 6000 guards and 350 mobile control cars. Thing, combining, and analyzing all data stemming from our activities and external sources. As our operation centers are connected worldwide, We combine international data, trends, and developments, while simultaneously boosting our global data and intelligence position. This way, any operation is information based, led proactively, and is continually optimized. Secureitas leads the way as the global intelligence security company with preventative security solutions. By combining our people, knowledge, and technology worldwide, we make this ever changing world a bit safer, day by day. For more information. I hope that gives you a good understanding of what is the role and the function of our securitas operation centers. We have 44 of this around the world. And we're also looking at and now actively working on how do we standardize the capability of the services because there is also a global connected component related to the SOC as well. Last area in terms of what is important now is related to modernization and efficiency. Because we're talking quite a lot about the protective services journey but we're also now really laying the groundwork as well to be a leader in intelligence security, which is the next exciting phase. But this also requires quite a lot of upgrading. And and if you look at Securitas historically, we have built almost all our ISIT on a local level. So it's been built locally for the local needs And and when you look at technology, when you look at ISIT, we see a strong need to upgrade the to also be able to build more efficiency, but also stronger capability on a global level. So this is one very important aspect of the work that we're doing. But when we do that, I should also mention that at the core of our beliefs is local ownership and then ownership for the operations and the team. And that is not going away. It's more that we are strengthening and enabling the local operations with more efficient tools driving full digitization. If you look at the security services industry, if you take a hard look, you can say in the last 10, 20 years, there hasn't been that much innovation. Well, one of the important, change areas that we are now driving that we are trying to digitize everything that we do. And this is very much related also to all of the people that we have in the front line. Because if you have a pen and paper based operation, it does not enable you to capture information in real time and it doesn't enable you to bond in a fast manner. So, so broad digitization is also one very important thing that we're working on. Because when we do that, it will also enable us to enhance and to build better services and innovation as we go forward. And then obviously a lot of this will require investment and we are also looking at how do we ensure good operational efficiency and financial efficiency. So some of the numbers that Bart has shared, we are also driving strong focus on really having good transparency in terms of all the performance metrics so that we can also make sure that Through higher efficiency, we're also able to free up resources, which will enable us to also invest more in the future. So that is a brief overview of what are the focus areas right now. So what I have talked about is the customer engagement and the value position, how do we continue to strengthen our protective services leadership and then the third part about modernization and efficiency. So let me just now spend a few minutes on the next exciting opportunity because this is then a little bit of an introduction also and to answer the question why I said at the beginning this morning that we are well placed to lead the developed of the security services industry and to take a strong position in intelligence security. So when we look at at Securitas, we have 1 fundamental strength and that is our presence. And this is not only a matter of having the geographic footprint, but it's also the quality that we have that we're also now building modern capabilities related to this presence. So when we talk about the power of presence, why is that important? Well, it does give us the ability to respond. And there is quite a lot of activity. Many technology companies are looking at how we become smarter in terms of leveraging hardware software to be able to predict or to be able to detect something that is happening. And that is all good work and we are obviously leveraging quite a lot of that ourselves. But a lot of knowledge without being able to respond, is also not that valuable. So I think that one very strong asset that we have when we look at the next 10 to 20 years is this power of presence because it does give us the ability to respond. And when we're able to respond, it also then means that we can enhance customer value through swift response when it's needed. So when you're looking then at the assets, And on the left hand side of this slide, we talk about the rich information and data that is available to us. And and data, I would categorize in a couple of different categories. 1 is the data that, that is our own data that we are generating. And there we have a good advantage because of the size. A lot more data we're able to generate in terms of leveraging technology and sensors Martin is going to come back and talk about this in some more detail. There is also a lot of public and third party data that is available that we can also let And then it's about not only them having a lot of data because one of the fundamental beliefs that we have is that when we're looking at intelligence security, the company that has access to the most data, which we are and who is also smart in terms of using that data, will also be able to provide better predictions and also then really making this shift from reactive view of security to a proactive and to be able to prevent. So the value creation, if we talk about, okay, what does then, what is then the value from a customer perspective or internal perspective First one, from a customer perspective, when we do this, we are convinced that we're able to bring better security to the customers. So that is one source of value. 2nd one is related to efficiency of our own operations because we do operate large and also fairly complex operations at airports, many larger sites all around the world. And what we are also seeing is that we can use data in a good way to drive optimization and we were able to use more of a data driven approach, we can actually beat quite a lot of the human capability in terms of planning and scheduling and things like that. So the value of that is that we can then enhance the efficiency. We can provide a better value to the customer but we can also then provide uses also to provide better optimization and working conditions for our people as well. So this is really exciting and we do believe that our position is strong because we are working now to be able to not only to predict but also then to detect and with the presence that we have also to respond. So with that, I'm going to hand over to Martin in a minute. But one thing I wanted to mention when we talk about intelligence security is that we are sharing a flavor today and this is still a fairly early view So we are working on use cases and examples, and Martin will share some of those. We are excited because we believe that we are really on the right path. But there is quite a lot of work that is required for us to do to be able to realize this ambition and to be able to do that at scale as well. And that is why we're saying that the emphasis of a lot of this is really 2020 and beyond. But with that, warm welcome Martin. Thank you very much, Magnus. And, hello, everyone. In the room and on the web. It's a true pleasure for me to be here today and to share with you a insight and the glimpse into the future of the security industry and an insight into the future of, security an exciting future. What I will talk about here today is, of course, about the future. There is a risk of becoming a bit conceptual talking about the future. But I will try to do my best at providing examples and some clarity around what it is and how we will do it. My name is Martin Alstian. And I'm the CIO of Securitas. I've been that soon 2 years now. I have spent the last 20 years in Global Companies like Securitas, but not in the security industry, working with information technology, product development, digital strategy development and digital strategy execution. When I was percent with the opportunity to join security us. I didn't know much about security industry. And to be honest, I didn't know too much about securitas either other than a strong brand recognition being Swedish. You see securitas all over the place in this country. But quite quickly, I saw the opportunity. It's a market an industry where the demand is growing. It's a market and an industry where digitization