Quarterly Report • Aug 6, 2010
Quarterly Report
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Interim Report January–June 2010
APRIL–JUNE 2010
january–JUNE 2010
With the uneven recovery taking place in the world economies, demand for security services has not yet increased due to the sector�s late cyclicality. It has, however, stabilized at the current levels. The recovery seems to be steady in North America, while security industry development in Europe varies from country to country and remains difficult to predict.
The Securitas strategy — to focus on profitability and to differentiate the company from its competitors through the added value in optimizing security solutions for customers — has been successful in various business cycles over the past few years. In the first half of 2010 the real improvement in operating income continued amounting to 4 percent. The operating margin improved in all business segments.
Although Security Services North America�s organic sales growth remained negative in the first half of the year, it is showing signs of improving. Security Services Europe as well as Mobile and Monitoring enjoyed positive organic sales growth.
During the second quarter a major acquisition was concluded in the U.S. in order to expand in the primary government security services market. Favorable acquisition opportunities continue to present themselves in both mature and new markets and we intend to remain active and selectively take advantage of such opportunities as they arise.
Alf Göransson President and Chief Executive Officer
| January–June summary 2 | |
|---|---|
| Group development 3 | |
| Development in the Group's business segments 5 |
|
| Cash flow 8 | |
| Capital employed and financing 9 |
|
| Acquisitions 10 | |
| Other significant events 12 | |
| Risks and uncertainties 12 | |
| Parent Company operations 13 |
|
| Accounting principles 14 | |
| Consolidated financial statements 15 |
|
| Segment overview 19 | |
| Notes 20 | |
| Definitions 21 | |
| Parent Company 22 | |
| Signatures of the Board of Directors 23 |
|
| Review report 24 | |
| Financial information 25 |
| Total | Total | |||||
|---|---|---|---|---|---|---|
| MSEK | Q2 2010 | Q2 2009 | change, % | H1 2010 | H1 2009 | change, % |
| Sales | 15,424 | 15,907 | –3 | 30,295 | 32,332 | –6 |
| Organic sales growth, % | 0 | 0 | –1 | 0 | ||
| Real sales growth, including acquisitions, % | 3 | 3 | 2 | 4 | ||
| Operating income before amortization | 859 | 880 | –2 | 1,676 | 1,752 | –4 |
| Operating margin, % | 5.6 | 5.5 | 5.5 | 5.4 | ||
| Real change, % | 4 | 2 | 4 | 2 | ||
| Income before taxes and items affecting | ||||||
| comparability | 671 | 679 | –1 | 1,314 | 1,394 | –6 |
| Real change, % | 4 | –7 | 2 | –2 | ||
| Income before taxes | 671 | 679 | –1 | 1,314 | 1,394 | –6 |
| Real change, % | 4 | –7 | 2 | –2 | ||
| Net income | 470 | 468 | 0 | 921 | 978 | –6 |
| Earnings per share (SEK) | 1.29 | 1.28 | 1 | 2.53 | 2.68 | –6 |
| Organic sales growth | Operating margin | |||||||
|---|---|---|---|---|---|---|---|---|
| Q2 | H1 | Q2 | H1 | |||||
| % | 2010 | 2009* | 2010 | 2009* | 2010 | 2009* | 2010 | 2009* |
| Security Services North America | –4 | –2 | –5 | –2 | 6.0 | 5.8 | 5.7 | 5.6 |
| Security Services Europe | 1 | 0 | 1 | 1 | 5.1 | 5.1 | 5.2 | 5.1 |
| Mobile and Monitoring | 1 | 3 | 2 | 4 | 10.6 | 10.8 | 10.9 | 10.7 |
| Group | 0 | 0 | –1 | 0 | 5.6 | 5.5 | 5.5 | 5.4 |
* 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 21 for quarterly information for 2009.
Group quarterly sales development Group quarterly sales development
Sales amounted to MSEK 15,424 (15,907) and organic sales growth was 0 percent (0). Development is estimated to be in line with security market growth in Europe and slightly lower in North America. Organic sales growth in the guarding operations is showing signs of a slow but steady recovery.
Real sales growth, including acquisitions and adjusted for changes in exchange rates, was 3 percent (3).
Operating income before amortization was MSEK 859 (880) which, adjusted for changes in exchange rates, represented an increase of 4 percent.
The Group�s operating margin was 5.6 percent (5.5). Security Services North America improved its operating margin compared to last year, while Security Services Europe�s margin was flat. The Group�s improved profitability in the second quarter was attributable to lower bad debt losses and provisions for bad debt losses and cost control.
Price adjustments corresponded approximately to total wage cost increases within the Group in the second quarter.
Amortization of acquisition related intangible assets amounted to MSEK –39 (–34).
Acquisition related costs impacted the quarter by MSEK –20 (0). Further information is provided in note 4.
Financial income and expenses amounted to MSEK –129 (–166). The decrease for the quarter is explained partly by a lower average interest rate on the net debt as well as a stronger Swedish krona, which had a positive impact on the finance net.
Income before taxes was MSEK 671 (679). The real change was 4 percent.
The Group's tax rate was 29.9 percent (31.1). The higher rate in 2009 was mainly due to capitalization within Securitas Spain. For further information refer to note 37 in the Annual Report 2009.
Net income was MSEK 470 (468). Earnings per share amounted to SEK 1.29 (1.28).
Sales amounted to MSEK 30,295 (32,332) and organic sales growth was –1 percent (0). Development is estimated to be in line with security market growth in Europe and slightly lower in North America. The consequences of the recession were still having a negative impact and impeding the Group�s organic sales growth in the first half of the year. Security Services North America�s organic sales growth was negative while Security Services Europe and Mobile and Monitoring enjoyed positive growth.
Real sales growth, including acquisitions and adjusted for changes in exchange rates, was 2 percent (4).
Operating income before amortization was MSEK 1,676 (1,752) which, adjusted for changes in exchange rates, represented an increase of 4 percent.
The operating margin was 5.5 percent (5.4), an improvement reflected in all business segments. The improved profitability in the first half of the year was mainly related to lower bad debt losses and provisions for bad debt losses, cost control and the positive effects of a lower employee turnover rate.
Price adjustments approximately corresponded to the total wage cost increases within the Group in the first half of the year.
Amortization of acquisition related intangible assets amounted to MSEK –77 (–68).
Acquisition related costs impacted the first half of the year by MSEK –25 (–2). Further information is provided in note 4.
Financial income and expenses amounted to MSEK –261 (–288).
Income before taxes was MSEK 1,314 (1,394). The real change was 2 percent.
The Group's tax rate was 29.9 percent (29.9).
Net income was MSEK 921 (978). Earnings per share amounted to SEK 2.53 (2.68).
Security Services North America 37%
Security Services North America 38%
Security Services North America provides specialized guarding 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, over 600 branch offices and approximately 100,000 employees.
| Security Services North America | April–June | January–June | January–December | ||
|---|---|---|---|---|---|
| MSEK | 2010 2009 |
2010 2009 |
2009 | ||
| Total sales | 5,855 | 6,077 | 11,217 | 12,605 | 23,530 |
| Organic sales growth, % | –4 | –2 | –5 | –2 | –4 |
| Operating income before amortization | 350 | 353 | 639 | 703 | 1,400 |
| Operating margin, % | 6.0 | 5.8 | 5.7 | 5.6 | 5.9 |
| Real change, % | 2 | 3 | –1 | 1 | 2 |
Organic sales growth was –4 percent (–2) in the second quarter, an improvement on the first quarter of 2010. The development is due to a steady but positive net change in the contract portfolio.
The new sales rate in the second quarter was higher than in the second quarter last year.
