Group 4 Falck A/S Business Information, Profile, and History

Company Perspectives:

It is Group 4 Falck's mission to provide assistance to people, authorities and companies in order to meet their demands for safety and security as individuals or groups on an everyday basis.

Our most important task is to further develop the Group's special core competencies within security, safety and Global Solutions in order to ensure that customers as well as national and international communities always see Group 4 Falck as a leading, professional, responsible and reliable operator within its fields of operation.

The core competencies are an important foundation for the generation of growth that will benefit customers, shareholders and employees, and thereby, the individual countries of operation.

History of Group 4 Falck A/S

Group 4 Falck A/S is gunning for the top spot among the world's leading security services companies. The Copenhagen-based firm, formed from the 2000 merger of Falck and Group 4 Securitas, is the number two security services company, behind Sweden's Securitas. Unlike that company, which has extensive operations in the United States through its Pinkerton's subsidiary, Group 4 Falck has staked out Europe for its strongest growth. The company is already the leading security services firm in the United Kingdom, Belgium, The Netherlands, Denmark, and Austria in Western Europe, and has captured leading shares in a number of former Eastern Bloc countries, including Latvia, Estonia, Poland, Hungary, and the Czech Republic. The company is also strongly represented in France and Germany. Since 2001, Group 4 Falck has redefined itself for the opening years of the new century, streamlining its focus to three core divisions: Security, including guard services, alarm, and cash and other transport services; Safety, including ambulance, rescue (including crisis counseling), and fire services; and Global Solutions, including prison and court services and meter reading services through its AccuRead joint venture. The company plans to dispose of operations not involved in these three areas. Traded on the Copenhagen stock exchange, Group 4 Falck posted combined revenues of more than DKr 18 billion ($2.3 billion) in 2000. Former Group 4 Chairman Jorgen Philip-Sorensen is chairman of the company; former Falck CEO and Chairman Lars Norby Johansen has become the enlarged company's president and CEO.

Scandinavian Security Pioneers: 1900s-20s

Both Group 4 and Falck trace their origins to the beginnings of the security services industry in Scandinavia. The older of the two, Group 4, originated with the founding of Kjobenhavn Frederiksberg Nattevagt by Philip-Sorensen and Marius Hogrefe in 1901. That company also formed the basis of what became Securitas AB, based in Sweden, which captured the world leadership in the security services industry at the end of the 20th century.

Philip-Sorensen soon became the driving force behind the company, which provided guard and other security services in Denmark, and the Philip-Sorensen family remained an active force in the security services industry throughout the century. In 1918, the company merged with another company to form De Forenede Vagtselskaber, which in turn lay the foundation for Danish services provider ISS (which later shed security services to focus on cleaning services).

Meanwhile, Denmark, and Copenhagen in particular, saw the appearance of a number of other firms providing a variety of security, guard, and even fire and rescue services. One of these companies was Redningskorpset for Kobenhavn og Frederiksberg A/S, set up by Sophus Falck in 1906. That company initially began operating as an ambulance and rescue service; in 1908, it became the first company in Denmark to offer ambulance services using automobiles. Redningskorpset later expanded into fire and other rescue services after the Danish government authorized private companies to provide firefighting services in 1926. By the end of that decade, Sophus Falck had expanded his business to cover all of Denmark.

Focus on Sweden, Then Other Parts of Europe: 1930s-70s

The 1930s saw the expansion of Philip-Sorensen's interests as well. In 1934, Erik Philip-Sorensen brought his father's company to Sweden, acquiring that country's Hälsingbords Nattvakt, in Helsingborg. This acquisition formed the basis for Securitas AB, which continued to operate as a subsidiary of De Forenede Vagtselskaber. The family bought out the larger company in 1938, taking full control of the Swedish Securitas (ISS maintained the Securitas name elsewhere). Sweden now became the family's primary activity.

The Philip-Sorensen family's move into Sweden gave it protection under that country's neutral status during World War II. After the war, both the Philip-Sorensens and the Falcks continued to build their businesses in their respective markets and targeted areas of operations. The Falck company grew in the early 1960s when it acquired another rescue services company, Zonen Redningskorps, in 1963.

The Philip-Sorensens, meanwhile, had begun expanding throughout Sweden, acquiring a number of other small security services firms, including that of AB Svensk Nattvakt, based in Stockholm. In 1950, the company looked beyond Scandinavia for the first time, opening a subsidiary operation in England. A second U.K. branch was opened by the end of the decade, as the company turned toward other European markets. At that time, the family renamed all of its operations under the single Securitas International name.