still not have still have not taken off. It is also a company securitas, a giant in the industry and 1 of the world's most trusted brands. And on top of strategy where technology is going to drive innovation and drive the strategy of the company forward. And I didn't want to miss that the opportunity to join that journey. When we started to analyze the point of departure for, security task from a digital transformation perspective. We quite quickly zoomed in on what Magnus talked about the power of presence. We have 300,000 gods We have over 700,000 connections to customers. We have millions and yet millions of incidents that are handled and pushed through our systems. With that power, what can we do with that unique strength of security task if we compliment that with new and emerging technologies? More specifically, we focused in on the opportunities presented by the different flavors of artificial intelligence. What if we use the data, the tremendous amount of data that all this presence generates every second And how about we leverage the real time capabilities of our operation instead of just throwing away that data and seeing the data as being a cost of operating. What opportunity does that present? And we concluded that this is a unique position for security task in the security industry. And we concluded a developed a view also of the future of the security industry. Our view is that future market leadership in the security industry is really belonging to those who are best positioned to capture, analyze and respond to rich data sets. It's a view of the future, which lends itself very well to scale and support the market leaders of the company of the industry. And you see that there is a virtuous cycle in capturing the most data having the best and strongest abilities bond to the outcome and analysis of that data. The technology that is needed to leverage this virtuous cycle or capture and analyze and respond is still emerging. Some of these technologies more mature, machine learning that automates the ability to quickly and at scale respond, optimize the response to data is becoming more available at scale in general, to the industry. Advanced analytics AI in analyzing huge amount of data. It's still an early to early technology, but it is becoming more and more widely deployed in different use cases in our industry and other industry. Other technologies such as deep neural network are still very early days, but those will present a game changer when it comes to responding and capturing and responding to reach datasets in real time like live video streams. As you see, this strategy this outlook of the future for the industry is really about scale scale, which is in unique position for securitas. And that led us to basically make a quite bold statement about the vision with this analysis of the future of the industry in mind. We are committed to take and that we are committed to actually lead the transformation of the entire security industry from a low tech business to a high-tech business. We will leverage the strength that we have as a company, being the leader in security services. Having evolved to be the leader in protective services and adding the component of data driven innovation to also become the leader So with that introduction, let me be a little bit more concrete now. What is intelligence security? And why is it important? As I have said, the intelligence security at the heart of it is by generating and capturing enormous amounts of data sets. From multiple sources, huge amount of different sources. And it's about transforming this information into intelligence. And with that, we can both enhance as Magnus talked about, we can both improve the efficiency of our operation and we can deliver better security to our customers. In delivering and executing on this strategy, we have broken down the execution into 4 tracks. One track is about the officer of tomorrow. How can we use technology to enhance the capabilities of our security offices? The second track is about future sensors. How do we leverage this exponential technology and opportunities that present to capture even more data and information. So how can we actually draw insights and use this data to actually predict what is going to happen before it's happening so that we can put in preventive actions and give advice on the most effective security programs to our customers. The last track we are exploring or actually executing on is how do we take the next step to leverage the assets of our 44 security operation centers? So how do we set them up to be most effective than it is today. We're already handling huge amounts of information and data in our operation centers, but tomorrow, It's only a fraction what we compute today compared to what we will compute in the future. So let me now go a little bit more into detail on each one of these tracks. And let's start with getting per and talk about the officer of tomorrow. Many people, interpret that technology will replace people. That is not true. Technology changes the position and the role of people. Technology change is also the role of the security officer. While as Magnus have talked about, the presence And the strength of our 300,000 gods is actually a unique differentiator for securitas. If you compare us to technology companies that might want to enter into the security equation. Think about the 300,000 gods, their ability to actually capture data. They are a most capable data capture platform, equipping 300,000 gods with sensors that they were sensors that pickup sound, air quality, chemicals, wearable cameras, huge amount of very capable data capture platforms in the shape of a god which is much more flexible which is more capable in the short to midterm than robots because a guard can handle stairs can open a door. Can adapt their behavior to circumstances. On the other hand, the god equipped with technology will be also much more powerful in what he or she can do. The god will be connected in real time, 2 colleagues in the same area, and they can mesh their with their view of the event seen together and create a rich picture of what's going on in the larger where they operate, they will be connected to the technology that is installed in the environment, in the building so that adds to their information picture. And they are also connected to the operation center in real time, so that the operation center can help guide the god to the most effective response that is that is suitable for in the actual scenario. So the god of the future equipped with technology will help us to really drive data into more effective, much more capable than the individual standalone god that is the norm or the presence. I will now show you a short movie that we're done, together with a couple of our partners. It is showing a use case oversimplified, I should say, with how technology can help a office security officer in the future. This project is a perfect example where we, 3 partners, Comtech, Microsoft search results were able in a very easy way to evaluate the value of a digital solution in a real security environment. New technology opens up new possibilities, but they are not always obvious, right? So when you start delivered scenarios for home loans, it was important to ask us. Now what can you do that you cannot do already better without technology? From our experience, which also includes decision making functions for tighter aircraft, high this is actually quite a similar example where you add ability to the human being by extra sensors. Our digital stuff information towards the base combination of technology, people, and knowledge requires a strong activity on asset security. These scenarios, aim to solve existing and future challenges. On one hand, it is an value to our customers. On the other hand, it is a knowledge increase for our employees. When we look into new technologies, Always ask yourself the question. What is the unique possibility with this technology compared to what is already existing? It's not until we find the answer to that question that we can do things truly different compared to before. So the goal of these scenarios they are 3 real listings and test technology capabilities that work right here and now. Of course, this is a simplified use case, but I think it does give a quite good illustration of how the reality of a security guard could look like a few years down the road. The technology will obviously be more adapted to field experience and field requirements then. But I, anyway, still think that it does serve as a good illustration of the future. Another point that I want to highlight from this video is that you see that Securitas is working and partnering together with with other companies to co create and develop solutions for the future. In the past, we have been very much more working on our own developing technology for our purposes, whereas