Securitas AB

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Securitas AB Press Release from Securitas AB August 6, 1998 Securitas AB Interim Report January June 1998 Sales increased by 17 percent to MSEK 5,959 (5,083), 8 percent of which is organic growth. Income before taxes increased by 27 percent to MSEK 291 (230). In local currencies the increase is 29 percent. Earnings per share after full taxes increased by 29 percent to SEK 2.81 (2.18). Securitas AB P.O. Box 12307, S-102 28 Stockholm Sweden Tel +46 8 657 74 00 Fax +46 8 657 70 72 Visiting address Lindhagensplan 70 Interim Report January June 1998 Sales and result nings from 1998. The restructuring of SGI has meant that a Consolidated sales of the Securitas Group amounted to MSEK number of unprofitable contracts have been terminated, 5,959 (5,083). This is an increase of 17 percent, and in local which has meant a volume decline in this line of business. currencies the corresponding increase is 19 percent compared All other operations in France show a good development in to the similar year-ago period. Acquired entities, TeleLarm in terms of volume and earnings performance. Sweden, SGI Surveillance and Kessler in France, and Segurcat Operations in Great Britain show a good development in Spain, have increased sales by 11 percent. Organic growth in terms of volume, and generate a positive contribution to was 8 percent (5). earnings. Insurance and claim costs have been reduced Operating income before amortization of goodwill according to plan. amounted to MSEK 392 (307), which is an increase of 28 In Spain, the good volume and earnings growth in Alarm percent. In local currencies the increase is 30 percent. The Systems continues. Good volume growth, 12 percent, was operating margin was 6.6 percent (6.0). generated in the Guard Services operation during the first six Income before taxes amounted to MSEK 291 (230). This months of the year. is an increase of 27 percent compared to the similar period In Portugal, volume development and earnings perfor- last year. In local currencies the increase is 29 percent. mance continued to be positive, especially in the Cash-in- Transit and Alarm Systems businesses. Development in the countries of operation Volumes and earnings continued their positive development in the Securitas Direct Division. The number Operations in Sweden, Norway, Denmark, and Finland show of new installations made during the first six months was continued good volume and earnings growth. Organic growth about 12,400, which is an increase of 50 percent over the reached an aggregate of 10 percent in these countries during similar period last year. The total installed base of systems is the first six months of 1998, which is an increase of 3 percen- now about 86,000. Sales increased by 34 percent. tage points compared to the similar period one year ago. In Germany the positive volume and earnings trend Cash flow continues in Guard Services. The restructuring work of the German Cash-in-Transit now brought to a close involved, Adjusted income amounted to MSEK 298 (226). The cash among other things, the termination of a number of un- flow effect of changes in working capital amounted to MSEK profitable contracts. This has meant a certain volume dec- 166 (175). The change in working capital is attributable line in the Cash-in-Transit business during 1998. As primarily to the organic growth and normal seasonal varia- previously announced, the German Cash-in-Transit business tions. is expected to reach a break-even result in 1998. Investments in operating assets amount to MSEK 321 In France, integration of the Kessler group has begun. (245). The acquisition is expected to have a positive effect on ear- Free cash flow amounted to MSEK 65 (16). The Group’s Sales by Country Jan.- June Jan.- June Jan.- June 1998 Share 1998 1997 Change in % Country MSEK of total M(local) M(local) organic total Sweden 1,593 27 1,593 1,176 6 35 Norway 577 10 551 464 15 19 Denmark 127 2 111 91 22 22 Finland 333 6 230 207 11 11 Germany 815 14 186 188 -1 -1 France 570 10 436 311 6 40 UK 489 8 37 33 13 13 Spain 668 11 12,929 11,490 9 13 Switzerland 130 2 24 24 3 3 Austria 63 1 101 89 14 14 Portugal 370 6 8,612 8,066 7 7 Hungary 45 1 1,205 947 27 27 Poland 28 0 12 8 63 63 Estonia 7 0 12 −−− Securitas Direct 186 3 186 139 34 34 Elimination -42 -1 -42 -35 Total (MSEK) 5,959 100 5,959 5,083 8 19 2 Capital employed, net indebtedness, and shareholders Karcher AG/VEBA Immobilien Management. Goodwill in equity connection with the acquisition amounts to MSEK 880. The Groups operating capital employed amounted to MSEK Considerable synergy effects will arise as a result of the 2,382 (2,182 as of December 31, 1997), which is equivalent to merger and integration with Securitas existing business. 