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Tuesday 24 February, 2004

Securicor PLC

Group 4 Falck and Securicor Merger


NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO 
AUSTRALIA, CANADA, JAPANOR THE UNITED STATES OR TO USPERSONS.THIS ANNOUNCEMENT
DOES NOT CONSTITUTE OR FORM PART OF AN OFFER TO SELL, PURCHASE, EXCHANGE OR
SUBSCRIBE FOR ANY SECURITIES OR SOLICITATION OF SUCH AN OFFER IN THE UNITED
STATES OR ANY OTHER JURISDICTION. THE SECURITIES REFERRED TO IN THIS
ANNOUNCEMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, AND WILL NOT BE OFFERED OR SOLD IN THE
UNITED STATES EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION.

 

                                                       

Group 4 Falck A/S         Securicor  plc                   
                                                           
CVR number: 24 79 21 10   Registration number: 3811216     
                                                           
Incorporated in Denmark   Incorporated in England and Wales
                                                           
ISIN: DK0010291699        ISIN: GB0032739848               
                                                           

                                       

                       

                       

24 February 2004

 

                 GROUP 4 FALCK AND SECURICOR ANNOUNCE  MERGER                  
                TO CREATE A GLOBAL LEADER IN SECURITY SERVICES                 

 

The merger of Group 4 Falck's security businesses and Securicor will create a
focused global leader in security services:

-   Consolidation of manned security operations in key European and North
American markets

-   A strong foundation for maintaining and developing an integrated security
services model

-   An enhanced platform across high growth emerging markets

-   Leverage of expertise and increased operational flexibility in cash
services

-   Identified cost synergies of £35 million (DKK 388 million) per annum

 

Group 4 Falck's Rescue & Safety and GSL businesses to be separated in order to
benefit from greater business focus and thereby realise their full potential

 

PART I - SUMMARY

The boards of Group 4 Falck A/S ('Group 4 Falck') and Securicor plc ('Securicor
') announce that they have agreed the terms of a merger of Group 4 Falck's
security businesses and Securicor (the 'Merger').  The proposed Merger will
create a leading global security group to be called Group 4 Securicor plc ('
Group 4 Securicor'). Completion of the Merger ('Completion') is expected to
occur in the third quarter of 2004.

Group 4 Securicor:

-      will be owned 57.5% by former Group 4 Falck shareholders and 42.5% by
former Securicor shareholders

-      will have approximately 340,000 employees across 108 countries

-      had pro forma combined turnover of £3,809 million (DKK 41,920 million)
and EBITA before exceptional items of £189 million (DKK 2,080 million) on a UK
GAAP basis, for the year ended 30 September 2003

-      will be incorporated and headquartered in the UKand it is intended that
its shares will be listed on the Londonand Copenhagen Stock Exchanges

Group 4 Securicor's shares are expected to be eligible for inclusion in the
FTSE UK Series, the KFX index and relevant Morgan Stanley Capital International
(MSCI) indices.

Jørgen Philip-Sørensen will be non-executive Chairman of Group 4 Securicor. He
will chair Group 4 Securicor during the period of integration following the
Merger and will retire in September 2005 on reaching 67 years of age, by which
time it is expected that the integration of the two businesses will have been
substantially completed. His successor will be appointed on the recommendation
of the Nomination Committee in line with normal corporate governance
procedures. Alf Duch-Pedersen and Lord Sharman will be Deputy Chairmen. Lord
Sharman will also serve as the Senior Independent Director.

Lars Nørby Johansen (currently Chief Executive of Group 4 Falck) will be
appointed Chief Executive of Group 4 Securicor, and Nick Buckles (currently
Chief Executive of Securicor) will be appointed Deputy CEO and Chief Operating
Officer.  Nick Buckles will succeed Lars Nørby Johansen as Chief Executive at
the appropriate time.  Trevor Dighton (currently Group Finance Director of
Securicor) will be appointed Chief Financial Officer.

In conjunction with the Merger, Group 4 Falck will undertake a full statutory
demerger (the 'Demerger') to separate its security businesses from its Rescue &
Safety (excluding Israeland Slovakia) and GSL businesses. After the Demerger,
Group 4 Falck's existing businesses will be held by two new Danish listed
companies to be called Group 4 A/S ('Group 4'), which will own the security
businesses, and Falck A/S ('Falck') which will own the Rescue & Safety and GSL
businesses. Securicor shareholders will not receive any interest in Falck.
Further details of the Demerger are set out in Parts II and III of this
announcement. Group 4 Securicor, a newly incorporated UKcompany, will make an
offer to acquire the shares of Group 4 shareholders in consideration for the
issue to such shareholders of Group 4 Securicor shares (the 'Tender Offer'). 
The acquisition of Securicor by Group 4 Securicor will be effected via a scheme
of arrangement in the UK(the 'Scheme').

Jørgen Philip-Sørensen said today: 'With Securicor now being a focused security
player and with Group 4 Falck having implemented the integration of Wackenhut
successfully, the timing of this transaction is opportune.  The demerger of
Rescue & Safety and GSL will give them a better opportunity to grow their
businesses.'

Lord Sharman said: 'We have thought carefully about how Securicor's
shareholders should participate in the consolidation of the security industry
and believe that the combination with Group 4 Falck's security businesses
represents the best way forward. By combining our expertise in specific
sectors, we will build a focused, leading security services company which will
bring substantial benefits to the shareholders, customers and employees of both
organisations.'

Commenting on the Merger in a joint statement, Lars Nørby Johansen and Nick
Buckles said: 'Group 4 Securicor will be a major force in the global security
services industry, and we are excited about the opportunities that this merger
will provide for all of our stakeholders.  The management teams of both
organisations have worked closely together to bring this transaction to
fruition.  This bodes well for the development of the culture and ongoing
commitment needed to ensure the successful integration of the two organisations
and the achievement of our future goals.'

Meetings

London  Briefing

There will be a briefing for institutional investors and analysts at 11:00 GMT
today at the Ground Floor Conference Centre, UBS, 1 Finsbury Avenue, London
EC2M 2PG. Investors can also participate in the briefing via telephone by
calling 0845 245 3471 in the UKor +44 (0) 1452 542 300 from outside the UK.
This briefing will also be webcast via www.group4falck.comand
www.securicor.com.

Copenhagen  Briefing

There will be a briefing for the Danish press at 15:30CET today at Group 4
Falck's head office, Falck-Huset, Polititorvet DK-1780 Copenhagen V.

Financial advisers

UBS Limited is acting as financial adviser and broker to Group 4 Falck for this
transaction. Morgan Stanley & Co. Limited is acting as financial adviser to
Securicor. Cazenove & Co. Ltd is acting as broker to Securicor.

Enquiries

Group 4 Falck                           Securicor                                     
                                                                                      
Lars Nørby Johansen  +45 70 13 43 43    Nick Buckles                  +44 20 8770 7000
                                                                                      
                                        Trevor Dighton                +44 20 8770 7000
                                                                                      
                                                                                      
                                                                                      
UBS Limited                             Morgan Stanley & Co. Limited                  
                                                                                      
Alistair Defriez     +44 20 7568 1000   Mark Warham                   +44 20 7425 5555
                                                                                      
Richard Gostling     +44 20 7568 1000   Colm Donlon                   +44 20 7425 5555
                                                                                      
Ian Bonnor-Moris     +44 20 7568 1000                                                 
                                                                                      
                                        Cazenove & Co. Ltd                            
                                                                                      
                                        Michael Wentworth Stanley     +44 20 7588 2828
                                                                                      
                                        Dermot McKechnie              +44 20 7588 2828
                                                                                      
                                                                                      
                                                                                      
Press enquiries                                                                       
                                                                                      
Brunswick                               Citigate Dewe Rogerson                        
                                                                                      
James Bradley        +44 20 7404 5959   Deborah Saw                   +44 207 638 9571
                                                                                      
Tim Grey             +44 20 7404 5959   Patrick Toyne-Sewell          +44 207 638 9571
                                                                                      
                                        Sarah Gestetner               +44 207 638 9571
                                                                                      

                                                                                                        
                                                 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UBS Limited is acting exclusively for Group 4 Falck and for no one else in
connection with the matters described herein and will not be responsible to
anyone other than Group 4 Falck for providing the protections afforded to
clients of UBS Limited nor for providing advice in relation to the matters
described herein.

