Annual Report 2008 - Securitas

54
Annual report
report of the Board of Directors
Acquisitions after December 31, 2008
Akal Security, Hawaii
Securitas has acquired the Hawaiian commercial business contracts
and assets of the security services company Akal Security. The
acquisition of these contracts and the addition of over 300 security
officers will strengthen Securitas‘ position as the market leader in
security services in the State of Hawaii. with this acquisition, Securitas
will employ over 2,700 employees in Hawaii. The acquisition
will be consolidated within Securitas as of February 20, 2009.
Moore Security, USA
Securitas has acquired the commercial contracts and operational
assets of the security services company Moore Security. Sales in
the acquired contracts are approximately MSEK 140 (MUSD 15.6).
Moore Security, with approximately 650 employees, has a very
balanced and diverse customer portfolio in terms of sizes and vertical
markets in Indiana and Kentucky. The acquisition will strengthen
Securitas’ position as the market leader in this area. The acquisition
will be consolidated within Securitas as of March 13, 2009.
Other significant events
Brazil – Estrela Azul
In connection with the efforts of Securitas to expand its activities
in Latin America, Securitas entered into an agreement in 2005
with respect to the possible acquisition of a security guarding
company in Brazil. In order to support this company while required
governmental approvals were obtained, Securitas provided a bank
guarantee for the benefit of the subject company. The governmental
approvals took much longer than anticipated to obtain and
during such period the financial condition of the target company
substantially deteriorated. Given the decline in the financial condition
of the company, in December 2006 Securitas exercised its
right not to complete the acquisition following the receipt of the
government approval. In view of the decision not to complete the
subject transaction, a provision in the amount of the bank guarantee
was recognized as of December 31, 2006.
The company has since filed for protection from its creditors
under Brazilian legislation providing for a judicial restructuring
process. Securitas, being a creditor in the insolvency matter, has
objected to the company’s restructuring plan proposed in the
judicial restructuring process. The insolvency judge decided against
Securitas and this decision was appealed by Securitas in 2008.
The court of Appeal has in its decision upheld the lower courts’
decision. This decision is now subject to a “special appeal”.
In connection with the commencement of this judicial restructuring
process, the company has asserted a claim of MUSD 140
against Securitas, alleging that Securitas is responsible for the
company’s failure. Securitas denies all responsibility for such claim.
The defense of these cases has been entrusted to one of the leading
law firms in Brazil.
In addition, a number of employees of Estrela Azul who claim
to be owed wages have named Securitas in addition to other
parties in pending labor suits. The number of labor law cases
involving Securitas increased in 2008. The claimed amounts
Securitas Annual report 2008
are normally low. The defense of these labour cases has been
entrusted to one of the leading law firms in Brazil. Securitas
denies all responsibility for such claims.
Germany – Heros
The German cash handling operations were divested in November
2005 to the German Heros Group. In February 2006, the Heros
Group of companies filed for insolvency under German law. In
connection with the foregoing, the Insolvency Trustee has been
examining all relevant prior transactions of the insolvent companies,
including the German cash handling companies, which
Securitas sold to the Heros Group. Following his investigation,
the Trustee has raised questions relating to pre-acquisition transactions
in the divested companies, alleging possible material
future claims.
On April 7, 2008 the Insolvency Trustee advised Securitas in
a letter that according to the Trustee, the Heros companies (in
bankruptcy) may have substantial monetary claims on Securitas
Germany and that in the absence of a mutual understanding and
agreement on the questioned transactions, Heros will commence
legal action against Securitas Germany.
The claims of the Heros companies (in bankruptcy) are based
on the Trustees current understanding of the subject transactions,
resulting in the allegation that certain inter-company transactions
(set-offs) performed by Securitas Germany prior to the sale of the
companies were not in compliance with German law. Heros’ aggregated
claims on Securitas Germany amounts to approximately
MEUr 108. Heros is in addition requesting Securitas Germany to
re-assign a claim against the insurance company IF which was kept
by Securitas in the divestiture. Based on local legal expertise and
a legal opinion from a renown law professor, Securitas will object
to the claims raised by the Trustee.
As of December 31, 2006 a minor provision was recognised
to cover the known exposure in the Heros claim at that time. This
provision remains unchanged. No additional provision has been
established for the recent claim.
Germany – Welo
During 2001 Securitas in Germany in response to customer
requests took on cash booking responsibilities in addition to the
cash in transit activities which it had historically provided in Germany.
In connection with the performance of these activities, during the
time of the euro introduction in Germany, a loss developed with a
major customer. The amount of the loss was advanced by Securitas
Germany to the customer in accordance with the relevant contract
in two payments and the equivalent has been claimed against the
relevant insurance policies.
On April 8, 2008 the court in Düsseldorf rendered its judgment
in the case. The court decided against Securitas. The claim under
the insurance policy was fully provided for as per June 30, 2006.
Securitas has decided not to appeal the Düsseldorf court decision
of April 8, 2008.