the future will be much more about securitized partnering with different companies, high-tech companies specifically around the globe to actually really accelerate their transformation and our transformation of the industry. Let's talk about the second track. It's about the future of sensors. Sensors is often referred to one of these exponential technologies where really the cost of the technology is going down exponentially, whereas the quality of the technology is going up exponentially. Sensors is already will increasingly be so cheap that there will be installed everywhere and so capable so that they can inform about their environment in a way that you can really leverage the output of them in extremely many and interesting ways. When I talk about sensors, I did already talk about sensors that the god can carry on herself or himself, Another kinds of sensors is what you see when you enter the room here. We have smart cameras. Smart cameras being an example of where we're pushing intelligence to the edge so that built in intelligence in the cameras can make intelligent decisions on actually how to respond at the edge and together with the user and at the event seen. Other kind of sensors is what you have up to the left here. You have a drone there. Jones today, we already used to send in, for example, to look at the fires seen in a petrochemical industry. But imagine micro drones that goes together with a mobile guard patrol that enters a big warehousing area or a harbor area, and you send up a swarm on drones that automatically scans the entire area and informs both the operation center about the risk and potential events that's going on in the area. But also the god that gets a quick scan of what is it that he or her is going into right now. That allows the god to make an informed decision on how to actually act in this situation. And it forms in the same time the operations center about what potential is going on and if there is any additional resources that needs to be deployed to the scene. If I extrapolate a little bit into the future, you are all aware about 5G And you are all aware about the internet of everything, connectivity of things that has been talked about in the last couple of years. And there is a lot of extrapolation about how many devices and things that will be connected in 2020 and so on. And without adding to those speculations, I just want to make very clear that 5G will completely disrupt their services and security industry. Why? Today, the typical modus operandi of security is that you are either preventive by your presence or you are pounding in real time by patrolling and checking that everything is okay or not okay and then taking an action. In a connected society, with 5G being deployed in our environments, each equipment will talk about itself. And equipment can be a door, for example. Or it can be high value asset. Those will continuously send status about themselves. I'm here. I'm okay. I'm here. I'm okay. I'm here. I'm not okay. That means a completely different way of operating as a security company. Instead of the patrolling, the heart of it will be to be connected and monitor all of these signal at all time and act on anomalies and exceptions combine that we're randomized patrolling to achieve a preventive effect. It totally turns around the equation on how you act and the delivery model and business model for security. Again, here, scale is a key factor. And it's about being connected to those environment. And tapping into all these signals that are being sent all the time from billions and billions of devices. And scale in terms of the company that can actually capture this information, do anything meaningful with that information. And actually provide a response to when the device says I'm not okay. Going into the 3rd track, talking about crime prediction, Minus talked about it, data. I have talked a lot about a huge amount of data. What do we do with the data? Well, I provided some examples, but the end game is really about being able to predict what is going to happen. How can we design preventive actions preventive security programs by predicting the probability of something that is going to happen. And when having predicted that, how can we assign our resources upfront in line with the prediction and the probability so that we have geared up and may and we are able to be where we need to be at the right time before it happens based on the probability of an adverse event. Here, we are already doing quite exciting things. We have huge amount of internally generated data. We have huge amount of data generated by our cameras, etcetera, which is really interesting. Lastly, of the 4 tracks, we're talking about the intelligent sock. Mine has talked about the operation centers, 44 of them. We're leveraging that asset, but also for the future where there is so much more data, we're also taking the steps to build the next generation socks. Which is basically standardized, cloud based global platform where really the ability to capture the information and form the information into intelligence and provide the response is concentrated. So how are we now setting ourselves up to deliver these 4 tracks? Well, we're already, building or I mean, actually, to some extent, have built a strong team and working across their organization in 3 different programs. One program is about optimizing for today. It's about how do we modernize our infrastructure and set our foundation, Now the track is about building for the future. How do we develop data driven digital products for the future? And the 3rd program is about research and innovation. What we are describing here today is a much more innovative and technology savvy company that used to be the norm in the security industry. Such company needs to invest also in research and innovation. Optimizing for today is really about a multiyear journey to consolidate and rationalize and modernize our IS and IT environment. Examples of what we do there are quite obvious. It's about rationalizing the number of data centers that we have, working out much more capacity and pushing as much as possible technology to the cloud. It's about driving efficiency but also building the platform for the future. In building for tomorrow, we are organizing ourselves around different product areas to develop and deploy the products of the future and you will soon see some examples of those products I'm talking about. In the Innovate for the future, it's really about creating and focusing research areas, for example, around 5G as I talked about. But it's also about fostering and innovation culture and a partnership culture in the company. And it's about how do we run co creation programs with our customers and how do we run speedboat projects to prove a project to proof point our ideas and our concepts. Let me show you now a film that shows the example of the products that I'm talking about and how they can be deployed in the context of a customer in the center. In a time to innovate, security assist the new face of security. We help you mitigate risk foresee potential threats and bring peace of mind. Securitized innovative tools and services are accessed through our digital customer interface. An interface that enables our customers to seamlessly control various security. One example of this is our crime prediction that utilizes many different datasets to support our operations and proactively help our customers, notifying them on new rates and advise on mitigating actions. When our system detects increased risk in an area, our customers get an automatic notification. This can be a recommended action or an advice specialists can propose tailored solutions, solutions directly bookable in our digital interface. This customer made the choice to install 1 of our smart security cameras. Through computer vision and advanced analytics, the camera can automatically detect when someone in the store is shoplifting. Because it gets a notification that our smart security camera detected shoplifting, and that our security officers are already on the way. To make wrap response possible, we optimize the location of our security officers with our intelligent scheduling based on our crime prediction engine. In this way, we secure that our customers can feel safe and trust that Securitas will arrive when they need it. At Securitas, we have created common framework, the Securitas customer engagement cycle, where the voice of our customer drives our actions and innovations. By putting the at the center of everything we do, we want to transform our customers into our fans. It's time to innovate. At Securitas, we integrate technology, people, and knowledge to offer innovative protective services to customers all over the world. It's one of the great people on our team. I hope you enjoyed the field, exemplifying some of the technologies of the future. To remind you, what you saw on the film was 1st, a digital interface the digital touch point with our customer through a channel, through which one we propagate our digital products. In terms of the context, you saw example of crime prediction in real life. You saw also demonstrated our new capability around intelligent scheduling, how we optimize where people should be at what time. And what people actually with what capabilities. And you also saw an example of video analytics and how that can be used in in the scenario of a customer in the center. To conclude then and wrap up, what I want to want to leave you with is basically that I think securitas is uniquely positioned to capture the opportunity of digital transformation in the security and security industry. That is due to the scale that we have, and it's also due to the power of presence that we have. I also want you to take away the commitment from the management to actually stand behind and do what it takes to drive this transformation because it's not easy and it's not everyone are going to succeed with it, but securitas is the company that will succeed with this. Thirdly, I want also to leave you with that what I just talked about and what minus a bot is talking about is being recognized and acknowledged by our customers. 