Interim / Quarterly Report • Aug 5, 2011
Interim / Quarterly Report
Open in ViewerOpens in native device viewer
Interim Report January–June 2011
APRIL–JUNE 2011
The positive organic sales growth continued in North America, Ibero-America and in Mobile and Monitoring. The organic sales growth in Latin America, an important area in the new business segment Security Services Ibero-America, is developing strongly and amounted to 24 percent during the period. The loss of a few important contracts has hampered the growth in Security Services Europe. Including acquisitions, the real sales growth in the Group was 13 percent in the quarter and 11 percent for the first half year.
The operating margin remains stable in North America, Ibero-America and in Mobile and Monitoring, and the real change of the operating income compared to previous year is developing well. In Security Services Europe, the loss of a few major contracts and difficulties to manage the balance between wage increases and price increases have resulted in a non-satisfactory development and actions are taken to restore the performance. The balance of labor markets recovering and competitive market conditions must be managed with prudence, and being the market leader in many European markets, we will continue to prioritize profitability rather than market share.
The recent large acquisitions in the United Kingdom, that give us an improved presence and strength in the UK security market, are developing as expected even if they dilute the operating margin during 2011.
| January–June summary 2 | |
|---|---|
| Group development 3 | |
| Development in the Group's business segments 5 |
|
| Cash flow 9 | |
| Capital employed and financing 10 |
|
| Acquisitions 11 | |
| Other significant events 13 | |
| Changes in Group Management 13 |
|
| Risks and uncertainties 14 | |
| Parent Company operations 14 |
|
| Accounting principles 15 | |
| Signatures of the Board of Directors 16 |
|
| Review report 17 | |
| Consolidated financial statements 18 |
|
| Segment overview 22 | |
| Notes 23 | |
| Parent Company 25 | |
| Definitions 25 | |
| Financial information 26 |
Alf Göransson President and Chief Executive Officer
| Total | Total | |||||
|---|---|---|---|---|---|---|
| MSEK | Q2 2011 | Q2 2010 | change, % | H1 2011 | H1 2010 | change, % |
| Sales | 15,628 | 15,424 | 1 | 30,403 | 30,295 | 0 |
| Organic sales growth, % | 3 | 0 | 3 | –1 | ||
| Real sales growth, including acquisitions, % | 13 | 3 | 11 | 2 | ||
| Operating income before amortization | 747 | 859 | –13 | 1,460 | 1,676 | –13 |
| Operating margin, % | 4.8 | 5.6 | 4.8 | 5.5 | ||
| Real change, % | –2 | 4 | –3 | 4 | ||
| Income before taxes | 526 | 671 | –22 | 1,053 | 1,314 | –20 |
| Real change, % | –12 | 4 | –11 | 2 | ||
| Net income | 369 | 470 | –21 | 738 | 921 | –20 |
| Earnings per share (SEK) | 1.01 | 1.29 | –22 | 2.02 | 2.53 | –20 |
As of the second quarter 2011, Securitas has created a fourth business segment, Security Services Ibero-America. The new business segment comprises the guarding activities in Argentina, Chile, Colombia, Ecuador, Peru, Portugal, Spain and Uruguay. The operations within Aviation as well as Mobile and Monitoring in Portugal and Spain are not affected by this reorganisation.
| Organic sales growth | Operating margin | |||||||
|---|---|---|---|---|---|---|---|---|
| Q2 H1 |
Q2 | H1 | ||||||
| % | 2011 | 2010* | 2011 | 2010* | 2011 | 2010* | 2011 | 2010* |
| Security Services North America | 4 | –4 | 4 | –5 | 6.0 | 6.0 | 5.7 | 5.7 |
| Security Services Europe | 0 | 3 | 1 | 2 | 3.1 | 4.7 | 3.5 | 4.8 |
| Mobile and Monitoring | 4 | 1 | 3 | 2 | 10.5 | 10.5 | 10.5 | 10.9 |
| Security Services Ibero-America | 11 | 0 | 9 | 0 | 6.3 | 6.2 | 6.0 | 6.3 |
| Group | 3 | 0 | 3 | –1 | 4.8 | 5.6 | 4.8 | 5.5 |
* The comparatives have been restated due to operations moved between the segments Security Services Europe, Mobile and Monitoring and Security Services Ibero-America. Refer to note 7 on page 24 for quarterly information for 2010 and for the first quarter 2011.
On May 16, 2011 Securitas announced a public offer to acquire all shares and warrants of Niscayah Group AB, a global technical security services company. The acquisition of Niscayah is an important strategic step in order for Securitas to improve the abilities to offer its customers comprehensive security programmes in the form of specialised physical security solutions within guarding, technical security solutions as well as consulting and crisis management services. The Offer to the shareholders of Niscayah consists of new class A and class B shares in Securitas. For every 4.19 class A and class B shares respectively in Niscayah, each shareholder will receive one (1) class A and class B share in Securitas respectively. The Offer represents a premium of approximately 34 percent compared to Niscayah's volume weighted average share price of approximately SEK 11.97 during the last three months up to and including May 13, 2011 being the last day of trading prior to announcement of the Offer. The acceptance period of the Offer commenced on June 20, 2011 and has been extended to expire on September 9, 2011.
At the Extraordinary General Meeting in Securitas AB held on June 13, 2011 it was resolved to approve the decision of the Board of Directors of May 15, 2011 to make a public takeover offer to the shareholders of Niscayah, which includes Securitas three largest shareholders. The meeting also resolved to authorize the Board, on one or more occasions until December 31, 2011, to issue new shares of series A and series B to be used as consideration for the acquisition of the shares of Niscayah. For further information, refer to www.securitas.com.
Group quarterly sales development Group quarterly sales development
Sales amounted to MSEK 15,628 (15,424) and organic sales growth was 3 percent (0). The improvement in organic sales growth was supported mainly by the development in Security Services North America, Mobile and Monitoring and Security Services Ibero-America and relates to both the contract portfolio as well as an increase in extra sales. In Security Services Europe, the organic sales growth showed a fragmented picture. The majority of countries showed positive organic sales growth, but a few countries were significantly negative which impacted the business segment.
Real sales growth, including acquisitions and adjusted for changes in exchange rates, was 13 percent (3).
Operating income before amortization was MSEK 747 (859) which, adjusted for changes in exchange rates, represented a decrease of –2 percent.
The Group's operating margin was 4.8 percent (5.6). The operating margin was negatively impacted mainly by Security Services Europe due to the loss of a few important contracts and difficulties to manage the wage cost increases in primarily France and Sweden. Security Services North America showed a flat operating margin, however supported by a settlement in a client dispute. Mobile and Monitoring's operating margin was also flat while Security Services Ibero-America's operating margin improved slightly. The acquisitions of Reliance Security Services and Chubb in the United Kingdom, along with Paragon Systems and Security Consultants Group in the USA, diluted the operating margin by –0.2 percent.
The price adjustments in the Group were behind the total wage cost increases in the second quarter.
Amortization of acquisition related intangible assets amounted to MSEK –53 (–39).
Acquisition related costs impacted the quarter by MSEK –47 (–20). Restructuring and integration costs for Reliance and Chubb amounted to MSEK –23. Further information is provided in note 4.
Financial income and expenses amounted to MSEK –121 (–129).
Income before taxes was MSEK 526 (671). The real change was –12 percent.
The Group's tax rate was 29.9 percent (29.9).
Net income was MSEK 369 (470). Earnings per share amounted to SEK 1.01 (1.29).
Sales amounted to MSEK 30,403 (30,295) and organic sales growth was 3 percent (–1). The positive development in organic sales growth derives foremost from Security Services North America and Security Services Ibero-America. In Security Services Europe, the majority of the countries showed positive organic sales growth, but a few countries were significantly negative due to a few large contract losses in the first half year.
Securitas organic sales growth in the first six months is estimated to be ahead of the market in North America and below market growth in Europe.
Real sales growth, including acquisitions and adjusted for changes in exchange rates, was 11 percent (2).
Operating income before amortization was MSEK 1,460 (1,676) which, adjusted for changes in exchange rates, represented a decrease of –3 percent.
The Group's operating margin was 4.8 percent (5.5). The operating margin was negatively impacted mainly by the margin decline in Security Services Europe and relates to the loss of a few large contracts, a price competitive environment and a discrepancy between price increases and wage cost increases. Security Services North America showed a flat operating margin, however supported by a settlement in a client dispute. Mobile and Monitoring and Security Services Ibero-America showed a decline in their respective business segments. The acquisitions of Reliance Security Services and Chubb in the United Kingdom, along with Paragon Systems and Security Consultants Group in the USA, diluted the operating margin by –0.2 percent.
Amortization of acquisition related intangible assets amounted to MSEK –98 (–77).
Acquisition related costs impacted the period by MSEK –79 (–25). Restructuring and integration costs for Reliance Security Services and Chubb amounted to MSEK –36 and transaction costs for the acquisition of Chubb of MSEK –11. Further information is provided in note 4.