The operating margin was 6.0 percent (5.8). The improvement is primarily due to a focus on cost control with the continuing benefits afforded by a favorable employment market. Lower bad debt losses and provisions for bad debt losses also contributed to the development.
The U.S. dollar exchange rate had a slightly negative effect on the operating result in Swedish kronor. The real change was 2 percent in the second quarter.
Organic sales growth was –5 percent (–2) in the first half of the year. The progress of the organic sales growth development took place towards the end of the first half of the year, and therefore had a limited impact on the organic sales growth figures for the period.
The new sales rate in the first of the half year was lower than in the same period last year, when it was boosted mainly by good growth in the Healthcare segment.
The operating margin increased to 5.7 percent (5.6). Cost reductions coupled with lower bad debt losses and provisions for bad debt losses contributed to this development. This effect was partially counteracted by higher payroll taxes that were not fully compensated for in the first half of the year.
The U.S. dollar exchange rate had a negative effect on the operating result in Swedish kronor. The real change was –1 percent in the first half of the year.
The client retention rate was just under 90 percent which is in line with the same period last year. The employee turnover rate in the U.S. was 36 percent (48).
Security Services Europe 50%
Security Services Europe 46%
Organic sales growth, %
Security Services Europe provides specialized security and safety services for large and medium-sized customers in 24 countries, while Aviation – part of the Security Services Europe business segment – provides airport security services in 13 countries. Security Services Europe has a combined total of over 800 branch offices and more than 110,000 employees.
| Security Services Europe | April–June | January–June | January–December | ||
|---|---|---|---|---|---|
| MSEK | 2010 2009* |
2010 2009* |
2009* | ||
| Total sales | 7,515 | 7,970 | 15,045 | 15,994 | 31,517 |
| Organic sales growth, % | 1 | 0 | 1 | 1 | 0 |
| Operating income before amortization | 381 | 410 | 775 | 814 | 1,800 |
| Operating margin, % | 5.1 | 5.1 | 5.2 | 5.1 | 5.7 |
| Real change, % | 2 | –3 | 4 | –1 | 4 |
* 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 21 for quarterly information for 2009.
Organic sales growth was 1 percent (0) in the second quarter. The improvement is due to a positive development in the contract portfolio. However, the countries in the European guarding operation are not showing a uniform picture in terms of organic sales growth. There was positive development in countries such as Austria, Denmark, Germany, Netherlands, Romania, Switzerland, Turkey and the United Kingdom. France also showed positive organic sales growth, while countries such as Norway and Spain experienced negative organic sales growth. Organic sales growth was good in Aviation in the second quarter.
The new sales rate was slightly lower in the second quarter than in the second quarter last year.
The operating margin was 5.1 percent (5.1). Lower bad debt provisions and losses had a positive impact, while the lower level of extra sales had a negative effect. Aviation's operating margin declined in the second quarter due to provisions for bad debts and negative impact related to the flight interruptions caused by the ash cloud in April.
The euro exchange rate had a negative impact on the operating income in Swedish kronor. The real change was 2 percent for the quarter.
Organic sales growth was 1 percent (1) in the first half of the year. Positive organic sales growth was seen in countries such as Austria, Denmark, Finland, Germany, Netherlands, Sweden, Switzerland and Turkey. Negative organic sales growth was seen in countries such as Norway and Spain. Organic sales growth was good in Aviation in the first half of the year.
The new sales rate was slightly lower in the first half year than in the same period last year.
The operating margin was 5.2 percent (5.1). The increase is primarily related to lower bad debt provisions and losses. The lower level of extra sales had a negative impact on the margin. Aviation's operating margin declined in the first half of the year, due to the events described under the second quarter above.
The euro exchange rate had a negative impact on the operating income in Swedish kronor. The real change was 4 percent in the first half of the year.
The client retention rate was approximately 90 percent. The employee turnover rate was approximately 25 percent (26).
Mobile and Monitoring 10%
Mobile and Monitoring 19%
Mobile provides mobile security services for small and medium-sized businesses, while Monitoring provides electronic alarm surveillance services. Mobile operates in 11 countries across Europe and has approximately 8,900 employees in 28 areas and 327 branches.
Monitoring, with approximately 900 employees, operates in 11 countries in Europe and covers the other European countries via partnerships.
| Mobile and Monitoring | April–June | January–June | January–December | ||
|---|---|---|---|---|---|
| MSEK | 2010 2009* |
2010 | 2009* | 2009* | |
| Total sales | 1,486 | 1,556 | 2,974 | 3,088 | 6,168 |
| Organic sales growth, % | 1 | 3 | 2 | 4 | 3 |
| Operating income before amortization | 157 | 168 | 325 | 331 | 740 |
| Operating margin, % | 10.6 | 10.8 | 10.9 | 10.7 | 12.0 |
| Real change, % | –1 | 8 | 4 | 12 | 7 |
* 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 21 for quarterly information for 2009.
Organic sales growth was 1 percent (3). The consequences of the recession continued to negatively affect the contract portfolio�s net change. In the Mobile operation, countries such as Germany, Netherlands, Norway and Sweden showed positive organic sales growth. The Monitoring operation enjoyed good organic sales growth in the Nordic countries and in the Netherlands.
The operating margin, which was 10.6 percent (10.8), was impacted by a provision due to changes in Group Management. Without this provision the operating margin would have been higher than in the same period last year. The real change was –1 percent for the quarter.
Organic sales growth was 2 percent (4). The lower organic sales growth compared to last year was primarily explained by the recession. In the Mobile operation, countries such as Germany, Netherlands, Norway, Portugal and Sweden showed positive organic sales growth. The Monitoring operation enjoyed good organic sales growth in the Nordic countries.
The operating margin was 10.9 percent (10.7). Lower bad debt provisions and losses had a positive effect on the operating margin. The entry into the Monitoring market in Spain also contributed to the improved margin. The real change was 4 percent for the first half of the year.
Operating income before amortization amounted to MSEK 859 (880). Net investments in noncurrent tangible and intangible assets amounted to MSEK 22 (–24).
Changes in accounts receivable amounted to MSEK –354 (–31). Changes in other operating capital employed amounted to MSEK –185 (–280).
Cash flow from operating activities amounted to MSEK 342 (545), equivalent to 40 percent (62) of operating income before amortization.
Financial income and expenses paid amounted to MSEK –317 (–112). Current taxes paid amounted to MSEK –295 (–237).
Free cash flow was MSEK –270 (196), equivalent to –49 percent (37) of adjusted income.
Cash flow from investing activities, acquisitions, was MSEK –347 (–53).
Cash flow from items affecting comparability was MSEK –1 (–2).
Cash flow from financing activities was MSEK 153 (–76).
Cash flow for the period was MSEK –465 (65).
Operating income before amortization amounted to MSEK 1,676 (1,752). Net investments in noncurrent tangible and intangible assets amounted to MSEK 28 (–23).
Changes in accounts receivable amounted to MSEK –644 (–321). Changes in other operating capital employed amounted to MSEK 1 (–626).
Cash flow from operating activities amounted to MSEK 1,061 (782), equivalent to 63 percent (45) of operating income before amortization.
Financial income and expenses paid amounted to MSEK –403 (–297). Current taxes paid amounted to MSEK –404 (–362).
Free cash flow was MSEK 254 (123), equivalent to 24 percent (11) of adjusted income.
Cash flow from investing activities, acquisitions, was MSEK –450 (–193).
Cash flow from items affecting comparability was MSEK –2 (–3).
Cash flow from financing activities was MSEK –117 (–1,264).