1 of our largest customers we are working with And a year ago, we were the trusted worldwide security partner, very, very good relationship, A year later now, when we have engaged deeply together on the journey of intelligence security, we are now this partners, not only a trusted security partner, but we are also their partner in their own digital transformation program. And I think that technology is also that we are on the right track. So with that, I am done And we are now going to have a up on the scene to help me out to respond to questions or actually take most questions. Forward. Okay. So I will try to moderate this. Please, yes, gentleman there in the middle. Hello. Good morning. Matija Geragales from Goldman Sachs. Two questions on my side. Firstly, a little bit more strategic. You talked a lot about the opportunities from innovating data technology. How does GDPR impact you? I mean, you're talking a lot about collecting data. I mean, essentially, it's about identifying the bad people to some extent. But collecting data now has become more difficult in the countries of GDPR. So what's your thinking about that? What are the limits know and how do you expect to overcome them? And then secondly, on the margins, you showed those charts, I think, pages 25, 27. There is some correlation between your you're basically your sales of a security service, electronic services and margins. But like on Page 27, you have some countries at 10% margin, even though you have very limited security sales, electronic security solutions sales. What are the drivers do you think are there now explaining the high margins in those countries? And conversely, perhaps also, where you're underperforming, what do you think are the critical aspects that are basically preventing you from having a higher margins and Can you address them in some way? Thank you. Thank you. I think in terms of GDPR, that in itself has been quite a significant work and effort that we had trying to take. We obviously take all privacy seriously and all the integrity of the data as well. I think one of the mechanisms, if you will, is andonymization of the data. So, a lot of this data, we don't really need to know exactly who it is, but more that there is a specific pattern or there is specific incident or specific movement or something like that. So but this is obviously something that we are working into our plans. And we've quite a lot also to make sure that we handled in a robust way as we go forward. I think on the margin, do you want to take that part? Yes, as you have rightfully observed, I mean, electronic security and solutions is not the only driver to the margin. And that is also what I have tried to explain. There was a bunch there of 6 key drivers, and there are a few other ones, but the 6 key drivers are mentioned there in the in the deck. First is the really what is the status of our industry. I mean, how well are we recognized as an industry in a particular country of being able to deliver value. And that, thanks together with the regulations that are available in that country, how the market leaders are acting in that country, how you basically where do you position the industry? How much value can you bring to your customer and how much are you able to be recognized for that? Secondly, is then our own position in that. I mean, there might be a market which is a very good market, but we might be not so strong in that market or the other way around as well. Sometimes the market is not so good, but we have a very strong position. And then you move up these different matters there. Then the protective services as well, how much have we been able to develop there? The security solution, electronic security, but also how much have we been able to be on top of our cost development and of our efficiencies? And or price wage. And all of that basically over a longer time period, meaning that margin is not a result of a 1 year work. It's a result of long and many years of working, that will decide on where you position yourself. In some markets, if you go in some markets, the market is not well developed. And we feel we need to have an impact there. We need to have a certain size. In some markets, we still lack that size. We are not able to set a clear market leadership role there on showing what this industry can do to you as a customer. And then we have lower margins. So it's depending on all these different factors. And that is why, I mean, if, mean, we cannot it's all blending together as well. In many cases, it's those things build up on each other. If we have a strong position, we are able to change the market conditions. If you have a strong position, we are able to move ourselves to protective services. So it somehow fits together, but there's a bandwidth around that. If you look at the 15 top markets where that is where we mostly focus on, of course, you clearly see the correlation there. I mean, it's a statistical correlation, which has been calculated. So correlation is still is very much there. And there is a bandwidth where the many different entities are. And then there are a few exceptions. There are always exceptions in every statistics. But that is, I think, yes, unless you want to add anything that might be The one thing that Bart mentioned is that there is also a correlation till the different areas. So if we, for example, have a guarding contract to make it specific and we have a that is saying, you know, what I want to enhance my security, but I also want to manage the costs. But if we then increase in the technology component and electronic security, It also then helps that we have ability to respond. So, that would also be easier to make happen if we have a strong mobile capability in that country, if we have a strong monitoring capability suites. But I think the reason that we are sharing this is because we are obviously keen on driving higher value. And this is very much in line with the work that we're doing with all the countries as well in terms of saying, how do we now really build up a good position over time. I want to just emphasize what Minus said on GDPR actually. Changing a little bit the perception of GDPR is only being a challenge to actually being an opportunity. By addressing it, it diligently, and we can we foresee that we will have similar requirements from customers outside of Europe, global customers, so that by actually taking it really seriously, using what Minus talked about anonymizing data, making sure that we have really good control of our data flows. It's actually something that we can turn into an advantage. We can provide that we are really, on top of the data flows and how we handle date in this industry, which I think will be a challenge for many companies. Okay. Next question from Bilal Azis here, UBS. Good morning. Just three questions from me, please. Firstly, what impact do you think the expansion towards electronic security is having on the traditional guarding side, in some case, have you seen that accelerate the pressures in that on the commoditized side of the business? And secondly, as you expect the business to become more capital intensive, how is that number of 15% of CapEx as total contract value tracking? Is that starting to trend high and what do you see as a long term trend towards CapEx to sales for the group? And lastly, you've been pushing the strategy for nearly 5 years, and we should have probably had a few renewal contract renewals. How does that process work? Is it similar with regards to the margin reset, with a customer asks for another price discount, or is it somewhat different? Yes. I can