Financial income and expenses amounted to MSEK –230 (–261).
Income before taxes was MSEK 1,053 (1,314). The real change was –11 percent.
The Group's tax rate was 29.9 percent (29.9).
Net income was MSEK 738 (921). Earnings per share amounted to SEK 2.02 (2.53).
Security Services North America 34%
Security Services North America 43%
Security Services North America provides specialized security services in the USA, Canada and Mexico and comprises 19 business units: one organization for national and global accounts, ten geographical regions and five specialty customer segments in the USA, plus Canada, Mexico and Pinkerton Consulting & Investigations (C&I). In total, there are 97 geographical areas, about 600 branch managers and approximately 100,000 employees.
| Security Services North America | April–June | January–June | January–December | ||
|---|---|---|---|---|---|
| MSEK | 2011 | 2010 | 2011 | 2010 | 2010 |
| Total sales | 5,333 | 5,855 | 10,563 | 11,217 | 22,731 |
| Organic sales growth, % | 4 | –4 | 4 | –5 | –2 |
| Operating income before amortization |
322 | 350 | 597 | 639 | 1,380 |
| Operating margin, % | 6.0 | 6.0 | 5.7 | 5.7 | 6.1 |
| Real change, % | 12 | 2 | 10 | –1 | 4 |
Organic sales growth was 4 percent (–4) in the second quarter, supported by contract sales as well as an increase in extra sales. The sales of specialized security solutions as percentage of total sales increased in the quarter.
The operating margin of 6.0 percent (6.0) was positively impacted by 0.4 percent through a settlement in a client dispute. The operating margin in the core business was negatively impacted by the price competitive environment. The operating margin was diluted by –0.2 percent due to the acquisitions of primarily Paragon Systems and Security Consultants Group.
The U.S. dollar exchange rate had a negative effect on the operating result in Swedish kronor. The real change was 12 percent in the second quarter.
Organic sales growth was 4 percent (–5) in the first half year and was primarily driven by the positive net change in the contract portfolio in the second half of 2010. The sales of specialized security solutions as percentage of total sales increased in the first half year.
The operating margin was 5.7 percent (5.7) and was positively impacted by 0.2 percent through a settlement in a client dispute. The operating margin was diluted by –0.1 percent due to the acquisitions of Paragon Systems and Security Consultants Group.
The U.S. dollar exchange rate had a negative effect on the operating result in Swedish kronor. The real change was 10 percent in the first half year.
The client retention rate was approximately 90 percent which is an improvement compared to last year. The employee turnover rate in the U.S. was 44 percent (36).
Security Services Europe 42%
Security Services Europe 27%
Security Services Europe provides specialized security services for large and medium-sized customers in 23 countries, while Aviation — part of the Security Services Europe business segment — provides airport security in 14 countries. Security Services Europe has a combined total of over 650 branch managers and more than 100,000 employees.
| Security Services Europe | April–June | January–June | January–December | ||
|---|---|---|---|---|---|
| MSEK | 2011 | 2010* | 2011 | 2010* | 2010* |
| Total sales | 6,529 | 6,077 | 12,625 | 12,104 | 24,556 |
| Organic sales growth, % | 0 | 3 | 1 | 2 | 4 |
| Operating income before amortization |
204 | 285 | 437 | 576 | 1,300 |
| Operating margin, % | 3.1 | 4.7 | 3.5 | 4.8 | 5.3 |
| Real change, % | –25 | 7 | –19 | 9 | 10 |
* The comparatives have been restated due to operations moved between the segments Security Services Europe, Security Services Ibero-America and Mobile and Monitoring. Refer to note 7 on page 24 for quarterly information for 2010 and for the first quarter 2011.
Organic sales growth was 0 percent (3) in the second quarter. The organic sales growth levels differ between the countries in the business segment even though the majority were positive in the quarter. In the guarding operation, countries such as Germany and Turkey showed good organic sales growth. Due to large contract losses, as previously reported, the development was significantly negative in Belgium and the United Kingdom. As reported in the first quarter 2011, the contract with the European Commission in Belgium worth approximately MEUR 36 in annual sales, expired on April 1, 2011. The level of extra sales increased in the quarter compared to last year.
The operating margin was 3.1 percent (4.7). The loss of major contracts represented –0.6 percent of the decline, acquisition related margin dilution –0.4 percent and discrepancy between price and wage cost increases represented –0.6 percent. The discrepancy between price and wage cost increases is primarily deriving from France and Sweden.
The euro exchange rate had a slight negative impact on the operating income in Swedish kronor. The real change was –25 percent in the quarter.
Organic sales growth was 1 percent (2) in the first half year. Most countries had positive organic sales growth, but despite that organic sales growth declined in the first half year. The decline is explained by the significantly negative organic sales growth in Belgium and the United Kingdom. As previously reported in the third quarter report 2010, the first half year was impacted by some contracts losses of exceptional magnitude. Security Services Europe lost a major contract in the United Kingdom and the contract with Brussels Airport in Belgium during the second half of 2010. Both contract losses were effective early in the first quarter 2011. On April 1 2011, the contract with the European Commission in Belgium worth approximately MEUR 36 annually in sales expired. The annual impact on sales from the contract losses is estimated to –3 percent in the business segment. The price pressure in the security market and the price aggressiveness from competition is fierce in many countries and especially in France.
The operating margin was 3.5 percent (4.8). The lost contracts had a negative effect on the operating margin and together with the transition and reduction of personnel, the total negative impact on the operating margin was –0.4 percent in the business segment. The acquisitions of Reliance Security Services and Chubb in the United Kingdom diluted the operating margin by –0.4 percent compared to the same period last year. The remaining deviation of –0.5 percent is due to discrepancies between price and wage cost increases, primarily in France and Sweden.
The remedy to manage the development in Europe is to continue with the specialization and added value strategy, to prioritize profitability when managing the price increases in relation to wage cost increases and to reduce overhead costs.
The euro exchange rate had a negative impact on the operating income in Swedish kronor. The real change was –19 percent for the first half year.
The client retention rate was slightly below 90 percent. The employee turnover rate was 29 percent (25).
Securitas AB Interim Report, January–June 2011
Mobile and Monitoring 10%
Mobile and Monitoring 22%
Mobile provides mobile security services for small and medium-sized businesses and residential sites, while Monitoring provides electronic alarm surveillance services. Mobile operates in 11 countries across Europe and has approximately 8,900 employees in 28 areas and about 220 branch managers. Monitoring, with approximately 900 employees, operates in 11 countries in Europe.
| Mobile and Monitoring | April–June | January–June | January–December | ||
|---|---|---|---|---|---|
| MSEK | 2011 | 2010* | 2011 | 2010* | 2010* |
| Total sales | 1,527 | 1,473 | 2,979 | 2,951 | 5,961 |
| Organic sales growth, % | 4 | 1 | 3 | 2 | 2 |
| Operating income before amortization |
161 | 155 | 312 | 323 | 740 |
| Operating margin, % | 10.5 | 10.5 | 10.5 | 10.9 | 12.4 |
| Real change, % | 8 | –2 | 1 | 3 | 6 |
* The comparatives have been restated due to operations moved between the segments Security Services Europe and Mobile and Monitoring. Refer to note 7 on page 24 for quarterly information for 2010.
Organic sales growth was 4 percent (1). In the Mobile operation, most countries had positive organic sales growth and countries such as Belgium, Germany and Norway were above average. In the Monitoring operation, all countries except Belgium and Spain had positive organic sales growth.
The operating margin was 10.5 percent (10.5). In the Mobile operation, the operating margin was diluted by –0.1 percent due to the acquisition of Reliance Security Services in the United Kingdom. In the Monitoring operation, the operating margin was negatively affected by due diligence costs related to an acquisition that was not completed. Adjusted for these one off effects, the operating margin improved. The real change in operating income in the business segment was 8 percent in the quarter.
Organic sales growth was 3 percent (2). In the Mobile operation, the improvement in organic sales growth was supported by countries such as Belgium and Norway. In the Monitoring operation, good organic sales growth was seen in Sweden and Norway while Belgium, France and Spain showed negative organic sales growth.
The operating margin was 10.5 percent (10.9). In the Mobile operation, the operating margin was negatively impacted by primarily increased fuel costs. Also, it was diluted by –0.1 percent due to the acquisition of Reliance Security Services in the United Kingdom. In the Monitoring operation, the operating margin was negatively affected by restructuring costs in Belgium, France and Spain and due diligence costs related to an acquisition that was not completed. Adjusted for these one off costs, the operating margin in the Monitoring operation improved. The real change in operating income in the business segment was 1 percent in the first half year.
