Securitas AB Annual Report 2005

More documents

Recommendations

Info

Notes and comments to the consolidated fi nancial statements NOTE 34 OTHER CURRENT LIABILITIES MSEK IFRS 2005 IFRS 2004 Swedish GAAP 2004 Staff-related items 5,053.2 4,410.1 4,410.1 Current tax liabilities 622.7 818.4 818.4 Accrued interest and fi nancial expenses Other accrued expenses and 524.7 465.7 465.7 prepaid income 1,136.0 1,070.8 1,070.8 Advance payments from customers 355.6 347.8 347.8 Short-term liability Group Management Bonus1 Short-term liability insurance-related – 14.5 14.5 claims reserves2 5,053.2 622.7 524.7 1,136.0 355.6 – 1,006.5 871.8 871.8 Other items 1,648.7 1,490.5 1,490.5 Total other current liabilities 10,347.4 9,489.6 9,489.6 1 For further information in relation to Short-term liability Group Management Bonus, refer to Note 7. 2 Liability insurance-related claims reserves primarily consist of estimated provisions for the portion of claims payable by the Group, i.e. its self-retention. NOTE 35 PLEDGED ASSETS MSEK IFRS 2005 IFRS 2004 Swedish GAAP 2004 Real estate mortgages – 7.8 7.8 NOTE 36 CONTINGENT LIABILITIES MSEK IFRS 2005 IFRS 2004 Swedish GAAP 2004 Sureties and guaranties 109.8 11.8 11.8 Other contingent liabilities1 109.8 148.8 146.6 146.6 Total contingent liabilities 258.6 258.6 158.4 158.4 1 The item Other contingent liabilities includes a contingent liability related to ongoing tax litigations. 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 2004. All investigations of the events of September 11 continue to indicate that Globe in no way has been negligent in its actions or is otherwise at fault for the events. This was confi rmed through the release of previously confi dential Congressional testimony by the Director of the FBI. The customer contract gives Globe the right to tender claims for damages to the customer. Globe is a separate operation and is a separate legal entity. Any liability for claims thus is limited to Globe’s own ability to pay and the insurance protection available to it. In November 2002, the U.S. Congress restored the liability cap for eligible screening companies such as Globe. Under this legislation, any potential liability arising out of the terrorist events of September 11 would be limited to the amount of liability insurance coverage maintained. As previously disclosed, a special fund has been established by the U.S. Government to compensate victims of the September 11 tragedy. Over 98 percent of persons claiming on behalf of World Trade Center deceased victims has elected to obtain compensation from the victim’s compensation fund rather than pursue litigation. Claimants under the fund waive their right to seek compensation through litigation. The deadlines for fi ling wrongful death, bodily injury and property damage claims have now all expired. Cross claims may still be fi led by existing parties to the already fi led claims. Together with the relevant airline and other parties, Globe or another Securitas company is a defendant in 58 lawsuits pertaining to the events of September 11. This represents a reduction from 68 due to the settlement of ten wrongful death 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 codefendants. 40 suits pertain to persons who died or who were injured and 18 relate to damage to property and businesses owing to the events of September 11. Certain of the property claims are believed to be substantial and the aggregate, estimated value of the claims fi led exceeds the insurance coverage estimated to exist as a potential source of recovery. Due to the statutory liability cap, any such claims are limited to the amount of liability coverage maintained. Globe and the other companies in the Group named as defendants are challenging these suits. All coverage disputes with the relevant 9/11 insurers have been resolved. Any liabilities arising out of the September 11 litigation are not expected to materially impact Securitas’ business operation or fi nancial position. WELO During 2001 Securitas Germany in response to customer requests took on cash booking responsibilities (referred to as WELO – WErte LOgistik) in addition to the cash in transit activities which it had historically provided in Germany. In connection with the performance of these WELO activities during the time of the euro introduction in