 

Morgan Stanley & Co. Limited is acting exclusively for Securicor and for no one
else in connection with the matters described herein and will not be
responsible to anyone other than Securicor for providing the protections
afforded to clients of Morgan Stanley & Co. Limited nor for providing advice in
relation to the matters described herein.

 

Cazenove & Co. Ltd, which is regulated in the UK by the FSA, is acting for
Securicor and for no one else in connection with the matters described herein
and will not be responsible to anyone other than Securicor for providing the
protections afforded to clients of Cazenove & Co. Ltd nor for providing advice
in relation to the matters described herein.

 

The directors of Group 4 Falck accept responsibility for the information
contained in this announcement insofar as it relates to the Group 4 Falck
group, the Group 4 Falck directors and their interests. To the best of the
knowledge and belief of the Group 4 Falck directors (who have taken all
reasonable care to ensure that such is the case), the information contained in
this document for which they are responsible is in accordance with the facts
and does not omit anything likely to affect the import of such information.

 

The directors of Securicor accept responsibility for the information contained
in this announcement insofar as it relates to the Securicor group, the
Securicor directors and their interests. To the best of the knowledge and
belief of the Securicor directors (who have taken all reasonable care to ensure
that such is the case), the information contained in this document for which
they are responsible is in accordance with the facts and does not omit anything
likely to affect the import of such information.

 

This announcement is being released in the English language and in the Danish
language. In the event of any inconsistency, the English language version
prevails.

 

The offer to be made to shareholders of Group 4 by Group 4 Securicor shall not
be available in any territory other than Denmark unless in the relevant
territory such an offer or invitation could lawfully be made to them without
contravention of any unfulfilled registration or other legal requirements.
Persons who are not resident in Denmarkshould inform themselves about and
observe any applicable legal requirements in their jurisdictions. In
particular, the Tender Offer will not be made in or into and will not be
capable of acceptance in or from the United States, Canada, Australiaor Japanor
to US persons. Accordingly, copies of the announcement are not being, and must
not be, mailed or otherwise distributed in or into or from the United States,
Canada, Australia or Japan or to US persons. The securities to be issued
pursuant to the Tender Offer and the Scheme have not been and will not be
offered or sold in the United Statesexcept pursuant to an applicable exception
from registration. No public offering of securities is being made in the United
Statesunder the Tender Offer.

 

The statements contained in this announcement regarding synergies, performance,
costs, divestments and growth are or may be forward-looking statements and
reflect each management's current analysis and expectations based on reasonable
assumptions. Forward-looking statements are not guarantees of future
performance and involve certain risks and uncertainties that are difficult to
predict, and undue reliance should not be placed on these statements. Actual
results may differ materially from the statements made depending on a variety
of factors (including, amongst other things, changes in legislation or
regulation, the result of consultation with employee representative bodies,
fluctuations in demand and pricing in the security services industry, changes
in taxation, future turnover being lower than expected, costs or difficulties
relating to the integration of the businesses being greater than expected,
expected cost savings from the transaction not being fully realised or realised
within the expected time frame, changes in the general economic condition and
currency fluctuations) and such forecasts or statements should not be
interpreted to mean that earnings per share will necessarily be greater than
those for the relevant preceding financial periods. Any forward-looking
statements in this announcement speak only at the date of this document.

 

 

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO 
AUSTRALIA, CANADA, JAPANOR THE UNITED STATES OR TO USPERSONS. THIS ANNOUNCEMENT
DOES NOT CONSTITUTE OR FORM PART OF AN OFFER TO SELL, PURCHASE, EXCHANGE OR
SUBSCRIBE FOR ANY SECURITIES OR SOLICITATION OF SUCH AN OFFER IN THE UNITED
STATES OR ANY OTHER JURISDICTION. THE SECURITIES REFERRED TO IN THIS
ANNOUNCEMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, AND WILL NOT BE OFFERED OR SOLD IN THE
UNITED STATES EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION.

 

                                           

Group 4 Falck A/S         Securicor  plc                   
                                                           
CVR number: 24 79 21 10   Registration number: 3811216     
                                                           
Incorporated in Denmark   Incorporated in England and Wales
                                                           
ISIN: DK0010291699        ISIN: GB0032739848               
                                                           

 

24 February 2004

 

                  GROUP 4 FALCK AND SECURICOR ANNOUNCE MERGER                  
                TO CREATE A GLOBAL LEADER IN SECURITY SERVICES                 

 

PART II - MERGER OF GROUP 4 FALCK'S SECURITY BUSINESSES AND SECURICOR

 

1)    Introduction

The boards of Group 4 Falck A/S ('Group 4 Falck') and Securicor plc ('Securicor
') announce that they have agreed the terms of a merger of Group 4 Falck's
security businesses and Securicor (the 'Merger').  The proposed Merger will
create a leading global security group to be called Group 4 Securicor plc ('
Group 4 Securicor'). Completion of the Merger ('Completion') is expected to
occur in the third quarter of 2004.

Group 4 Securicor will be incorporated and headquartered in the UKand it is
intended that its shares will be listed on the Londonand Copenhagen Stock
Exchanges.

Group 4 Securicor had pro forma combined turnover of £3,809 million (DKK 41,920
million) and EBITA before exceptional items of £189 million (DKK 2,080 million)
on a UK GAAP basis, for the year ended 30 September 2003.

In conjunction with the Merger, Group 4 Falck will undertake a full statutory
demerger (the 'Demerger') to separate its security businesses from its Rescue &
Safety (excluding Israeland Slovakia) and GSL businesses. After the Demerger,
Group 4 Falck's existing businesses will be held by two new Danish listed
companies to be called Group 4 A/S ('Group 4'), which will own the security
businesses, and Falck A/S ('Falck'), which will own the Rescue & Safety and GSL
businesses. Securicor shareholders will not receive any interest in Falck.
Falck will be demerged on the basis that it would have had net cash on a
consolidated basis of £44 million (DKK 466 million) as at 1 January 2004. No
adjustment has been made to the pro forma net debt of Group 4 Securicor as at
30 September 2003to reflect the impact of this net cash position. Further
details of the Demerger are set out below and in Part III of this announcement.

The acquisition of Securicor by Group 4 Securicor will be effected via a scheme
of arrangement in the UK(the 'Scheme').

Under the terms of the proposed Merger:

-       Each Group 4 Falck shareholder will be entitled to receive 
approximately 8.2 Group 4 Securicor shares for each Group 4 Falck share held.
In aggregate, Group 4 Falck shareholders will be entitled to receive shares in
Group 4 Securicor representing 57.5% of the issued share capital of Group 4
Securicor. In addition, they will receive one Falck share for each Group 4
Falck share held and will own 100% of Falck.

-       Each Securicor shareholder will receive one Group 4 Securicor share for
each Securicor share held. In aggregate, Securicor shareholders will receive
new shares in Group 4 Securicor representing 42.5% of the issued share capital
of Group 4 Securicor.

2)    Rationale for the Merger and Merger benefits

The boards of Group 4 Falck and Securicor believe that the Merger represents an
attractive opportunity to create a focused global security services provider.
Group 4 Securicor will be a leading global security company, with pro forma
combined turnover for the year to 30 September 2003 of £3,809 million (DKK
41,920 million), operations in 108 countries and approximately 340,000
employees worldwide. It will be able to compete strongly for business in all of
its key market sectors, maximise the opportunities from international customer
relationships and provide a platform from which to grow in emerging markets.

The boards of Group 4 Falck and Securicor believe that there are strong growth
opportunities in the security services market stemming from increased security
awareness, the increased outsourcing of complex cash operations by financial
institutions and a rising demand for integrated security solutions.

The boards of Group 4 Falck and Securicor believe that the combined businesses
will have an improved ability to generate long-term growth and to create value
for both companies' shareholders. This will derive from:

-       consolidation of manned security operations in key European and North
American markets

-       a strong foundation for maintaining and developing an integrated
security services model

-       an enhanced platform across high growth emerging markets

-       the leverage of expertise and increased operational flexibility in cash
services

-       identified cost synergies of £35 million per annum (DKK 388 million),
representing approximately 19% of pro forma combined Group 4 Securicor EBITA
before exceptional items for the year to September 2003 or approximately 1% of
pro forma turnover for the same period

In addition, the boards of Group 4 Falck and Securicor believe that the
combined businesses will benefit from the sharing of best business practices
and knowledge and that the combination will allow Group 4 Securicor to realise
shareholder value through increasing the penetration of services on
international accounts.