Security Services Ibero-America 14%
Security Services Ibero-America 18%
Security Services Ibero America provides specialized security services for large and mediumsized customers in six countries in Latin America, Spain and Portugal. Security Services Ibero-America has a combined total of approximately 58,000 employees.
| Security Services Ibero-America | April–June | January–June | January–December | ||
|---|---|---|---|---|---|
| MSEK | 2011 | 2010* | 2011 | 2010* | 2010* |
| Total sales | 2,158 | 1,998 | 4,075 | 4,000 | 7,968 |
| Organic sales growth, % | 11 | 0 | 9 | 0 | 1 |
| Operating income before | |||||
| amortization | 135 | 123 | 244 | 250 | 529 |
| Operating margin, % | 6.3 | 6.2 | 6.0 | 6.3 | 6.6 |
| Real change, % | 20 | 0 | 8 | 0 | –5 |
*Refer to note 7 on page 24 for quarterly information for 2010 and for the first quarter 2011.
Organic sales growth was 11 percent (0) in the second quarter and all countries in Security Services Ibero-America had positive organic sales growth. The second quarter last year was pressured by negative organic sales growth in Spain.
The operating margin was 6.3 percent (6.2). The improvement derives from the Latin American countries with good performance and helped by acquisitions made in Argentina and Chile. The operating margin in Spain and Portugal has declined due to the highly price competitive market and a discrepancy between price and wage cost increases.
The currency exchange rates had a negative impact on the operating income in Swedish kronor. The real change was 20 percent in the quarter.
Organic sales growth was 9 percent (0) in the first half year and positive organic sales growth was seen in all countries. The first half 2010 was pressured by negative organic sales growth in Spain.
The operating margin was 6.0 percent (6.3). The decline in the operating margin is due to the development in Spain and Portugal, where market conditions remain difficult and price increases did not meet wage cost increases.
The currency exchange rates had a negative impact on the operating income in Swedish kronor. The real change was 8 percent in the first half year.
The client retention rate was 87 percent. The employee turnover rate was 34 percent.
Operating income before amortization amounted to MSEK 747 (859). Net investments in noncurrent tangible and intangible assets amounted to MSEK –35 (22).
Changes in accounts receivable was MSEK –484 (–354) for the second quarter. An increase in days of sales outstanding (DSO) impacted the quarter negatively. A major explanation for the increase in DSO is due to the integration of Reliance Security Services where a change in credit- and collection procedures have resulted in an increase. This is expected to be collected during the second half of the year.
Changes in other operating capital employed was MSEK –107 (–185). The negative payroll timing from the Netherlands that impacted the first quarter 2011 has been reduced during the second quarter, but for the full year 2011 a negative impact is expected compared to full year 2010. This is due to the payroll system with almost a full extra salary period falling into 2011 compared to 2010. Another negative impact in the quarter was explained by a VAT payment that is related to the Reliance Security Services acquisition.
Cash flow from operating activities amounted to MSEK 121 (342), equivalent to 16 percent (40) of operating income before amortization.
Financial income and expenses paid amounted to MSEK –274 (–317). Current taxes paid amounted to MSEK –333 (–295).
Free cash flow was MSEK –486 (–270), equivalent to –100 percent (–49) of adjusted income.
Cash flow from investing activities, acquisitions, was MSEK –840 (–347).
Cash flow from items affecting comparability was MSEK –3 (–1).
Cash flow from financing activities was MSEK 134 (153).
Cash flow for the period was MSEK –1,195 (–465).
Operating income before amortization amounted to MSEK 1,460 (1,676). Net investments in non-current tangible and intangible assets amounted to MSEK –33 (28).
Changes in accounts receivable was MSEK –743 (–644) for the period, and is explained by an increase in the days of sales outstanding (DSO) including the impact relating to the integration of Reliance Security Services described above.
Changes in other operating capital employed was MSEK –754 (1). The first half year was negatively impacted by the settlement with US Army in the first quarter. The negative payroll timing from the Netherlands that impacted the first quarter 2011 has been reduced during the second quarter, but for the full year 2011 a negative impact is expected compared to full year 2010. Another negative impact in the second quarter was explained by a VAT payment that is related to the Reliance Security Services acquisition. The first six months last year was positively impacted by payroll timing in the US and Canada.
Cash flow from operating activities amounted to MSEK –70 (1,061), equivalent to –5 percent (63) of operating income before amortization.
Financial income and expenses paid amounted to MSEK –335 (–403). Current taxes paid amounted to MSEK –442 (–404).
Free cash flow was MSEK –847 (254), equivalent to –89 percent (24) of adjusted income.
Cash flow from investing activities, acquisitions, was MSEK –977 (–450).
Cash flow from items affecting comparability was MSEK –11 (–2).
Cash flow from financing activities was MSEK 1,454 (–117).
Cash flow for the period was MSEK –381 (–315).
| MSEK | |
|---|---|
| Jan 1, 2011 | –8,209 |
| Free cash flow | –847 |
| Acquisitions | –977 |
| IAC payments | –11 |
| Dividend paid | –1,095 |
| Change in net debt | –2,930 |
| Translation and | |
| revaluation | 215 |
| Jun 30, 2011 | –10,924 |
The Group's operating capital employed was MSEK 4,017 (2,587 as of December 31, 2010) corresponding to 6 percent of sales (4 as of December 31, 2010) adjusted for the full year sales figures of acquired units.
Acquisitions decreased operating capital employed by MSEK –231 during the second quarter 2011.
Acquisitions increased consolidated goodwill by MSEK 772. Adjusted for negative translation differences of MSEK –393, total goodwill for the Group amounted to MSEK 13,718 (13,339 as of December 31, 2010).
Acquisitions have increased acquisition related intangible assets by MSEK 356. After amortization of MSEK –98 and negative translation differences of MSEK –18, acquisition related intangible assets amounted to MSEK 1,336 (1,096 as of December 31, 2010).
The Group's total capital employed was MSEK 19,185 (17,147 as of December 31, 2010). The translation of foreign capital employed to Swedish kronor decreased the Group's capital employed by MSEK –467.
The return on capital employed was 18 percent (22 as of December 31, 2010).
The Group's net debt amounted to MSEK 10,924 (8,209 as of December 31, 2010). Acquisitions and acquisition related payments increased the Group's net debt by MSEK 977, of which purchase price payments accounted for MSEK 846, assumed net debt for MSEK 51 and acquisition related costs paid accounted for MSEK 80. The Group's net debt decreased by MSEK –212 due to the translation of net debt in foreign currency to Swedish kronor.
A dividend of MSEK 1,095 (1,095) was paid to the shareholders in May 2011.
The free cash flow to net debt ratio amounted to 0.08 (0.24).
The main capital market instruments drawn as of the end of June 2011 were eight bonds issued under the Group's Euro Medium Term Note Program. These comprised the 6.50 percent MEUR 500 Eurobond loan maturing in 2013, and seven floating rates notes (FRN's). Four of these FRN's are denominated in SEK, two for MSEK 1,000 issued in the second quarter 2011 and maturing in 2012, and two for MSEK 500 maturing in 2014. Another two FRN's are denominated in USD, one for MUSD 40 and one for MUSD 62. Both of these loans mature in 2015. There is also a MEUR 45 FRN maturing in 2014.
In addition to the above, Securitas has access to committed bank financing through a new Revolving Credit Facility (RCF) which was signed with 12 Swedish and international banks in January 2011. The new RCF comprises two respective tranches of MUSD 550 and MEUR 420 (MUSD 1,100 in total), and matures in 2016. There is also an RCF maturing in 2012 of MUSD 100 for issuance of letters of credit only.
The Group also has access to uncommitted bank borrowings and a MSEK 5,000 Swedish Commercial Paper Program for short-term borrowing needs.
Securitas has ample liquidity headroom under the committed credit facilities in line with established policies, which combined with the strong free cash flow generation means that the future liquidity requirements for the Company's operations are met.
Further information of the credit facilities as of June 30, 2011 is provided in note 8.
The interest cover ratio amounted to 6.8 (7.3).
Shareholders' equity amounted to MSEK 8,260 (8,938 as of December 31, 2010). The translation of foreign assets and liabilities into Swedish kronor decreased shareholders' equity by MSEK –255 after taking into account net investment hedging of MSEK –167 and MSEK –88 before net investment hedging. Refer to the statement of comprehensive income on page 18 for further information.
