Delivering strong results in the face of a global pandemic

Avarn Security is a leading security group with operations in Norway, Sweden, Finland and Denmark, supplying first-class security solutions to our clients across the Nordic market.

We are pleased to have delivered solid results in 2020, increasing both revenues and EBITDA. This success was achieved despite a significant drop in revenue in the Aviation and Cash Handling business. Our results in 2020 are in line with our plans, represent a significant improvement on 2019, and contributed to a positive development in cash flow during the year.

Throughout 2020 we continued our planned restructuring and merger programs, despite the unprecedented circumstances.

Our rebranding process started in 2020 and will continue until July 2021. We’re confident Avarn Security is a brand that is respected and appreciated by both our employees and customers.

The last year has shown that the security industry has the ability to manage unexpected situations, such as the global Covid-19 pandemic. A solid year for all our business streams in Norway Our Margin Improvement Program (MIP) is ongoing, with new initiatives having been implemented in a timely way, to the benefit of our bottom line. The journey to make Avarn Security a digitalized security company has successfully begun and continues across our business streams. Operational performance Along with the rest of the world, we were affected by the Covid-19 pandemic in 2020, with our Aviation and Travel-related business suffering the most.

Norway saw at total topline reduction of approximately 10% as a result of Covid-19, while volume decrease in Aviation was around NOK 200 million. Despite the significant reductions in volume, we managed to deliver results according to plan.

The Guarding business was affected by two major incidents in 2020 - Covid-19 and a historically long-lasting strike. The first quarter of 2020 was progressing as planned, until the Covid-19 situation hit hard in March. Mitigating actions were taken and employees were temporarily laid off. We took a number of actions to achieve our targets, including a focus on internal organization and maintaining a close dialogue with our customers.

Photo: Avarn Security

The Systems business remained solid with sales according to plan. However, results were negatively affected by clean-up and losses on three older projects.

Our Monitoring business remained steady but was negatively affected by a decrease in the call-out market, as a result of the pandemic and the strike.

Our Avarn Alarm business downscaled sales activity during the pandemic. This reduced costs and had a positive impact on EBTIDA in the short term, leading to a lower run rate for 2021 than planned.

Market segments – largely stable In 2020 most of our market segments were stable, except our Travel and Aviationrelated businesses. Many contracts were renegotiated, and several new tenders have been launched. Even among small and medium size businesses the willingness to invest has been almost on a normal level and we expect this situation to continue. New services and opportunities in retail for Skan-kontroll AS Skan-kontroll and Semac AS delivered solid results in 2020.

Changing operations The period since mid-March 2020, when Covid-19 really started to have an impact on global businesses, has been one of constant change in operations. In the summer, employees who had been temporarily laid off as part of our response to the pandemic, were taken back into production. New Covid-19 related services have been offered and business opportunities in the retail industry have secured revenue and margins.

Semac started 2020 in a very strong condition, but from Q2 the background check business was paralyzed, as a result of Covid-19, with hiring being put on hold across markets.

In mid Q3 the market was normalized, and by temporarily laying off employees and adjusting cost level, Semac managed to achieve its EBITDA target in 2020.

...2020 has been the most exciting year ever in the Swedish security market. Two of the largest security companies have successfully merged into one strong and agile player in the Swedish security market.

A challenging market The Covid-19 pandemic and long-running strike action proved challenging in 2020.

Constant changes in national and regional regulations have had both positive and

negative impacts on our business. While long-term planning has proved difficult, we have adapted to the ‘new normal’.

We are pleased to report that several new customers have been signed during the year in both Skan-kontroll and in Semac.

The retail industry has, of course, been challenging during the pandemic, but we are now ready to handle rapid changes in services to the market.

Successful merger of Nokas and Avarn in Sweden It’s true to say that 2020 has been the most exciting year ever in the Swedish security market. Two of the largest security companies have successfully merged into one strong and agile player in the Swedish security market.

Adapting to change and challenges We had a slow start in the first half of 2020, partly down to the merger which was, in some respects, more challenging than we expected, and Covid-19.

During the summer we managed to stabilize the situation. Significant steps were taken organizationally and some developments in our technical systems were launched. These actions made it possible to start a positive trend in second half of the year and, thanks to a strong result in December, we achieved our goal. Challenges faced by Guarding were mainly connected to three issues. Firstly, we had to move nearly 3,000 employees from one company to another, with all the associated regulatory approvals.

Secondly, we needed to deliver good and efficient schedules to promote productivity. In this area we encountered some challenges, as new Avarn Security quickly needed to be more automated in handling personnel and costumer invoicing.

Thirdly, solid leadership had to be put in place and we had to adjust to working within the Avarn culture.

In November we carried out our first employee survey to get a baseline for moving forward. As expected, we have identified areas for improvement and set a challenge and mission for 2021. The aviation industry stopped almost completely due to the pandemic. Since March 2020 air traffic has been around 10-12% of normal activity level. This extreme drop in traffic volumes forced us to completely change our organization and reduce employee numbers from about 1,000 to 250. However, with government initiatives we were able to deliver services to our customers and finalize the year according to plan.

Monitoring had a challenging start in 2020 as old Avarn ARC was relocated to new Avarn Security. During 2020 our focus has been on ensuring processes and systems work together seamlessly.