In justice services, the boards of Group 4 Falck and Securicor see growth
opportunities in police outsourcing, in developing markets and in tracking
technology.

Group 4 Securicor's strategy is to become a world leader in the provision of
integrated security, cash services and justice services solutions and to:

-       lead the integrated security, cash services and justice services
markets

-       become the preferred partner in value added sectors

-       continue to grow organically and by acquiring mid-size and smaller
companies

-       attain the best shareholder returns versus its industry peers

Group 4 Securicor will target organic growth in turnover in manned security of
5% in developed countries and 10% in emerging markets, organic turnover growth
of 8% in electronic security and cash services and 15% in justice services.
Group 4 Securicor will also target a medium term EBITA margin of 6% in manned
security and 10% in each of electronic security, cash services and justice
services, leading to an overall target EBITA margin of 7%.

Consolidation of manned security operations in key European and North American
markets

Group 4 Securicor will be a global leader in manned security and will be well
positioned to benefit from economies of scale and improved market positions in
key markets. Group 4 Securicor will have leading market positions in many of
the highly competitive European markets, including the UK, the Netherlandsand
Scandinavia. Group 4 Securicor will also be one of the leading operators in the
United States, and in African, Latin American and Far Eastern markets. 

Strong foundation for maintaining and developing an integrated security
services model

The manned security industry is developing as customers seek integrated
security services covering a complete security solution including risk
assessment, manned security, electronic security, monitoring and response
services. Group 4 Securicor will be well placed to respond to this demand
through the range of services it offers as well as its ability to manage
sophisticated and durable customer relationships.

Group 4 Falck's experience in the electronic security sector is expected to
bring enhancements to the future combined manned security business, enabling
Group 4 Securicor to provide integrated security services to its global
customer base.

Group 4 Securicor will have leading positions by turnover in the UK, the
Netherlands, Belgium, Scandinavia, Germany, France, Eastern Europeand North
Americaas well as a strong presence in Asia, the Middle East, Latin Americaand
South Africa.

Enhanced platform across high growth emerging markets

Western Europeand North Americacurrently constitute approximately 70% of the
global security services industry. However, markets such as Eastern Europe,
South East Asiaand Chinaare enjoying GDP growth rates in excess of those of
Western Europe and North America and in these markets customers are
increasingly demanding more sophisticated security services.

The Merger will provide Group 4 Securicor with a stronger platform across these
emerging markets. With increased global presence and the combined expertise and
reputations of both companies, the boards of Group 4 Falck and Securicor
believe that Group 4 Securicor will have the ability to benefit from these
growth opportunities.

Leverage of expertise and increased operational flexibility in cash services

The boards of Group 4 Falck and Securicor believe that, despite a recent
marginal slowdown in the European cash services market, there are good growth
prospects in cash services. Cash in circulation continues to grow in most
economies, commercial banks are increasingly outsourcing ATM and cash
management services and pressures are growing on central banks to ensure that
the cash cycle operates more efficiently.

Securicor is considered to be a market leader in the cash services sector, both
in the transportation of cash and the more recent development of outsourced ATM
and cash management. The boards of Group 4 Falck and Securicor believe that the
Securicor model is transferable to the existing Group 4 Falck cash services
businesses and has the potential to improve performance and to enable more
effective competition for further outsourcing contracts in key countries. Group
4 Falck will bring new customer relationships to Securicor's existing cash
services business and enable Group 4 Securicor to grow in this sector.

Group 4 Securicor will have leading positions by turnover in the UK, Belgium,
Poland, Finland, the Netherlands, Sweden, Germanyand France.

Identified cost synergies of £35 million (DKK 388 million), representing
approximately 19% of pro forma combined Group 4 Securicor EBITA before
exceptional items in the year to 30 September 2003

In addition to the business rationale discussed above, Group 4 Securicor is
expected to benefit from substantial cost synergies deriving from a number of
areas, including:

-       reduction of central overheads

-       elimination of overlapping national and regional headquarters

-       consolidation of branches through the merger of manned security
businesses

-       consolidation of branches and route optimisation through the merger of
cash services businesses

-       merger of control and monitoring centres

It is expected that the cost synergies, once implemented, will amount to £35
million annually (DKK 388 million), of which £18 million are expected to come
from manned security operations, £10 million from cash services operations and
£7 million from corporate head office and regions. Approximately 60% of these
synergies are expected to have been achieved within one year of Completion and
substantially all of them within two years of Completion.

It is expected that the direct costs incurred in achieving the synergy benefits
will amount to approximately £55 million (DKK 609 million), which are expected
to be substantially incurred and paid during the first and second years
following Completion.

3)    Board and Management

Following Completion, Jørgen Philip-Sørensen will be appointed as non-executive
Chairman of Group 4 Securicor. He will chair Group 4 Securicor during the
period of integration following the Merger and will retire in September 2005 on
reaching 67 years of age, by which time it is expected that the integration of
the two businesses will have been substantially completed. His successor will
be appointed on the recommendation of the Nomination Committee in line with
normal corporate governance procedures.

Alf Duch-Pedersen and Lord Sharman will be appointed as deputy non-executive
Chairmen. Lord Sharman will also serve as the Senior Independent Director. In
addition Sir David Gore-Booth, Lord Condon, Thorleif Krarup, Bo Lerenius,
Waldemar Schmidt and Malcolm Williamson will be appointed to the board of Group
4 Securicor as non-executive directors.

Lars Nørby Johansen (currently Chief Executive of Group 4 Falck) will be
appointed Chief Executive of Group 4 Securicor, and Nick Buckles (currently
Chief Executive of Securicor) will be appointed Deputy CEO and Chief Operating
Officer. Nick Buckles will succeed Lars Nørby Johansen as Chief Executive at
the appropriate time.  Trevor Dighton (currently Group Finance Director of
Securicor) will be appointed Chief Financial Officer and will be the only other
executive director on the board. Nigel Griffiths will be appointed as company
secretary.

An executive committee will be chaired by Lars Nørby Johansen and will comprise
Hans Bennetzen (currently Chief Operating Officer of Group 4 Falck, Europe),
Nick Buckles, Irene Cowden (currently Group Human Resources Director of
Securicor), Trevor Dighton, Grahame Gibson (currently Chief Operating Officer
of Group 4 Falck, Americas and New Markets), Søren Lundsberg-Nielsen (currently
Group General Counsel of Group 4 Falck) and Ken Niven (currently UK regional
Managing Director of Securicor).

The new operational management structure will focus on facilitating the sharing
of best practice and global product line development.  Hans Bennetzen and
Grahame Gibson will take responsibility for integrated security services in
Europeand the rest of the world, and Ken Niven will take global responsibility
for cash services. 

The members of the Audit Committee will be Sir David Gore-Booth, Waldemar
Schmidt, Lord Sharman and Malcolm Williamson. The Remuneration Committee will
comprise Lord Condon, Thorleif Krarup, Bo Lerenius and Alf Duch-Pedersen. The
Nomination Committee will comprise Lord Condon, Alf Duch-Pedersen, Lord Sharman
and Jørgen Philip-Sørensen.

The board of Group 4 will be formed from that of Group 4 Securicor, save that
employee representatives will be appointed in accordance with Danish law.

Derrick Miller, Group Chief Financial Officer of Group 4 Falck, wishes to
remain in Denmarkand will continue in charge of the group finance function in
Denmarkfor Group 4 Securicor for a transitional period, after which he will
leave the group.

4)    Integration plan

Group 4 Falck and Securicor will base their approach to integration on two key
objectives:

-       moving quickly to deliver synergy targets and create a single, cohesive
company

-       maintaining focus on day-to-day business performance

To achieve this, the companies will prepare an integration plan between
announcement and Completion.  During that time, Lars Nørby Johansen will
oversee the integration process and Nick Buckles will be responsible for head
office integration. The integration plan has the following objectives:

-       senior operational management in place shortly after Completion

-       new organisational structure implemented by 1 January 2005

-       60% of annual synergy benefits to be reached within 12 months of
Completion

-       integration largely complete within 18 months of Completion

The boards of Group 4 Falck and Securicor are confident that management will
integrate the two businesses successfully under the product line model.