The total number of outstanding shares amounted to 365,058,897 as of June 30, 2011.
| Business | Included | Acquired | Annual | Enter - prise |
Acq. related intangible |
||
|---|---|---|---|---|---|---|---|
| Company | segment 1) | from | share 2) | sales 3) | value 4) Goodwill | assets | |
| Opening balance | 13,339 | 1,096 | |||||
| Interseco, the Netherlands 7) | Other | Jan 1 | 100 | 62 | 20 | 39 | - |
| Adria Ipon Security, Bosnia and Herzegovina 7) 8) |
Security Services Europe |
Jan 1 | 85 | 16 | 14 | 9 | 8 |
| Seguridad y Turismo Segutouring, Ecuador 7) |
Security Services Ibero-America |
Feb 1 | 100 | 47 | 8 | 0 | 10 |
| Chubb Security Personnel, the United Kingdom |
Security Services Europe |
Apr 1 | 100 | 1,093 | 322 | 198 | 89 |
| Seguricorp, Chile 7) | Security Services Ibero-America |
Apr 1 | 100 | 263 | 97 | 70 | 57 |
| Consultora Videco, Argentina 7) Security Services | Ibero-America | Apr 1 | 100 | 258 | 131 | 264 | 115 |
| Security Consultants Group, the USA 7) |
Security Services North America |
Apr 15 | 100 | 681 | 190 | 133 | 18 |
| Assistance Sécurité Gardiennage, France 7) |
Security Services Europe |
Jun 1 | - | 128 | 17 | - | 26 |
| Al Sharika Al Muatfawika Likhadamat Al Amin Wa Al |
|||||||
| Himaya, Jordan | Other | Jun 1 | 50 | 28 | 11 | 5 | 7 |
| Other acquisitions 5) 7) | 84 | 87 | 54 | 26 | |||
| Total acquisitions January–June 2011 | 2,660 | 897 | 7726) | 356 | |||
| Amortization of acquisition related intangible assets | - | –98 | |||||
| Exchange rate differences | –393 | –18 | |||||
| Closing balance | 13,718 | 1,336 |
1) Refers to business segment with main responsibility for the acquisition.
2) Refers to voting rights for acquisitions in the form of share purchase agreements. For asset deals no voting rights are stated.
3) Estimated annual sales.
4) Purchase price paid plus acquired net debt, but excluding any deferred considerations.
5) Related to other acquisitions for the period and updated previous year acquisition calculations for the following entities: Security Professionals and Security Management, National Security Protective Services and Paragon, USA, Creab (contract portfolio), Services Sweden, APSP (contract portfolio), Apri Bering (contract portfolio), Pole Protection Provence (contract portfolio), SPR Sécurité (contract portfolio) and Agence Privé 3I Sécurité (contract portfolio), Mobile France, Metod Localisation, Alert Services France, Reliance Security Services, Services UK, WOP Protect, Services Switzerland, Optimit, Other Belgium, Nordserwis.pl and Purzeczko, Services Poland, Agency of Security Fenix, Services Czech Republic, Cobra, Romania, Guardian Security, Montenegro, Alarm West Group, Bosnia and Herzegovina, Securityring, Greece, Socovig, Colombia, Ubiq, Peru, Pedro Valdivia Seguridad and Protec Austral, Chile, ESC and SSA Guarding Company, Thailand, Legend Group, Singapore, Claw Protection Services and Piranha Security, South Africa. Related also to deferred considerations paid in the USA, Sweden, France, Switzerland, Poland, Argentina, Colombia, Peru, Chile, Hong Kong and South Africa.
6) Goodwill that is expected to be tax deductible amounts to MSEK 321.
7) Deferred considerations have been recognized mainly based on an assessment of the future profitability development in the acquired entities for an agreed period. The net of new deferred considerations and payments made from previously recognized deferred considerations was MSEK 263. Total deferred considerations, short-term and long-term, in the Group's balance sheet amount to MSEK 559.
8) No non-controlling interests have been accounted for since Securitas has an option to buy the remaining shares and the seller has an option to sell the remaining shares. Consequently, 100 percent of the company is consolidated.
All acquisition calculations are finalized no later than one year after the acquisition is made. Transactions with non-controlling interests are specified in the statement of changes in shareholders' equity on page 20. Transaction costs and revaluation of deferred considerations can be found in note 4 on page 23.
Securitas has acquired all shares in the security consulting company Interseco in the Netherlands. Interseco has approximately 50 employees and focuses on advising and assisting their customers to detect and gain control of crime risks.
Securitas has acquired 85 percent of the shares in the security services company Adria Ipon Security in Bosnia and Herzegovina. The agreement includes an option of acquiring the remaining 15 percent. Adria Ipon Security has approximately 200 employees.
Securitas has acquired all shares in the security services company Seguridad y Turismo Segutouring in Ecuador. The company has approximately 900 employees and is mainly operating in guarding services.
Securitas has acquired all shares in the security services company Chubb Security Personnel in the United Kingdom. With 5,000 employees, Chubb Security Personnel is a leading manned guarding security services provider in the United Kingdom. The company has a well diversified contract portfolio with a stable customer portfolio within guarding. The acquisition has been approved by the United Kingdom Office of Fair Trading.
Securitas has acquired all shares in the security services company Seguricorp in Chile. The company has approximately 3,750 employees and has nationwide coverage in guarding services. The company has a strong position in the customer segment mining industry. With this acquisition, Securitas will be the market leader in security services in Chile.
Securitas has acquired all shares in the security services company Consultora Videco in Argentina. The company has approximately 2,240 employees and is operating in the area of Buenos Aires.
Paragon Systems, a subsidiary of Pinkerton's Government Services within the Securitas Group, has acquired all shares in the security services company Security Consultants Group in the USA. With this acquisition, Securitas expands in the primary government security services market in the USA. The company has approximately 2,000 employees and specializes in providing high level, armed security officer services to various U.S. Government agencies and facilities.
Securitas has acquired the commercial business contracts and assets of the security services company Assistance Sécurité Gardiennage (ASG) in France. ASG, a subsidiary of the French Group Assystem, has approximately 400 employees. The company is specialized in security services to the energy sector.
Securitas has acquired 50 percent plus one of the shares in the security services company Al Sharika Al Muatfawika Likhadamat Al Amin Wa Al Himaya in Jordan. The company has approximately 800 employees, which makes it the second largest security services company in Jordan.
Securitas has acquired 85 percent of the shares in the security services company Zvonimir Security in Croatia. Zvonimir Security is one of the leading security services companies in Croatia, with annual sales of approximately MSEK 82 (MHRK 67) and approximately 1,000 employees. The company offers mainly guarding and mobile services and operates across Croatia.
For critical estimates and judgments and items affecting comparability and contingent liabilities refer to pages 92–93 and pages 125–126 in the Annual Report 2010. If no significant events have occurred relating to the information in the Annual Report, no further comments are made in the Interim Report for the respective case.
Luis Miguel Posadas, previously Divisional President Security Services Latin America, has been appointed Divisional President of the new division Security Services Ibero-America.
Åsa Thunman has been appointed Senior Vice President General Counsel. She succeeded Bengt Gustafson, who remains in the company as Senior Vice President and Senior Advisor to Group Management.
Antonio Villaseca Lòpez has been appointed Senior Vice President Technical Solutions at Securitas. With this appointment, Securitas further strengthens its technical knowledge and experience.
Risk management is necessary in order for Securitas to be able to fulfill its strategies and achieve its corporate objectives. Securitas' risks fall into three main categories; contract risk, operational assignment risk and financial risks. Securitas approach to enterprise risk management is described in more detail in the Annual Report for 2010.
In the preparation of financial reports the Board of Directors and Group Management are required to make estimates and judgments. These estimates and judgments impact the statement of income and balance sheet as well as disclosures such as contingent liabilities. Actual results may differ from these estimates and judgments under different circumstances and conditions.
For the forthcoming six-month period, the financial impact of certain items affecting comparability and contingent liabilities, as described in the Annual Report for 2010 and if applicable above under the heading "Other significant events", may vary from the current financial estimates and provisions made by management. This could affect the Groups profitability and financial position.
The Group's Parent Company, Securitas AB, is not involved in any operating activities. Securitas AB provides Group Management and support functions for the Group.
The Parent Company's income amounted to MSEK 510 (521) and mainly relates to administrative contributions and other income from subsidiaries.
Financial income and expenses amounted to MSEK 109 (-313). Dividends received from subsidiaries had a positive impact on the finance net. Income before taxes amounted to MSEK 376 (–34).
The Parent Company's non-current assets amounted to MSEK 40,847 (40,659 as of December 31, 2010) and mainly comprise shares in subsidiaries of MSEK 40,107 (40,027 as of December 31, 2010). Current assets amounted to MSEK 4,227 (4,021 as of December 31, 2010) of which liquid funds amounted to MSEK 17 (2 as of December 31, 2010).
Shareholders' equity amounted to MSEK 21,429 (22,392 as of December 31, 2010).
The Parent Company's liabilities amounted to MSEK 23,645 (22,288 as of December 31, 2010) and mainly consist of interest-bearing debt.
For further information, refer to the Parent Company's condensed financial statements on page 25.
This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act.
Securitas' consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union, the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's standard RFR 1 Supplementary Accounting Rules for Groups. The most important accounting principles under IFRS, which is the basis for the preparation of this interim report, can be found in note 2 on pages 83 to 89 in the Annual Report for 2010. The accounting principles are also available on the Group's website www.securitas.com under the section Investor Relations— Financials — Accounting Principles.
The Parent Company's financial statements are prepared in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's standard RFR 2 Accounting for Legal Entities. The most important accounting principles used by the Parent Company can be found in note 39 on page 131 in the Annual Report for 2010.
There have been no other changes than the change described below in the Group's or the Parent Company's accounting principles compared to the accounting principles described in note 2 and note 39 in the Annual Report for 2010.
