Infologue Review 2005

 
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Tuesday, 17 January 2017

Infologue Review 2005

2005 can be best described as “interesting” as it became the first real step towards regulation of the security guarding industry. As the lack of licence applications started to cause concern the SIA started working with the larger Companies towards meeting their agreed profiles.

These profiles were agreed percentages of licensable guards’ applications rising on a monthly basis until March 2006. Based on the information provided we believe that the following Infologue.com Top 20 companies met their November Profiles:

G4S
Reliance Security Services Limited
Chubb Security Personnel Limited
Securitas Security Services Limited
Mitie Security Limited
OCS Resolution Limited
VSG
The Corps
First Security (Guards) Limited
ICTS UK Limited
Pegasus Security Limited
The Shield Guarding Company Limited
Legion Security Limited

In June 2005 the Security Industry Authority (SIA) warned against a late influx of licence applications to prior to the March 2006 deadline. Infologue.com research showed that at the time, (June 2005) whilst there are around 14,000 people on the qualifications database making them eligible to apply for a licence, 11% of those (1550) had actually applied. The slow start resulted in a bottle neck of licence applications resulting in the following guarding licence application statistics as of 22 December 2005 (Source SIA)

Applications Pre System: 10,451
Number of qualified guards: 72,167
Applications on SIA system: 31,634
Number of SIA Guarding Licences granted: 17,280
Number of SIA Guarding Licences refused: 225

If one takes the figure of 100,000 licensable security and 40,000 applications in the system or ready to be entered into the system there is a shortfall of:

Trained Guards – 28,000
Guards in the licensing process – 60,000.

It is clear that there will be a critical shortage of licensed guards on licencing D-Day of 20 March 2006. We expect this shortage to impact upwards on the wages of licensed guards. The SIA has remained steadfast in its assurances that the D-Day is cast in stone. We expect that the SIA will start prosecuting companies that fail to comply with the licensing requirements by 20 March 2006. From intelligence gathered in the industry it is clear that the SIA is working positively with companies to ensure they achieve their licensing profiles.

Approved Contractors Scheme

There has been some disquiet in the industry over the past six months as a result of the voluntary Approved Contractors Scheme (ACS). Almost every day brought new intrigue as the Home Office issued a Regulatory Impact Assessment (RIA) consultation document. Four options were offered with the third and fourth being the most popular choices from feedback Infologue.com has received from participants. There appeared to be a clear choice – remain with the status quo or try a new untested system. The latter option, known as option 4 related to a standard that was more output focussed with its roots in the European Quality Foundation Model (EQFM). To choose this option would require a leap of faith and leadership from the industry. The RIA is believed to be under consideration with the Home Office Minister, Tim Goggins, and the result is expected to be announced in early January. One of the main benefits of the ACS is the ability for members of the scheme to deploy trained but unlicensed guards. Infologue.com believes that it will be almost impossible to operate a guarding company without membership of the ACS. Infologue.com became increasingly concerned at the crucial role being played by officials at the Home Office who appear to have no working knowledge of the way the industry operates. We believed it was imperative that a clear statement is made as to their strategy in regard to the Private Security Industry. (See – Commentary: Infologue.com concerned about role of Home Office Officials in the Private Security Industry) We asked the Home Office for a response to six questions relating to the RIA decision making process and when we received our response our concerns remained, if not deepened. (See – Home Office responds to Infologue.com Questions)

BS7858 – The Industry Vetting Standard

An important debate took place in the industry into whether the current vetting standard BS7858 should be replaced with a standard that took into account the criminality element covered by Regulation and some form of financial probity check. Also under discussion was whether the 10 year employment history check should be reduced to 3 or 5 years. We believe that after constructive debate consideration is being given to a new standard.

Companies making Headlines in 2005

VSG was listed as Britain’s 14th fastest growing privately owned company in 2005. The Sunday Times Virgin Atlantic Fast Track 100 published annually since 1997 is the definitive league table of Britain’s fastest growing private companies, excluding technology companies which are featured separately. Earlier this year VSG was chosen as SMT Excellence Awards – Best Guarding Company 2005. At the end of 2004 the Managing Director – Bill Muskin was selected as Infologue.com Person of the Year (renamed Building the Future Award this year).

Securiplan Plc was ranked 24th in the 2005 annual Sunday Times PricewaterhouseCoopers Profit Track 100 league table of Britain’s one hundred private companies with the fastest-growing profits.

Major Acquisitions in 2005

The LSE quoted bundled services company MITIE Group PLC acquired Warwick based security services group The Watch. The consideration was up to £8.1 million, with £6 million paid on completion and a further £2.1 million paid on deferment. The annual turnover up to June 2005 of the Watch was £15.2 million with pre tax profits of £400,000.

Chicago based IPC International Corporation, one of the leading manned guarding providers in North America acquired a strategic stake in Gateshead based St James Security Ltd. IPC was founded over 25 years ago by its current President & CEO Howard Kaplan. From a standing start in 1978, IPC’s turnover now approaches $200million, principally derived from its security expertise and services to over 400 shopping malls across the United States.

