Securitas 2010 Annual Report: Passionately Impatient

“If you had a serious heart problem – who would you see? A cardiologist or your family doctor?  If you had serious security concerns, I would strongly recommend seeing a security specialist rather than a service bundler. We believe in specialization, not diversification,” wrote Securitas AB President and CEO, Alf Göransson as he set out Securitas’ stall as a focused security specialist in a an ever increasing sea of bundled service providers, writes Editor, Bobby Logue. Passion and inspiration were in abundance in the statement of the CEO Alf Göranssonas he introduced the 2010 Securitas Annual Report yesterday.  The global security business Securitas AB, started in 1934 with three employees, now employs more than 280,000 employees in 45 countries across five continents. Comments by Alf Göransson included:

Tough and competitive times

In regard to the current tough and competitive environment in the security services sector, Alf Göransson said: “The security industry is highly competitive, and we have to fight hard to secure contracts. Sometimes we win – sometimes we lose, and periods of joy are muddied by losses. This will not go away and may even get worse. But we are not paid to complain about low margins. We are employed by Securitas because we are security professionals, and because we believe that we can develop our core business and make a difference in the security industry. We are here to work hard and find improved security solutions. We are here to innovate and lead. And I am not the only person who thinks this way – there are more than 280,000 of us.”

Focus and differentiation

Alf Göransson spoke of the importance for Securitas’ to focus on its profitability and to differentiate ourselves from our competitors; “We offer added value through optimized security solutions. Over the past few years, this strategy has been successful in the various business cycles – both in difficult and in more prosperous times.

“Securitas has a successful business model. We perform professional risk assessments and risk  surveys at our customers’ sites, analyze our customers’ needs and expectations, design security solutions, often in combination with mobile patrols, alarm monitoring and technical solutions. In 2010, we also strengthened our competence in sophisticated consulting and investigation services, which I believe will be even more important for our customers in the future.

“We are continuing to pursue our long-term strategy. More than one third of our sales volume is generated by specialized branch offices that focus on one or very few customer segments. This is gradually leading to improved margins, higher growth, long-term and improved customer relations, and our branch managers are constantly seeking solutions that will add value to our services. Also, as an added benefit, employees who possess specialized knowledge and enhance their skills remain working at the company for a longer period of time.

“We believe that knowledge can be transferred from one market to another, and that our customers expect advice from us that is based on global knowledge. My Securitas was launched in 2010 to strengthen and more efficiently structure our knowledge. It is an online professional social network, with Facebook functions, blogs, an internal “Wikipedia” with an advanced search engine and best practice databases. Approximately 4,500 users now have access to the network and in 2011, we will expand the user group to about 17,000 employees from throughout the Securitas world. This is unprecedented in the security industry – a tool for sharing knowledge, locating security knowledge, and creating all kinds of communities. This will lead to better security solutions and add value to our customer offering.

The importance of being impatient

Alf Göransson said he was proud and impressed by how Securitas delivers high-quality services in almost every corner of the world every single day, he continued, “but I am equally in awe of how we constantly strive to add value to our services by providing more and better security in an efficient way. This impatient culture has been built by decades of consistent work, commitment and management, and is based on our values and our management model, the Toolbox, for running and managing our operations internally.  We have now taken our Toolbox one step further and developed a Securitas Group standard, the Diamond Box, for doing business externally with a clear focus on security. The separate pieces of our methodology may not be unique, but the way we systematically and consistently combine them and build the processes behind each component is without comparison. Market by market, we are also making our services more transparent and accessible in state-of-the-art online customer portals, which provides customers a complete overview of their security solution. As security professionals, we understand our customers’ needs, provide optimal service and build profitable relationships. In addition to the models of how we do business, we are also building a stronger culture of innovation in Securitas, which will benefit both us and our customers.

“We are currently creating an infrastructure that will support innovation. A culture where everyone is encouraged to present ideas that will be nurtured, rewarded, tested, and if they are strong enough, implemented and allowed to grow. Innovation can take many forms. It could mean better ways to conduct sales and marketing, or describe the benefits of our services. It could be new technology or tools, but also new business concepts or methods for making our operations more efficient.

“Being a specialist and an innovator in the security industry means that we have to look for opportunities. Once we know that an innovation works, that it passes our tests and receives approval, it will bring even more added value to our customer offerings.”

Financial Performance

“Our strategy of focusing on profitability and differentiating ourselves from our competitors through the added value that we create by optimizing our security solutions, works when times are both tough and better. In terms of profitability, the last three years have been our best ever. In 2010, earnings per share declined 2 percent compared with 2009. Adjusted for the strengthening of the Swedish krona in 2010, earnings per share increased 5 percent in real terms compared with the preceding year. We are coming out of the recession in good shape. In 2010, the Group operating margin amounted to 6.1 percent (2009 6.0 percent)” commented a satisfied Alf Göransson.

Headline Figures

The 2010 headline figures for Securitas included:
Sales, income and organic sales growth

· Total sales – £6,018,981,346(2009 : £6,149,945,025)
· Income before taxes  £291,323,815 (2009 : £3,022)
· Organic sales growth 1 percent (2009 : 1 percent)
· Operating margin 6.1 percent (2009 : 6.0 percent)
· Proposed dividend £0.29 (2009 : £0.29)

Financial targets
· Earnings per share, continuing operations £0.56 (2009 : £0.569)
· Free cash flow to net debt ratio 0.24 (2009 : 0.26)

Major acquisitions in 2010

In 2010 Securitas completed 15 major acquisitions both in mature and new markets, adding 19,500 employees and adding annual sales of approximately £406,017,474 :

Seccredo (Sweden),
Claw Protection Services (South Africa),
Dan KontrolSystemer (Denmark),
Bren Security (Sri Lanka),
Paragon Systems (USA),
Legend Group Holding International (Singapore),
Guardian Security (Montenegro),
Nikaro (United Kingdom),
ESC and SSA Guarding Company (Thailand), (Poland),
Security Professionals and Security Management (USA),
Reliance Security Services (United Kingdom),
Alarm West Group (Bosnia and Herzegovina),
Piranha Security (South Africa),
Cobra Security (Romania)

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