start with the first one. When when and that was essentially the question, how does electronic security solution affect the guarding part of the business? Well, there is a few, I think, dynamics that are important. One is that I think we are selling more guarding today because we have a broader protective services offering. And there is a number of customers because moving to protective services is a change journey for us, but it's also a change for many of the customers as well. And why do we then sell more guarding? Well, because they understand and they believe the logic in the in the strategy in the story. So I think that that is actually one of the main reasons, Bart explained in his part why we're also growing guarding more than what we had anticipated And we welcome that because when we bring regarding customer in, it also then gives us one more customer that we can also then drive the development with over time. So I think that that is a positive, impact. The other part, of course, is that we Garding is such a big part of the business. It's almost 80% when you look at the totality. So we also need to look at how do we then say, well, regarding that we deliver is good. We are proud of it and we deliver good quality, but how do we also then preserve the value in that part of the business? Because that is the part that is always subject to more pressure as well from competition because in a number of countries, there is a lot of compared and unfortunately, quite a few who are more price aggressive as well. So that is also one of the focus areas we then talk about. How do we also then make this part better as part of the specialization focus as well as we go forward. I think on the CapEx Bart, do you want to comment on the because there I think the trend Trend was the question. Absolutely. So within our present strategy, we have stepped up our use of capital. As being discussed. And we have guided there before if we look at the contract, at the average capital expenditure that we do into solution contract is around 15% of annual sales, 1 off capital expenditure. Trending there, a little bit below 2%, I think capital expenditures as a percentage of our sales. And we have obviously stepped up. We used to be a bit lower there. We obviously stepped up a bit. We get many and I get many acquisition files on my table. I mean, almost every week in acquisition opportunities presented to ourselves. And and quite often in there is it's a one sentence which says CapEx has been lower than 1% of of sales, which is put as a positive to that business. And I consider that really as a negative more and more. The companies we have studied, we see if that is the case, they are under invested. They had been under investing for quite some time and there's an inherent debt being built up there by being under it. So my view is clearly that we should support the CapEx for the business. The guidance we have provided is still valid contract by contract. Maybe that could change going forward, but for the timing, it's still valid. And I would also say that our shareholders really encouraged to make those type of investments as well. Prepare the company for the future. And it does give us a competitive advantage as well because we are one of the few, in many cases, the only one that is actually willing to invest in that partnership, in a much deeper ways, it also helps us to win more business, which I think is an important part. And the third question on the contract renewals? Yes. So I think like you rightfully said, I mean, we started this 25, 6 years ago. So we're now coming to some of these contracts. We always prefer long contracts together with the customers because it gives us more time to also then build and develop the services. What I have seen is it's usually working well when we are proactively working to drive improvements throughout the contract period. But if we take kind of a past approach and we say we build the security solution and we don't really change it that much in that 5 year period. Then the customer is okay. What are the triggers in terms of the added value? So I think one of the critical parts that we are working on is when we have that on contract period that we continuously also then doing the risk assessment. We are understanding the needs how they develop and that we then also fine tune and make differences to the services that we provide over time because then we have a lot of proof as well that the customer satisfaction for the solutions contract is significantly higher. And when there is higher satisfaction, that also typically means better profitability. And better retention as well. Okay. Next question. Yeah, please. It's Samik Puna from Kepler Cheuvreux. I've got 4 questions. They're all related and trying to assess whether this move to technologies, a value enhancing, a strategic move or necessary cost of staying in business. So bear with me. The first, the question relates to the the technology solution, I mean, you gave some indication of what you think is the most important benefit on the commercial side. I was wondering in terms of the most important margin driver, are we talking about an efficiency cost benefit over time as you people by automated automation and monitoring devices? Or are we talking more of an organic growth driver, a pricing and answer or retention benefit that as you alluded to, so that's the first question. The second question, I think it was almost asked, but about capital intensity of the business as it's growing. We see the barrier to entry of the civil industry, benefit strategically, but is there a tipping point when that scale advantage that you're building start to drive a return higher as well. 3rd question is on leverage. You've been accelerating the acquisition move. You mentioned you have an acquisition every day brought to you. But you also have that very narrow leverage ratio target. Would you be ready to actually increase that that ban to absorb larger deals in order to accelerate further this strategic move. And the last question, You didn't talk about competition and how technology is actually bringing alternative to customers. In particular, is it possibility to do that, that security monitoring themselves as a cost of technology is coming down? Or the possibility that technology providers are actually entering that segment. So could you help us understand the ticket of the competitive landscape as evolving in that matter? Thank you. I'm going to make it easy for myself and I will answer the 4th question that I hand over to you Bart. I think because the competitive aspect, I mean, we prefer to talk more about what we are doing in our journey. And I think the we see and it's partly related to first question that you had as well, that the technology is playing and will play a more important role. The data will also play a more important role in terms of how smart we are in providing the security. And so I think that that is the trend, that is unquestionable. If you then look from a customer perspective, many customers also say that you know what, we like the services, we like the quality, but we need to manage that cost question. And so that is always where we have the strength of being able to bring an alternative to alternative solution where we're then integrating the capability of the different protective services. So I think that that is clearly helping us. And like we said earlier, it's also helping us to win more business And there are many customers that I have seen over the last couple of years who just 1 or 2 years or 3 years back said. You know what? We really want to work with you, but solutions, electronic security, not at this point in time. And today, we're starting to roll out on a footprint across Europe, and in one case, on a global level as well, more standardized solutions. So this is also a journey we need to go through. And I think that is one important part. In terms of being replaced, and I think that's what we mentioned in the 4th question also in terms of will technology replace? Well, you can do a lot of smart and smarter things, with technology, but it's it's then also important to have the right information to be able to work in a smart way. And I think that is something that that's the reason that Martin, I emphasize that quite a lot. We believe we have a competitive advantage because of the footprint we have and the data that we can generate. So, we have a real scale advantage from the presence. So, I think that these are some of the kind of the views that we have. The other part of course as well is with technology, well, you cannot have a camera response. The camera can indicate to you what is potentially happening and it can smart analytics on it, but you do not have the power of being able to respond. And that's also the reason that we talk about the power of presence as one of the real important assets. Then