SECURITAS AB Annual Report 2011

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60 The formal annual accounts and the consolidated accounts comprise pages 61–137 Annual Report Report of the Board of Directors 61 Consolidated financial statements Consolidated statement of income Consolidated statement of 70 comprehensive income 70 Consolidated statement of cash flow 72 Consolidated balance sheet Consolidated statement of changes 74 in shareholders’ equity 76 Notes and comments to the consolidated financial statements 77 Parent Company financial statements Parent Company statement of income Parent Company statement of 126 comprehensive income 126 Parent Company statement of cash flow 126 Parent Company balance sheet Parent Company statement of changes 127 in shareholders’ equity 128 Notes and comments to the Parent Company financial statements 129 Signatures of the Board of Directors 136 Auditor’s report and Auditor’s report on the Corporate Governance Statement 137 Quarterly data 138 Financial information and invitation to the Annual General Meeting 140 Securitas Annual Report 2011 Note 1 General corporate information 77 Note 2 Accounting principles 77 Note 3 Definitions, calculation of key ratios and exchange rates Note 4 Critical estimates and judgments 86 Note 5 Events after the balance sheet date 87 Note 6 Financial risk management 87 Note 7 Transactions with related parties 93 Note 8 Remuneration to the Board of Directors and senior management 93 Note 9 Segment reporting 97 Note 10 Allocation of revenue 100 Note 11 Operating expenses 100 Note 12 Personnel 102 Note 13 Depreciation and amortization 103 Note 14 Net financial items 103 Note 15 Taxes 103 Note 16 Acquisitions and divestitures of subsidiaries and joint ventures and impairment testing 106 Note 17 Goodwill 115 Note 18 Acquisition related intangible assets 115 Note 19 Other intangible assets 115 Note 20 Tangible non-current assets 116 Note 21 Shares in associated companies 116 Note 22 Interest-bearing financial non-current assets 117 Note 23 Other long-term receivables 117 Note 24 Inventories 117 Note 25 Accounts receivable 117 Note 26 Other current receivables 117 Note 27 Other interest-bearing current assets 117 Note 28 Liquid funds 117 Note 29 Shareholders’ equity 118 Note 30 Long-term liabilities excluding provisions 118 Note 31 Provisions for pensions and similar commitments 119 Note 32 Other long-term provisions 121 Note 33 Short-term loan liabilities 122 Note 34 Other current liabilities 122 Note 35 Short-term provisions 122 Note 36 Pledged assets 122 Note 37 Contingent liabilities 123 Note 38 Financial five year overview 124 Note 39 Accounting principles 129 Note 40 Transactions with related parties 130 Note 41 Financial risk management 130 Note 42 Operating expenses and other operating income 132 Note 43 Personnel 132 Note 44 Other financial income and expenses, net 132 Note 45 Taxes 133 Note 46 Intangible assets 133 Note 47 Machinery and equipment 133 Note 48 Shares in subsidiaries 134 Note 49 Shares in associated companies 135 Note 50 Prepaid expenses and accrued income 135 Note 51 Liquid funds 135 Note 52 Shareholders’ equity 135 Note 53 Long-term liabilities 135 Note 54 Accrued expenses and prepaid income 135 Note 55 Pledged assets 135 Note 56 Contingent liabilities 135 84
Report of the Board of Directors – Financial overview The Board of Directors and the President of Securitas AB (publ.), corporate registration number 556302–7241, with its registered office in Stockholm, hereby submit the Annual Report and consolidated financial statements for the 2011 financial year. Securitas protects homes, workplaces and society. Our core business is security services and the main service offering categories are specialized guarding, mobile security services, monitoring and consulting and investigation services. Securitas is present in 51 countries in North America, Europe, Latin America, the Middle East, Asia and Africa, with more than 300 000 employees. The Securitas Group consists of the business segments Security Services North America, Security Services Europe, Mobile and Monitoring and Security Services Ibero-America. The latter was created in 2011. In addition to these business segments, the Group conducts guarding operations in the Middle East, Asia and Africa, which are included under the heading Other in the segment report in note 9. Due to the new segment structure as well as operations moved between the segments Security Services Europe and Mobile and Monitoring, comparatives have been restated below under the heading Development in the Group’s business segments as well as in the segment report in note 9 for the segments Security Services Europe, Mobile and Monitoring and Other. The organic sales growth in 2011 