Germany, a loss of MEUR 40.4 developed with a major customer. Following the discovery of this loss, the customer and Securitas Germany, with the assistance of professional advisors, conducted an intensive investigation in an effort to determine the source of the loss. As a result of the investigation the amount of the loss was verifi ed. The amount of the loss was advanced by Securitas Germany to the customer in accordance with the relevant contract in two payments (one paid during 2003 and the other paid during 2004) and the equivalent has been claimed against the relevant insurance policies. As a result of the relevant insurer having failed to pay the claim, Securitas Germany has commenced an action in the German courts against the insurer in the full amount of the claim. No provision for the loss has been made as it is anticipated to be covered by insurance. The WELO operations conducted by Securitas Germany were terminated during the fourth quarter 2003 and these operations will cause no further losses. SCM Securitas Cash Management Ltd (SCM) is enhancing its reconciliation methodology for third parties’ currency (notes and coins) that passes through its cash handling centers following the identifi cation of short-comings in the previously applied methodology. These short-comings have resulted in variances between SCM’s records and those of the third parties ranging between £25 million and £35 million. SCM has hired external investigators to assist in the process of identifying the root cause of these variances. To date, the on-going investigation into the variations has not uncovered any root cause which has materially impacted the profi t and loss amount of the SCM. Depending on the ultimate nature of the remaining variances and the contractual rights of the third parties, SCM may have an obligation to settle all or some part of the variances identifi ed. Such settlements may be wholly or partially covered by third party insurance. To date, management is unable to make a reliable estimate of the impact of these variances, if any, on SCM’s fi nancial position or its cash fl ows. Globe/Federal Aviation Administration Prior to the Aviation and Transportation Security Act (Aviation Security Act), which was passed in November 2001, the air carriers were responsible under federal law for providing pre-board screening of passengers. In most cases, the air carriers contracted with private security companies for these services. Under the Aviation Security Act, pre-board screening services were federalized in two steps. The fi rst step consisted of a transition period where the Federal Aviation Administration (FAA) became the party responsible for pre-board screening and contracted with private security companies for these services (the FAA’s responsibilities were later transitioned to the Transportation Security Administration (TSA)). The second step, which occurred in November 2002, consisted of the TSA directly providing these services by federal government employees. Globe had been requested to provide pre-board screening services during the initial transition period and, following extended negotiations, Globe entered into an agreement with the FAA in February 2002 to provide such services during the transition period. Based on the performance of Globe during this transition period, Globe increased at the request of the FAA/TSA the number of airports which Globe was servicing under its contract. During the transition period, the FAA/TSA compensated Globe based on the governing contract and the invoices submitted. After the services had been substantially completed, the TSA indicated that it wished to renegotiate the pricing under the contract and stopped making payments under the contract. Following unsuccessful negotiations attempting to resolve the amounts in dispute, Globe commenced during 2004 formal legal proceedings against the FAA to recover amounts due under the contract. The outcome of this proceeding is not expected to have a negative material impact on the fi nancial position of the Group. Other Proceedings Over the years, Securitas has made a number of acquisitions in different countries. As a result of such acquisitions, certain contingent liabilities of the businesses acquired have been assumed. The risks relating to such contingent liabilities are covered by contractual indemnifi cation, insurance or adequate reserves. Companies within the Securitas Group are involved in a number of other legal proceedings arising out of the ordinary course of their businesses. Any liabilities arising out of such proceedings are not expected to be material to the business operations or the fi nancial position of the Group. 100 SECURITAS 2005
