Securitas Annual Report 2007

The Divisions
Security Services North America, page 38.
Security Services North America offers specialized guarding services in the USA, Canada and Mexico. In the USA the division is split into 17 business units – one organization for national and global customers, ten geographical regions and three specialized regions (the automotive industry, the public sector and the energy industry). Canada and Mexico are separate regions. The division also includes Pinkerton Consulting & Investigations. Altogether this division encompasses just over 600 branch offices and more than 100,000 employees. Security Services North America’s service offering covers all segments in most industries.
Market share: 16 percent.
Security Services Europe, page 40.
Securitas’ European guarding operation consists of Security Services Europe, which offers specialized guarding services for large and medium-sized customers in 20 countries, and Aviation, which offers airport security in nine countries. The organization has more than 800 branch offices and has more than 100,000 employees. The customers’ operations and businesses range from financial services, retail, energy, healthcare and the public sector to special events, to mention a few. Aviation offers specialized services for airports, airport-related business and airlines.
Market share, existing markets: 18 percent.
Mobile and Monitoring, page 42.
Mobile offers mobile services for small and medium-sized companies, such as beat patrol and call-out services. Mobile operates in eleven countries in Europe with 8,600 employees and 274 branch offices. Monitoring offers electronic alarm surveillance to both homes and businesses under the Alert Services brand. Alert Services also offers an integrated GPS service, track and trace, that covers a major part of the EU area. Alert Services operates control rooms in eight countries in Europe and has 700 employees.
Market share, existing markets: 22 percent.
Loomis, page 44.
Loomis offers a complete range of integrated cash handling solutions and has a strong market position in the USA and Western Europe. The company’s services are primarily aimed at banks and retail companies. Loomis offers its customers a secure and efficient service for cash handling. Services are divided into three areas: cash transportation, cash handling and technical services. Altogether Loomis has more than 440 branch offices with almost 21,000 employees in Western Europe and the USA.
Market share, existing markets: 20 percent.
Group 1
1 Including Other and Eliminations.
2007 in Brief
The year of 2007 showed continued good organic sales growth and stable operating margins in Security Services, while Loomis was burdened by difficulties primarily in the United Kingdom. Securitas strategy for the future was launched in August 2007 and then rolled out in the Group during the latter half of the year. The three key elements in the strategy are: a higher degree of specialization in the service offering, driven by more customer segmentation; expansion of the Mobile and Monitoring organization; and increased global presence. In addition, Securitas’ new financial objectives going forward are an annual average increase in Earnings Per Share (EPS) of 10 percent and a free cash flow in relation to net debt of at least 0.20.
  • New CEO and Group Management in place.
  • Stable growth and operating margins in Security Services.
  • Loomis Cash Management (LCM) UK Ltd., part of Loomis, was sold to Vaultex UK Ltd. in November 2007.
  • Total sales amounted to MSEK 62,908 (60,523).
  • Income before taxes amounted to MSEK 1,397 (883).
  • Net income after tax amounted to MSEK 526 (513).
  • Earnings per share amounted to SEK 1.44 (1.41).
  • Earnings per share before items affecting comparability and impairment losses of goodwill were SEK 4.78 (6.00). Adjusted also for the LCM and Note Circulation Rules (NCS) not for the LCM operational losses, the earnings per share was SEK 5.36, which Securitas considers to be the relevant basis for future performance comparisons.
  • Total impact from impairment losses of goodwill and items affecting comparability amounted to MSEK –1,068 (–2,060).
  • Proposed dividend SEK 3.10 (3.10). The total dividend amounts to 47 percent of free cash flow, which is in line with the dividend level that Securitas should sustain.
Key ratios      
MSEK 2007 2006 2005
Sales 62,908 60,523 58,201
Organic sales growth, % 5 6 4
Operating income before amortization 3,182 3,591 3,526
Operating margin, % 5.1 5.9 6.1
Real change, % –8 4 5
Income before taxes and items affecting comparability and impairment losses of goodwill 2,465 2,943 2,992
Real change, % –12 4 8
Income before taxes 1,397 883 2,841
Real change, % 72 –67 4
Net income for the period, continuing operations 526 513 2,158
Earnings per share, before items affecting comparability, continuing operations (SEK) 1 4.78 6.00 6.32
Earnings per share, continuing operations (SEK) 1 1.44 1.41 5.91
1 For the purpose of the earnings per share (EPS) calculation, the impairment losses of goodwill have also been added back.      
EPS is calculated before dilution.      
The Divisions
 
Security Services North America, page 38.
 
