Securitas Annual Report 2007

Financial Control for Correct Decisions
To accomplish our strategies and guide our people and organization towards achieving its objectives, Securitas has an established financial framework that continuously measures the Group’s performance from the branch offices up to Group level. This method of reporting makes it possible to follow a number of clear and simple key ratios that are understood by all of our employees.
The aim of the Group’s financial reporting is to produce information that is as accurate as possible so that managers and employees can take the decisions necessary to achieve profitable growth in line with Securitas’ strategies, and control risks to ensure that objectives are achieved. Financial reporting also forms the basis for good internal control.
The Group’s financial reporting is based on the following foundations:
  • Guidelines provided by our financial model for the divisions’ financial focus and division of responsibilities between different levels within the organization with respect to financial key ratios – Securitas Six Fingers.
  • Financial Policies and Guidelines, the Board of Directors’ policy document which is built around three central themes: transparent and coherent internal and external reporting, proactive risk management, and continuous improvement of financial oversight and control processes.
  • Securitas Reporting Manual, which provides all managers and financial staff with detailed instructions and definitions for financial reporting.
  • The Controller, whose role it is to work with integrity and professionalism to lead and collaborate with others to inspire high ethical standards and high levels of competence and dedication, as well as to constantly strive for accurate, transparent, relevant and up-to-date financial information.
Clarity and simplicity
Securitas’ financial model is basically simple. It focuses on transparency and distinct relationships between income and expenses in the statement of income, capital in the balance sheet, and the generation of cash flow to attain the highest possible levels of free cash flow and shareholder value. Managers and employees will thereby gain an understanding of the relationships between risk and opportunities and how they can be monitored and controlled and in turn impact their business areas. Transparent, accurate financial reporting is also the basis of good internal control.
The diagram on page 26 shows the statement of income, the statement of cash flow and the balance sheet and the relationships between them.
Statement of income
The statement of income is divided according to function and thus reflects the Group’s organization. Responsibility for each profit level is therefore clear, and managers with operational responsibility can concentrate on the factors they can affect. Gross margin and operating margin are key indicators used in reviewing operations at both division and Group level. Amortization of acquisition related intangible assets, financial items and taxes are monitored separately.
Statement of cash flow
In principle, the operating income should generate the same amount of cash flow from operating activities. The cash flow is affected

Page 25

Financial Control for Correct Decisions
 
To accomplish our strategies and guide our people and organization towards achieving its objectives, Securitas has an established financial framework that continuously measures the Group’s performance from the branch offices up to Group level. This method of reporting makes it possible to follow a number of clear and simple key ratios that are understood by all of our employees.
 
The aim of the Group’s financial reporting is to produce information that is as accurate as possible so that managers and employees can take the decisions necessary to achieve profitable growth in line with Securitas’ strategies, and control risks to ensure that objectives are achieved. Financial reporting also forms the basis for good internal control.
 
The Group’s financial reporting is based on the following foundations:
  • Guidelines provided by our financial model for the divisions’ financial focus and division of responsibilities between different levels within the organization with respect to financial key ratios – Securitas Six Fingers.
 
  • Financial Policies and Guidelines, the Board of Directors’ policy document which is built around three central themes: transparent and coherent internal and external reporting, proactive risk management, and continuous improvement of financial oversight and control processes.
 
  • Securitas Reporting Manual, which provides all managers and financial staff with detailed instructions and definitions for financial reporting.
 
  • The Controller, whose role it is to work with integrity and professionalism to lead and collaborate with others to inspire high ethical standards and high levels of competence and dedication, as well as to constantly strive for accurate, transparent, relevant and up-to-date financial information.
 
Clarity and simplicity
Securitas’ financial model is basically simple. It focuses on transparency and distinct relationships between income and expenses in the statement of income, capital in the balance sheet, and the generation of cash flow to attain the highest possible levels of free cash flow and shareholder value. Managers and employees will thereby gain an understanding of the relationships between risk and opportunities and how they can be monitored and controlled and in turn impact their business areas. Transparent, accurate financial reporting is also the basis of good internal control.
 
The diagram on page 26 shows the statement of income, the statement of cash flow and the balance sheet and the relationships between them.
 
Statement of income
The statement of income is divided according to function and thus reflects the Group’s organization. Responsibility for each profit level is therefore clear, and managers with operational responsibility can concentrate on the factors they can affect. Gross margin and operating margin are key indicators used in reviewing operations at both division and Group level. Amortization of acquisition related intangible assets, financial items and taxes are monitored separately.
 
Statement of cash flow
In principle, the operating income should generate the same amount of cash flow from operating activities. The cash flow is affected