As of the second quarter 2011, Securitas has created a fourth business segment, Security Services Ibero-America. The new business segment comprises the guarding activities in Argentina, Chile, Colombia, Ecuador, Peru, Portugal, Spain and Uruguay. The operations within Aviation as well as Mobile and Monitoring in Portugal and Spain are not affected by this reorganisation.
The Board of Directors and the President and CEO certify that the interim report gives a true and fair overview of the Parent Company's and Group's operations, their financial position and results of operations, and describes significant risks and uncertainties facing the Parent Company and other companies in the Group.
Alf Göransson President and Chief Executive Officer
Translation of the Swedish original
We have reviewed this report for the period January 1, 2011 to June 30, 2011 for Securitas AB (publ). The board of directors and the President and CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the Swedish Standard on Review Engagements SÖG 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Stockholm, August 5, 2011 PricewaterhouseCoopers AB
Peter Nyllinge Authorised Public Accountant
| MSEK | Apr–Jun 2011 | Apr–Jun 2010 | Jan–Jun 2011 | Jan–Jun 2010 | Jan–Dec 2010 | Jan–Dec 2009 |
|---|---|---|---|---|---|---|
| Sales | 14,210.1 | 15,000.3 | 28,056.7 | 29,538.6 | 59,097.5 | 61,216.7 |
| Sales, acquired business | 1,417.5 | 423.9 | 2,345.8 | 756.1 | 2,242.3 | 1,450.0 |
| Total sales | 15,627.6 | 15,424.2 | 30,402.5 | 30,294.7 | 61,339.8 | 62,666.7 |
| Organic sales growth, %1) | 3 | 0 | 3 | –1 | 1 | –1 |
| Production expenses | –12,957.4 | –12,655.7 | –25,189.9 | –24,832.6 | –50,076.0 | –50,983.9 |
| Gross income | 2,670.2 | 2,768.5 | 5,212.6 | 5,462.1 | 11,263.8 | 11,682.8 |
| Selling and administrative expenses | –1,924.0 | –1,912.4 | –3,756.3 | –3,791.3 | –7,551.3 | –7,933.5 |
| Other operating income 2) | 1.1 | 2.8 | 3.9 | 5.6 | 12.7 | 11.3 |
| Share in income of associated companies 3) | 0.0 | –0.1 | –0.5 | 0.0 | –1.0 | –4.1 |
| Operating income before amortization | 747.3 | 858.8 | 1,459.7 | 1,676.4 | 3,724.2 | 3,756.5 |
| Operating margin, % | 4.8 | 5.6 | 4.8 | 5.5 | 6.1 | 6.0 |
| Amortization of acquisition related intangible assets | –53.2 | –39.4 | –97.5 | –77.3 | –164.3 | –138.3 |
| Acquisition related costs 4) | –47.2 | –19.8 | –78.8 | –24.7 | –89.6 | –5.9 |
| Operating income after amortization | 646.9 | 799.6 | 1,283.4 | 1,574.4 | 3,470.3 | 3,612.3 |
| Financial income and expenses 5) | –120.8 | –128.6 | –230.1 | –260.9 | –502.3 | –589.8 |
| Income before taxes | 526.1 | 671.0 | 1,053.3 | 1,313.5 | 2,968.0 | 3,022.5 |
| Net margin, % | 3.4 | 4.4 | 3.5 | 4.3 | 4.8 | 4.8 |
| Current taxes | –139.5 | –181.4 | –276.1 | –350.6 | –735.7 | –715.4 |
| Deferred taxes | –17.8 | –19.3 | –38.8 | –42.2 | –151.5 | –189.1 |
| Net income for the period | 368.8 | 470.3 | 738.4 | 920.7 | 2,080.8 | 2,118.0 |
| Whereof attributable to: | ||||||
| Equity holders of the Parent Company | 367.9 | 471.3 | 736.5 | 922.8 | 2,083.1 | 2,116.2 |
| Non-controlling interests | 0.9 | –1.0 | 1.9 | –2.1 | –2.3 | 1.8 |
| Earnings per share before dilution (SEK) | 1.01 | 1.29 | 2.02 | 2.53 | 5.71 | 5.80 |
| Earnings per share after dilution (SEK) | 1.01 | 1.29 | 2.02 | 2.53 | 5.71 | 5.80 |
| MSEK | Apr–Jun 2011 | Apr–Jun 2010 | Jan–Jun 2011 | Jan–Jun 2010 | Jan–Dec 2010 | Jan–Dec 2009 |
|---|---|---|---|---|---|---|
| Net income for the period | 368.8 | 470.3 | 738.4 | 920.7 | 2,080.8 | 2,118.0 |
| Other comprehensive income | ||||||
| Actuarial gains and losses and effects of minimum funding | ||||||
| requirement net of tax | –23.0 | –108.3 | 0.2 | –121.0 | –117.9 | 16.2 |
| Cash flow hedges net of tax | –5.8 | 13.9 | –0.1 | 21.4 | 53.2 | 56.8 |
| Net investment hedges | –69.4 | –121.9 | –167.1 | 35.3 | 361.0 | 254.9 |
| Translation differences | 243.4 | 446.5 | –87.9 | 83.4 | –1,232.2 | –1,073.8 |
| Other comprehensive income for the period 6) | 145.2 | 230.2 | –254.9 | 19.1 | –935.9 | –745.9 |
| Total comprehensive income for the period | 514.0 | 700.5 | 483.5 | 939.8 | 1,144.9 | 1,372.1 |
| Whereof attributable to: | ||||||
| Equity holders of the Parent Company | 513.0 | 701.4 | 481.4 | 942.0 | 1,147.6 | 1,370.8 |
| Non-controlling interests | 1.0 | –0.9 | 2.1 | –2.2 | –2.7 | 1.3 |
Notes 1–6 refer to pages 23–24.
| Operating cash flow MSEK | Apr–Jun 2011 | Apr–Jun 2010 | Jan–Jun 2011 | Jan–Jun 2010 | Jan–Dec 2010 | Jan–Dec 2009 |
|---|---|---|---|---|---|---|
| Operating income before amortization | 747.3 | 858.8 | 1,459.7 | 1,676.4 | 3,724.2 | 3,756.5 |
| Investments in non-current tangible and intangible assets | –263.7 | –203.8 | –480.4 | –425.3 | –901.9 | –950.7 |
| Reversal of depreciation | 228.6 | 225.3 | 447.2 | 453.7 | 900.7 | 927.5 |
| Change in accounts receivable | –484.0 | –353.7 | –742.5 | –644.7 | –768.4 | 197.6 |
| Change in other operating capital employed | –107.4 | –184.9 | –754.5 | 0.5 | 312.8 | –556.4 |
| Cash flow from operating activities | 120.8 | 341.7 | –70.5 | 1,060.6 | 3,267.4 | 3,374.5 |
| Cash flow from operating activities, % | 16 | 40 | –5 | 63 | 88 | 90 |
| Financial income and expenses paid | –274.1 | –316.7 | –335.4 | –402.9 | –521.7 | –481.6 |
| Current taxes paid | –333.2 | –295.0 | –441.6 | –403.5 | –735.1 | –728.2 |
| Free cash flow | –486.5 | –270.0 | –847.5 | 254.2 | 2,010.6 | 2,164.7 |
| Free cash flow, % | –100 | –49 | –89 | 24 | 81 | 88 |
| Cash flow from investing activities, acquisitions | –839.7 | –347.1 | –976.9 | –449.7 | –1,359.0 | –757.7 |
| Cash flow from items affecting comparability | –3.2 | –1.0 | –10.5 | –2.1 | –62.5 | –12.0 |
| Cash flow from financing activities | 134.4 | 152.7 | 1,454.3 | –117.2 | –424.5 | –2,775.5 |
| Cash flow for the period | –1,195.0 | –465.4 | –380.6 | –314.8 | 164.6 | –1,380.5 |
| Cash flow MSEK | Apr–Jun 2011 | Apr–Jun 2010 | Jan–Jun 2011 | Jan–Jun 2010 | Jan–Dec 2010 | Jan–Dec 2009 |
| Cash flow from operations | –273.3 | –83.8 | –457.9 | 654.1 | 2,784.7 | 3,069.3 |
| Cash flow from investing activities | –1,056.1 | –534.3 | –1,377.0 | –851.7 | –2,195.6 | –1,674.3 |
| Cash flow from financing activities | 134.4 | 152.7 | 1,454.3 | –117.2 | –424.5 | –2,775.5 |
| Cash flow for the period | –1,195.0 | –465.4 | –380.6 | –314.8 | 164.6 | –1,380.5 |
| Change in net debt MSEK | Apr–Jun 2011 | Apr–Jun 2010 | Jan–Jun 2011 | Jan–Jun 2010 | Jan–Dec 2010 | Jan–Dec 2009 |
| Opening balance | –8,384.4 | –7,798.7 | –8,208.9 | –8,387.7 | –8,387.7 | –9,412.6 |
| Cash flow for the period | –1,195.0 | –465.4 | –380.6 | –314.8 | 164.6 | –1,380.5 |
| Change in loans | –1,229.6 | –1,247.9 | –2,549.5 | –978.0 | –670.7 | 1,716.8 |
| Change in net debt before revaluation and translation | ||||||
| differences | –2,424.6 | –1,713.3 | –2,930.1 | –1,292.8 | –506.1 | 336.3 |
| Revaluation of financial instruments 5) | –7.8 | 18.2 | 2.4 | 26.7 | 67.6 | 76.7 |
| Translation differences | –107.4 | –206.0 | 212.4 | –46.0 | 617.3 | 611.9 |
| Change in net debt | –2,539.8 | –1,901.1 | –2,715.3 | –1,312.1 | 178.8 | 1,024.9 |
| Closing balance | –10,924.2 | –9,699.8 | –10,924.2 | –9,699.8 | –8,208.9 | –8,387.7 |
Note 5 refers to page 23.