was 3 percent, and including acquisitions the real sales growth reached 11 percent. We have made 19 major acquisitions with annual sales of MSEK 4 500 and strengthened our presence in the United Kingdom, Belgium, Eastern Europe, in the government sector in the USA and in various high growth markets in Latin America. We have also grown in the technology area and in the consulting and investigation market. The sales growth of 11 percent was the highest since 2002. It has strained the cash flow mainly due to working capital needs, but also due to the decrease in earnings compared to last year and a slight increase in days of sales outstanding (DSO). In 2012 we will be restrictive on acquisitions until we have restored the financial target of free cash flow to net debt of 0.20. For the full year of 2011, the lower operating margin was primarily due to dilution from acquisitions, the loss of a few major contracts in Europe and the discrepancy between wage costs and price increases. During 2011 we have grown substantially by acquisitions and taken significant restructuring and integration costs, which we will benefit from in 2012. We are investing in new solutions and technology resources to bring added value to our customers, and at the same time we have reduced the overhead costs. Sales and market development Sales amounted to MSEK 64 057 (61 340) and organic sales growth was 3 percent (1). A positive development was seen in Security Services North America, Mobile and Monitoring and Security Services Ibero-America. In North America the security market has been basically flat in 2011, which means that Security Service North America has gained market shares. In Security Services Europe, the majority of the countries showed positive organic sales growth, but primarily Belgium and the United Kingdom were negative due to a few large contract losses in the first half year of 2011. In Latin America the organic sales growth was 28 percent. In Spain, the organic sales growth was also positive mainly because of a major guarding contract in the retail sector. Effective in the first quarter 2012, contracts with poor profitability worth approximately MSEK 450 (MEUR 50) in annual sales will be terminated in Spain. The same applies for a major contract with an automotive customer in the USA worth approximately MSEK 515 (MUSD 80) annually. These terminations have no material impact on the operating income, but a positive effect on the operating margin. Real sales growth, including acquisitions and adjusted for changes in exchange rates, was 11 percent (5). SALES JANuARy – DECEMBER MSEK 2011 2010 % Total sales 64 057 61 340 4 Acquisitions / divestitures -5 062 -20 Currency change from 2010 4 229 – Organic sales 63 224 61 320 3 Operating income before amortization Operating income before amortization was MSEK 3 385 (3 724) which, adjusted for changes in exchange rates, represented a decrease of -3 percent. The Group’s operating margin was 5.3 percent (6.1). The total dilution from the acquisitions of Reliance Security Services and Chubb Security Personnel in the United Kingdom, along with Security Consultants Group in the USA, was -0.2 percent on the Group’s operating margin. In Security Services Europe, the operating margin was negatively impacted mainly by the loss of a few large contracts earlier in the year and a discrepancy between price increases and wage cost increases, all together representing -0.4 percent on the Group’s operating margin. The increase of payroll related taxes in Security Services North America had an impact of -0.1 percent for the full year. The price adjustments in the Group were behind the total wage cost increases in 2011, the main reason being a negative deviation in France. OPERATING INCOME JANuARy – DECEMBER Annual Report Report of the Board of Directors MSEK Operating income before 2011 2010 % amortization 3 385 3 724 -9 Currency change from 2010 Currency adjusted operating 215 – income before amortization 3 600 3 724 -3 Securitas Annual Report 2011 61
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Annual Report 2011
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Operating income before by business
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“ Specialization rather than dive
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2. Acquisitions Approximately half
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The key to success lies in “ work
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Knowledge Leader in Security Securi
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Securitas AB P.O. Box 12307 SE-102
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SECURITAS AB Annual Report 2011

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