Table 1A. Adjusted Consolidated Statement of Income for 2004 according to Securitas’ fi nancial model MSEK Notes and comments to the consolidated fi nancial statements NOTE 37 TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS IN 2005 Introduction Securitas has adopted International Financial Reporting Standards (formerly IAS as endorsed by the European Union (EU) from January 1, 2005. Although the Swedish Financial Accounting Standards Council’s standards had progressively converged with IFRS, a number of divergences remained at the time of adopting IAS/IFRS. The divergences mainly concerned application dates, transition rules but also refl ected some of the changes introduced to IAS/IFRS via ongoing improvement projects carried out by the International Accounting Standards Board (IASB). However taken as a whole the Swedish fi nancial reporting framework, in terms of the parts applicable to Securitas, had in all material aspects been adapted to the changes that were introduced within the European Union. The information in this appendix is based on an adoption of IAS/IFRS standards in their current form as expressed in the consolidated accounting principles in Note 1. The infor- Overview of Statement of Income and Balance Sheets Swedish GAAP 2004 Employee Benefi ts 1 Securitization 2 IFRS 3 and other impact Total sales 59,687 – – – 59,687 Organic sales growth, % 3 – – – 3 Operating income before amortization 3,994 – – 32 4,026 Operating margin, % 6.7 – – – 6.7 Amortization of goodwill –1,150 – – 1,150 – Amortization of acquisition related intangible fi xed assets – – – –100 –100 Acquisition related restructuring costs – – – –26 –26 Operating income after amortization 2,844 – – 1,056 3,900 Financial income and expense –516 – – – –516 Interest cover ratio 6.7 – – – 6.5 Income before taxes 2,328 – – 1,056 3,384 Taxes –860 – – 5 –855 Minority share in net income –1 – – 1 – Net income3 59,687 3 3,994 6.7 –1,150 – – 2,844 –516 6.7 2,328 –860 –1 Earnings per share attributable to equity holders 1,467 – – 1,062 2,529 of the Parent Company (SEK) 4.01 – – 2.78 6.79 Table 1B. Adjusted Consolidated Opening Balance Sheet as per January 1, 2004 according to Securitas’ fi nancial model MSEK Swedish GAAP Jan 1, 2004 Employee Benefi ts 1 Securitization 2 IFRS 3 and other impact IFRS 2004 IFRS Jan 1, 2004 Accounts receivable 6,736 – 1,637 – 8,373 Other operating capital employed –1,215 –564 – –165 –1,944 Total operating capital employed 5,521 –564 1,637 –165 6,429 Goodwill 14,778 – – –118 14,660 Acquisition related intangible fi xed assets – – – 308 308 Total capital employed 20,299 –564 1,637 25 21,397 Operating capital employed as % of total sales 9 – – – 11 Return on capital employed, % 18 – – – 17 Net debt 9,083 –33 1,637 – 10,687 Net debt equity ratio, multiple 0.81 – – – 1.00 Shareholder’s equity 11,216 –531 – 25 10,710 Total fi nancing 20,299 –564 1,637 25 21,397 Table 1C. Adjusted Consolidated Closing Balance Sheet as per December 31, 2004 according to Securitas’ fi nancial model MSEK Swedish Swedish GAAP Dec 31, 2004 Employee Benefi ts 1 Securitization 2 IFRS 3 and other impact IFRS Dec 31, 2004 Accounts receivable 7,279 – 1,549 – 8,828 Other operating capital employed –1,888 – – –199 –2,087 Total operating capital employed 5,391 – 1,549 –199 6,741 Goodwill 14,508 – – 794 15,302 Acquisition related intangible fi xed assets – – – 433 433 Total capital employed 19,899 – 1,549 1,028 22,476 Operating capital employed as % of total sales 9 – – – 11 Return on capital employed, % 20 – – – 18 Net debt 9,084 – 1,549 – 10,633 Net debt equity ratio, multiple 0.84 – – – 0.90 Shareholder’s equity 10,815 – – 1,028 11,843 Total fi nancing 19,899 – 1,549 1,028 22,476 1 Employee benefi ts are accounted for according to RR 29 which equals IAS 19 from January 1, 2004 and thus has no impact on the income statement. 2 Securitization has no net impact on the statement of income, but has been reclassifi ed within fi nancial income and expense and thus lead to a decline in the interest cover ratio for 2004 of 0.2. 