5)    Summary unaudited pro forma financial information under UKGAAP

The unaudited pro forma UK GAAP summary financial information set out below has
been prepared to illustrate the effect on the combined turnover and profits of
Group 4 Securicor as if the Merger and Demerger had occurred on 1 October
2002and on the combined net assets as if the Merger and Demerger had occurred
as at 30 September 2003. This information has been prepared for illustrative
purposes only. By its nature, it cannot give a true picture of, and is not
necessarily indicative of, the financial statements that would have been
reported if the Demerger and Merger had, in fact, occurred on 1 October 2002
(for the income statement) or 30 September 2003 (for net assets). In
particular, the unaudited pro forma financial information takes no account of
any cost synergies, transaction costs, merger costs or additional goodwill
amortisation which may arise from the Merger and Demerger. The Group 4
information set out below is unaudited. The Securicor information relates to
its continuing activities and has been derived from the audited financial
statements of Securicor for the year ended September 2003.

Pro forma unaudited business areas - Combined business
turnover under UK GAAP (12 months to 30 September     
2003)                                                 
                                                      
Amounts in £m   Turnover                              
                                                      
                  Group 4                             
                 adjusted                   Combined  
                              Securicor               
                (unaudited)  (unaudited)   (unaudited)
                                                      
Manned security                                       
                                                      
Europe                  897            424       1,321
                                                      
North America           911             89       1,000
                                                      
New Markets             180            158         338
                                                      
Manned                                                
security, total       1,988            671       2,659
                                                      
Electronic                                            
security                320              -         320
                                                      
Cash services           204            503         707
                                                      
Justice                                               
services                  -             96          96
                                                      
Other services           27              -          27
                                                      
Total Turnover        2,539          1,270       3,809
                                                      

 

Pro forma unaudited business areas - Combined business EBITA     
under UKGAAP (12 months to 30 September 2003)                    
                                                                 
                                                         EBITA   
Amounts in £m     EBITA before exceptional items      margin (%) 
                                                                 
                      Group 4                                    
                     adjusted                Combined    Combined
                                Securicor                        
                  (unaudited) (unaudited) (unaudited) (unaudited)
                                                                 
Manned security                                                  
                                                                 
Europe                     31          15          46         3.5
                                                                 
North America              43         (3)          40         4.0
                                                                 
New Markets                15           9          24         7.1
                                                                 
Manned security,           89          21         110         4.1
total                                                            
                                                                 
Electronic                 19           -          19         5.9
security                                                         
                                                                 
Cash services               4          43          47         6.6
                                                                 
Justice services            -          10          10        10.4
                                                                 
Other services            (5)           -         (5)          NM
                                                                 
EBITA excluding           107          74         181         4.8
share of                                                         
associates and                                                   
JVs                                                              
                                                                 
Share of                    2           6           8          NM
Associates/JVs                                                   
                                                                 
Total EBITA               109          80         189         5.0
including share                                                  
of associates and                                                
JVs                                                              
                                                                 

EBITA comprises earnings before interest, tax and amortisation.

For Group 4, head office costs of £23 million (DKK 253 million) which are not
normally allocated across the business areas have been allocated for
comparative purposes in the analysis above based on the ratio of turnover.

Other services include businesses previously reported under Rescue & Safety
(namely, Israeland Slovakia) with turnover of £5 million (DKK 55 million) and
EBITA of £0.5 million (DKK 6 million) for the 12 months to September 2003.

Securicor's turnover of £1,270 million and EBITA of £80 million excludes the
results of discontinued operations.  In the year to 30 September 2003, turnover
from discontinued operations amounted to £53.9 million and operating losses
from discontinued operations before exceptional items and goodwill amortisation
and excluding joint ventures amounted to £7 million.

The pro forma segmental financial information for Securicor included above has
been re-stated to be consistent with that reported by Group 4 Falck, based on
the accounting records of Securicor.  The re-stated segmental information has
not been audited.

Pro forma unaudited income statement - Combined business under UKGAAP (12
months to 30 September 2003)                                             
                                                                         
                                          Group 4                        
                                         adjusted                Combined
Amounts in £m                         (unaudited) Securicor   (unaudited)
                                                                         
                                                                         
                                                                         
Group turnover                              2,539     1,270         3,809
                                                                         
Group operating profit before                 107        74           181
goodwill amortisation and exceptional                                    
items                                                                    
                                                                         
Joint ventures and associates                   2         6             8
                                                                         
Total operating profit before                 109        80           189
goodwill amortisation and exceptional                                    
items, including joint ventures and                                      
associates (EBITA)                                                       
                                                                         
Operating margin                              4.3       6.3           5.0
                                                                         
Goodwill amortisation                        (29)      (13)          (42)
                                                                         
Exceptional items                            (18)       (1)          (19)
                                                                         
Profit before tax                              37        50            87
                                                                         
                                                                         
                                                                         

 

Pro forma unaudited net assets - Combined business under UKGAAP (as at 30
September 2003)                                                          
                                                                         
                               Group 4                                   
                              adjusted                           Combined
Amounts in £m              (unaudited) Securicor Adjust-ments (unaudited)
                                                                         
                                                                         
                                                                         
Goodwill                           474       219          364       1,057
                                                                         
Total fixed assets (incl.                                                
goodwill)                          665       414          364       1,443
                                                                         
Net current assets                                                       
(liabilities) excluding                                                  
cash and borrowings                147      (25)                      122
                                                                         
Net borrowings                   (379)     (115)                    (494)
                                                                         
Provisions                       (132)       (4)                    (136)
                                                                         
Net assets (including                                                    
minority interests)                301       270          364         935
                                                                         
                                                                         
                                                                         

The above pro forma summary of net assets for the proposed combined group does
not take account of any fair value adjustments which may arise, nor of the
costs associated with the Merger.  The additional goodwill arising on
consolidation as a result of the transaction has been calculated based on the
closing price of Securicor shares on the London Stock Exchange on 23 February
2003and the net assets of Securicor as at 30 September 2003.

Falck will be demerged on the basis that it would have had net cash on a
consolidated basis of £44 million (DKK 466 million) as at 1 January 2004. No
adjustment has been made to the pro forma net debt of Group 4 Securicor as at
30 September 2003to reflect the impact of this net cash position. Further
details of the Demerger are set out below and in Part III of this announcement.

Pro forma unaudited operating cash flow - Combined business under UKGAAP 
(12 months to 30 September 2003)                                         
                                                                         
                                          Group 4                        
                                         adjusted                Combined
Amounts in £m                         (unaudited) Securicor   (unaudited)
                                                                         
EBITA excluding share of associates                                      
and JVs                                       107        74           181
                                                                         
Discontinued operations                         -       (7)           (7)
                                                                         
Depreciation                                   42        35            77
                                                                         
Operating profit before depreciation                                     
and amortisation and exceptional                                         
items (EBITDA)                                149       102           251
                                                                         
Change in working capital and                                            
provisions                                     17       (5)            12
                                                                         
Net capital expenditure                      (64)      (40)         (104)
                                                                         
Free cash flow from operations                                           
before financial items, exceptional                                      
items, tax, etc.                              102        57           159
                                                                         
                                                                         
                                                                         

 

Group 4 Securicor will have an accounting year end of 31 December and, with
effect from 2004, will report half yearly in Pounds Sterling and in accordance
with UK GAAP. It is intended that Group 4 Securicor will provide quarterly
updates on key trading indicators.

The sources and bases of the financial information contained in this document
are set out at Appendix A. Details of the unaudited restatement of Group 4's
Danish GAAP historical financial information to UK GAAP are provided in
Appendix B. Historical financial information in respect of Group 4, Falck,
Group 4 Falck and Securicor is set out in Appendices C, D, E and F.

6)    Dividend Payments and Dividend Policy

The boards of Group 4 Falck and Securicor currently expect that the timetable
for dividends to be paid between the date of this announcement and Completion
(assuming Completion occurs on or prior to 30 September 2004) will be as
follows:

               

                         Dividend            Date of      Ex-date  Payment Date
                             Type       Announcement                           
                                                                               
Securicor              2003 Final    4 December 2003 3 March 2004  5 April 2004
Shareholders                                                                   
                                                                               
                     2004 Interim           May 2004  August 2004     September
                                                                           2004
                                                                               
Group 4 Falck          2003 Final      10 March 2004     16 April 21 April 2004
Shareholders                                                 2004              
                                                                               

Securicor anticipates declaring an interim dividend with its interim results
for the six months to 31 March 2004. Thereafter, Group 4 Securicor will adopt a
policy of paying dividends twice yearly. It is expected that payment of the
dividends will be weighted towards paying a higher final than interim dividend.

