Securitas AB Annual Report 2005

Notes and comments to the consolidated fi nancial statements
NOTE 15 ACQUISITIONS AND DIVESTMENTS OF SUBSIDIARIES AND IMPAIRMENT TESTING
Acquisitions and divestments of subsidiaries
Acquisition calculations can be subject to fi nal adjustments up to one year after the date of acquisition.
MSEK
Purchase
price 1
Acquired
net debt
Enterprise
value 2 Goodwill 3
Acquisition
related intangible
fi xed assets
Operating
capital
employed
Adjustment
capital loss
Total capital
employed
BDM, Switzerland –42.8 20.5 –22.3 –22.0 –2.9 2.6 – –22.3
Alert Services Holding, Belgium –451.5 – –451.5 –342.0 –140.0 30.5 – –451.5
ESES, Spain –27.4 – –27.4 –2.9 –6.0 –18.5 – –27.4
Wornall Electronics Inc., USA –1.1 –5.8 –6.9 –10.9 – 4.0 – –6.9
Bell, UK – – – –63.0 – 63.0 – –
Hamilton Pacifi c L.P., USA –280.9 1.5 –279.4 –239.9 –9.9 –29.6 – –279.4
AIPAA, Argentina –17.3 2.5 –14.8 – –11.8 –3.0 – –14.8
Black Star, Spain –235.7 7.2 –228.5 –85.6 –76.0 –66.9 – –228.5
Cash Handling Services, Eastern Europe 77.4 11.5 88.9 8.9 – 89.0 –9.0 88.9
Cash Handling Services, Germany 27.9 –8.4 19.5 96.3 25.5 48.3 –150.6 19.5
Other acquisitions and adjustments4 13.3 4.5 17.8 135.7 –37.9 –80.0 – 17.8
Total acquisitions and divestitures –938.1 33.5 –904.6 –525.4 –259.0 39.4 –159.6 –904.6
Liquid assets according to acquisition
analyses
Total effect on the Group’s
38.3 – – – – – – –
liquid assets –899.8
1 Price paid to seller.
2 Purchase price plus acquired net debt.
3 Total increase in consolidated goodwill.
In the statement of cash fl ow the line Acquisition of subsidiaries amount to
MSEK –1,174.9. The item consists of:
MSEK
Purchase price according to the table above –938.1
Assumed net debt according to the table above 33.5
Payment of tax booked as a provision
in connection with the acquisition of Burns
Total acquisitions of subsidiaries
–270.3
according to the statement of cash fl ow –1,174.9
Acquisitions
BDM, Switzerland
In January 2005 Securitas acquired BDM with activities in systems installations
and monitoring in the Geneva region. The company, which is a high quality systems
provider with a strong position on video surveillance, had at the time of the
acquisition, forecasted annual sales at the prevailing rate of exchange of MCHF 4.2
(MSEK 24). The acquisition is included in the Securitas Group as from January 1,
2005 with an enterprise value of MCHF 3.8 (MSEK 23). The acquisition will signifi
cantly strengthen the installation and alarm monitoring capabilities of Securitas’
operations in Switzerland.
Alert Services Holding, Belgium
In April 2001 Securitas Direct signed an agreement with Belgacom S.A. to combine
their respective small alarms operations in the Benelux and France. The transaction
was completed in three steps. As a fi rst step, Securitas contributed its Belgian
alarm operations and received a 5 percent minority interest in Alert Services Holding
S.A. (ASH). As a second step in 2002, Securitas transferred its French small
alarms operations to ASH and received in return additional ASH shares which
resulted in a 72 percent majority shareholding in the company. These two steps
did not include any exchange of cash. ASH was consolidated in the Securitas
Group as from March 1, 2002.
On January 14, 2005 Securitas announced that Belgacom has exercised its
option to sell its remaining shares in ASH for MEUR 50 (MSEK 452). Through
this third step, Securitas acquired the remaining 28 percent of the shares in ASH.
This completed the Belgacom transaction that has strengthened Securitas small
alarm position in the Belgian and Dutch markets. ASH is now a wholly owned
subsidiary of Securitas with sales of approximately MEUR 23 (MSEK 207) and
with 91,000 alarm connections in the Benelux area.
Acquisition of minority interest in Alert Services Holding
Acquisition calculation per January 14.
MSEK Purchase price allocation
Other liabilities1 48.4
Total operating capital employed –48.4
Goodwill from the acquisition 342.0
Other acquisition related intangible fi xed assets 140.0
Total capital employed 433.6
Minority interest 17.9
Purchase price2 451.5
1Refers to deferred tax calculated on Other acquisition related intangible fi xed assets.
2 No acquisition costs have been paid in connection with the acquisition of the minority interest.
Alert Services Holding is included in the Securitas Group as from March 1, 2002.
The impact on the Group’s liquid assets correspond to the purchase price paid.
4 Securitconsult, Switzerland, Franceval-Sofi gem, France, TCV Image & Control, Spain, Irmas B.V., the Netherlands,
PSI Beveiliging, the Netherlands, contract portfolios, Services USA and Services Europa, adjustment of goodwill
(Burns), USA, divestment of Globe, USA.
ESES, Spain
In February, Securitas Systems in Spain acquired the operations of ESES (Empresa
de Servicios Especializados de Seguridad S.A.) with nationwide installation and
servicing of security systems in Spain. The company had, at the time of the acquisition,
forecasted annual sales at the prevailing rate of exchange of MEUR 8
(MSEK 73) in 2005. The operations have 130 employees and the enterprise value
of the acquisition is MEUR 3.0 (MSEK 27). The service and monitoring contract
portfolio accounts for 25 percent of total sales.
Acquisition related restructuring costs has amounted to MEUR –1.7
(MSEK –16) for ESES as per December 31 2005.
After the acquisition Securitas Systems in Spain will have annual sales of
MEUR 74 (MSEK 672) and 700 employees in 30 branches throughout Spain.
The acquisition allows Securitas Systems to increase its presence in different
market segments and thus broaden the offer of specialized products and services
to its customers.
Wornall Electronics Inc., USA
In April 2005, Securitas Systems in the USA acquired Wornall Electronics Inc., the
market leader in Kansas City. Wornall installs and services security systems in the
Kansas City and New Jersey markets. The company had, at the time of the acquisition,
forecasted annual sales at the prevailing rate of exchange of MUSD 5 (MSEK 35)
in 2005 and 27 employees. The enterprise value of the acquisitions amounts to
MUSD 1 (MSEK 7).
This acquisition allows Securitas Systems to establish a strong local market
presence in Kansas City and New Jersey. The New Jersey operation has the capacity
to service the metro New York City market. These two operations will give
Securitas Systems access to new markets and increase the footprint to further support
the national customer market segment in the USA.
Bell, UK
A fair value adjustment regarding Bell Tech Australia, which is treated as an asset
held for sale and not consolidated, has increased goodwill for the remaining operations
of Bell with MSEK 62. Bell Tech Australia has been treated as an asset held
for sale from the time of the acquisition of Bell and it has been the management’s
intention to dispose of Bell Tech Australia since this time. Bell Tech Australia is
carried at fair value less costs to sell and is valued at MSEK 0. Share options in
Bell UK exercised during 2005 has increased goodwill with a further MSEK 1,
bringing the total increase in goodwill to MSEK 63. These are the fi nal adjustments
to the Bell acquisition calculation.
SECURITAS 2005 93