| MSEK | Jun 30, 2011 | Mar 31, 2011 | Dec 31, 2010 | Jun 30, 2010 | Mar 31, 2010 | Dec 31, 2009 |
|---|---|---|---|---|---|---|
| Operating capital employed | 4,016.8 | 3,250.8 | 2,586.5 | 3,371.9 | 2,511.3 | 2,623.4 |
| Operating capital employed as % of sales | 6 | 5 | 4 | 5 | 4 | 4 |
| Return on operating capital employed, % | 106 | 124 | 143 | 123 | 144 | 135 |
| Goodwill | 13,717.8 | 12,808.8 | 13,338.8 | 13,982.7 | 13,352.7 | 13,558.3 |
| Acquisition related intangible assets | 1,335.7 | 1,051.2 | 1,096.5 | 868.1 | 859.8 | 894.9 |
| Shares in associated companies | 114.3 | 114.5 | 125.6 | 141.5 | 135.2 | 132.1 |
| Capital employed | 19,184.6 | 17,225.3 | 17,147.4 | 18,364.2 | 16,859.0 | 17,208.7 |
| Return on capital employed, % | 18 | 21 | 22 | 20 | 22 | 22 |
| Net debt | –10,924.2 | –8,384.4 | –8,208.9 | –9,699.8 | –7,798.7 | –8,387.7 |
| Shareholders' equity | 8,260.4 | 8,840.9 | 8,938.5 | 8,664.4 | 9,060.3 | 8,821.0 |
| Net debt equity ratio/multiple | 1.32 | 0.95 | 0.92 | 1.12 | 0.86 | 0.95 |
| MSEK | Jun 30, 2011 | Mar 31, 2011 | Dec 31, 2010 | Jun 30, 2010 | Mar 31, 2010 | Dec 31, 2009 |
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Non-current assets | ||||||
| Goodwill | 13,717.8 | 12,808.8 | 13,338.8 | 13,982.7 | 13,352.7 | 13,558.3 |
| Acquisition related intangible assets | 1,335.7 | 1,051.2 | 1,096.5 | 868.1 | 859.8 | 894.9 |
| Other intangible assets | 287.0 | 273.3 | 272.4 | 264.3 | 267.5 | 278.4 |
| Tangible non-current assets | 2,301.5 | 2,230.9 | 2,283.9 | 2,307.8 | 2,319.0 | 2,377.2 |
| Shares in associated companies | 114.3 | 114.5 | 125.6 | 141.5 | 135.2 | 132.1 |
| Non-interest bearing financial non-current assets | 1,831.4 | 1,666.1 | 1,737.7 | 2,072.8 | 1,920.8 | 1,995.7 |
| Interest bearing financial non-current assets | 173.4 | 160.5 | 205.7 | 213.6 | 196.0 | 160.8 |
| Total non-current assets | 19,761.1 | 18,305.3 | 19,060.6 | 19,850.8 | 19,051.0 | 19,397.4 |
| Current assets | ||||||
| Non-interest bearing current assets | 12,661.2 | 11,513.5 | 11,169.5 | 11,799.7 | 11,295.5 | 10,819.5 |
| Other interest bearing current assets | 92.5 | 49.9 | 68.3 | 25.3 | 47.7 | 81.9 |
| Liquid funds | 2,168.6 | 3,343.5 | 2,586.9 | 2,195.7 | 2,634.5 | 2,497.1 |
| Total current assets | 14,922.3 | 14,906.9 | 13,824.7 | 14,020.7 | 13,977.7 | 13,398.5 |
| TOTAL ASSETS | 34,683.4 | 33,212.2 | 32,885.3 | 33,871.5 | 33,028.7 | 32,795.9 |
| MSEK | Jun 30, 2011 | Mar 31, 2011 | Dec 31, 2010 | Jun 30, 2010 | Mar 31, 2010 | Dec 31, 2009 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||||
| Shareholders' equity | ||||||
| Attributable to equity holders of the Parent Company | 8,254.5 | 8,836.7 | 8,935.4 | 8,659.5 | 9,053.3 | 8,812.7 |
| Non-controlling interests | 5.9 | 4.2 | 3.1 | 4.9 | 7.0 | 8.3 |
| Total shareholders' equity | 8,260.4 | 8,840.9 | 8,938.5 | 8,664.4 | 9,060.3 | 8,821.0 |
| Equity ratio, % | 24 | 27 | 27 | 26 | 27 | 27 |
| Long-term liabilities | ||||||
| Non-interest bearing long-term liabilities | 562.9 | 312.5 | 282.3 | 248.5 | 222.5 | 193.8 |
| Interest bearing long-term liabilities | 9,205.4 | 7,046.6 | 7,202.6 | 6,940.4 | 6,913.7 | 8,357.5 |
| Non-interest bearing provisions | 2,500.9 | 2,341.2 | 2,564.8 | 2,756.3 | 2,608.5 | 2,626.2 |
| Total long-term liabilities | 12,269.2 | 9,700.3 | 10,049.7 | 9,945.2 | 9,744.7 | 11,177.5 |
| Current liabilities | ||||||
| Non-interest bearing current liabilities and provisions | 10,000.5 | 9,779.3 | 10,029.9 | 10,067.9 | 10,460.5 | 10,027.4 |
| Interest bearing current liabilities | 4,153.3 | 4,891.7 | 3,867.2 | 5,194.0 | 3,763.2 | 2,770.0 |
| Total current liabilities | 14,153.8 | 14,671.0 | 13,897.1 | 15,261.9 | 14,223.7 | 12,797.4 |
| Jun 30, 2011 | Dec 31, 2010 | Jun 30, 2010 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| MSEK | Attributable to equity holders of the Parent Company |
Non controlling interests |
Total | Attributable to equity holders of the Parent Company |
Non controlling interests |
Total | Attributable to equity holders of the Parent Company |
Non controlling interests |
Total | |
| Opening balance January 1, 2011/2010 | 8,935.4 | 3.1 | 8,938.5 | 8,812.7 | 8.3 | 8,821.0 | 8,812.7 | 8.3 | 8,821.0 | |
| Total comprehensive income for the period | 481.4 | 2.1 | 483.5 | 1,147.6 | –2.7 | 1,144.9 | 942.0 | –2.2 | 939.8 | |
| Transactions with non-controlling interests | - | 0.7 | 0.7 | - | –2.5 | –2.5 | - | –1.2 | –1.2 | |
| Share based incentive scheme | –67.11) | - | –67.1 | 70.3 | - | 70.3 | - | - | - | |
| Dividend paid to the shareholders of | ||||||||||
| the Parent Company | –1,095.2 | - | –1,095.2 | –1,095.2 | - | –1,095.2 | –1,095.2 | - | –1,095.2 | |
| Closing balance June 30/December 31, 2011/2010 | 8,254.5 | 5.9 | 8,260.4 | 8,935.4 | 3.1 | 8,938.5 | 8,659.5 | 4.9 | 8,664.4 |
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 34,683.4 33,212.2 32,885.3 33,871.5 33,028.7 32,795.9
1) Refers to a swap agreement, hedging the share portion of Securitas share based incentive scheme 2010.
| SEK | Apr–Jun 2011 | Apr–Jun 2010 | Jan–Jun 2011 | Jan–Jun 2010 | Jan–Dec 2010 | Jan–Dec 2009 |
|---|---|---|---|---|---|---|
| Share price, end of period | 66.95 | 71.10 | 66.95 | 71.10 | 78.65 | 70.05 |
| Earnings per share before dilution 1) | 1.01 | 1.29 | 2.02 | 2.53 | 5.71 | 5.80 |
| Earnings per share before dilution and before items affecting comparability 1) |
1.01 | 1.29 | 2.02 | 2.53 | 5.71 | 5.80 |
| Dividend | - | - | - | - | 3.00 | 3.00 |
| P/E-ratio after dilution and before items affecting comparability | - | - | - | - | 14 | 12 |
| Number of shares outstanding 2) | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 |
| Average number of shares outstanding 2) | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 |
1) There are no convertible debenture loans. Consequently there is no difference between earnings per share before and after dilution.