Cash flow for the period was MSEK –315 (–1,337).
| MSEK | |
|---|---|
| Jan 1, 2010 | –8,388 |
| Free cash flow | 254 |
| Acquisitions | –450 |
| IAC payments | –2 |
| Dividend paid | –1,095 |
| Change in net debt | –1,293 |
| Translation and | |
| revaluation | –19 |
| Jun 30, 2010 | –9,700 |
The Group's operating capital employed was MSEK 3,372 (2,623 as of December 31, 2009) corresponding to 5 percent of sales (4 as of December 31, 2009) adjusted for the full year sales figures of acquired units.
Acquisitions increased operating capital employed by MSEK 40 during the period.
Acquisitions increased consolidated goodwill by MSEK 315. Adjusted for positive translation differences of MSEK 110, total goodwill for the Group amounted to MSEK 13,983 (13,558 as of December 31, 2009).
Acquisitions have increased acquisition related intangible assets by MSEK 70. After amortization of MSEK –77 and negative translation differences of MSEK –20, acquisition related intangible assets amounted to MSEK 868 (895 as of December 31, 2009).
The Group's total capital employed was MSEK 18,364 (17,209 as of December 31, 2009). The translation of foreign capital employed to Swedish kronor increased the Group's capital employed by MSEK 129.
The return on capital employed was 20 percent (22 as of December 31, 2009).
The Group's net debt amounted to MSEK 9,700 (8,388 as of December 31, 2009). Acquisitions and acquisition related payments increased the Group's net debt by MSEK 450, of which purchase price payments accounted for MSEK 449, assumed net debt for MSEK –23 and acquisition related costs paid accounted for MSEK 24. The Group's net debt increased by MSEK 46 due to the translation of net debt in foreign currency to Swedish kronor.
A dividend of MSEK 1,095 (1,059) was paid to the shareholders in May 2010.
The free cash flow to net debt ratio amounted to 0.24 (0.18).
The main debt instruments drawn as of the end of June 2010 were three 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 two floating rates notes (FRN's), one for MEUR 45 maturing in 2014 and one for MUSD 62 maturing in 2015. In early July 2010 another FRN for MUSD 40 was issued, also maturing in 2015. In addition to the above, Securitas has access to committed financing through the MUSD 1,100 revolving credit facility maturing in 2012.
Securitas 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.
| Type | Currency | Facility amount (million) |
Available amount (million) |
Maturity |
|---|---|---|---|---|
| Multi Currency Revolving Credit Facility | USD (or equivalent) | 1,100 | 641 | 2012 |
| EMTN Eurobond, 6.50% fixed | EUR | 500 | 0 | 2013 |
| EMTN FRN Private Placement | EUR | 45 | 0 | 2014 |
| EMTN FRN Private Placement | USD | 62 | 0 | 2015 |
| Commercial Paper (uncommitted) | SEK | 5,000 | 1,725 | n/a |
Summary of credit facilities as of June 30, 2010:
The interest cover ratio amounted to 7.3 (4.4).
Shareholders' equity amounted to MSEK 8,664 (8,821 as of December 31, 2009). The translation of foreign assets and liabilities into Swedish kronor increased shareholders' equity by MSEK 118 after taking into account net investment hedging of MSEK 35 and MSEK 83 before net investment hedging. Refer to the statement of comprehensive income on page 15 for further information.
The total number of outstanding shares amounted to 365,058,897 as of June 30, 2010.
| Company | Business segment 1) | Included from |
Acquired share 2) |
Annual sales 3) |
Enter - prise value 4) |
Goodwill | Acq. related intangible assets |
|---|---|---|---|---|---|---|---|
| Opening balance | 13,558 | 895 | |||||
| Seccredo, Sweden 7) 8) |
Other | Jan 1 | 51 | 25 | 14 | 35 | - |
| Claw Protection Services, |
|||||||
| South Africa 7) | Other | Mar 1 | 100 | 38 | 7 | 10 | 5 |
| Dan Kontrol Systemer, Denmark |
Security Services Europe | Apr 1 | 100 | 21 | 24 | 19 | 11 |
| Bren Security, Sri Lanka 7) 8) |
Other | Jun 1 | 60 | 16 | 23 | 40 | 9 |
| Paragon Systems, USA |
Security Services North America |
Jun 8 | 100 | 1,102 | 267 | 217 | - |
| Other acquisitions 5) 7) | 198 | 91 | –6 | 45 | |||
| Total acquisitions January–June 2010 | 1,400 | 426 | 3156) | 70 | |||
| Amortization of acquisition related intangible assets | - | –77 | |||||
| Exchange rate differences | 110 | –20 | |||||
| Closing balance | 13,983 | 868 |
1) Refers to business segment with main responsibility for the acquisition.
2) Refers to voting rights.
3) Estimated annual sales.
4) Purchase price paid plus acquired net debt.
6) Goodwill that is expected to be tax deductible amounts to MSEK 15.
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 –9. Total deferred considerations, short-term and long-term, in the Group's balance sheet amount to MSEK 270.
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 17. Transaction costs can be found in note 4 on page 20.
Securitas has acquired 51 percent of the shares in Seccredo, a leading consulting company providing crisis management and risk and security services. Seccredo has 20 employees. The company helps customers to prevent, control and mitigate disturbances and losses in organizations and operations and of assets. Seccredo�s customers represent a broad cross section of leading brands from both the private and public sectors.
Securitas has acquired all shares in the security services company Claw Protection Services in South Africa. Claw Protection Services has approximately 800 employees and specializes in guarding services, mainly in the areas of Johannesburg and Pretoria.
5) Related to other acquisitions for the period and updated previous year acquisition calculations for the following entities: Hamilton, USA, Atlantis Securite, Canada, Addici (contract portfolio) and Jourman (contract portfolio), Services Sweden, Dalslands bevakning (contract portfolio) and Labelå (contract portfolio), Mobile Sweden, Verdisikring Vest (contract portfolio), Mobile Norway, G4S, Germany, Ferssa Group, Services France, Staff Sécurité (contract portfolio), AGSPY and SCPS (contract portfolio), Mobile France, Tecniserv, Alert Services Spain, WOP Protect (contract portfolio) and Alpha Protect (contract portfolio), Services Switzerland, GPDS (contract portfolio), Mobile Belgium, EMS (contract portfolio), Alert Services Belgium, Hose, Services Netherlands, Hadi Bewaking (contract portfolio), Mobile Netherlands, Agency of Security Fenix, Czech Republic, Gordon, Serbia, ICTS, Services Turkey, GMCE Gardiennage, Morocco, Vigilan and El Guardian, Argentina, Trancilo and Gadonal, Uruguay, Worldwide Security and Protec Austral, Chile, Guardforce, Hong Kong, MKB Tactical, South Africa and Long Hai Security, Vietnam. Related also to deferred considerations paid in the USA, Belgium, Switzerland, Turkey and Argentina.
Securitas subsidiary in Denmark, Dansikring, has acquired all shares in the monitoring company Dan Kontrol Systemer in Denmark. Dan Kontrol Systemer, with 25 employees, is the largest independent monitoring company in Denmark. The acquisition has enabled Securitas to expand in the monitoring market in Denmark.
Securitas has acquired 60 percent of the shares in the security services company Bren Security in Sri Lanka. Bren Security has approximately 1,050 employees and operates guarding services in the Colombo city area.
Pinkerton Government Services, a company within the Securitas Group, has acquired all shares in the security services company Paragon Systems in the USA. With this acquisition, Securitas is expanding in the primary government security services market in the USA. Paragon, with approximately 3,000 employees, specializes in providing high level, armed security officer services to various government agencies and facilities under the oversight of the U.S. Federal Protective Service and the U.S. Government Department of Defense. Paragon is one of the leading companies in the prime government sector in the U.S.