In Systems we have taken several positive steps, based on the turnaround plan we produced at the end of 2019. The progress during the year has led to an EBITDA improvement of 340%.

Successful merger Sales activity has been high during 2020 and we experienced a positive trend overall in the security market, although we can see a small and short-term decline within Systems.

The successful merger of Nokas and Avarn has given us compelling advantages in the Swedish market, but we have experienced increased local competition from small and midsize competitors.

Our Systems and Solutions business have been doing reasonably well in a turbulent environment.

Dedicated people

Our people are our most important asset as they are the core component of our service offering.

• We will be the most attractive employer through our open and honest culture • We will be best in class in developing our people through structured and targeted competency and leadership development • We empower and involve our people to create true ownership and engagement throughout our organization • Our people choose to stay with

Avarn Security as we provide a great place to work • We care about our employees and our impact on the society • Our core values Compassion,

Commitment and Collaboration are rooted in our daily work

Photo: Avarn Security

Stable operations in security services in Finland in 2020 In 2020 we completed the first full fiscal year after the merger of Prevent 360 and Avarn Security Finland.

We were operating the same IT systems and processes nationwide, which made it easier to respond to Covid-19 challenges. Overall, the pandemic had a fairly limited impact on business and our people. We are pleased that the amount of infected personnel remained low and Helsinki-Vantaa Airport was the only place to have a drop in volume. We experienced Covid-19 related direct costs, such as the cost of safety equipment, including masks, more sick leave and overtime. However, at the same time financial performance has been supported by the government initiative to temporarily reduce pension payments between May and December 2020.

Living and working with the pandemic In Security Services 2020 was more about contract extensions than obtaining new customers through tenders. But we welcomed some new, large customers, such as Helsinki Harbour, and made significant contract extensions, including the Terrafame contract, which was extended by five years.

We re-negotiated a contract with Finavia to stop regular security check services and continue on a project basis. While other customer segments have been more stable, there have been requests for changes in payment terms and reductions in service delivery.

Best-in-class solutions

• We are a full-service security solution provider • We create unique and innovative combinations of proven technology and manned services to exceed customer expectations • As your security expert advisor, we use data analytics to optimize solutions and increase insight for our customers • We offer digital solutions in order to make customer interaction easy • We deliver excellent customer experience through our friendly, professional and competent people • We take responsibility for our customers’ concerns and help them succeed by creating smooth and secure operational environment

Commercial orientation

• Profitable growth is a prerequisite for our capacity to invest in our dedicated people and best-in-class solutions • We compete on quality and provide the best value for money • We understand and act on the drivers of profitability at a customer and contract level • We have a relentless focus on continuous improvement and deploy leading practices across our business and operations • We use modern IT platforms and digital solutions to ensure efficient operations

Overall, we have gradually learned to live and work with the pandemic.

Our Monitoring business has been stable, but we are aware of the challenges facing SMEs in Finland. The amount of small business closures and bankruptcies are increasing monthly, impacting some of our Monitoring customers. Our strong volume base in Monitoring means the financial impact has been limited.

Our Systems and Solutions business have been doing reasonably well in a turbulent environment. The exception is two large pre-merger projects, started in 2018 by Prevent 360, with operational and financial challenges. We have been working on process improvements and inventory levels during 2020 and results became evident in operational and financial performance in Q4.

Competition and opportunities in the market Market development differs across our businesses. We see intense and heavy competition in the security services and monitoring market. In systems and solutions, the total market has been increasing which has created opportunities. Market development is expected to continue in a similar vein in 2021. Nokas Cash Handling heavily impacted by Covid-19 The year started well for Nokas Cash Handling. After a solid result in 2019 we began 2020 with EBDITA up by almost 25% on the previous year.

During March we entered the first Covid-19 lockdown. The impact – with supermarkets, stores and restaurants either closing down or encouraging customers not to use cash – was significant.

The second and third wave of the pandemic saw severe restrictions introduced by governments in Norway, Finland and Denmark and had an even greater impact on our business. The revenue for our ATM business declined approximately 45% on average and cash processing was down almost 15%.

On a positive noted, in June we were awarded the CIT/CP contract with Danske Bank and in October the agreement was signed. Implementation planning and work started immediately.

The longest-lasting strike in Norwegian history created operational challenges during Q4 and, eventually, we had to stop almost all activities in that market.

We decided to close a cash centre in Finland and the full effect of the savings from this move will be felt in the second half of 2021. In total, Nokas Cash Handling has reduced costs with an annual value of 48 MNOK. This included the increased cost in Denmark related to higher activity in the Danish market.

Challenges in 2020, and uncertainty about the use of cash in the ‘new normal’, have forced us to take mitigating action to ensure profitability. These actions have been identified and will be implemented and measured throughout 2021.

To conclude, we are starting to see positive signs and we expect the market to recover during 2021.

We are pleased to have delivered solid results in 2020, increasing both revenues and EBITDA. This success was achieved despite a significant drop in revenue in the Aviation and Cash Handling business.

Sustainability • We are ambitious and committed to reducing climate emissions to near zero by 2050 and set the same environmental requirements for our suppliers and subcontractors • We strive to become carbon neutral by applying a broad set of measures, including the use of new technology, reduction of travel, facility building/location optimization and replacement to fossil free vehicles • We set the highest standards in how we conduct our business, relate to the society and treat our customers and employees • We foster a culture of diversity and inclusion