2) There are no convertible debenture loans. Consequently there is no difference between number of shares before and after dilution.
| Security Services |
Security Services |
Mobile and |
Security Services |
||||
|---|---|---|---|---|---|---|---|
| MSEK | North America | Europe | Monitoring | Ibero-America | Other | Eliminations | Group |
| Sales, external | 10,563 | 12,584 | 2,864 | 4,075 | 317 | - | 30,403 |
| Sales, intra-group | - | 41 | 115 | - | - | –156 | - |
| Total sales | 10,563 | 12,625 | 2,979 | 4,075 | 317 | –156 | 30,403 |
| Organic sales growth, % | 4 | 1 | 3 | 9 | - | - | 3 |
| Operating income before amortization | 597 | 437 | 312 | 244 | –130 | - | 1,460 |
| of which share in income of associated | |||||||
| companies | - | - | - | - | –1 | - | –1 |
| Operating margin, % | 5.7 | 3.5 | 10.5 | 6.0 | - | - | 4.8 |
| Amortization of acquisition related | |||||||
| intangible assets | –15 | –30 | –22 | –27 | –4 | - | –98 |
| Acquisition related costs | –6 | –49 | –6 | –12 | –6 | - | –79 |
| Operating income after amortization | 576 | 358 | 284 | 205 | –140 | - | 1,283 |
| Financial income and expenses | - | - | - | - | - | - | –230 |
| Income before taxes | - | - | - | - | - | - | 1,053 |
| Security Services |
Security Services |
Mobile and |
Security Services |
||||
|---|---|---|---|---|---|---|---|
| MSEK | North America | Europe 1) | Monitoring 1) | Ibero-America 1) | Other 1) | Eliminations | Group |
| Sales, external | 11,217 | 12,067 | 2,828 | 4,000 | 183 | - | 30,295 |
| Sales, intra-group | - | 37 | 123 | - | - | –160 | - |
| Total sales | 11,217 | 12,104 | 2,951 | 4,000 | 183 | –160 | 30,295 |
| Organic sales growth, % | –5 | 2 | 2 | 0 | - | - | –1 |
| Operating income before amortization | 639 | 576 | 323 | 250 | –112 | - | 1,676 |
| of which share in income of associated companies |
- | - | - | - | 0 | - | 0 |
| Operating margin, % | 5.7 | 4.8 | 10.9 | 6.3 | - | - | 5.5 |
| Amortization of acquisition related intangible assets |
–12 | –18 | –22 | –25 | 0 | - | –77 |
| Acquisition related costs | –13 | –1 | –1 | –6 | –4 | - | –25 |
| Operating income after amortization | 614 | 557 | 300 | 219 | –116 | - | 1,574 |
| Financial income and expenses | - | - | - | - | - | - | –260 |
| Income before taxes | - | - | - | - | - | - | 1,314 |
1) Comparatives have been restated due to operations moved between the segments Security Services Europe and Mobile and Monitoring. Security Services Europe has further been adjusted for the guarding operations in Portugal and Spain moved to the new segment Security Services Ibero-America. The segment Other has been restated due to the guarding operations in Argentina, Chile, Colombia, Ecuador, Peru, and Uruguay moved to the new segment Security Services Ibero-America. Refer to note 7 for restated segment information per quarter and accumulated 2010 as well as per Q1 2011.
The calculation of organic sales growth (and the specification of currency changes on operating income and income before taxes) is specified below:
| Apr–Jun | Apr–Jun | Apr–Jun | Jan–Jun | Jan–Jun | Jan–Jun | |
|---|---|---|---|---|---|---|
| Sales, MSEK | 2011 | 2010 | % | 2011 | 2010 | % |
| Total sales | 15,628 | 15,424 | 1 | 30,403 | 30,295 | 0 |
| Acquisitions/divestitures | –1,418 | - | –2,346 | - | ||
| Currency change from 2010 | 1,739 | - | 3,262 | - | ||
| Organic sales | 15,949 | 15,424 | 3 | 31,319 | 30,295 | 3 |
| Apr–Jun | Apr–Jun | Apr–Jun | Jan–Jun | Jan–Jun | Jan–Jun | |
| Operating income, MSEK | 2011 | 2010 | % | 2011 | 2010 | % |
| Operating income | 747 | 859 | –13 | 1,460 | 1,676 | –13 |
| Currency change from 2010 | 96 | - | 174 | - | ||
| Currency adjusted operating income | 843 | 859 | –2 | 1,634 | 1,676 | –3 |
| Apr–Jun | Apr–Jun | Apr–Jun | Jan–Jun | Jan–Jun | Jan–Jun | |
| Income before taxes, MSEK | 2011 | 2010 | % | 2011 | 2010 | % |
| Income before taxes | 526 | 671 | –22 | 1,053 | 1,314 | –20 |
| Currency change from 2010 | 62 | - | 120 | - | ||
| Currency adjusted income before taxes | 588 | 671 | –12 | 1,173 | 1,314 | –11 |
Other operating income consists in its entirety of trade mark fees from Securitas Direct AB.
Securitas recognizes share in income of associated companies depending on the purpose of the investment.
· Associated companies that have been acquired to contribute to the operations (operational) are included in operating income before amortization.
· Associated companies that have been acquired as part of the financing of the Group (financial investments) are included in income before taxes as a separate line within the finance net. Currently, Securitas has no associated companies recognized as financial investments.
| MSEK | Apr–Jun 2011 | Apr–Jun 2010 | Jan–Jun 2011 | Jan–Jun 2010 | Jan–Dec 2010 | Jan–Dec 2009 |
|---|---|---|---|---|---|---|
| Walsons Services PVT Ltd | –0.6 | –0.1 | –1.3 | –0.3 | –1.8 | –4.1 |
| Long Hai Security | 0.6 | 0.0 | 0.8 | 0.3 | 0.8 | 0.0 |
| Facility Network A/S 1) | - | - | - | - | - | 0.0 |
| Share in income of associated companies included in | ||||||
| operating income before amortization | 0.0 | –0.1 | –0.5 | 0.0 | –1.0 | –4.1 |
1) Facility Network A/S was divested during 2009.
| MSEK | Apr–Jun 2011 | Apr–Jun 2010 | Jan–Jun 2011 | Jan–Jun 2010 | Jan–Dec 2010 | Jan–Dec 2009 |
|---|---|---|---|---|---|---|
| Restructuring and integration costs | –35.3 | –10.7 | –50.6 | –14.0 | –48.3 | –5.9 |
| Transaction costs 1) | –13.4 | –9.1 | –31.2 | –10.7 | –41.3 | - |
| Revaluation of deferred considerations 2) | 1.5 | - | 3.0 | - | - | - |
| Acquisition related costs | –47.2 | –19.8 | –78.8 | –24.7 | –89.6 | –5.9 |
1) Expensed from 2010 in accordance with IFRS 3 (revised).
2) Refers to revaluation of deferred considerations and aquisition related option liabilities in accordance with IFRS 3 (revised) from 2010.
| MSEK | Apr–Jun 2011 | Apr–Jun 2010 | Jan–Jun 2011 | Jan–Jun 2010 | Jan–Dec 2010 | Jan–Dec 2009 |
|---|---|---|---|---|---|---|
| Recognized in the statement of income | ||||||
| Revaluation of financial instruments | 0.1 | –0.6 | 2.6 | –2.3 | –4.5 | –0.4 |
| Deferred tax | 0.0 | 0.2 | –0.7 | 0.6 | 1.2 | 0.1 |
| Impact on net income | 0.1 | –0.4 | 1.9 | –1.7 | –3.3 | –0.3 |
| Recognized in the statement of comprehensive income | ||||||
| Cash flow hedges | –7.9 | 18.8 | –0.2 | 29.0 | 72.1 | 77.1 |
| Deferred tax | 2.1 | –4.9 | 0.1 | –7.6 | –18.9 | –20.3 |
| Cash flow hedges net of tax | –5.8 | 13.9 | –0.1 | 21.4 | 53.2 | 56.8 |
| Total revaluation before tax | –7.8 | 18.2 | 2.4 | 26.7 | 67.6 | 76.7 |
| Total deferred tax | 2.1 | –4.7 | –0.6 | –7.0 | –17.7 | –20.2 |
| Total revaluation after tax | –5.7 | 13.5 | 1.8 | 19.7 | 49.9 | 56.5 |
The amount disclosed in the specification of change in net debt is the total revaluation before tax.