Securitas has acquired the security services company Legend Group Holding International in Singapore. Legend has approximately 600 employees. The acquisition was consolidated in Securitas as of July 1, 2010.
For critical estimates and judgments and items affecting comparability and contingent liabilities refer to page 72 and pages 103–104 in the Annual Report 2009. 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.
On July 22, 2010 Securitas signed an out of court settlement agreement with the Trustee of the Heros bankruptcy estate (Germany). Securitas will make a total payment of MEUR 5.9 in return for Heros waiving all claims whatsoever against the Securitas Group. The Securitas companies will simultaneously waive all claims against the bankruptcy estate. The settlement amount is covered by previously recognized provisions.
The U.S. tax authorities have, after finalizing an audit of Securitas USA for the years 2003–04, issued a notice on July 1, 2010 disallowing certain deductions for interest expenses and insurance premiums. Securitas is of the opinion that it has acted in accordance with the law and will defend its position in U.S. Tax courts. It may take several years until a final judgment is awarded. If the notice is finally upheld by the U.S. Tax courts a judgment could result in a tax of MUSD 60 plus interest.
The Divisional President of the Mobile Division, Morten Rønning, left Securitas on July 8, 2010. Securitas AB's President and CEO Alf Göransson manages the Mobile Division until a new Divisional President has been appointed.
The Annual General Meeting held on May 4, 2010 resolved with the requisite majority to adopt the incentive program and in order to enable the Board to deliver the shares according to said incentive scheme, to authorize the Board to enter into a share swap agreement with a third party, which was one of the suggested hedging arrangements proposed by the Board. The incentive program is now being implemented throughout the Securitas Group.
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 2009.
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 2009 and above under the heading "Other significant events", may vary from the current financial estimates and provisions made by management. This could affect the Group�s 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 521 (486) and mainly relates to administrative contributions and other income from subsidiaries.
Financial income and expenses amounted to MSEK –313 (–179). Exchange rate differences had a negative impact on the finance net. Income after financial items amounted to MSEK –34 (106).
The Parent Company's non-current assets amounted to MSEK 40,870 (40,604 as of December 31, 2009) and mainly comprise shares in subsidiaries of MSEK 40,172 (40,074 as of December 31, 2009). Current assets amounted to MSEK 3,768 (4,527 as of December 31, 2009) of which liquid funds amounted to MSEK 114 (2 as of December 31, 2009).
Shareholders' equity amounted to MSEK 20,739 (21,855 as of December 31, 2009).
A dividend of MSEK 1,095 (1,059) was paid to the shareholders in May 2010.
The Parent Company's liabilities amounted to MSEK 23,899 (23,276 as of December 31, 2009) and mainly consist of interest-bearing debt.
For further information, refer to the Parent Company's condensed financial statements on page 22.
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 1.3 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 62 to 68 in the published Annual Report for 2009. 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 2.3 Accounting for Legal Entities. The most important accounting principles used by the Parent Company can be found in note 39 on page 109 in the published Annual Report for 2009.
The effects on the Group from new and revised standards and interpretations that came into effect on January 1, 2010 have been described in note 2 on pages 62 to 63 in the published Annual Report for 2009. The revised standards that impact the Group's financial statements are IFRS 3 (revised) Business combinations and IAS 27 (revised) Consolidated and separate financial statements. The new accounting principles adopted from January 1, 2010 without restatement of the comparative years are:
The acquisition method is applied to business combinations. All payments to acquire a business are recorded at fair value at the acquisition date, with contingent considerations classified as debt subsequently re-measured through the statement of income. There is a choice on an acquisitionby-acquisition basis to measure the non-controlling interest in the acquiree at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets. All acquisition related transaction costs are expensed. These costs are in the Group accounted for on a line in the statement of income named acquisition related costs. Costs accounted for on this line are transaction costs, revaluation of contingent considerations, revaluation to fair value of previously acquired shares in step acquisitions and, as previously, acquisition related restructuring costs.
Transactions with non-controlling interests are recorded in equity if there is no change in control. When control is lost by the Parent Company, any remaining interest in the entity is remeasured to fair value, and a gain or loss is recognised in the statement of income.
| MSEK | Apr–Jun 2010 | Apr–Jun 2009 | Jan–Jun 2010 | Jan–Jun 2009 | Jan–Dec 2009 | Jan–Dec 2008 |
|---|---|---|---|---|---|---|
| Continuing operations | ||||||
| Sales | 15,000.3 | 15,434.0 | 29,538.6 | 31,385.3 | 61,216.7 | 55,247.9 |
| Sales, acquired business | 423.9 | 472.7 | 756.1 | 946.6 | 1,450.0 | 1,323.7 |
| Total sales | 15,424.2 | 15,906.7 | 30,294.7 | 32,331.9 | 62,666.7 | 56,571.6 |
| Organic sales growth, %1) | 0 | 0 | –1 | 0 | –1 | 6 |
| Production expenses | –12,655.7 | –13,011.0 | –24,832.6 | –26,475.3 | –50,983.9 | –46,122.9 |
| Gross income | 2,768.5 | 2,895.7 | 5,462.1 | 5,856.6 | 11,682.8 | 10,448.7 |
| Selling and administrative expenses | –1,912.4 | –2,017.9 | –3,791.3 | –4,109.2 | –7,933.5 | –7,196.3 |
| Other operating income 2) | 2.8 | 2.8 | 5.6 | 6.0 | 11.3 | 18.7 |
| Share in income of associated companies 3) | –0.1 | –0.8 | 0.0 | –1.6 | –4.1 | –0.4 |
| Operating income before amortization | 858.8 | 879.8 | 1,676.4 | 1,751.8 | 3,756.5 | 3,270.7 |
| Operating margin, % | 5.6 | 5.5 | 5.5 | 5.4 | 6.0 | 5.8 |
| Amortization of acquisition related intangible assets | –39.4 | –34.0 | –77.3 | –68.1 | –138.3 | –102.2 |
| Acquisition related costs 4) | –19.8 | - | –24.7 | –1.9 | –5.9 | –52.6 |
| Items affecting comparability | - | - | - | - | - | –29.3 |
| Operating income after amortization | 799.6 | 845.8 | 1,574.4 | 1,681.8 | 3,612.3 | 3,086.6 |
| Financial income and expenses 5) | –128.6 | –166.4 | –260.9 | –287.9 | –589.8 | –469.6 |
| Income before taxes | 671.0 | 679.4 | 1,313.5 | 1,393.9 | 3,022.5 | 2,617.0 |
| Net margin, % | 4.4 | 4.3 | 4.3 | 4.3 | 4.8 | 4.6 |
| Current taxes | –181.4 | –180.1 | –350.6 | –352.7 | –715.4 | –651.8 |
| Deferred taxes | –19.3 | –31.1 | –42.2 | –63.7 | –189.1 | –75.3 |
| Net income for the period, continuing operations | 470.3 | 468.2 | 920.7 | 977.5 | 2,118.0 | 1,889.9 |
| Net income for the period, discontinued operations | - | - | - | - | - | 431.8 |
| Net income for the period, all operations | 470.3 | 468.2 | 920.7 | 977.5 | 2,118.0 | 2,321.7 |
| Whereof attributable to: | ||||||
| Equity holders of the Parent Company | 471.3 | 467.6 | 922.8 | 977.8 | 2,116.2 | 2,323.6 |
| Non-controlling interests | –1.0 | 0.6 | –2.1 | –0.3 | 1.8 | –1.9 |
| Earnings per share before dilution, continuing operations (SEK) | 1.29 | 1.28 | 2.53 | 2.68 | 5.80 | 5.18 |
| Earnings per share before dilution, discontinued operations (SEK) | - | - | - | - | - | 1.18 |
| Earnings per share before dilution, all operations (SEK) | 1.29 | 1.28 | 2.53 | 2.68 | 5.80 | 6.36 |
| Earnings per share after dilution, continuing operations (SEK) | 1.29 | 1.28 | 2.53 | 2.68 | 5.80 | 5.18 |
| Earnings per share after dilution, discontinued operations (SEK) | - | - | - | - | - | 1.18 |
| Earnings per share after dilution, all operations (SEK) | 1.29 | 1.28 | 2.53 | 2.68 | 5.80 | 6.36 |
| MSEK | Apr–Jun 2010 | Apr–Jun 2009 | Jan–Jun 2010 | Jan–Jun 2009 | Jan–Dec 2009 | Jan–Dec 2008 |
|---|---|---|---|---|---|---|
| Net income for the period, all operations | 470.3 | 468.2 | 920.7 | 977.5 | 2,118.0 | 2,321.7 |
| Other comprehensive income | ||||||
| Actuarial gains and losses net of tax, all operations | –108.3 | –34.2 | –121.0 | 8.7 | 16.2 | –464.6 |
| Cash flow hedges net of tax, all operations | 13.9 | 26.8 | 21.4 | 15.6 | 56.8 | –130.2 |
| Net investment hedges, all operations | –121.9 | 202.0 | 35.3 | 36.2 | 254.9 | –232.8 |
| Translation differences, all operations | 446.5 | –507.1 | 83.4 | –209.0 | –1,073.8 | 2,188.1 |
| Other comprehensive income for the period, | ||||||
| all operations 6) | 230.2 | –312.5 | 19.1 | –148.5 | –745.9 | 1,360.5 |
| Total comprehensive income for the period, all operations | 700.5 | 155.7 | 939.8 | 829.0 | 1,372.1 | 3,682.2 |
| Whereof attributable to: | ||||||
| Equity holders of the Parent Company | 701.4 | 155.3 | 942.0 | 829.4 | 1,370.8 | 3,683.0 |
| Non-controlling interests | –0.9 | 0.4 | –2.2 | –0.4 | 1.3 | –0.8 |
Notes 1–6 refer to pages 20–21.