It is expected that Group 4 Securicor will, in the absence of unforeseen
circumstances, pay dividends for the financial year ending 31 December 2004
equivalent to not less than 2.4 pence per Group 4 Securicor share after taking
into account any interim dividend declared by Securicor (equivalent on a
see-through basis to 2.4 pence per existing Securicor share and 19.7 pence, or
approximately DKK 2.18 at current exchange rates, per existing Group 4 Falck
share). Group 4 Securicor expects to grow dividends over time and will aim to
strike a balance going forward between income distribution and investing
cashflow to grow its business.

Group 4 Securicor will declare dividends in Pounds Sterling.  It is anticipated
that shareholders will be able to elect to receive dividends in Danish Kroner.
Shareholders so electing can expect fluctuations between the amount received in
Danish Kroner between one dividend and the next due to exchange rate
fluctuations.

7)    Index Classification

Group 4 Securicor is expected to be eligible for inclusion in the FTSE UK
Series, the KFX index and relevant Morgan Stanley Capital International (MSCI)
indices.

8)    Current Trading

Group 4 Falck 2003 Profit Estimate

Group 4 Falck confirms that it will be announcing its annual results under
Danish GAAP for the year ended 31 December 2003on 10 March 2004. The following
is the Directors' estimate of the results under Danish GAAP of Group 4 Falck
for the year ended 31 December 2003, which is made on the bases and assumptions
set out in Appendix G.

Selected key figures and financial ratios (Danish GAAP)                        
                                                                               
Amounts in DKKm - Danish GAAP                                       12 months  
                                                                               
                                                                   2003   2002 
                                                                               
Key figures                                                                    
                                                                               
Turnover                                                          34,522 32,209
                                                                               
Operating profit before goodwill amortisation and special items                
(EBITA)                                                           1,706   1,675
                                                                               
Operating margin (EBITA%)                                          4.9      5.2
                                                                               
Free cash flow from operating activities before financial items,               
as a % of EBITA (cash conversion ratio)                            95.5    82.7
                                                                               
Net interest-bearing debt                                         3,597   5,316
                                                                               
                                                                               
                                                                               

 

Business areas - Turnover by business area (Danish GAAP)

                                              Organic growth   
Amounts in DKKm - Danish GAAP Turnover        (%)              
                                                               
                               2003   2002         2003        
                                                               
Guarding services                                              
                                                               
Europe                         9,836  9,823              2.4   
                                                               
North America                  9,796  7,707              9.3   
                                                               
New Markets                    1,988  1,661             17.1   
                                                               
Guarding services, total      21,620 19,191              6.3   
                                                               
Alarm services                 3,561  3,685            (2.0)   
                                                               
Cash services                  2,254  2,300            (1.8)   
                                                               
Rescue and Safety services     3,835  3,858              1.6   
                                                               
Global Solutions               3,129  2,956              9.7   
                                                               
Other services                   123    217                    
                                                               
Head office                        -      2                    
                                                               
Total                         34,522 32,209              4.5   
                                                               
                                                               
                                                               

 

Business areas - EBITA and EBITA Margin by business area (Danish GAAP)

Amounts in DKKm - Danish GAAP     EBITA              EBITA%    
                                                               
                                    2003   2002    2003 2002   
                                                               
Guarding services                                              
                                                               
Europe                               446    443     4.5  4.5   
                                                               
North America                        553    410     5.6  5.3   
                                                               
New Markets                          200    164    10.0  9.9   
                                                               
Guarding services, total           1,199  1,017     5.5  5.3   
                                                               
Alarm services                       229    236     6.4  6.4   
                                                               
Cash services                         65    143     2.9  6.2   
                                                               
Rescue and Safety services           258    278     6.7  7.2   
                                                               
Global Solutions                     201    207     6.4  7.0   
                                                               
Other services                         1      6                
                                                               
Head office                        (247)  (212)                
                                                               
Total                              1,706  1,675     4.9  5.2   
                                                               
                                                               
                                                               

Rescue & Safety services include businesses in Israeland Slovakiathat will be
retained by Group 4 following the Demerger. These operations will be reported
within 'Other services' going forward.

Commentary on results

In general, Group 4 Falck's estimates are in line with the revised expectations
for the year 2003 as disclosed in the interim results for the period January to
September 2003 announced on 26 November 2003.

Securicor  TradingStatement

Securicor has today released a trading statement as follows: 'Securicor's
organic growth is currently running at a rate of 5% year on year and margins
are improving. Cash Services is progressing well, with strong performances in
key markets such as the Netherlands and the UK. The Security division has shown
satisfactory progress, with the US business achieving break-even and improved
profitability in Europe. Overall, Securicor has had a good start to 2004.'

9)    Employees

Group 4 currently has approximately 230,000 employees and Securicor has around
110,000 employees.

The boards of Group 4 Falck and Securicor believe that the prospects of
employees of Group 4 and Securicor generally will be enhanced through the
strengthened market position and growth prospects which the boards expect Group
4 Securicor to enjoy. It is expected that some staff reductions will arise
across the combined worldwide operations as a result of bringing the two
companies together, but efforts will be made to avoid or reduce the number of
job losses. The integration process will take place over 18 months.
Communication and consultation with employees, or employees' representatives,
as applicable, will play a major part in the integration process.

Group 4 Securicor is committed to policies and practices which are expected to
provide enhanced opportunities for employees generally to learn and grow
through experience and training.

10)  Share Options Schemes and Warrants

Certain employees and former employees of Group 4 Falck currently hold options
and warrants over Group 4 Falck shares. As a result of the Demerger, these
options and warrants will be converted into options and warrants over the
shares in Group 4 and/or Falck. There is no accelerated right of exercise for
the existing Group 4 Falck options and warrants as a result of the Demerger or
the Tender Offer.

Securicor currently operates three employee share schemes - the Securicor
Executive Share Option Scheme ('ESOS'), the 1999 Securicor Sharesave Scheme
('SAYE') and the Securicor 2003 Performance Share Plan ('PSP'). If the Scheme
is approved, all options under the ESOS and SAYE will become exercisable for a
period of 6 months, and awards of shares under the PSP will become transferable
to participants. The extent to which ESOS options granted in 2003 become
exercisable and awards under the PSP will be transferred, will depend on the
achievement of certain performance targets. The Securicor Remuneration
Committee will determine the extent to which the performance target has been
met. SAYE options may only be exercised to the extent of the participant's
savings under the linked savings contract as at the date of exercise.

Group 4 Securicor will offer an option exchange to participants in the ESOS and
SAYE. Group 4 Falck is working on a solution for the Group 4 Falck option
holders and warrant holders that will take account of the interests of the
participants and the company from a legal and tax perspective. Group 4 and
Securicor intend to agree, prior to the date of Completion, the terms of any
new employee share schemes to be established and operated by Group 4 Securicor.

11)  Statement regarding Argenbright

Securicor's wholly-owned US subsidiary, Argenbright Security, Inc.
('Argenbright'), was responsible for passenger checkpoint security screening
for two of the flights involved in the terrorist atrocities of 11 September
2001, being the United Airlines flight from Newark to San Francisco and the
American Airlines flight from Washington to Los Angeles. The hijacked planes
performing these flights crashed respectively in rural Pennsylvania and into
the Pentagon, Washington.

The directors of Securicor believe that, in respect of those two flights,
Argenbright carried out its security screening services properly and in
accordance with its contractual and regulatory duties and that it should have
no liability for the losses that occurred subsequently. However, the events of
11 September were so extraordinary that it is impossible at this stage to state
with certainty that no findings against Argenbright will be made.

Argenbright, which is a stand-alone limited liability corporation, is being
sued and a number of lawsuits have been served upon it. Securicor itself has
been named in some of the lawsuits. At 11 September 2001, Argenbright and
Securicor had in place joint aviation liability insurance which included cover
for acts of terrorism and which provided insurance cover of US$1 billion for
each of the two flights referred to above.

The directors of Securicor are confident that, if there were to be awards of
damages against Argenbright, they would be below the limits of the available
insurance.

The board of Group 4 Falck, having reviewed the implications of the September
11 litigation with Securicor, has no reason to disagree with the views of
Securicor's board as set out above. Information relating to the Argenbright
litigation will be contained in the information provided to Group 4 Falck's and
Securicor's shareholders, referred to in paragraph 15 below.