19.5 percent of sales, adjusted for full-year sales of acquired After the acquisitions, Securitas in Germany will have entities. The increase is explained by the organic growth and sales of about MSEK 3,900 and about 15,000 employees. by normal seasonal variations in working capital. The acquisitions strengthen Securitas position in the Ger- Acquisitions consummated have affected net indebted- man security market, Europes largest, estimated to be worth ness by MSEK 81. Conversion of convertible subordinated SEK 40 billion, and constitutes a base for continued profi- debentures had a positive effect on net indebtedness of the table growth. Securitas will now be the market leader in Group in the amount of MSEK 15, and shareholders equity Germany in guard services as well, with a market share of was increased correspondingly. Dividends of MSEK 201 were about 17 percent. Securitas total market share in Germany is paid to shareholders during the second quarter. The about 10 percent. convertible subordinated debenture issue to the employees, Subject to approval by the Extra General Meeting, and as resolved by an Extra General Meeting held in January, local competition authorities, the acquisition will be completed was paid in April in the amount of MSEK 700, replacing exis- by October 1, 1998. The acquisition process is currently pro- ting borrowing. The Groups net debt amounted to MSEK ceeding according to plan. 1,723 (1,532 as of December 31, 1997). The net debt equity France ratio was 0.72 (0.65). In June 1998, an agreement was reached with the main owner The number of shares outstanding as of June 30, 1998 Finecco S.A. to acquire Proteg S.A. with sales of MSEK was 73,369,008. The total number of shares outstanding after 3,800 and operations in guard services, alarm systems, and full conversion will be 76,444,153. cash-in-transit services. Proteg is the market leader in guard services in France, and has a total of 15,000 employees. The Acquisitions company also has some business abroad, primarily in Spain. Germany The purchase price amounts to about MSEK 2,176, MSEK In June 1998, Securitas in Germany acquired a guarding 1,318 of which will be paid in the form of issuance of 4,250,000 services company Deutsche Sicherheits AG, with sales of Class B shares to the sellers, and MSEK 858 to be paid in about MSEK 290, and 800 employees. With very good profita- cash. Goodwill in connection with the acquisition amounts bility, the company has specialized in guarding assignments to MSEK 2,100. Significant efficiency gains will be reaped for nuclear power plants, chemical production facilities, and through the merger and integration with Securitas existing other objects where high security is required. The purchase operations in France. price was MSEK 180, and consolidated goodwill will increase After the acquisitions, Securitas in France will have sa- by MSEK 150 as a result of this acquisition. The acquisition, les of about MSEK 4,800, and 18,850 employees. This will being paid for in cash, will have a positive effect on the make France the Groups largest country, both in terms of Group's earnings in 1998. Subject to approval by local com- sales and the number of employees. The acquisition makes petition authorities, the acquisition will be a part of the Securitas the market leader in France, with a market share of Securitas Group from July 1, 1998. about 35 percent of the guard services market, and 13 per- In June 1998, an agreement was reached with Raab cent of the total market. Karcher AG/ VEBA Immobilien Management on acquiring Subject to approval of the Extra General Meeting and the Raab Karcher Sicherheit with sales of approximately MSEK local competition authority, the acquisition will be completed 2,000, MSEK 180 of which emanates from businesses in by October 1, 1998. The acquisition process is currently pro- Austria, Hungary, and the Czech Republic. The total number ceeding according to plan. of employees is 8,000. Raab Karcher Sicherheit is the market leader in guard services in Germany, and is a significant Acquisitions summary supplier of security to German industry. The price paid Through the acquisitions of Raab Karcher Sicherheit and amounts to MSEK 1,113, to be financed through the issue of Proteg, Securitas strengthens its position as the leading Eu- 3,589,014 shares of Class B to be subscribed by Raab ropean security company, with a market share of 10 percent Securitas’ Acquisitions 1997-1998 Included from Company Country Sales Business Areas Jan. –97 JLMT France 18 Alarm Apr.
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