Annual Report 2008 - Securitas

56
Annual report
report of the Board of Directors
USA – the events of September 11, 2001
A detailed account of the developments surrounding the events
of September 11, 2001 has been presented in press releases
and interim and annual reports for 2001 to 2007, and is
described in Note 38.
Globe and other Securitas companies are, together with the
relevant airline and other parties, defendants in 21 lawsuits pertaining
to the events of September 11, 2001. The reduction of
outstanding cases is due to the settlement of cases. The proceedings
against the Securitas companies other than Globe have,
with the consent of the Court and the plaintiffs, been temporarily
stayed. In all the suits, a number of persons other than Globe and
Securitas companies are co-defendants. Three of the remaining
suits pertain to persons who died and 18 relate to damage to
property and businesses owing to the events of September 11,
2001. All bodily injury cases involving Globe have been settled.
certain of the property claims are believed to be substantial and
the aggregate, estimated value of the claims filed exceeds the
insurance coverage estimated to exist as a potential source of
recovery. Due to the statutory liability cap, any such liability is
limited to the amount of liability coverage maintained. The potential
exposure has been reduced due to a court decision which declares
that in the property cases the Fair Market value rather than the
replacement value shall be applied when computing possible
property damages.
Globe and the other companies in the Group named as defendants
are challenging these suits. All coverage disputes with the
relevant September 11, 2001 insurers have been resolved.
Any liabilities arising out of the September 11, 2001 litigation
are not expected to materially impact Securitas’ business operation
or financial position.
Other
In accordance with normal procedures the NASDAq OMX
Stockholm has made a review of Securitas disclosure regarding
the Loomis cash Management (LcM) in the United Kingdom.
The review was finalized during the first quarter 2008.
Listing of Loomis AB
The Extraordinary General Meeting of Securitas AB held on
December 3, 2008, resolved in accordance with the Board of
Director’s proposal on a dividend to the effect that all shares in
the wholly-owned subsidiary Loomis AB would be distributed
to the shareholders. Loomis AB was listed on NASDAq OMX
Stockholm on December 9, 2008.
Securitas Annual report 2008
Risks and uncertainties
risks in connection with Securitas’ ongoing operations fall into
two main categories; operational risks and financial risks. Operational
risks are managed with a decentralized approach by the
local operations and financial risks are managed centrally by the
Group’s Treasury center. In addition to this there are also certain
risks connected to the acquisitions made by the Group.
Operational Risks
Operational risks are risks associated with the day-to-day operations
and the services provided to customers. These risks may
arise when labor laws and regulations, or their interpretation,
change or when services provided do not meet the required standards
and result in loss of property, damage to property or bodily
injury. Securitas uses a business risk evaluation model to assess
these types of operational risks on an ongoing basis.
Another type of operations-related risk which may impact
profitability is the risk that Securitas will not be able to increase
prices to be paid by customers in order to compensate fully for
increases in wages and related costs.
Further information regarding the overall Enterprise risk
Management approach of Securitas as well as the business risk
evaluation model is provided on pages 38–41.
Financial Risks
Financial risks arise because the Group has external financing
needs and operates in a number of foreign currencies. The risks
are mainly:
· Interest rate risk · Foreign currency risk
· Financing risk · credit/counterparty risk
The customer credit risk, that is the risk of Securitas’ customers
not being able to fulfill their obligation of paying invoices for
services being provided, increased during the financial markets
crisis. The risk is reduced by the fact that the numerous customers
are spread over many business sectors and geographies, and
by established routines for monitoring and collecting of accounts
receivable within Group companies. Further information regarding
financial risk management is provided above under Capital
employed and financing – Financing and in Note 6.
Acquisition Risks
The Group has made a significant number of acquisitions over
the years and will, as part of the Group’s strategy, continue to
acquire security companies. Although the Group has demonstrated
in the past the ability to successfully integrate acquired
businesses, the integration of new companies always carries certain
risks. To a higher degree than previously, such acquisitions
are also taking place in new markets such as Latin America and
Asia. The profitability of the acquired company may be lower
than expected or certain costs in connection with the acquisition
may be higher than expected.
The acquisitions made during 2008 are described under the
heading Acquisitions above and in Note 16.