Security Services North America offers specialized guarding services in the USA, Canada and Mexico. In the USA the division is split into 17 business units – one organization for national and global customers, ten geographical regions and three specialized regions (the automotive industry, the public sector and the energy industry). Canada and Mexico are separate regions. The division also includes Pinkerton Consulting & Investigations. Altogether this division encompasses just over 600 branch offices and more than 100,000 employees. Security Services North America’s service offering covers all segments in most industries.
Market share: 16 percent.
 
 
Security Services Europe, page 40.
Securitas’ European guarding operation consists of Security Services Europe, which offers specialized guarding services for large and medium-sized customers in 20 countries, and Aviation, which offers airport security in nine countries. The organization has more than 800 branch offices and has more than 100,000 employees. The customers’ operations and businesses range from financial services, retail, energy, healthcare and the public sector to special events, to mention a few. Aviation offers specialized services for airports, airport-related business and airlines.
Market share, existing markets: 18 percent.
 
 
Mobile and Monitoring, page 42.
 
Mobile offers mobile services for small and medium-sized companies, such as beat patrol and call-out services. Mobile operates in eleven countries in Europe with 8,600 employees and 274 branch offices. Monitoring offers electronic alarm surveillance to both homes and businesses under the Alert Services brand. Alert Services also offers an integrated GPS service, track and trace, that covers a major part of the EU area. Alert Services operates control rooms in eight countries in Europe and has 700 employees.
Market share, existing markets: 22 percent.
 
 
Loomis, page 44.
 
Loomis offers a complete range of integrated cash handling solutions and has a strong market position in the USA and Western Europe. The company’s services are primarily aimed at banks and retail companies. Loomis offers its customers a secure and efficient service for cash handling. Services are divided into three areas: cash transportation, cash handling and technical services. Altogether Loomis has more than 440 branch offices with almost 21,000 employees in Western Europe and the USA.
Market share, existing markets: 20 percent.
 
 
Group 1
 
1 Including Other and Eliminations.
 

Page 5

 
2007 in Brief
 
The year of 2007 showed continued good organic sales growth and stable operating margins in Security Services, while Loomis was burdened by difficulties primarily in the United Kingdom. Securitas strategy for the future was launched in August 2007 and then rolled out in the Group during the latter half of the year. The three key elements in the strategy are: a higher degree of specialization in the service offering, driven by more customer segmentation; expansion of the Mobile and Monitoring organization; and increased global presence. In addition, Securitas’ new financial objectives going forward are an annual average increase in Earnings Per Share (EPS) of 10 percent and a free cash flow in relation to net debt of at least 0.20.
 
  • New CEO and Group Management in place.
  • Stable growth and operating margins in Security Services.
  • Loomis Cash Management (LCM) UK Ltd., part of Loomis, was sold to Vaultex UK Ltd. in November 2007.
  • Total sales amounted to MSEK 62,908 (60,523).
 
  • Income before taxes amounted to MSEK 1,397 (883).
  • Net income after tax amounted to MSEK 526 (513).
  • Earnings per share amounted to SEK 1.44 (1.41).
 
  • Earnings per share before items affecting comparability and impairment losses of goodwill were SEK 4.78 (6.00). Adjusted also for the LCM and Note Circulation Rules (NCS) not for the LCM operational losses, the earnings per share was SEK 5.36, which Securitas considers to be the relevant basis for future performance comparisons.
 
  • Total impact from impairment losses of goodwill and items affecting comparability amounted to MSEK –1,068 (–2,060).
  • Proposed dividend SEK 3.10 (3.10). The total dividend amounts to 47 percent of free cash flow, which is in line with the dividend level that Securitas should sustain.
 

Key ratios      
MSEK 2007 2006 2005
Sales 62,908 60,523 58,201
Organic sales growth, % 5 6 4
Operating income before amortization 3,182 3,591 3,526
Operating margin, % 5.1 5.9 6.1
Real change, % –8 4 5
Income before taxes and items affecting comparability and impairment losses of goodwill 2,465 2,943 2,992
Real change, % –12 4 8
Income before taxes 1,397 883 2,841
Real change, % 72 –67 4
Net income for the period, continuing operations 526 513 2,158
Earnings per share, before items affecting comparability, continuing operations (SEK) 1 4.78 6.00 6.32
Earnings per share, continuing operations (SEK) 1 1.44 1.41 5.91
1 For the purpose of the earnings per share (EPS) calculation, the impairment losses of goodwill have also been added back.      
EPS is calculated before dilution.