12)  Merger Agreement

The Merger Agreement sets out the pre-conditions to posting by Group 4 Falck
and Securicor of the public documents in respect of the Merger and the
Demerger. It also contains certain termination rights, mutual representations
and warranties and various covenants relating to the operation of the Group 4
Falck and Securicor businesses in the period prior to Completion.

The Merger Agreement requires Group 4 Falck and Securicor to use all reasonable
endeavours to implement the Merger unless any one of the pre-conditions is not
satisfied or waived, or either Group 4 Falck or Securicor exercises one of its
limited termination rights.

Principal conditions

The conditions to posting of the public documents include the approval, where
necessary, of the UK Listing Authority and the Copenhagen Stock Exchange, the
delivery of expert valuer unqualified statements in respect of the Demerger
pursuant to the Danish Companies' Act and the convening of a meeting of
Securicor shareholders to vote on the Scheme by the High Court of England and
Wales (the 'High Court').

The conditions to the implementation of the Merger include Securicor
shareholder approval of the Scheme, Group 4 Falck shareholder approval of the
Merger and the Demerger, the agreed level of acceptances under the Tender Offer
being received, the sanction of the Scheme by the High Court, implementation of
the transaction steps needed to effect the Merger, admission of Group 4
Securicor shares to listing by the UK Listing Authority and to trading on the
London and Copenhagen Stock Exchanges, admission of Group 4 and Falck shares to
trading on the Copenhagen Stock Exchange, and the satisfaction of certain
specified competition, financing and tax conditions, including that the Merger,
the Demerger and the Tender Offer are exempt from Danish taxation.

Full details of the Terms and Conditions to which the Merger is subject are set
out at Appendix H.

Termination

The Merger Agreement provides for termination in the circumstances set out in
Appendix H.

Warranties/Indemnities

The Merger Agreement contains certain limited warranties and indemnities given
by each party to the other.

Conduct of Business

Save as otherwise agreed between Group 4 Falck and Securicor, the Merger
Agreement restricts the parties in the conduct of their businesses prior to
Completion including in relation to the making of any major acquisitions or
disposals (but excluding certain specified transactions), issues of new shares
except pursuant to the Group 4 Falck warrants scheme and certain awards of
Securicor shares, the incurring of major borrowing or indebtedness, the payment
or declaration of any dividends except in relation to certain permitted
dividends, and material changes to the terms of employment of key management.

Break Fee

The Merger Agreement also provides for a break fee to be paid by one party to
the other in certain circumstances.

A break fee will be payable by Group 4 Falck to Securicor if Securicor
exercises its termination right because (i) the board of directors of Group 4
Falck determines not to give or to withdraw or modify in a material respect
(or, on request by Securicor, fails to confirm publicly and promptly) its
recommendation that the Merger is in the best interests of the shareholders of
Group 4 Falck and that such shareholders should vote in favour of the Demerger
at the Group 4 Falck EGM and accept the Tender Offer, except in certain
specified circumstances; or (ii) Group 4 Falck has materially breached the
terms of the Merger Agreement or the warranties given by it (or if such
warranties would be materially breached if repeated) or if it is liable to
Securicor under indemnities given by it.

A break fee will be payable by Securicor to Group 4 Falck if Group 4 Falck
exercises its termination right because (i) the board of directors of Securicor
determines not to give or to withdraw or modify in a material respect (or, on
request by Group 4 Falck, fails to confirm publicly and promptly) its
recommendation that the Merger is in the best interests of the shareholders of
Securicor and that such shareholders should vote in favour of the Scheme at the
relevant meetings (as described in paragraph 13 below), except in certain
specified circumstances; (ii) if the Securicor directors do not take such steps
as are required to make the Scheme effective (except in the circumstances
specified in the Merger Agreement); or (iii) Securicor has materially breached
the terms of the Merger Agreement or the warranties given by it (or if such
warranties would be materially breached if repeated) or if it is liable to
Group 4 Falck under indemnities given by it. 

Any break fee which may need to be paid by either Group 4 Falck or Securicor
will be in the amount of £6.3 million.  

Other

Group 4 Falck and Securicor have also agreed certain standstill and exclusivity
arrangements in the period prior to completion of the Merger.

13)  Details of the Merger and the Demerger

The transaction will be effected by means of (i) the Demerger; (ii) the
transfer of Group 4's businesses to a newly incorporated UK company which shall
hold the businesses of Group 4 and Securicor ('Joint OpCo'); (iii) the Tender
Offer; and (iv) the Scheme.

Implementation of the Demerger, the transfer to Joint OpCo, the Tender Offer
and the Scheme will all be inter-conditional so that no such step shall become
effective unless each of the others will become effective.

Demerger

Group 4 Falck will implement the Demerger in order to effect the separation of
Group 4 from Falck. The demerger will require the approval at an extraordinary
general meeting of Group 4 Falck (the 'Group 4 Falck EGM') of shareholders
representing both two thirds of the voting share capital represented and two
thirds of the share capital voted at the EGM. In order to achieve a quorum at
the EGM, shareholders representing at least 50% of the share capital must be in
attendance. If a quorum is not achieved, a new EGM must be called, at which
such a quorum is not required. Following the Demerger, Group 4 Falck
shareholders will hold shares in Group 4 and Falck pro rata to their existing
holdings in Group 4 Falck. It is intended that the shares of both Group 4 and
Falck will be listed on the Copenhagen Stock Exchange. Securicor shareholders
will not receive any interest in Falck.

Under Danish law, Group 4 and Falck will be jointly and severally liable to
creditors of Group 4 Falck for any obligations of Group 4 Falck as at the date
when the demerger plan is published. However, the liability for each of the new
demerged entities cannot exceed the net value attributed to such entities.

Merger

Group 4 Falck

The businesses held by Group 4 will be transferred to Joint OpCo in
consideration for the issue of shares by Joint OpCo to Group 4.

Group 4 Securicor will then acquire Group 4 by way of the Tender Offer, which
will be a share exchange offer under Danish law. Under the terms of the Tender
Offer, Group 4 Securicor will offer to acquire all of the shares of Group 4 in
consideration for the issue to Group 4 shareholders of shares in Group 4
Securicor. The Tender Offer will be conditional on, amongst other things,
acceptances being received in respect of at least 90% of Group 4 shares
(waivable to a level not less than 67% at the option of either Group 4 Falck or
Securicor).

If acceptances under the Tender Offer are received in excess of 90% of Group 4
shares and the Tender Offer becomes otherwise unconditional, Group 4 Securicor
intends to institute proceedings under Danish law compulsorily to acquire the
outstanding shares of Group 4 in respect of which acceptances have not been
received. In this event Group 4 will be delisted. 

Securicor

Group 4 Securicor will become the new ultimate parent company of the Securicor
group pursuant to the Scheme. A scheme of arrangement is a legal process under
section 425 of the Companies Act 1985 and which requires the sanction of the
High Court. Under the terms of the Scheme, Securicor shares will be cancelled
and new Securicor shares will be issued to Joint OpCo, a newly incorporated UK
company. In turn, Joint OpCo will issue shares to Group 4 Securicor, another
newly incorporated UK holding company, and Group 4 Securicor will issue Group 4
Securicor shares to former Securicor shareholders. In order for it to become
effective, the Scheme will require:

-       approval, at a specially convened court meeting (the 'Court Meeting'),
of a majority in number of Securicor shareholders present and voting at such
meeting, whether in person or by proxy, representing not less than 75% in value
of the Securicor shares voted by such shareholders;

-       approval by way of a special resolution (requiring a majority of at
least 75% of the votes cast) at an extraordinary general meeting of Securicor
(the 'Securicor EGM') expected to be held on the same day as the Court Meeting;

-       sanction of the High Court; and

-       registration of the order of the High Court approving the Scheme (and
the reduction of capital involved therein) by the Registrar of Companies in
England and Wales.

In the event that the Scheme becomes effective, all of the Securicor
shareholders will be bound by its terms, regardless of whether or not they
voted in favour of the Scheme.

Tax residency

Group 4 Securicor will be tax resident in the UK.