| MSEK | Apr–Jun 2011 | Apr–Jun 2010 | Jan–Jun 2011 | Jan–Jun 2010 | Jan–Dec 2010 | Jan–Dec 2009 |
|---|---|---|---|---|---|---|
| Deferred tax on actuarial gains and losses | 12.3 | 64.7 | –3.1 | 68.2 | 48.8 | –7.2 |
| Deferred tax on cash flow hedges | 2.1 | –4.9 | 0.1 | –7.6 | –18.9 | –20.3 |
| Deferred tax on net investment hedges | 24.8 | 43.5 | 59.6 | –12.6 | –128.8 | –91.0 |
| Deferred tax on other comprehensive income | 39.2 | 103.3 | 56.6 | 48.0 | –98.9 | –118.5 |
The tables below show Security Services Europe and Mobile and Monitoring adjusted for operations moved between the segments per quarter and accumulated 2010. Security Services Europe has further been adjusted per quarter and accumulated 2010 as well as quarter 1 2011 for the guarding operations in Portugal and Spain moved to the new segment Security Services Ibero-America. The table Security Services Ibero-America below shows segment data for the new segment Security Services Ibero-America per quarter and accumulated 2010 as well as per quarter 1 2011. The table Other below shows restated segment data for the segment Other, due to the guarding operations in Argentina, Chile, Colombia, Ecuador, Peru, and Uruguay moved to the new segment Security Services Ibero-America.
| Security Services Europe | ||||||||
|---|---|---|---|---|---|---|---|---|
| MSEK | Q1 2010 | Q2 2010 | H1 2010 | Q3 2010 | 9M 2010 | Q4 2010 | FY 2010 | Q1 2011 |
| Total sales | 6,027 | 6,077 | 12,104 | 6,048 | 18,152 | 6,404 | 24,556 | 6,096 |
| Organic sales growth, % | 2 | 3 | 2 | 4 | 3 | 5 | 4 | 2 |
| Operating income before | ||||||||
| amortization | 291 | 285 | 576 | 348 | 924 | 376 | 1,300 | 233 |
| Operating margin, % | 4.8 | 4.7 | 4.8 | 5.8 | 5.1 | 5.9 | 5.3 | 3.8 |
| Mobile and Monitoring | ||||||||
| MSEK | Q1 2010 | Q2 2010 | H1 2010 | Q3 2010 | 9M 2010 | Q4 2010 | FY 2010 | |
| Total sales | 1,478 | 1,473 | 2,951 | 1,492 | 4,443 | 1,518 | 5,961 | |
| Organic sales growth, % | 2 | 1 | 2 | 3 | 2 | 3 | 2 | |
| Operating income before | ||||||||
| amortization | 168 | 155 | 323 | 217 | 540 | 200 | 740 | |
| Operating margin, % | 11.4 | 10.5 | 10.9 | 14.5 | 12.2 | 13.2 | 12.4 | |
| Security Services Ibero-America | ||||||||
| MSEK | Q1 2010 | Q2 2010 | H1 2010 | Q3 2010 | 9M 2010 | Q4 2010 | FY 2010 | Q1 2011 |
| Total sales | 2,002 | 1,998 | 4,000 | 1,981 | 5,981 | 1,987 | 7,968 | 1,917 |
| Organic sales growth, % | –1 | 0 | 0 | 1 | 0 | 3 | 1 | 7 |
| Operating income before | ||||||||
| amortization | 127 | 123 | 250 | 121 | 371 | 158 | 529 | 109 |
| Operating margin, % | 6.3 | 6.2 | 6.3 | 6.1 | 6.2 | 8.0 | 6.6 | 5.7 |
| Other | ||||||||
| MSEK | Q1 2010 | Q2 2010 | H1 2010 | Q3 2010 | 9M 2010 | Q4 2010 | FY 2010 | Q1 2011 |
| Total sales | 83 | 100 | 183 | 121 | 304 | 145 | 449 | 156 |
| Operating income before | ||||||||
| amortization | –57 | –55 | –112 | –51 | –163 | –62 | –225 | –56 |
| Type | Currency | Facility amount (million) |
Available amount (million) |
Maturity |
|---|---|---|---|---|
| Multi Currency Revolving Credit Facility | USD (or equivalent) | 1,100 | 950 | 2016 |
| Multi Currency Revolving Credit Facility | USD (or equivalent) | 100 | 11 | 2012 |
| EMTN Eurobond, 6.50% fixed | EUR | 500 | 0 | 2013 |
| EMTN FRN private placement | EUR | 45 | 0 | 2014 |
| EMTN FRN private placement | SEK | 1,000 | 0 | 2012 |
| EMTN FRN private placement | SEK | 1,000 | 0 | 2012 |
| EMTN FRN private placement | SEK | 500 | 0 | 2014 |
| EMTN FRN private placement | SEK | 500 | 0 | 2014 |
| EMTN FRN private placement | USD | 62 | 0 | 2015 |
| EMTN FRN private placement | USD | 40 | 0 | 2015 |
| Commercial Paper (uncommitted) | SEK | 5,000 | 1,420 | n/a |
| MSEK | Jan–Jun 2011 | Jan–Jun 2010 |
|---|---|---|
| Administrative contribution and other revenues | 510.3 | 521.4 |
| Gross income | 510.3 | 521.4 |
| Administrative expenses | –243.1 | –242.8 |
| Operating income | 267.2 | 278.6 |
| Financial income and expenses | 109.2 | –313.0 |
| Income before taxes | 376.4 | –34.4 |
| Taxes | –7.6 | –44.2 |
| Net income for the period | 368.8 | –78.6 |
| MSEK | Jun 30, 2011 | Dec 31, 2010 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Shares in subsidiaries | 40,107.5 | 40,026.8 |
| Shares in associated companies | 112.1 | 112.1 |
| Other non-interest bearing non-current assets | 186.0 | 189.0 |
| Interest bearing financial non-current assets | 441.0 | 331.3 |
| Total non-current assets | 40,846.6 | 40,659.2 |
| Current assets | ||
| Non-interest bearing current assets | 846.3 | 929.5 |
| Other interest bearing current assets | 3,363.2 | 3,089.5 |
| Liquid funds | 17.4 | 2.2 |
| Total current assets | 4,226.9 | 4,021.2 |
| TOTAL ASSETS | 45,073.5 | 44,680.4 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||
| Shareholders' equity | ||
| Restricted equity | 7,727.7 | 7,727.7 |
| Non-restricted equity | 13,701.6 | 14,664.6 |
| Total shareholders' equity | 21,429.3 | 22,392.3 |
| Long-term liabilities | ||
| Non-interest bearing long-term liabilities/provisions | 164.5 | 138.5 |
| Interest bearing long-term liabilities | 9,088.1 | 7,155.7 |
| Total long-term liabilities | 9,252.6 | 7,294.2 |
| Current liabilities | ||
| Non-interest bearing current liabilities | 862.9 | 1,118.5 |
| Interest bearing current liabilities | 13,528.7 | 13,875.4 |
| Total current liabilities | 14,391.6 | 14,993.9 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 45,073.5 | 44,680.4 |
Operating income before amortization (rolling 12 months) plus interest income (rolling 12 months) in relation to interest expenses (rolling 12 months).
Free cash flow as a percentage of adjusted income (operating income before amortization adjusted for financial income and expenses, excluding revaluation of financial instruments, and current taxes).
Free cash flow (rolling 12 months) in relation to closing balance net debt.
Operating capital employed as a percentage of total sales adjusted for the full-year sales of acquired entities.
Operating income before amortization (rolling 12 months) plus items affecting comparability (rolling 12 months) as a percentage of the average balance of operating capital employed.
Operating income before amortization (rolling 12 months) plus items affecting comparability (rolling 12 months) as a percentage of closing balance of capital employed.
Net debt in relation to shareholders' equity.
An information meeting will be held on August 5, 2011, at 9.30 a.m. CET.
The information meeting will take place at Securitas' head office, Lindhagensplan 70, Stockholm.
The meeting will be webcast at www.securitas.com/webcasts
To participate in the telephone conference during the information meeting, please dial in five minutes prior to the start of the conference call, from:
The United States: +1866 458 4087 Sweden: +46(0)8 505 598 53 United Kingdom: +44(0)203 043 2436
A recorded version of the webcast will be available at www.securitas.com/webcasts after the meeting.
Micaela Sjökvist, Head of Investor Relations, +4610 470 3013
Gisela Lindstrand, Senior Vice President Corporate Communications and Public Affairs, +4610 470 3011
Securitas will release financial information for 2011 as follows:
January–September 2011: November 9, 2011
January–December 2011: February 9, 2012
P.O. Box 12307 SE-102 28 Stockholm Sweden Tel +46 10 470 3000 Fax +46 10 470 3122 www.securitas.com Visiting address: Lindhagensplan 70
Corporate registration number 556302–7241 Securitas is a knowledge leader in security, focusing on providing security solutions to fit each customer's needs in 45 countries in North America, Europe, Latin America, Asia, Middle East and Africa. Everywhere from small stores to airports, our 280,000 employees are making a difference.
Securitas AB discloses the information provided herein pursuant to the Securities Markets Act and/or the Financial Instruments Trading Act. The information was submitted for publication at 8.00 a.m. (CET) on Friday, August 5, 2011.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.