Securitas AB Annual Report 2005

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Report of the Board of Directors – Security Services USA “ 2005 was an important and successful year for Security Services USA. It’s no exaggeration to call it a turning point. When entering 2005, our three highest priorities were growth, profi tability and organizational development. I am very pleased to report that we have been successful in all three areas. After two challenging years in 2003 and 2004, there were some doubts about the long-term potential for the Group’s guarding services in the USA. Personally, I have always believed that growth and results would come with the development of our organization and the successful establishment of our concepts. This is what we began to prove in 2005. Back on track Our sales increased by 4 percent organically, so we are now back on track, having reported a decrease in total sales in both 2003 and 2004. The most important reason behind this increase is that on the whole we have succeeded in retaining our existing clients. Our client retention rate was over 90 percent, an increase of about two percentage points compared with the previous year. This is a clear sign that our efforts to improve customer service have been effective. At the same time, our new sales also increased. However, despite these improvements, we have not been able to fully grow in line with the market, which grew by approximately 4 percent during the year. This is due to the fact that market growth was strongest in the government sector, where for historical reasons we are not as strong as in the private sector. Our ambition is, however, to strengthen our offering to this part of the market. As regards profi tability, the trend was also clearly positive. Our operating income rose by 6 percent to 2005 was an important and successful year. It’s no exaggeration to call it a turning point. An important turning point in the USA MSEK 1,080 (982), adjusted for changes in exchange rates. This improvement was primarily due to increased volume, combined with improved cost control. Our cost increases for the year were very limited and we were also able to introduce certain rate increases. Since 2003, when our operations were united under one company, we have put a great deal of effort into decentralizing the organization and delegating responsibility to the people who work close to our customers. We have invested considerable resources in developing expertise in the local organization, and the positive effects of this were evident during the year. I am convinced that greater responsibility and increased expertise at the local level have contributed to improved customer service and more effective sales activities. We are the market leader in the USA, with a market share of 19 percent, and operations that span the entire USA and all customer segments. This strong position provides us with a solid platform for continued growth and profi tability. Even closer to our customers Santiago Galaz Divisional President Security Services USA As the market leader, we are able to play as important role in driving the entire industry towards greater professionalism and more advanced services. We will also continue to increase customer segmentation. Other important objectives are to get even closer to our existing customers, attract new customers, and improve the skills of our security offi cers as well as their working conditions. I believe that we are in a good position to reach annual growth of 4–5 percent in the next few years and am looking forward to what we will achieve in 2006. ” 42 SECURITAS 2005
30 25 20 15 10 5 0 Total sales ■ BSEK 01 02 03 04 05 The year 2005 ■ The division’s total sales amounted to MSEK 21,616 (20,017). Organic sales growth was 4 percent. ■ Operating income was MSEK 1,080 (982), an increase of 6 percent, adjusted for changes in exchange rates, compared with the previous year. Operating margin increased to 5.0 percent (4.9). ■ Client retention rate was above 90 percent. ■ All branch managers took part in an extensive training program focusing on fi nance, sales and human resources development. Key ratios 1 4 3 2 1 0 Operating income/Operating margin ■ BSEK % ■ 01 02 03 04 05 8 6 4 2 0 12 10 8 6 4 2 0 Security Services USA Capital employed/ Return on capital emloyed ■ BSEK % ■ 01 02 03 04 05 ■ A new IT platform for scheduling, payroll and invoicing was rolled out throughout the organization. This is expected to result in greater effi ciency. ■ Customer segmentation continued through the establishment of special units for energy, seaports, high-rise buildings, fi nancial services, retail malls and petrochemical plants, among others. IFRS IFRS Swedish GAAP MSEK Income 2005 2004 2003 Total sales 21,616 20,017 22,036 Organic sales growth, % 4 –2 –9 Operating income before amortization 1,080 982 1,200 Operating margin, % 5.0 4.9 5.4 Amortization of goodwill – – –460 Amortization of acquisition related intangible fi xed assets –33 –34 – Acquisition related restructuring costs – –1 – Operating income after amortization 1,047 947 740 Operating cash fl ow Operating income before amortization 1,080 982 1,200 Investments in fi xed assets –177 –123 –193 Reversal of depreciation 161 104 149 Change in operating capital employed –77 –145 –440 Cash fl ow from operating activities 987 987 818 716 Cash fl ow from operating activities, % 91 83 60 Capital employed and fi nancing Operating fi xed assets 740 543 947 Accounts receivable 3,463 2,680 2,860 Other assets 214 205 298 Other liabilities 3,078 2,490 2,835 Total operating capital employed 1,339 938 1,270 Goodwill 6,873 5,831 6,526 Acquisition related intangible fi xed assets 38 42 – Total capital employed 8,250 6,811 7,796 Operating capital employed as % of sales 6 5 6 Return on capital employed, % 13 14 15 1 Adjusted to include Canada and Mexico that have been transferred to Security Services USA. SECURITAS 2005 43 30 25 20 15 10 5 0
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 44 and 45: Security Services USA Security Offi
Page 46 and 47: Security Services USA Security Offi
Page 50 and 51: Security Services Europe In order t
Page 52 and 53: Security Services Europe Securitas
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
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Notes and comments to the consolida
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Goodwill is tested on an annual bas
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NOTE 28 CHANGES IN SHAREHOLDERS’
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Pension cost MSEK IFRS 2005 Notes a
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Table 1A. Adjusted Consolidated Sta
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Free cash fl ow was not impacted by
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elating to the tax calculated on th
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Table 5. Consolidated Balance Sheet
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NOTE A GOODWILL MSEK Jan 1, 2004 De
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Statement of income MSEK NOTE Paren
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Parent Company changes in sharehold
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NOTE 42 PERSONNEL Average number of
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NOTE 50 LIQUID ASSETS Liquid assets
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To the Annual General Meeting of th
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Corporate Governance - Board of Dir
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Corporate governance - Report of th
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Report of the Board of Directors -
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Corporate Governance - Report of th
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Corporate Information
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Corporate Information - Financial i
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Securitas Services Ltd. Berkshire H
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Securitas AB Annual Report 2005

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