Tax treatment for Group 4 Falck Shareholders

Group 4 Falck's shareholders will receive shares in Group 4 and Falck pursuant
to the Demerger and Group 4's shareholders will receive shares in Group 4
Securicor pursuant to the Tender Offer. The Demerger and the Tender Offer will
be conditional upon tax clearances being obtained under sections 15(a) and 15
(b) of the Danish Tax Act on Mergers and section 13 of the Danish Capital Gains
Tax Act for Danish tax purposes in relation to the Demerger and the Tender
Offer. Group 4 Falck shareholders who are Danish residents will not be treated
for Danish tax purposes as having made a disposal of their shares pursuant to
the Demerger under the condition that tax clearance has been granted. Instead,
they will roll over the base cost in their Group 4 Falck shares into their
Group 4 shares and their Falck shares.  Furthermore, Group 4 shareholders who
are Danish residents will not be treated for Danish tax purposes as having made
a disposal of their shares under the Tender Offer under the condition that tax
clearance has been granted. Instead they will roll over the base cost in their
Group 4 shares into their Group 4 Securicor shares.

The base cost for the Danish shareholders will be split between the shares in
Group 4 and Falck according to the ratio between the value of the respective
shares and the total value of Group 4 and Falck.

Tax treatment for Securicor Shareholders

Securicor shareholders will receive shares in Group 4 Securicor pursuant to the
Scheme. The Merger will be conditional upon tax clearances being obtained under
section 703 Income and Corporation Taxes Act 1988 and section 138 Taxation of
Chargeable Gains Act 1992. Assuming that tax clearances are obtained, the
Merger will not have any tax consequences for UK resident Securicor
shareholders. Securicor shareholders who are UK tax resident will not be
treated as having made a disposal of their shares. Instead they will roll over
the base cost in their Securicor shares into the Group 4 Securicor shares.

14)  Securicor Pension Scheme

Securicor is the principal employer for the purposes of the Securicor group
pension scheme.  Securicor has held discussions in respect of the Merger
proposals with the pension scheme trustees, and it has been agreed that
following Completion, Group 4 Securicor will become the principal employer
instead of Securicor. It has also been agreed that the Securicor group pension
scheme shall be amended so that one of the Securicor-appointed trustees of the
pension scheme shall, following Completion, be replaced by an additional
independent trustee. The effect of these proposed arrangements is that the
Merger is expected to have no adverse consequences in relation to the pension
entitlements of the members of the Securicor group pension scheme.

15)  Approval process and timetable

In the second quarter of 2004, the following documents are expected to be sent
or made available to Group 4 Falck shareholders:

(i) the shareholder documentation in relation to the Demerger; (ii) the offer
document in respect of the Tender Offer; (iii) the prospectuses in respect of
the listings of shares in Group 4 Securicor on the London and Copenhagen Stock
Exchanges and in respect of the listings of shares in Group 4 and Falck on the
Copenhagen Stock Exchange; and (iv) a notice in respect of the Group 4 Falck
EGM.

In the second quarter of 2004, the following documents are expected to be sent
to Securicor shareholders:

(i) notices in respect of the Court Meeting and the Securicor EGM; (ii) the
circular setting out details of the Scheme; and (iii) the prospectus in respect
of the listings of the Group 4 Securicor shares on the London and Copenhagen
Stock Exchanges.

It is proposed that the Court Meeting, the Securicor EGM and the Group 4 Falck
EGM should take place approximately four weeks following the dispatch to
shareholders of the documents referred to above.

Assuming that the resolutions needed to approve the Scheme are duly passed at
the Court Meeting and the Securicor EGM, and that the Merger and the Demerger
are approved at the Group 4 Falck EGM, Securicor will seek the sanction of the
Scheme and approval of the reduction of capital involved therein by the High
Court.

Following sanction by the High Court of the Scheme, the offer period for the
Tender Offer will close, and the results (in terms of the level of acceptances)
will be announced in accordance with Copenhagen Stock Exchange requirements. It
is expected that the Scheme and the Demerger will become effective and the
Tender Offer will be completed shortly thereafter and Group 4 Securicor will
issue shares to the former shareholders of Group 4 and Securicor.

The Merger will require competition clearances in a number of jurisdictions,
including the EU. A preliminary analysis has been undertaken in order to assess
any issues that could be related to obtaining the necessary clearances. Based
thereon, Securicor and Group 4 Falck do not expect that applications for
clearances will raise material issues of a nature that will prevent them from
obtaining the necessary clearances in accordance with the proposed timetable.

It is envisaged that all necessary tax clearances in respect of the Merger will
be obtained within approximately six weeks from the date on which documents are
dispatched to shareholders.

Completion is expected to occur in the third quarter of 2004.

16)  Irrevocable Undertaking

Group 4 Falck and Securicor have received an irrevocable undertaking to accept
the Tender Offer and vote in favour of the resolutions to be proposed at the
Group 4 Falck EGM from Jørgen Philip-Sørensen in respect of his entire holding
of ordinary shares in Group 4 Falck amounting to 20,968,288 shares representing
approximately 23.6% of Group 4 Falck's existing issued share capital. This
undertaking will not apply in certain specified circumstances where the
implementation of the Demerger or the Tender Offer could have an adverse effect
on his taxation position. The undertaking will cease to be binding if the offer
document in respect of the Tender Offer is not posted to Group 4 Falck
shareholders prior to 30 June 2004; the Tender Offer ceases to be recommended
by the directors of Group 4 Falck; the Tender Offer has not become
unconditional in all respects by 31 December 2004; or the Merger Agreement is
terminated by either party for any reason.

Mr. Philip-Sørensen has indicated that he has no current intention to dispose
of the shares in Group 4 Securicor which he will receive pursuant to the Tender
Offer in the 6 month period following that offer being declared unconditional.
 

17)  Recommendations

The Group 4 Falck board, which has been so advised by UBS Limited, its
financial adviser, considers the terms of the Merger to be fair and reasonable
to Group 4 Falck shareholders. In providing its advice to Group 4 Falck, UBS
Limited has taken into account the Group 4 Falck board's assessment of the
commercial merits of the Merger.

The Group 4 Falck board believes that the terms of the Merger are in the best
interests of Group 4 Falck's shareholders as a whole and unanimously recommends
that Group 4 Falck's shareholders vote in favour of the resolutions to be
proposed at the Group 4 Falck EGM and accept the Tender Offer, as members of
the Group 4 Falck board intend to do in respect of their own beneficial
holdings in Group 4 Falck and Group 4 respectively.

The Securicor board, which has been so advised by Morgan Stanley & Co. Limited,
considers the terms of the Merger to be fair and reasonable. In providing its
advice to Securicor, Morgan Stanley & Co. Limited has taken into account the
commercial assessment of the Securicor board.

The Securicor board believes that the terms of the Merger are in the best
interests of Securicor's shareholders as a whole and unanimously recommends
that Securicor's shareholders vote in favour of the resolutions to be proposed
at the shareholder meetings, as members of the Securicor board intend to do in
respect of their own beneficial holdings.

Meetings

London Briefing

There will be a briefing for institutional investors and analysts at 11:00 GMT
today at the Ground Floor Conference Centre, UBS, 1 Finsbury Avenue, London
EC2M 2PG. Investors can also participate in the briefing via telephone by
calling 0845 245 3471 in the UK or +44 (0) 1452 542 300 from outside the UK.
This briefing will also be webcast via www.group4falck.com and
www.securicor.com

Copenhagen Briefing

There will be a briefing for the Danish press at 15:30 CET today at Group 4
Falck's head office, Falck-Huset, Polititorvet 1780 Copenhagen V.

Enquiries

Group 4 Falck                      Securicor                              
                                                                          
Lars Nørby        +45 70 13 43     Nick Buckles             +44 20 8770   
Johansen          43                                        7000          
                                   Trevor Dighton                         
                                                            +44 20 8770   
                                                            7000          
                                                                          
                                                                          
                                                                          
UBS Limited                        Morgan Stanley & Co.                   
                                   Limited                                
                                                                          
Alistair Defriez  +44 20 7568      Mark Warham              +44 20 7425   
                  1000                                      5555          
                                                                          
Richard Gostling  +44 20 7568      Colm Donlon              +44 20 7425   
                  1000                                      5555          
                                                                          
Ian Bonnor-Moris  +44 20 7568                                             
                  1000                                                    
                                                                          
                                   Cazenove & Co. Ltd                     
                                                                          
                                   Michael Wentworth        +44 20 7588   
                                   Stanley                  2828          
                                                                          
                                   Dermot McKechnie         +44 20 7588   
                                                            2828          
                                                                          
                                                                          
                                                                          
Press enquiries                                                           
                                                                          
Brunswick                          Citigate Dewe Rogerson                 
                                                                          
James Bradley     +44 20 7404      Deborah Saw              +44 207 638   
                  5959                                      9571          
                                                                          
Tim Grey          +44 20 7404      Patrick Toyne-Sewell     +44 207 638   
                  5959                                      9571          
                                                                          
                                   Sarah Gestetner          +44 207 638   
                                                            9571          
                                                                          

            
                                                                                           


 

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO 
AUSTRALIA, CANADA, JAPANOR THE UNITED STATES OR TO USPERSONS.  THIS
ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM PART OF AN OFFER TO SELL, PURCHASE,
EXCHANGE OR SUBSCRIBE FOR ANY SECURITIES OR SOLICITATION OF SUCH AN OFFER IN
THE UNITED STATES OR ANY OTHER JURISDICTION. THE SECURITIES REFERRED TO IN THIS
ANNOUNCEMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, AND WILL NOT BE OFFERED OR SOLD IN THE
UNITED STATES EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION.