Bart, do you want to give some on the other questions as well? Absolutely. You challenged a bit my brain now to remember all the questions. But, on, is it a margin driver? Is it growth driver? Entire journey we're looking into, it's both. It's obviously protective services guarding protective services, electronic security. We're looking driving both the top line and the margin. I think we have been quite successful. We have been actually been more successful than we thought at the beginning of driving the top line. Guarding has been the way the guarding has developed and we should not forget guarding is a good business. It has been better than we expected basically on the top line largely driven also to some traction that we get from the entire offering to our customers. So it's something which blends together. And the different pieces are enforcing each other. So it's both. We are looking both at efficiency and top line growth. Capital expenditures, is there a tipping point? I don't know for sure. What is clear, of course, is that 2 or scale and what we have reached, it will become difficult to get up to the same level as we are. I mean, we have been investing. We have been moving in this direction. I think we are taking advantage or advance compared to many of our other plays in the industry. It's a combination of having both the understanding what is the needs of the customers. How can we use technology and our people then to combine and how can we respond? And you need to have all those components in place. So we will continue to invest in all of that and make sure that we keep the lead here. Is there a tipping point? I don't know. But our strategy is much more to make sure that we take advance compared to anyone else. And then, leverage acquisitions I mean, we are comfortable there around, yes, leverage net debt to EBITDA of 2.5 is absolutely No problem. We have been lower at 12, at some point in time, more than around 2. We have been up a little bit higher as well just the Diebold acquisition. So our balance sheet is in a very good position. Acquiring is one thing, integrating is another thing. So you also need to make that you have the integration capability. But if we come around the right targets and we have the right capability to integrate, then we could make such acquisitions. It's more a matter of making sure we find the right targets and we invest into the right companies as well. There's quite some M and A activity going on right now, as all of you judge from different industries We are taking actively part of that or evaluating and scanning different possibilities. But at the same time, prices are also quite high at this point in time. So we are judging on our cars here, but one thing is for sure we have the right balance sheet and our shareholder support us in using that leverage capacity. Okay. Thank you. Next question, yes, from Mikaela Lohr. Hi. I have two questions. The first one, I think I've got many times over the latest years, and that's on the margin progression in the group. You showed that, security solutions and electronic security has grown from 8% of sales to 18% of sales 2013 to 2017, and margins were flat during that period. If you could just, elaborate a bit of that, what is happening with the margins in the more of the technology part of the business and what is happening on the man guarding side of the business and when we can see potential and the new inflection point for that development? That's the first question. And the second one is just related to you divided the 51 countries in how large share of sales that were coming from solutions and electronic security, if you could say something about the sales growth organic in the different groups, at what level in terms of security solutions and electronic security are growth leveling off Is that 30%, 40% or at 50%. So I mean, if you take a really long term view, how large that business could be, that's the second question. Okay, thank you. I think on the first question, we are aware of the operating margin obviously being at a stable level. At the same time, we have been growing the business quite a lot. We want to bring that up over time. There's no doubt about that, and we believe that we're going to be in a position to do that as well as progressing on the journey. But when you look at the I think one of the reasons that we also shared the examples from the countries today is also then to see What is really the dynamic when we are progressing in terms of solutions, electronic security and also what is the kind of correlation to profitability? Like we said, this is one tier driver, there are a few others as well. And when we do that and when we look at individual contracts, and I mean, we're tracking this all the time because we're also investing in CapEx, as we've said, We have many, many good proof points that distracted is working, but at the same time, we're also investing quite a lot. So when we say that in our protective services journey, We are in the middle of that right now, and that is continuously requiring investment on our side. And there is also then on the guarding side, there is always some pressure as well, on the guarding. And there we see different cycles as well. When you look at Spain, for example, it was almost a brutal situation competitively speaking a number of years ago in the middle of the crisis. Well, a number of companies were basically pricing themselves too low. So they also then went out to the market and now we see that that is then stabilizing a little bit as well. So this is something that we continuously working with. The pressure is there, but I can mention earlier as well. We are also looking at how can we also become more efficient and deliver better efficiency also and profitability in that guarding side. And second one, do you want to take that part Yes. I mean, the fifty one countries, could you elaborate a little bit more on your question? Because it was not that clear what you were asking for, for me, sorry. Yeah. I meant, for example, if you take those 13 countries that today have more than 30% of sales, okay, from electronic security, are they growing still in line with the group average of 16%, 7% organically or is growth leveling off at that level? Yeah, now I understand. So if you look at the entities, which, of course, have a low percentage of sales for them, it's easier to grow the percentage wise. So clear. So the more you go up in the ladder, it's difficult, more difficult it becomes to grow percentage wise. In nominal terms, however, we see that they are moving on in similar patterns still. And where is the end of that? Well, you have seen that we have already couple of countries which are in the 40% to 50% bandwidth, which to be honest, we could almost not imagine that would happen 5, 6 years ago. So where is the endpoint? I don't think we have discovered it. It's probably not 100%. We'd have not simply not discovered that, but the opportunities, the first opportunity for us is they have to move this, yes, 0% to 10% to move them also up in the ladder and to move everyone up to the 40% to 50% I mean, that is our first priority at this point in time. And it's also a learning curve. So I think what we see in a number of countries is that to get the first kind of movement before you build real momentum typically takes some time. And that is also because we need to have the right type of mindset, we need to have the technical capability, also quite a lot stronger support also on the sales and the commercial side. So that's why we talk quite a lot about the customer because it's different to sell a range of protected services or an integrated solution versus selling a stand alone service. And I think this is also something that is really then like partial is that when we have good growth in the penetration, we also typically see that the nominal levels that continue because then we're building the momentum and the confidence and the knowledge as well within that country to make it happen. One more comment maybe Ray to the margin. I think if you look at what happened in North America, there we have the cleanest picture on both, generating, yeah, being benefiting from scale and having not been too much disrupted by any other events. So there, we have been able to bring more content to our services, move up more into the protective services. Do a large acquisition in electronic security. So we have been able to build scale there, and you also see that being reflected in the margin, thanks to very good work of our colleagues in North America. In Europe, it has been proven to be a bit more difficult. It's the same strategy. It's the same goals. It's the same targets. But you need more people organically. It's more difficult to make sizable acquisitions. We have been a bit disturbed from the, from the refugee and terror crisis. We have also been a bit, maybe surprisingly