| Operating cash flow MSEK | Apr–Jun 2010 | Apr–Jun 2009 | Jan–Jun 2010 | Jan–Jun 2009 | Jan–Dec 2009 | Jan–Dec 2008 |
|---|---|---|---|---|---|---|
| Continuing operations | ||||||
| Operating income before amortization | 858.8 | 879.8 | 1,676.4 | 1,751.8 | 3,756.5 | 3,270.7 |
| Investments in non-current tangible and intangible assets | –203.8 | –255.7 | –425.3 | –490.3 | –950.7 | –977.0 |
| Reversal of depreciation | 225.3 | 232.1 | 453.7 | 466.9 | 927.5 | 839.9 |
| Change in accounts receivable | –353.7 | –31.0 | –644.7 | –320.8 | 197.6 | 7.8 |
| Change in other operating capital employed | –184.9 | –280.3 | 0.5 | –625.6 | –556.4 | 107.3 |
| Cash flow from operating activities | 341.7 | 544.9 | 1,060.6 | 782.0 | 3,374.5 | 3,248.7 |
| Cash flow from operating activities, % | 40 | 62 | 63 | 45 | 90 | 99 |
| Financial income and expenses paid | –316.7 | –111.7 | –402.9 | –297.6 | –481.6 | –433.4 |
| Current taxes paid | –295.0 | –237.0 | –403.5 | –361.7 | –728.2 | –803.5 |
| Free cash flow | –270.0 | 196.2 | 254.2 | 122.7 | 2,164.7 | 2,011.8 |
| Free cash flow, % | –49 | 37 | 24 | 11 | 88 | 94 |
| Cash flow from investing activities, acquisitions | –347.1 | –52.6 | –449.7 | –192.4 | –757.7 | –1,021.5 |
| Cash flow from items affecting comparability | –1.0 | –2.3 | –2.1 | –3.1 | –12.0 | –110.8 |
| Cash flow from financing activities | 152.7 | –76.5 | –117.2 | –1,264.2 | –2,775.5 | –199.3 |
| Cash flow for the period, continuing operations | –465.4 | 64.8 | –314.8 | –1,337.0 | –1,380.5 | 680.2 |
| Cash flow for the period, discontinued operations | - | - | - | - | - | –790.5 |
| Cash flow for the period, all operations | –465.4 | 64.8 | –314.8 | –1,337.0 | –1,380.5 | –110.3 |
| Cash flow MSEK | Apr–Jun 2010 | Apr–Jun 2009 | Jan–Jun 2010 | Jan–Jun 2009 | Jan–Dec 2009 | Jan–Dec 2008 |
| Cash flow from operations, continuing operations | –83.8 | 443.6 | 654.1 | 585.1 | 3,069.3 | 2,858.1 |
| Cash flow from operations, discontinued operations | - | - | - | - | - | 436.8 |
| Cash flow from operations, all operations | –83.8 | 443.6 | 654.1 | 585.1 | 3,069.3 | 3,294.9 |
| Cash flow from investing activities, continuing operations | –534.3 | –302.3 | –851.7 | –657.9 | –1,674.3 | –1,978.6 |
| Cash flow from investing activities, discontinued operations | - | - | - | - | - | –764.5 |
| Cash flow from investing activities, all operations | –534.3 | –302.3 | –851.7 | –657.9 | –1,674.3 | –2,743.1 |
| Cash flow from financing activities, continuing operations | 152.7 | –76.5 | –117.2 | –1,264.2 | –2,775.5 | –199.3 |
| Cash flow from financing activities, discontinued operations | - | - | - | - | - | –462.8 |
| Cash flow from financing activities, all operations | 152.7 | –76.5 | –117.2 | –1,264.2 | –2,775.5 | –662.1 |
| Cash flow for the period, continuing operations | –465.4 | 64.8 | –314.8 | –1,337.0 | –1,380.5 | 680.2 |
| Cash flow for the period, discontinued operations | - | - | - | - | - | –790.5 |
| Cash flow for the period, all operations | –465.4 | 64.8 | –314.8 | –1,337.0 | –1,380.5 | –110.3 |
| Change in net debt MSEK | Apr–Jun 2010 | Apr–Jun 2009 | Jan–Jun 2010 | Jan–Jun 2009 | Jan–Dec 2009 | Jan–Dec 2008 |
|---|---|---|---|---|---|---|
| Opening balance | –7,798.7 | –9,915.3 | –8,387.7 | –9,412.6 | –9,412.6 | –9,878.0 |
| Cash flow for the period, all operations | –465.4 | 64.8 | –314.8 | –1,337.0 | –1,380.5 | –110.3 |
| Change in loans, all operations | –1,247.9 | –982.2 | –978.0 | 205.5 | 1,716.8 | –469.6 |
| Change in net debt before revaluation and translation | ||||||
| differences, all operations | –1,713.3 | –917.4 | –1,292.8 | –1,131.5 | 336.3 | –579.9 |
| Revaluation of financial instruments, all operations 5) | 18.2 | 35.4 | 26.7 | 19.5 | 76.7 | –178.2 |
| Translation differences, all operations | –206.0 | 391.3 | –46.0 | 118.6 | 611.9 | –1,313.0 |
| Impact from dividend of discontinued operations | - | - | - | - | - | 2,536.5 |
| Change in net debt, all operations | –1,901.1 | –490.7 | –1,312.1 | –993.4 | 1,024.9 | 465.4 |
| Closing balance | –9,699.8 | –10,406.0 | –9,699.8 | –10,406.0 | –8,387.7 | –9,412.6 |
Note 5 refers to page 20.