3 Whereof attributable to the minority interests, under IFRS, MSEK 1 and to the equity holders of the Parent Company MSEK 2,528. ■ Operational items. ■ Net debt related items. ■ Goodwill and acquisition related intangible fi xed assets. ■ Items related to shareholders’ equity. mation given in this note equals the information that was provided in the published Annual Report for 2004 on pages 99–115. In addition to the information given there, further information regarding the statement of cash fl ow for 2004, the opening balance on January 1, 2005 and the effects on the opening equity as of January 1, 2005 have been included. This information is included following the adoption of IAS 39 Financial Instruments: Recognition and Measurement, on January 1, 2005. Quarterly data for the segments and for the Group have been omitted. The tables below give an overview of the impact on the full year statement of income for 2004, opening balance sheet for 2004, closing balance sheet for 2004 and for the opening balance sheet for 2005. SECURITAS 2005 101
Page 1 and 2:
Securitas AB Annual Report 2005
Page 3 and 4:
Sales per region A world
Page 5 and 6:
A positive 2005 lays the foundation
Page 7 and 8:
A history of growth Securitas was f
Page 9 and 10:
The wheel of fortune Rationalizatio
Page 11 and 12:
Koncernen 12 Comments by the CEO 14
Page 13 and 14:
and customers have been convinced t
Page 15 and 16:
The Securitas Group - sales growth,
Page 17 and 18:
From multi-service providers to sec
Page 19 and 20:
The entire organization supports th
Page 21 and 22:
Our values Our values - Integrity,
Page 23 and 24:
New sales of customer contracts tha
Page 25 and 26:
25 20 15 10 5 0 Return on capital e
Page 27 and 28:
Risk business plans Each division a
Page 29 and 30:
Swedish GAAP IFRS MSEK 2001 2002 20
Page 31 and 32:
Income 2004 MSEK IFRS Q1 2004 IFRS
Page 33 and 34:
Market capitalization & Enterprise
Page 36 and 37:
Report of the Board of Directors -
Page 38 and 39:
Financial overview BDM, Switzerland
Page 40 and 41:
Financial overview Divestment of re
Page 42 and 43:
Page 44 and 45:
Security Services USA Security Offi
Page 46 and 47:
Security Services USA Security Offi
Page 48 and 49:
Page 50 and 51: Security Services Europe In order t
Page 52 and 53: Security Services Europe Securitas
Page 54 and 55: Report of the Board of Directors -
Page 56 and 57: Securitas Systems In the fall of 20
Page 58 and 59: Securitas Systems Bell Security, ac
Page 62 and 63: Direct Mikael Sundberg holds the fr
Page 64 and 65: Direct Directs model for expansion
Page 68 and 69: Cash Handling Services Route Superv
Page 70 and 71: Cash Handling Services One of the s
Page 72: Annual Report - Financial statement
Page 75 and 76: Statement of cash fl ow MSEK NOTE I
Page 77 and 78: Supplementary information Securitas
Page 79 and 80: Financial statements - Notes and co
Page 81 and 82: net assets, and qualify for the hed
Page 83 and 84: Recognition and subsequent measurem
Page 85 and 86: NOTE 3 CRITICAL ESTIMATES AND JUDGE
Page 87 and 88: Table 3A. Maturity structure of iss
Page 89 and 90: a certain percentage of the fi nal
Page 91 and 92: NOTE 10 OPERATING EXPENSES Income s
Page 93 and 94: Notes and comments to the consolida
Page 95 and 96: Goodwill is tested on an annual bas
Page 97 and 98: NOTE 28 CHANGES IN SHAREHOLDERS’
Page 99: Pension cost MSEK IFRS 2005 Notes a
Page 103 and 104: Free cash fl ow was not impacted by
Page 105 and 106: elating to the tax calculated on th
Page 107 and 108: Table 5. Consolidated Balance Sheet
Page 109 and 110: NOTE A GOODWILL MSEK Jan 1, 2004 De
Page 111 and 112: Statement of income MSEK NOTE Paren
Page 113 and 114: Parent Company changes in sharehold
Page 115 and 116: NOTE 42 PERSONNEL Average number of
Page 117 and 118: NOTE 50 LIQUID ASSETS Liquid assets
Page 119 and 120: To the Annual General Meeting of th
Page 122 and 123: Corporate Governance - Board of Dir
Page 124 and 125: Corporate governance - Report of th
Page 130 and 131: Corporate Governance - Report of th
Page 134 and 135: Corporate Information
Page 136 and 137: Corporate Information - Financial i
Page 138: Securitas Services Ltd. Berkshire H
show all

Securitas AB Annual Report 2005

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?