not the right word, but at least our indirect cost development has also been higher than our sales Suna top line. So all of that is a bit more reflecting on Europe. Ibera America then, yeah, there we have been very much impacted from what is going on in Spain. And now that has started to turn around as well. But for instance, in Spain, if it would not have been for our journey of security solutions and technology, we would have been in a much worse position. Clearly, which we can clearly see that. And now we start to benefit from what we have built. And just to follow-up on the margin, you have this this ladder shown that security solutions and electronic security should have a margin of around 10%. Is that like the vision you have, or is that where you are today in that part of the business? That is the clear benchmark, and we have proof points to show that this is also the case. What we are doing also to support that is we're always looking at if we are converting a contract, what is then the benchmark in terms of what does good or great look like? And that we are tracking contract, every country as well, so that we also make sure that we get in the return for that investment and for the conversion that we're making. But on average, you are a bit below that then if you just have proof points of. So I think that's the general rule. And then there will be contracts where we have higher than that. There will be contracts where we have lower as well. And it depends quite a lot also on what is the mix of the protective services in the contract. Next question, Paul Chickates from Barclays. Hi, everyone. It is Paul Balgreens. I've got 3 as well, please. The first is you've got to see you've seen this explosion in use of electronic security and you're going to see a lot more data coming through. Are the IT systems within the organization robust enough to deal with all that? That's number 1. The second is returning to acquisitions and when you get to this sort of scale and when you're leading the industry, why can't you do this organically rather than making purchases? And perhaps in the future, is it not about the next stage where you'll be adding skill sets rather than buying businesses that look like yours today? And then the last one is with the changes that are happening, do you think we'll see more tendering for contracts rather than the sort of bilateral negotiations that have typically happened? Thanks. Martin, do you want to take the first one? I think that sounds like my question, yes. The systems we have today, Minus talked about it also, they, I would say, are robust and fit for purpose in an operating model, which we have been using up to date. When we move to more globalized on a mail leveraging scale and data, there is a need to modernize to consolidate these systems. So you heard me talk about the program around optimized for today. It's really what's it all about. It's about modernizing our systems. It's about building the platform for the future. Reducing local complexity into fewer points, which can scale well and leverage the new technology like cloud platforms, etcetera. So yes, there is a gap that we are addressing in terms of modernizing our systems, etcetera. That is a in sort of my team roughly on the optimized for today. That's where we spend at least 50% of resource and effort and tension to making sure that that is actually setting the foundation so that we can build the future on. I think when you look at the second question, was more related to organic versus acquisitions. And And when we look at the electronic security, acquisitions enabled us to speed up this pace of transformation. So what we have seen in our North America division, Barco, shared numbers earlier, fairly low numbers 5 years ago, but now they had done a tremendous job in really driving the change. And that is partly thanks to then making significant acquisitions and also then getting a different type of capability. And when we do that, versus then hiring organically and training and building organically, that obviously buys us some time as well. So I think that the time dimension is one very important part related to that question. But then obviously, we keep on building organically consistently. And we're also looking at some territories we would like to make acquisitions, but we don't find the right targets. And that means that there, we have to do more of an organic growth investment as well. I'll take the last one. Your third question was around tendering activity. I would say, in general, there is a move and definitely of the leading companies to say they go from more tendering to partnering. I think people are looking for efficiencies for improved quality for improved, safety and security environments. Absolutely. And bring also efficiencies to that But I think the shift there is a shift going on definitely in the leading company say, well, instead of going for tendering with GOMO for partnering and see what we can do together. And create value here together. I think it's not there to say this is everywhere and it's happening in every corner, but you see that the leading companies are embarking on this journey more than on a brutal tendering exercise. Still you will find brutal tendering as well, but there I see some shifter in thinking of some of our global key large customers, yes. And what's important then is that they look at security safety of very important activities but typically not their core activity. And here I think from a competitive standpoint, we are in a really, really good position because the footprint we have, the services we have, there are not that many companies that are actually able to compete with us. And that is why we're also then saying we're putting some folks also on the global customers because we believe that we are stronger and clearly the head of everyone else in that space. I think we have a coinciding interest here, actually, where we see a customer base, which is moving more to manage services, which coincides with our interest and abilities actually to provide managed services that can move us up the value chain delivery. And the next question from Mikael Lofdal, Kamiegi? Yes. Hi. Follow-up on the margin question. And first of all, how do you define when a contract becomes solutions contract. I mean, the percentage of technology or electronic, in that contract, when does it become a solution contract. And on that topic, when you look at the margins that a specific contract generates, is the mix within that contract, more important than the actual country where you operate in I. E. The competition or the level of maturity and so on. Because it when you look at all these graphs, there's a huge spread between countries and between the tech content, which we have difficulties to understand, I guess. Yes. Now to answer the last part of your question, it is different drivers. We have been focusing a lot on the technology component because we see the opportunity of that the other components we are working on as well constantly. We have maybe not talked so much about it, but of course, price wage equation, we have talked a lot about it. So that we have been able to manage from 1 year to the other. The basics of our industry is something we work on as well. If that is very difficult one to change and it takes time to change that over time. But there are countries where we have been really been able to change that over time. There are other countries where we are not we have not been able ourselves to change that yet, still to come. And in any case, even then in those countries where we are in in a lower maturity, so to say, we still by introducing electronic security and solutions, we still move the needle. And that's the whole thinking to wherever you are today, it doesn't matter as long as you start to improve. That is really the goal. No matter and even if you are in a country with maybe a low maturity still, you can improve. And that is what we try to bring to all the countries So, so, yeah, that is why you see some spread as well. If you would draw a line there, around it. We're still playing in a bandwidth. You could do that mentally. You could draw a bandwidth there around the regression line, and you would see that most countries play in a bandwidth with a few exceptions here or there. You will always have statistical exceptions, of course. The other part of your question The definition of a solution. Yes, that is when we combine different services into one contract with the customer, and we add the component of technology in their where we are investing into the technology. Yes, but what is the criteria? Yes, the criteria then. So it is when we combine different things, that's one criteria. And then we also invest into the technology. And then there's a bandwidth there. The one off investment should be between 10% 20% of sales. On average. So on average, 