| MSEK | Jun 30, 2010 | Mar 31, 2010 | Dec 31, 2009 | Jun 30, 2009 | Mar 31, 2009 | Dec 31, 2008 |
|---|---|---|---|---|---|---|
| Operating capital employed | 3,371.9 | 2,511.3 | 2,623.4 | 3,880.6 | 3,693.5 | 2,959.4 |
| Operating capital employed as % of sales | 5 | 4 | 4 | 6 | 6 | 5 |
| Return on operating capital employed, % | 123 | 144 | 135 | 104 | 103 | 108 |
| Goodwill | 13,982.7 | 13,352.7 | 13,558.3 | 13,964.0 | 14,513.9 | 14,104.3 |
| Acquisition related intangible assets | 868.1 | 859.8 | 894.9 | 736.5 | 783.8 | 751.3 |
| Shares in associated companies | 141.5 | 135.2 | 132.1 | 102.3 | 104.5 | 104.9 |
| Capital employed | 18,364.2 | 16,859.0 | 17,208.7 | 18,683.4 | 19,095.7 | 17,919.9 |
| Return on capital employed, % | 20 | 22 | 22 | 19 | 18 | 18 |
| Net debt | -9,699.8 | –7,798.7 | –8,387.7 | –10,406.0 | –9,915.3 | –9,412.6 |
| Shareholders' equity | 8,664.4 | 9,060.3 | 8,821.0 | 8,277.4 | 9,180.4 | 8,507.3 |
| Net debt equity ratio/multiple | 1.12 | 0.86 | 0.95 | 1.26 | 1.08 | 1.11 |
| MSEK | Jun 30, 2010 | Mar 31, 2010 | Dec 31, 2009 | Jun 30, 2009 | Mar 31, 2009 | Dec 31, 2008 |
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Non-current assets | ||||||
| Goodwill | 13,982.7 | 13,352.7 | 13,558.3 | 13,964.0 | 14,513.9 | 14,104.3 |
| Acquisition related intangible assets | 868.1 | 859.8 | 894.9 | 736.5 | 783.8 | 751.3 |
| Other intangible assets | 264.3 | 267.5 | 278.4 | 269.9 | 259.0 | 255.2 |
| Tangible non-current assets | 2,307.8 | 2,319.0 | 2,377.2 | 2,453.7 | 2,481.0 | 2,460.1 |
| Shares in associated companies | 141.5 | 135.2 | 132.1 | 102.3 | 104.5 | 104.9 |
| Non-interest bearing financial non-current assets | 2,072.8 | 1,920.8 | 1,995.7 | 2,262.9 | 2,423.1 | 2,366.4 |
| Interest bearing financial non-current assets | 213.6 | 196.0 | 160.8 | 156.2 | 158.1 | 150.6 |
| Total non-current assets | 19,850.8 | 19,051.0 | 19,397.4 | 19,945.5 | 20,723.4 | 20,192.8 |
| Current assets | ||||||
| Non-interest bearing current assets | 11,799.7 | 11,295.5 | 10,819.5 | 12,351.3 | 12,655.8 | 11,532.2 |
| Other interest bearing current assets | 25.3 | 47.7 | 81.9 | 36.3 | 12.7 | 42.4 |
| Liquid funds | 2,195.7 | 2,634.5 | 2,497.1 | 2,599.0 | 2,568.9 | 3,951.5 |
| Total current assets | 14,020.7 | 13,977.7 | 13,398.5 | 14,986.6 | 15,237.4 | 15,526.1 |
| TOTAL ASSETS | 33,871.5 | 33,028.7 | 32,795.9 | 34,932.1 | 35,960.8 | 35,718.9 |
| MSEK | Jun 30, 2010 | Mar 31, 2010 | Dec 31, 2009 | Jun 30, 2009 | Mar 31, 2009 | Dec 31, 2008 |
|---|---|---|---|---|---|---|
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||||
| Shareholders' equity | ||||||
| Attributable to equity holders of the Parent Company | 8,659.5 | 9,053.3 | 8,812.7 | 8,271.3 | 9,174.7 | 8,500.6 |
| Non-controlling interests | 4.9 | 7.0 | 8.3 | 6.1 | 5.7 | 6.7 |
| Total shareholders' equity | 8,664.4 | 9,060.3 | 8,821.0 | 8,277.4 | 9,180.4 | 8,507.3 |
| Equity ratio, % | 26 | 27 | 27 | 24 | 26 | 24 |
| Long-term liabilities | ||||||
| Non-interest bearing long-term liabilities | 248.5 | 222.5 | 193.8 | 176.2 | 230.7 | 201.6 |
| Interest bearing long-term liabilities | 6,940.4 | 6,913.7 | 8,357.5 | 7,754.4 | 5,410.5 | 7,148.4 |
| Non-interest bearing provisions | 2,756.3 | 2,608.5 | 2,626.2 | 2,741.5 | 2,823.3 | 2,811.9 |
| Total long-term liabilities | 9,945.2 | 9,744.7 | 11,177.5 | 10,672.1 | 8,464.5 | 10,161.9 |
| Current liabilities | ||||||
| Non-interest bearing current liabilities and provisions | 10,067.9 | 10,460.5 | 10,027.4 | 10,539.5 | 11,071.4 | 10,641.0 |
| Interest bearing current liabilities | 5,194.0 | 3,763.2 | 2,770.0 | 5,443.1 | 7,244.5 | 6,408.7 |
| Total current liabilities | 15,261.9 | 14,223.7 | 12,797.4 | 15,982.6 | 18,315.9 | 17,049.7 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 33,871.5 | 33,028.7 | 32,795.9 | 34,932.1 | 35,960.8 | 35,718.9 |
| Jun 30, 2010 Dec 31, 2009 |
Jun 30, 2009 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 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, 2010/2009 | 8,812.7 | 8.3 | 8,821.0 | 8,500.6 | 6.7 | 8,507.3 | 8,500.6 | 6.7 | 8,507.3 |
| Total comprehensive income for the period, all operations |
942.0 | –2.2 | 939.8 | 1,370.8 | 1.3 | 1,372.1 | 829.4 | –0.4 | 829.0 |
| Transactions with non-controlling interests | - | –1.2 | –1.2 | - | 0.3 | 0.3 | - | –0.2 | –0.2 |
| Dividend paid to the shareholders of the Parent Company |
–1,095.2 | - | –1,095.2 | –1,058.7 | - | –1,058.7 | –1,058.7 | - | –1,058.7 |
| Closing balance June 30 / December 31, 2010/2009 | 8,659.5 | 4.9 | 8,664.4 | 8,812.7 | 8.3 | 8,821.0 | 8,271.3 | 6.1 | 8,277.4 |
| SEK | Apr–Jun 2010 | Apr–Jun 2009 | Jan–Jun 2010 | Jan–Jun 2009 | Jan–Dec 2009 | Jan–Dec 2008 |
|---|---|---|---|---|---|---|
| Share price, end of period | 71.10 | 65.50 | 71.10 | 65.50 | 70.05 | 64.00 |
| Earnings per share before dilution and before items affecting | ||||||
| comparability, continuing operations | 1.29 | 1.28 | 2.53 | 2.68 | 5.80 | 5.24 |
| Earnings per share before dilution and before items affecting comparability, discontinued operations |
- | - | - | - | - | 1.18 |
| Earnings per share before dilution and before items | ||||||
| affecting comparability, all operations | 1.29 | 1.28 | 2.53 | 2.68 | 5.80 | 6.42 |
| Earnings per share before dilution, continuing operations | 1.29 | 1.28 | 2.53 | 2.68 | 5.80 | 5.18 |
| Earnings per share before dilution, discontinued operations | - | - | - | - | - | 1.18 |
| Earnings per share before dilution, all operations | 1.29 | 1.28 | 2.53 | 2.68 | 5.80 | 6.36 |
| Earnings per share after dilution and before items affecting | ||||||
| comparability, continuing operations | 1.29 | 1.28 | 2.53 | 2.68 | 5.80 | 5.24 |
| Earnings per share after dilution and before items affecting comparability, discontinued operations |
- | - | - | - | - | 1.18 |
| Earnings per share after dilution and before items | ||||||
| affecting comparability, all operations | 1.29 | 1.28 | 2.53 | 2.68 | 5.80 | 6.42 |