Reducing Margins in 2005

Margins in the industry continued to fall as competition intensified. Industry analysts Plimsoll revealed recently that one in three Manned Security companies has taken a hit on margin. Their study into just how desperate to cling on to sales the UK’s Top 194 security guarding companies have become has revealed that 30% have accepted a reduction in margin or have fallen into loss as a sacrifice for maintaining or increasing sales levels. This is supported by anecdotal evidence from operators in the industry who also report a like for like decrease in guarding hours.

The Role of the BSIA in 2005

Over the past year questions have been asked as to the future role of the British Security Industry Association. Our belief is that the BSIA has played a strong behind the scenes role in determining the shape of the industry of the future. The BSIA had two choices – megaphone diplomacy or carefully constructed influence. They chose the latter and have had an impact regulation agenda. Once regulation is fully implemented they will play a crucial role in ensuring the interest of their members is protected. The role of the regulator requires scrutiny by the Industry and the BSIA is adequately qualified to perform this role. In 2004 the Chancellor Philip Hampton to lead a review into regulatory inspection and enforcement with a view to reducing the administrative cost of regulation, to the minimum consistent, whilst maintaining regulatory outcomes. The Hampton Review suggests that the SIA should fall under the Health & Safety Executive (HSE) once regulation is fully implemented. The industry would require its interests are best protected when such a change occurs. (UK Treasury)

The Role of the SIA in 2005

The SIA has never suggested that the implementation of regulation would be easy. They entered uncharted waters and in hindsight could have done things differently but we are where we are, and the SIA has done the best they could. We do believe that regulation will become fully effective but probably 3-4 months later than 20 March (D-Day). We believe that this will not stop the Regulator enforcing D-Day and prosecuting companies who deliberately flout the law. During 2006, Infologue.com will introduce four campaigns relating the activities of the SIA. These campaigns under the banner – Standing with the Industry – are not directed at the SIA, we support them, but at areas where with hindsight need, re-examination. Our four campaign issues will be:

Licensing of In-house Guards(See Sir Digby Jones calls for UK business leaders to make security an integral part of their strategic planning)

Fair representation on the SIA Board – The SIA has no industry representation on its Board. If the SIA intends to do regulation with the industry and not to it, surely it is fair that the industry has representation in the decision making process

Fair Charging – We would like the SIA to creatively rethink how guards who have paid for licenses before the 20 March 2006 receive the same benefit as those guards licensed on or after D-Day. Effectively the guards who applied for their licenses early are being financially penalized. We would also ask the SIA to review the proposed ACS charges.

Cutting Red Tape – We will ask the SIA to review the practice where a licensed guard has to repeat the whole licensing process if they require, for example a Public Space Surveillance CCTV operators licence. Our understanding is the only difference in the application process is the training element. If this is the case then surely a training certificate relating to the area of competence is required.

During 2006 we will focus on these issues and encourage debate to foster change.

Infologue.com Top 20 largest UK Guarding Companies 2005

Ranking 2005 Company Name Est Turnover Estimated Market Share
1 G4S £345,000,000 16.43%
2 Reliance Security Services £187,000,000 8.90%
3 Initial Security Ltd. £140,000,000 6.67%
4 Chubb Security Personnel Ltd. £120,000,000 5.71%
5 Securitas Security Services Ltd. £87,000,000 4.14%
6 Mitie plc £86,200,000 4.10%
7 Securiplan Plc. £85,000,000 4.05%
8 OCS Resolution Ltd £72,500,000 3.45%
9 Vision Security Group Ltd £60,000,000 2.86%
10 The Corps £53,500,000 2.55%
11 First Security (Guards) Ltd. £49,000,000 2.33%
12 ICTS UK Ltd £46,000,000 2.19%
13 The Shield Guarding Co. Ltd. £41,500,000 1.95%
14 Pegasus Security Ltd £41,000,000 1.98%
15 Wilson James Ltd. £34,000,000 1.62%
17 Legion Security Plc £29,000,000 1.38%
16 Sabrewatch Ltd £28,000,000 1.33%
18 Carlisle Security £22,000,000 1.05%
19 AFC Group £21,000,000 1.00%
20 Temple Security Ltd. £20,000,000 0.95%

The above table is based on estimates and historical published data of annual turnover and should be viewed only as a guide to the approximate size of the largest companies in the manned security industry. The turnover is calculated on annualised basis as of November 2005 and relates to the Infologue.com definition of the provision of manned security services. Some companies have non related areas of business in their statutory accounts which Infologue.com attempts to estimate and factor out of the estimated turnover. Whilst most companies are now providing information on turnover to Infologue.com all figures will not be accurate as statutory information can be up to two years out of date. The Mitie Plc figure includes the acquisition of the Watch Security. The MacLennan plc Security Portfolio has an estimated annual turnover of £64 million. However, this business runs independently of First Security Guards Plc. Therefore these figures should be treated with caution. Movement in the rankings may reflect the use of more accurate and up to date data and not significant change in turnover. Infologue.com welcomes input from the companies in the Infologue.com Top 20 and will change the figures on request provided we have no information to the contrary. Links to the companies listed in the Infologue.com Top 20 Table are inserted at the discretion of Interconnective Limited.


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