15% has been mentioned here before today, the capital expenditure. And you will find exceptions where it is a bit lower and it is higher as well. It should also be signed for 3, 4 or 5 years to be recognized internally as a contract, a solutions contract. Exactly. And yes, Karina Elvien from Handelsbanken. Yes. Thank you. I was a little bit wondering about the margin for intelligent and predictive security beyond 2020. Is your target for this, kind of service also 10% or? Yes. So I think, I mean, today we're giving a flavor of the services and the kind of the use cases, too early to talk about the commercial model, but obviously when we are bringing something will be stronger and different than anyone else can bring, we will add more value to the customer. We must also be able to price that something that is also one of the reasons that we do this, of course, because we believe we can bring really strong offering but also create significant value to the customer. But also then, the internal efficiency related aspects as well because this is about being data driven. It's not only to enhance security for the customer, but also then how do we optimize better also the entire operation that we have? Okay. And maybe a second question. You're saying that your margin has been a bit maybe hampered by also you're investing in this kind of new technology and solutions is is the level of investment something that you're going to continue with or are you going maybe to increase that or decrease, say in the near term or mid term? Yes. I think what we have shared today is that we need to modernize to be able to realize this ambition. There is quite a lot of work that we have ahead of us. That's the reason we say it's a multiyear program. I think that when it is the appropriate time, then we'll obviously come back and also communicate what that will mean also in terms of continued work and changes that we need to undertake and also the financial impact of that. Thanks. Any further questions? Yes. Henrik Marvey from Nordea. Thank you. Sorry if this is a long and complex question. I'm trying to sort my own thoughts here, but this primarily came to Martin. On the systems behind the digital solutions now. My question is really about trying to understand how proprietary and difficult those systems are to build. I suppose that there is a large need for local adoption and has been a large need for local adoption, which, to some extent, acts as a barrier for tech players copy or make similar systems. You're now saying that you want to globalize this and have reduced the amount of local adoption of these them. And to me, that could be an indication that maybe they are converging on more global standards and thus would actually reduce the barriers of entry. Can you elaborate a little bit around how much of the back end or should we say plumbing of these systems is actually proprietary to secure tests? And how much is just something that you've bought? Okay. In our leg, yes, differs a little bit on the geographies we have here. There is a certain amount of proprietary systems and they are a course, a have a hampering effect on scale. So we are both addressing some modernized and changed systems to more modern platforms. We are also working on the data the land and data modeling of the data that is common across systems so that it can actually tap into the valuable data regardless of the system and build services on top of that. But the long term, of course, then we are exchanging the systems to modern modern platforms. And in some of the geographies, we have we already have production systems that are coming from external bought platform providers which are already built for such purposes from the beginning. So it is a combination. And To really drive out the full scale, as Magnus said, that's a multi year journey. We have a lot of commonality in our back end systems. So we have guard reporting and guard management systems that have different flavors across different markets. But at the heart of it, they are basically the same systems. So the adaptation is not a completely different system in one market to another market. So the adaptation is smaller steps there. But I foresee if you look at the longer term, that we will actually modernize our back end systems quite significantly. And for the bulk of our processes, we will go for modern platform based system, which will then quickly then scale up what data is available. Do we have a final question? Please. Hi there. James Winkler from Jefferies. Obviously, the operational centers are a key part of deploying your new strategy going forward. 44 now. I'm wondering if you could provide some context in terms of how many you had, say, 5 years ago and maybe maybe, future plans in terms of how many more that may be required in terms of, investment in the future in order to execute your strategy? And then just a quick follow-up on the earlier, conversation on IT modern wondering if that's, baked into current CapEx, estimates in terms of kind of sitting around 2% of group or whether that represents a possibility of the requirement to increase CapEx moving forward? Thank you. I think in terms of the security operation, centers. The numbers have been fairly stable. When you look at the last 5 years, the critical difference now is that we are building more harmonized capabilities, so more sophisticated capability across this footprint. And there wasn't because when you're looking at an operation center in Some of that is just basic alarm receiving activities. But as you've seen now in the video, there is quite a lot more that we actually do. So the change there is not to really expand the number, but it's more a question of bringing up the capability and harmonizing that capability on a global level. I think the question, second one. Yes. On capital expenditures, I mean, I have mentioned there a bit below the 2% and that is still where we are targeting at this point in time. As Magnus said, we have made investments. We have upgraded. We had quite some of these operating centers, but we were more talking then about the control room and it was smaller things and it was more limited in capacities. So I have been upgrading those centers, both in terms of premises, in terms of software capabilities. And we will further do that, but the big investments there have made, absolutely. But for instance, if you look at the U. S. By itself, we almost have nothing 4 or 5 years ago in terms of operating center today. You have seen it in the movie, it was in one of the movies, our operating center in Charlotte, the state of the art with lot of capacity to further benefit from growth as well. So those things we have been working with the last 4, 5 years and everything of that is today included in our numbers. And to be clear, the intelligence operation center I talked about, it's not another 44 new operating centers. It's basically more to be seen platform that we glue together the footprint that we have today and leverage the capacity and the capabilities of those centers. Then I'm not saying that we will not add operating centers, but it's not something that is new and standalone to the current operating centers. And one more thing we have to add is, of course, we have to decide on our final strategies as well for the next 5 or 10 years. Is an exercise which is going on. And based on that, it could be that we changed some of our assumptions of some of our targets, but that's is too early to talk about. And we haven't had those conversations either, to be honest with you. We are now looking at conceptually what do we need to do in front of our customer and then we would take the decisions based on that. Good. You can push it round off, yes? I think if you can just click one forward, Mikhail. I would just like to say thank you to all of you for joining us today. I hope that we have made it informative for you. I hope that you also had some good opportunity to get a bit of a flavor of of the things that we are doing also leveraging technology. And I also want to say, we have a very strong foundation as a company, and this is obviously related to the strength of the entire team. So the team that has been helping and putting together, this, session this morning, but obviously also all the colleagues that we have all around the world who are really making security such a great company. We put up last slide, and this is about the different phases. That was just to to recap the strength that we have, but also then the continuous work that we are driving to make sure that we are stronger and that we're really leading the industry in the next 15 to 20 years. So this is an exciting journey and we are looking forward to also coming back and sharing more with you as well as we progress. So with that, a big thank you and enjoy the rest of the day. Thanks a lot.

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