Erik Philip-Sorensen's sons, Jorgen and Sven, joined the company and began taking an active role in its expansion—after first serving as security guards themselves and working their way up the company's ranks. Jorgen was involved particularly in the company's international growth, while Sven concentrated on its Swedish operations. Securitas's U.K. business soon took on greater weight when, in 1963, the company launched two new British security services companies, Store Detectives Ltd. and Securitas Alarms Ltd.

Two years later, Jorgen Philip-Sorensen was placed in charge of Securitas's U.K. business and given the title of managing director. In 1968, these operations were joined with the company's other U.K. businesses to form a new independent subsidiary, Group 4 (Total Security).

Falck maintained its focus on fire and rescue services throughout the 1970s, becoming one of the largest in the Danish market. The company continued to be led by the Falck family into the 1980s. Meanwhile, across the Kattegat, the Philip-Sorensen family was preparing a changing of the guard. In 1974, the company was turned over to Sven and Jorgen Philip-Sorensen. In 1981, however, the brothers agreed to split the company into two, with Sven taking charge of the Sweden-based Securitas operations, and Jorgen taking control of the company's U.K.-centered European activities. This company was then renamed Group 4 Securitas.

Gunning for World Leadership in the 21st Century

If Sven Philip-Sorensen quickly exited the business, selling his company in 1983, Jorgen Philip-Sorensen continued to build up Group 4 throughout the 1980s. Expanding beyond Europe, the company established a business in India, starting with 1,400 employees, in 1989. That move was a prelude into other far-flung areas, such as Bangladesh, in the late 1990s. Throughout the decade, Group 4 built up a major share in the Indian subcontinent's security services market.

In 1990, the company turned to the United States, acquiring American Magnetics Corporation and its specialty in access control systems. Group 4 also moved into Eastern Europe, with an agreement with the Hungarian government to provide services in that country. The following year, Group 4 captured a leading share of the Belgian market with its acquisition of that country's IMS; Group 4 also had strengthened its position in the United Kingdom, being the first private company there to be awarded a prison management contract.

By then, the Falck family had sold its company, which had branched out into the larger security services field with the formation of Falck Sikring, to insurance company Baltica, in 1988. At that time, Lars Norby Johansen, the first non-Falck family member, took over as president and CEO of the group. Under Johansen, Falck was to see accelerated growth catapulting it into the top ranks of Europe's security services market. Baltica soon sold off a majority of its shares to a consortium of investors.

Falck began its expansion in earnest in 1993 when it acquired ISS's Securitas operations. Falck merged these with its own Falck Sikring business to form Falck Securitas. Two years later, Falck took a listing on the Copenhagen stock exchange, and then acquired Norway's Trygghetssentralen. The following year, Falck grew larger with the purchases of Partena Security, based in Sweden, and Norway's Falken, a safety services business.

Group 4 also was expanding rapidly during this time. The company had moved into Turkey in 1991, and then Austria and Canada with the 1993 acquisition of EWWS Group. A year later, the company established operations in the United Arab Emirates and in Ukraine. Meanwhile Group 4 exited the Spanish market by swapping its Spanish holdings for shares in former sister company Securitas AB. Group 4 also began to diversify a bit during this period, notably through the formation of AccuRead, a joint venture with British Gas to provide meter-reading services throughout the United Kingdom.

Both Falck and Group 4 expanded steadily throughout the second half of the 1990s before joining together to confront the growing strength of Securitas AB on the world's security services scene. The companies targeted rather different markets, however, which heightened the interest of their eventual merger—at that time, the companies had overlapping business in just four domestic markets. Falck continued to expand throughout Scandinavia, acquiring two small security businesses in Finland in 1997; the company remained close to home in its expansion moves in 1998, when it picked up Germany's Simis, Poland's Sezam, and Estonia's AS ESS. The following year, Falck took the leadership position in The Netherlands, with the purchase of Nederlandse Veiligsheidsdienst. The company also acquired Lithuania's UAB Gelvora that year, giving it the lead in that market.

Falck's public status had given it the backing for an aggressive acquisition campaign at the end of the decade. In 1999, the company became the largest security company in Latvia with its acquisition of SIA Apsargs. The company had by then strengthened its position in Poland with the acquisition of Erminus. In 2000, Falck added Germany's ADS Sicherheit Group, and then gained a plum contract when it took over the newly privatized guard and security services operations of Denmark's government.