| Earnings per share after dilution, continuing operations | 1.29 | 1.28 | 2.53 | 2.68 | 5.80 | 5.18 |
| Earnings per share after dilution, discontinued operations | - | - | - | - | - | 1.18 |
| Earnings per share after dilution, all operations | 1.29 | 1.28 | 2.53 | 2.68 | 5.80 | 6.36 |
| Dividend | - | - | - | - | 3.00 | 2.90 |
| P/E-ratio after dilution and before items affecting comparability, | ||||||
| continuing operations | - | - | - | - | 12 | 12 |
| Number of shares outstanding | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 |
| Average number of shares outstanding | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 |
| Number of shares after dilution | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 |
| Average number of shares after dilution | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 | 365,058,897 |
| Security Services |
Security Services |
Mobile and |
||||
|---|---|---|---|---|---|---|
| MSEK | North America | Europe | Monitoring | Other | Eliminations | Group |
| Sales, external | 11,217 | 15,008 | 2,851 | 1,219 | - | 30,295 |
| Sales, intra-group | - | 37 | 123 | - | –160 | - |
| Total sales | 11,217 | 15,045 | 2,974 | 1,219 | –160 | 30,295 |
| Organic sales growth, % | –5 | 1 | 2 | - | - | –1 |
| Operating income before amortization | 639 | 775 | 325 | –63 | - | 1,676 |
| of which share in income of associated companies | - | - | - | 0 | - | 0 |
| Operating margin, % | 5.7 | 5.2 | 10.9 | - | - | 5.5 |
| Amortization of acquisition related intangible assets | –12 | –29 | –22 | –14 | - | –77 |
| Acquisition related costs | –13 | –1 | –1 | –10 | - | –25 |
| Operating income after amortization | 614 | 745 | 302 | –87 | - | 1,574 |
| Financial income and expenses | - | - | - | - | - | –260 |
| Income before taxes | - | - | - | - | - | 1,314 |
| Security | Security | Mobile | ||||
|---|---|---|---|---|---|---|
| Services | Services | and | ||||
| MSEK | North America | Europe 1) | Monitoring 1) | Other | Eliminations | Group |
| Sales, external | 12,605 | 15,957 | 2,951 | 819 | - | 32,332 |
| Sales, intra-group | - | 37 | 137 | - | –174 | - |
| Total sales | 12,605 | 15,994 | 3,088 | 819 | –174 | 32,332 |
| Organic sales growth, % | –2 | 1 | 4 | - | - | 0 |
| Operating income before amortization | 703 | 814 | 331 | –96 | - | 1,752 |
| of which share in income of associated companies | - | 0 | - | –2 | - | –2 |
| Operating margin, % | 5.6 | 5.1 | 10.7 | - | - | 5.4 |
| Amortization of acquisition related intangible assets | –10 | –25 | –24 | –9 | - | –68 |
| Acquisition related costs | - | - | - | –2 | - | –2 |
| Operating income after amortization | 693 | 789 | 307 | –107 | - | 1,682 |
| Financial income and expenses | - | - | - | - | - | –288 |
| Income before taxes | - | - | - | - | - | 1,394 |
1) Comparatives have been restated due to operations moved between the segments Security Services Europe and Mobile and Monitoring. Refer to note 7 for restated segment information per quarter and accumulated 2009.
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 |
|---|---|---|---|---|---|
| 2010 | 2009 | % | 2010 | 2009 | % |
| 15,424 | 15,907 | –3 | 30,295 | 32,332 | –6 |
| –424 | - | –756 | - | ||
| 886 | - | 2,591 | - | ||
| 15,886 | 15,907 | 0 | 32,130 | 32,332 | –1 |
| Apr–Jun | Apr–Jun | Apr–Jun | Jan–Jun | Jan–Jun | Jan–Jun |
| 2010 | 2009 | % | 2010 | 2009 | % |
| 859 | 880 | –2 | 1,676 | 1,752 | –4 |
| 56 | - | 153 | - | ||
| 915 | 880 | 4 | 1,829 | 1,752 | 4 |
| Apr–Jun | Apr–Jun | Apr–Jun | Jan–Jun | Jan–Jun | Jan–Jun |
| 2010 | 2009 | % | 2010 | 2009 | % |
| 671 | 679 | –1 | 1,314 | 1,394 | –6 |
| 36 | - | 113 | - | ||
| 707 | 679 | 4 | 1,427 | 1,394 | 2 |
Other operating income consists 2010 and 2009 in its entirety of trade mark fees from Securitas Direct AB, while the comparative year 2008 also includes trade mark fees from Niscayah Group AB (former Securitas Systems AB). Trade mark fees from Niscayah Group AB ceased in November 2008.
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 2010 | Apr–Jun 2009 | Jan–Jun 2010 | Jan–Jun 2009 | Jan–Dec 2009 | Jan–Dec 2008 |
|---|---|---|---|---|---|---|
| Walsons Services PVT Ltd | –0.1 | –0.8 | –0.3 | –1.6 | –4.1 | –0.4 |
| Long Hai Security | 0.0 | - | 0.3 | - | 0.0 | - |
| Facility Network A/S 1) | - | 0.0 | - | 0.0 | 0.0 | 0.0 |
| Share in income of associated companies included in | ||||||
| operating income before amortization | –0.1 | –0.8 | 0.0 | –1.6 | –4.1 | –0.4 |
1) Facility Network A/S was divested during 2009.
| MSEK | Apr–Jun 2010 | Apr–Jun 2009 | Jan–Jun 2010 | Jan–Jun 2009 | Jan–Dec 2009 | Jan–Dec 2008 |
|---|---|---|---|---|---|---|
| Restructuring and integration costs | –10.7 | - | –14.0 | –1.9 | –5.9 | –52.6 |
| Transaction costs 1) | –9.1 | - | –10.7 | - | - | - |
| Acquisition related costs | –19.8 | - | –24.7 | –1.9 | –5.9 | –52.6 |
1) Expensed from 2010 in accordance with IFRS 3 (revised).
| MSEK | Apr–Jun 2010 | Apr–Jun 2009 | Jan–Jun 2010 | Jan–Jun 2009 | Jan–Dec 2009 | Jan–Dec 2008 |
|---|---|---|---|---|---|---|
| Recognized in the statement of income | ||||||
| Revaluation of financial instruments | –0.6 | –0.9 | –2.3 | –1.7 | –0.4 | 2.7 |
| Deferred tax | 0.2 | 0.2 | 0.6 | 0.4 | 0.1 | –0.8 |
| Impact on net income | –0.4 | –0.7 | –1.7 | –1.3 | –0.3 | 1.9 |
| Recognized in the statement of comprehensive income | ||||||
| Cash flow hedges | 18.8 | 36.3 | 29.0 | 21.2 | 77.1 | –180.9 |
| Deferred tax | –4.9 | –9.5 | –7.6 | –5.6 | –20.3 | 50.7 |
| Cash flow hedges net of tax | 13.9 | 26.8 | 21.4 | 15.6 | 56.8 | –130.2 |
| Total revaluation before tax | 18.2 | 35.4 | 26.7 | 19.5 | 76.7 | –178.2 |
| Total deferred tax | –4.7 | –9.3 | –7.0 | –5.2 | –20.2 | 49.9 |
| Total revaluation after tax | 13.5 | 26.1 | 19.7 | 14.3 | 56.5 | –128.3 |
Revaluation of financial instruments was previous years accounted for on a separate line in the statement of income. As of 2010, revaluation of financial instruments is included in Financial income and expenses in the statement of income.
