* Net addition of 30,143 new customers in the third quarter * Payback period for investments in new customers of 4.1 years in the third quarter * 14,089 customer cancellations in the third quarter SALES AND INCOME NOTE THAT COMPARATIVE FIGURES ARE PRO FORMA Jul-Sep 07 Jul-Sep 06 Jan-Sep 07 Jan-Sep 06 Net sales, SEK thousand 953,732 826,378 2,814,942 2,435,035 Sales growth adjusted for currency effects, % 15 21 16 23 Operating profit, SEK 80,937 55,426 221,417 163,386 thousand Operating margin, % 8.5 6.7 7.9 6.7 Net profit for the 54,088 35,004 144,532 105,159 period, SEK thousand Earnings per share, SEK 0.15 0.10 0.40 0.29 OPERATING TARGETS * Net customer portfolio growth was 16.2[1] % (22.4[2]) * Payback period for investments in new customers was 4.1 years (3.8) * Cancellation rate was 6.9[1] % (5.7) [1] Net growth and the cancellation rate have been adjusted for 6,419 cancellations which arose during the second quarter of 2007 and do not affect income. [2] Adjusted for sale of 4,174 monitored alarms to Securitas Group during the second quarter of 2006. Customer cancellations and net growth are based on 12-month rolling figures and the payback period is for the year to date. PRESIDENT'S COMMENTS During the quarter we recorded a gross gain of around 44,000 new customers. This underlines the strength of the business, especially considering that we have reduced our use of indirect sales channels and seen a general decrease in sales to the house and home segment in Spain. Our most important measure of long-term value creation - customer cancellations - continues to move in the right direction. Cancellations totalled approximately 14,000 during the third quarter, which was in line with our expectations. Cancellations stabilised at the start of the year and it is my belief that we will now see a reversal of the upward trend on a 12-month basis. On a net basis, more than 30,000 customers joined the portfolio during the third quarter, and in the last 12 months the net gain exceeded 128,000, to reach a total of 919,000 customers. The mix of new customers has shifted somewhat to small businesses, offsetting lower sales to households to some degree. The market remains slightly sluggish and we have sensed a lower level of activity from our competitors on the household side in some geographical areas. Our long-term drive to introduce higher levels of efficiency and quality in the customer portfolio delivered a continued improvement in the net contribution per customer as against previous quarters. Higher sales and marketing costs during late summer increased the per-customer acquisition cost, though the impact on the payback period during the third quarter was only marginal. With cancellations at a more stable level, my earlier forecast of net portfolio growth exceeding 15% for the full year still holds firm. And with an operating margin for the first nine months of 7.9% we are starting to approach our long-term target level of 8-10%. Greater stability and strength in the customer portfolio gives us a good platform for meeting the challenge of developing the market and increasing sales volumes. GROUP KEY DATA OPERATING 30 September 30 September 2006 2007 Cancellation rate, % 6.9[1] 5.7 Payback period, years 4.1 3.8 Net customer portfolio growth, % 16.2 [1] 22.4 [2] Customer portfolio 918,792 796,845 [1] Net growth and the cancellation rate have been adjusted for 6,419 cancellations which arose during the second quarter of 2007 and do not affect income. Including these, net growth and customer cancellations were 15.3% and 7.7% respectively. [2] Adjusted for sale of 4,174 monitored alarms to Securitas Group during the second quarter of 2006. Customer cancellations and net growth are based on 12-month rolling figures and the payback period is for the year to date. FINANCIAL July-September January-September SEK thousand 2007 2006 2007 2006 Net sales 953,732 826,378 2,814,942 2,435,035 Sales growth 15 21 16 23 adjusted for currency effects, % Operating profit 80,937 55,426 221,417 163,386 Operating margin, % 8.5 6.7 7.9 6.7 EBITDA 202,420 157,701 572,231 455,352 EBITDA margin, % 21.2 19.1 20.3 18.7 Net profit for the 54,088 35,004 144,532 105,159 period Earnings per share, 0.15 0.10 0.40 0.29 SEK Capital employed -- -- 1,642,340 1,545,046 Return on capital -- -- 17 14 employed, % Net cash/debt -- -- 1,123 -107,280 Free cash flow 29,662 -104,207 119,252 -263,572 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 2006 and available for download at 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: * Cancellation rate of less than 6% per year * Payback period for investments in new customers of less than 4 years * Net customer portfolio growth exceeding 20% per year Securitas Direct's growth strategy is based on long-term value creation, and the aim is that growth should not be at the expense of a higher cancellation rate or longer payback period. Hence, the Group's targets for the cancellation rate and payback period take precedence over customer portfolio growth. Management's expectations for the full year are that: net customer portfolio growth will exceed 15%; the repayment period will be slightly above the long-term target level of 4 years; the operating margin will exceed 7.5%; and free cash flow will be positive. Management also expects the number of cancellations for the fourth quarter to be in line with the third quarter figure. BRIEFING AND CONFERENCE CALL A briefing on the third quarter results will be held on 7 November 2007 at 09:00 CET at the Radisson SAS Strand Hotel, Nybrokajen 9, Stockholm. If you wish to follow a webcast of the briefing, please visit the Investors and Media section at www.securitas-direct.com. If you would like 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. The full agenda is contained in a press release issued on 30 October. A recording of the briefing 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 September 2007
| Source: Securitas Direct AB