The two companies announced their decision to merge and form Group 4 Falck in May 2000. The new company became the world's second largest security services firm in the world. As part of the merger agreement, Jorgen Philip-Sorensen was named company chairman, while Johansen became president and CEO; the company retained Falck's listing on the Copenhagen stock exchange. Group 4 Falck also quickly showed its intention to become number one, as the acquisition drive mounted by Falck continued into the new century.

Among the company's acquisitions after the merger were those of Austria's SOS; Finland's SPAC; Hungary's Banktech Security Rt; Unikey, of Norway; and, in July 2001, Top Control Group, of Germany. At the same time, Group 4 Falck stepped up its position in France, where it acquired OGS, adding another DKr 125 million in sales and, especially, the number two firm in that country, Euroguard, which added another DKr 650 million.

Group 4 Falck's expansion at the dawn of the 21st century had more than doubled the group's pro forma consolidated sales—which had reached a combined DKr 8 billion in 1996, before topping DKr 18 billion in the newly enlarged group's first annual report in 2000. At that time, Group 4 Falck announced a new strategic vision to lead it though 2003. The company announced its intention to step up the consolidation of the highly fragmented security services industry, with a goal of topping rival Securitas for the number one position. Group 4 Falck also announced its intention to streamline its own operations in order to tighten its focus on three core divisions: Security, Safety, and Global Solutions. As such, the company began to sell off operations outside of this core, such as its Belgian cleaning services arm, sold to ISS at the beginning of 2001.

Principal Subsidiaries: AccuRead Limited (U.K.; 51%); ADS Holding GmbH (Germany); Erste Wiener Wach- und Schliessg. AG (Austria); Euroguard SA/NV (Belgium; 55%); Falck Denmark; Falken Gruppen AS (Norway); Falck Estonia (ESS); Falck Germany; Falck Norway; Falck Poland; Falck Räddningskår AB (Sweden); Falck Security Oy (Finland); Falck Sweden; First Select (India); GCS Securiton (Austria); Group 4 Austria; Group 4 Belgium; Group 4 Canada; Group 4 Correction Services Pty Ltd (Australia); Group 4 Czech Republic; Group 4 Falck Managed Services; Group 4 Falck Security Support Services; Group 4 Falck Slovakia; Group 4 India; Group 4 Ireland; Group 4 Monitoring Services; Group 4 Prison Services (U.K.); Group 4 Poland; Group 4 Technology UK; Group 4 Total Security UK; Nederlandse Veiligheidsdienst Holding BV (Netherlands); Ratownictwo Falck Sp.z.o.o. (Poland); Seceurop Receptieservices BV BA (Belgium).

Principal Divisions: Security; Safety; Global Solutions.

Principal Competitors: AHLS/Argenbright; Allied; Chubb plc; Command Security Corporation; Guardsmark; Home Security International, Inc.; Initial; The Pittston Company; Prosegur; Compañía de Seguridad, S.A; Protection One, Inc.; Rentokil Initial plc; Secom Co., Ltd.; Securicor plc; Transnational Security Group; Tyco International Ltd.; The Wackenhut Corporation.

Chronology

• Key Dates:
• 1901: Kjobenhavn Frederiksberg Nattevagt is formed.
• 1906: Redningskorpset for Kobenhavn og Frederiksberg is launched.
• 1908: Redningskorpset introduces first automobile ambulances in Scandinavia.
• 1918: Kjobenhavn Frederiksberg Nattevagt merges into De Forenede Vagtselskaber.
• 1934: Securitas AB (Sweden) is formed.
• 1950: Securitas establishes U.K. subsidiary.
• 1963: Falck acquires Zonen Redningskorps; Securitas launches Store Detectives Ltd. and Securitas Alarms Ltd. in the United Kingdom.
• 1968: Securitas renames U.K. operations as Group 4 Securitas.
• 1981: Securitas splits in two; Jorgen Philip-Sorensen is given control of Group 4 Securitas.
• 1988: Baltica acquires Falck.
• 1989: Group 4 enters India.
• 1991: Group 4 acquires Belgium-based IMS.
• 1993: Falck acquires ISS Securitas and forms Falck Securitas; Group 4 enters the Austrian and Canadian markets through the purchase of EWWS.
• 1995: Falck lists on the Copenhagen stock exchange.
• 1998: Falck acquires Germany's Simis, Poland's Sezam, and Estonia's AS ESS.
• 1999: Falck acquires Nederlandse Veiligheidsdienst.
• 2000: Falck and Group 4 merge and form Group 4 Falck A/S.
• 2001: Company acquires Germany's Top Control; company sells its Belgian cleaning services arm.