The amount disclosed in the specification of change in net debt is the total revaluation before tax.
| MSEK | Apr–Jun 2010 | Apr–Jun 2009 | Jan–Jun 2010 | Jan–Jun 2009 | Jan–Dec 2009 | Jan–Dec 2008 |
|---|---|---|---|---|---|---|
| Deferred tax on actuarial gains and losses | 64.7 | 22.0 | 68.2 | –4.4 | –7.2 | 250.2 |
| Deferred tax on cash flow hedges | –4.9 | –9.5 | –7.6 | –5.6 | –20.3 | 50.7 |
| Deferred tax on net investment hedges | 43.5 | –72.2 | –12.6 | –13.0 | –91.0 | 90.5 |
| Deferred tax on other comprehensive income | 103.3 | –59.7 | 48.0 | –23.0 | –118.5 | 391.4 |
The tables below show Security Services Europe and Mobile and Monitoring adjusted for operations moved between the segments per quarter and accumulated 2009.
| Security Services Europe MSEK |
Q1 2009 | Q2 2009 | H1 2009 | Q3 2009 | 9M 2009 | Q4 2009 | FY 2009 |
|---|---|---|---|---|---|---|---|
| Total sales | 8,024 | 7,970 | 15,994 | 7,671 | 23,665 | 7,852 | 31,517 |
| Organic sales growth, % | 2 | 0 | 1 | –1 | 0 | –1 | 0 |
| Operating income before amortization | 404 | 410 | 814 | 443 | 1,257 | 543 | 1,800 |
| Operating margin, % | 5.0 | 5.1 | 5.1 | 5.8 | 5.3 | 6.9 | 5.7 |
| Mobile and Monitoring | |||||||
|---|---|---|---|---|---|---|---|
| MSEK | Q1 2009 | Q2 2009 | H1 2009 | Q3 2009 | 9M 2009 | Q4 2009 | FY 2009 |
| Total sales | 1,532 | 1,556 | 3,088 | 1,529 | 4,617 | 1,551 | 6,168 |
| Organic sales growth, % | 5 | 3 | 4 | 3 | 3 | 1 | 3 |
| Operating income before amortization | 163 | 168 | 331 | 207 | 538 | 202 | 740 |
| Operating margin, % | 10.6 | 10.8 | 10.7 | 13.5 | 11.7 | 13.0 | 12.0 |
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 excluding shares in associated companies relating to financial investments.
Net debt in relation to shareholders' equity.
| MSEK | Jan–Jun 2010 | Jan–Jun 2009 |
|---|---|---|
| Administrative contribution and other revenues | 521.4 | 485.8 |
| Gross income | 521.4 | 485.8 |
| Administrative expenses | –242.8 | –200.7 |
| Operating income | 278.6 | 285.1 |
| Financial income and expenses | –313.0 | –178.9 |
| Income after financial items | –34.4 | 106.2 |
| Appropriations | - | - |
| Income before taxes | –34.4 | 106.2 |
| Taxes | –44.2 | –12.0 |
| Net income for the period | –78.6 | 94.2 |
| MSEK | Jan–Jun 2010 | Jan–Jun 2009 |
|---|---|---|
| Net income for the period | –78.6 | 94.2 |
| Other comprehensive income | ||
| Cash flow hedges net of tax 1) | 21.4 | 15.6 |
| Net investment hedges 2) | 134.1 | –61.2 |
| Other comprehensive income for the period | 155.5 | –45.6 |
| Total comprehensive income for the period | 76.9 | 48.6 |
1) Deferred tax amounts to MSEK –7.6 (–5.6). 2) Deferred tax amounts to MSEK –47.9 (21.8).
| MSEK | Jun 30, 2010 | Dec 31, 2009 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Shares in subsidiaries | 40,171.8 | 40,073.7 |
| Shares in associated companies | 112.1 | 112.1 |
| Other non-interest bearing non-current assets | 201.5 | 200.7 |
| Interest bearing financial non-current assets | 384.9 | 217.2 |
| Total non-current assets | 40,870.3 | 40,603.7 |
| Current assets | ||
| Non-interest bearing current assets | 505.0 | 1,230.6 |
| Other interest bearing current assets | 3,148.7 | 3,294.5 |
| Liquid funds | 113.9 | 1.7 |
| Total current assets | 3,767.6 | 4,526.8 |
| TOTAL ASSETS | 44,637.9 | 45,130.5 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||
| Shareholders' equity | ||
| Restricted equity | 7,727.7 | 7,727.7 |
| Non-restricted equity | 13,011.1 | 14,126.9 |
| Total shareholders' equity | 20,738.8 | 21,854.6 |
| Long-term liabilities | ||
| Non-interest bearing long-term liabilities/provisions | 167.5 | 77.7 |
| Interest bearing long-term liabilities | 6,893.0 | 8,259.1 |
| Total long-term liabilities | 7,060.5 | 8,336.8 |
| Current liabilities | ||
| Non-interest bearing current liabilities | 778.6 | 942.2 |
| Interest bearing current liabilities | 16,060.0 | 13,996.9 |
| Total current liabilities | 16,838.6 | 14,939.1 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 44,637.9 | 45,130.5 |
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.
Stockholm, August 6, 2010 Melker Schörling Chairman Carl Douglas Vice Chairman Marie Ehrling Director Annika Falkengren Director Fredrik Cappelen Director Fredrik Palmstierna Director Stuart E. Graham Director Sofia Schörling Högberg Director Susanne Bergman Israelsson Employee Representative Åse Hjelm Employee Representative Jan Prang Employee Representative
Alf Göransson President and Chief Executive Officer
Translation of the Swedish original
We have reviewed this report for the period January 1, 2010 to June 30, 2010 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 Standards on Auditing in Sweden, RS, 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 6, 2010 PricewaterhouseCoopers AB
Peter Nyllinge Authorised Public Accountant Auditor in charge
Patrik Adolfson Authorised Public Accountant
An information meeting will be held on August 6, 2010, at 9.30 a.m. CET. The information meeting will take place at Securitas' head office, Lindhagensplan 70, Stockholm.
To follow the information meeting via telephone (and participate in a Q&A session), please register via the link https://eventreg2.conferencing.com/webportal3/reg.html?Acc=007175&Conf=201979 and follow the instructions, or call +44 (0)20 7162 0177 or +46 (0) 8 505 201 14.
The meeting will be webcast at www.securitas.com/webcasts
A recorded version of the webcast will be available at www.securitas.com/webcasts after the meeting and a recorded version of the meeting will also be available until midnight on August 10 at tel: +44 (0)207 031 4064 and +46 (0)8 505 203 33, access code: 869939.
Micaela Sjökvist, Head of Investor Relations, +46 10 470 3013
Gisela Lindstrand, Senior Vice President Corporate Communications and Public Affairs, +46 10 470 3011
Securitas will release financial information for 2010 as follows:
January–September 2010: November 15, 2010
January–December 2010: February 8, 2011
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. By focusing on providing security solutions to fit each customer's needs, Securitas has achieved sustainable growth and profitability in 40 countries in North America, Europe, Latin America, Asia, Middle East and Africa. Everywhere from small stores to airports, our 260,000 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 a.m. (CET) on Friday, August 6, 2010.
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