CUSTOMER CANCELLATIONS STABILISED IN THE SECOND QUARTER * Net addition of 35,029* new customers during second quarter * Customer cancellations totalled 13,947* in second quarter * Payback period for investments in new customers of 4.0 years in second quarter *) Net growth and the cancellation rate have been adjusted for 6,419 cancellations due to closer monitoring of the customer portfolio in Spain. The cancellations have no effect upon income SALES AND INCOME note that comparative figures are pro forma Apr-June 07 Apr-June 06 Jan-June 07 Jan-June 06 Net sales, SEK 949,304 828,898 1,861,211 1,608,657 thousand Sales growth adjusted for currency effects, % 15 24 17 24 Operating profit, SEK 69,860 51,241 140,479 107,960 thousand Operating margin, % 7.4 6.2 7.5 6.7 Net profit for the 45,449 32,989 90,443 70,155 period, SEK thousand Earnings per share, 0.12 0.09 0.25 0.19 SEK OPERATING TARGETS * Net customer portfolio growth was 17.4*% (24.3**) * Cancellation rate of 6.7*% (5.4) * Payback period for investments in new customers totalled 4.1 years (3.7) *) Net growth and the cancellation rate have been adjusted for 6,419 cancellations due to closer monitoring of the customer portfolio in Spain. The cancellations have no effect upon income **) Adjusted for sale of 4,174 alarms to Securitas AB. Net growth and the cancellation rate are based on12-month rolling figures, while the payback period is for the year to date. PRESIDENT'S COMMENTS Our increased focus on customer service and terminations has delivered noticeable results. Customer cancellations - our most important measure of long-term value creation - are moving in the right direction and were 1,400 fewer in the second quarter compared to the first. I believe that our focus on increased proactivity and improved customer service will enable us to remain at the current level in the coming quarters. The addition of 48,976 new customers to the portfolio in the second quarter was in line with the increase in sales which we normally see at this time of year. In the long term, net customer portfolio growth depends on our ability to grow while maintaining high standards of quality and that new customers appreciate our services and stay with us for many years. We are increasing our focus on existing customers and also improving the customer mix. This is essential because profitable growth is simply not possible in some segments. During the quarter we reduced sales to newly built apartments and vacation homes when these are via indirect sales. The market is a little slow, which was reflected during the second quarter in a SEK 200 increase in the per-customer acquisition cost. Nevertheless, the payback period decreased during the period due to an increase in the net contribution per customer to SEK 124 per month, which was a result of improved efficiency and economies of scale. The payback period (QTD) of 4.0 years was the lowest since the listing last year. The customer portfolio stands at 888,649 customers and the average life of each contract is 10-11 years. We are currently adding about 30,000 new customers per quarter on a net basis (though the gain was 35,000 in the second quarter), suggesting net portfolio growth for the full year of just over 14%. I expect net growth for the full year of 15-17%. GROUP KEY DATA OPERATING 30 June 30 June 2007 2006 Net customer portfolio growth, % 17.4* 24.3** Customer portfolio 888,649 762,574 Cancellation rate, % 6.71 5.4 Payback period, years 4.1 3.7 *) Net growth and the cancellation rate have been adjusted for 6,419 cancellations that do not affect income. Including these, net growth and customer cancellations were 16.5% and 7.5% respectively. **) Adjusted for sale of 4,174 monitored alarms to Securitas Group. Net growth and the cancellation rate are based on 12-month rolling figures, while the payback period is for the year to date. FINANCIAL April-June January-June SEK thousand 2007 2006 2007 2006 Net sales 949,304 828,898 1,861,211 1,608,657 Sales growth adjusted for 15 24 17 24 currency effects, % Operating profit 69,860 51,241 140,479 107,960 Operating margin, % 7.4 6.2 7.5 6.7 EBITDA 186,714 148,558 369,810 297,651 EBITDA margin, % 19.7 17.9 19.9 18.5 Net profit for the year 45,449 32,989 90,443 70,155 Earnings per share, SEK 0.12 0.09 0.25 0.19 Capital employed - - 1,633,296 1,364,783 Net debt - - 43,095 835,015 Return on capital employed, % - - 16 15 Free cash flow 54,998 -51,015 89,589 -159,365 Note that comparative figures are pro forma. Details of the adjustments in the pro forma accounts are shown on page 36 of the Prospectus for Distribution and Listing of Shares 2006, published in September last year. The prospectus can be downloaded from www.securitas-direct.com. The balance sheet and cash flow data relate to actual outcomes. TARGETS AND OUTLOOK Securitas Direct has three long-term operating targets: * Net customer portfolio growth exceeding 20% per year * Cancellation rate of less than 6% per year * Payback period for investments in new customers of less than 4 years Management continues to expect net customer portfolio growth for the full year of 15-17% and that the payback period at year-end will be in line with the long-term target of 4 years. We also expect total customer cancellations in the third and fourth quarters to be in line with the second quarter figure. For the full year, we expect the operating margin to be 7.5% and free cash flow to be positive. BRIEFING AND CONFERENCE CALL A briefing on the second quarter results will be held on 22 August 2007 at 09.30 CET at the Radisson SAS Strand Hotel, Nybrokajen 9, Stockholm, Sweden. If you wish to follow a webcast of the briefing, please visit the Investors and Media section at www.securitas-direct.com. If you wish to follow the briefing by phone and participate in the Q&A session, please call +44 (0)20 7162 0025, allowing yourself 10 minutes for registration. Conference call at 17.30 CET on 22 August 2007 Securitas Direct's CEO and CFO will give a short presentation of the report and take questions. If you wish to participate, please call +44 (0) 20 7162 0025, allowing yourself 10 minutes for registration. A full agenda was published in a press release on 13 August 2007. Recordings Recordings of the briefing and teleconference will be posted on the Securitas Direct website. FOR FURTHER INFORMATION CONTACT Dick Seger, President and CEO, tel +46 (0)708 218817 Lars Andersson, CFO, tel +46 (0)706 327580 Michael Peterson, Investor and Media Relations Manager, tel +46 (0)733 221814 e-mail: ir@securitas-direct.com, www.securitas-direct.com
Securitas Direct AB: Interim report 1 January-30 June 2007
| Source: Securitas Direct AB