 

                                                                               

Group 4 Falck A/S

CVR number: 24 79 21 10

Incorporated in Denmark

ISIN: DK0010291699

 

24 February 2004

 

               SEPARATION AND LISTING OF RESCUE & SAFETY AND GSL               
                                                                               

 

PART III - SEPARATION AND LISTING OF RESCUE & SAFETY AND GSL

1)    Introduction

During recent years Group 4 Falck A/S ('Group 4 Falck') has increased its focus
on security, and the proposed Merger will create a world leader in security
services. In connection with the Merger as detailed in Part II of this
announcement, Group 4 Falck will undertake the Demerger to separate the Group 4
Security businesses from the Rescue & Safety and GSL businesses. The board of
Group 4 Falck believes that the Demerger will allow the Rescue & Safety and GSL
businesses to realise their full potential and maximise shareholder value.

The Demerger will secure full management focus on further developing these
businesses and thereby strengthen their potential for future growth.
Furthermore, the Demerger will highlight the investment cases and potential of
the Rescue & Safety and GSL businesses.

As part of the Demerger, Falck A/S ('Falck'), incorporated in Denmark, will be
established as the holding company for the Rescue & Safety businesses other
than those in Israeland Slovakia('Rescue & Safety') and GSL. The shares of
Falck are expected to be listed on the Copenhagen Stock Exchange. Falck will be
headquartered in Copenhagen and Allan Søgaard Larsen (currently Senior Vice
President of Group 4 Falck and responsible for Rescue & Safety) will be
appointed Chief Executive of Falck.

Falck will have pro forma consolidated turnover for the first 9 months to
September 2003 of DKK 5,122 million (£478 million) and EBITA of DKK 295 million
(£28 million) on a Danish GAAP basis and will employ approximately 15,000
employees in 8 countries worldwide excluding part-time firefighters.

Rescue & Safety - turnover of DKK 2,813 million (£262 million)  and EBITA of
DKK 160 million (£15 million) and approximately 7,000 employees, excluding
part-time firefighters

GSL - turnover of DKK 2,309 million (£215 million) and EBITA of DKK 135 million
(£13 million) and approximately 8,000 employees

Falck will be demerged on the basis that it would have had net cash on a
consolidated basis of £44 million fixed in Pounds Sterling (DKK 466 million) as
at 1 January 2004. 

Both Rescue & Safety and GSL are leaders within their respective fields with
strong growth opportunities:

Rescue & Safety                                  GSL                           
                                                                               
Strong Danish market position                    Integrated solutions provider 
                                                 in support services           
International expansion opportunities                                          
                                                 Market leader in custodial    
Growth opportunities due to structural change in activities                    
the healthcare sector in Europe and increased                                  
focus on safety                                  Strong market positions in the
                                                 UK, Australia and South Africa
High operational efficiency                                                    
                                                 Leading outsourcer with good  
Strong cash flow generation                      reputation in rapidly         
                                                 expanding market              
                                                                               
                                                 Strong cash flow generation   
                                                                               
                                                                               
                                                                               

 

Over recent months, Group 4 Falck has received a number of approaches regarding
the potential acquisition of GSL. In the event that GSL is divested, the
relevant board will consider returning a significant proportion of the proceeds
to shareholders, taking into account Rescue & Safety's strategic plans.

Lars Nørby Johansen said:

'Both Rescue & Safety and GSL are strong businesses with solid business models.
With the benefit of increased management focus, the separation will enable the
companies to realise their full potential and create value for shareholders.'

Allan Søgaard Larsen said:

'Rescue & Safety has a unique business model, that generates strong stable cash
flows and enables Rescue & Safety to pursue profitable growth. I am confident
that our business will be strengthened through the Demerger and that we will be
in a position to leverage the business model across a broader geographic area
and expand the service offerings.'

Stephen Brown, Managing Director of GSL, said:

'I am excited about the opportunities that the Demerger presents for GSL. Our
business is a leading outsourcer in rapidly expanding markets. The Demerger
will allow GSL to pursue growth opportunities outside Group 4 Falck's core
security focus, particularly in health, education, accommodation services and
business process outsourcing, as well as the broader outsourcing areas relating
to custodial services. I believe that this will bring substantial advantages
and innovative solutions to all stakeholders.'

2)    Rescue & Safety

Rescue & Safety provides rescue and safety services which originally formed the
basis of Group 4 Falck's Danish activities. Today, the division has
approximately 7,000 employees excluding part-time firefighters. Rescue & Safety
had turnover for the first 9 months of 2003 of DKK 2,813 million (£262 million)
(on a Danish GAAP basis), a substantial majority of which originated in
Denmark. Other countries include Norway, Sweden and Poland. EBITA for the first
9 months of 2003 was DKK 160 million (£15 million), implying an EBITA margin of
5.7% (on a Danish GAAP basis). The business model of Rescue & Safety is based
on a unique infrastructure, which has been built up over the years. It consists
of a strong brand, extensive know-how and a broad customer base, which serve as
the foundation for Rescue & Safety's service and product offerings.

Based on this infrastructure, Rescue & Safety offers a number of services and
products, currently within four business areas - assistance, emergency, health,
and training and prevention. These four business areas are closely linked and
create unique business opportunities, including the opportunity to use one
business area to market and penetrate other business areas.

The business environment for Rescue & Safety is currently undergoing
significant change, including deregulation and increased focus on safety
measures. These changes significantly enhance Rescue & Safety's growth
opportunities, with the potential to further strengthen the platform in
Scandinavia and roll out services into other European markets.

Principal activities

Assistance           Emergency      Health             Training and Prevention 
                                                                               
Auto-, travel- and   Ambulance      Rehabilitation     Contingency planning    
home                 services                                                  
                                                                               
Lifestyle and care   Patient        Emergency medicine Offshore and maritime   
service              transport                         training                
                                                                               
Healthcare           Fire fighting  Preventative       Consultancy             
assistance                          programmes                                 
                                                                               

 

The assistance and emergency activities account for approximately 38% and 54%
of turnover whilst the health activities and training and prevention
activities, which have significant growth potential, currently account for the
remaining 8%.

The assistance division provides services to customers in all segments relating
to people, homes, businesses and municipalities. The main products are provided
through private subscriptions, including road side assistance, and
business-to-business subscriptions.

The emergency division operates in the public sector market where Rescue &
Safety provides fire fighting services for 171 out of Denmark's 271
municipalities (approximately 50% of total residents). Ambulance services are
provided for all of Denmark's 13 counties as well as the Bornholm region
(approximately 85% of total residents). In addition, patient transport is
provided for both municipalities and counties.

The health division intends to focus on adding acute cardiac and emergency ward
functions to the emergency business. The division currently operates a
rehabilitation and prevention centre and a number of aid equipment centres in
Denmark. There are ongoing structural changes in the healthcare sector in
Europewhich will provide strong opportunities for growth within this business
area in the coming years.

The training and prevention division provides rescue and safety courses,
contingency planning and consultancy including crisis management to the
business-to-business market in Scandinavia. In January 2004, Rescue & Safety
announced the acquisition of Global Safety Group BV ('GSG') (with annual
turnover of approximately DKK 390 million). This will strengthen the position
in Norway and expand the product portfolio internationally, including into the
Netherlands, UK and Malaysia.  GSG is also a leading player in rescue and
safety courses for the off-shore and maritime sectors. The acquisition is
subject to due diligence, which is expected to be completed no later than the
end of March 2004.

3)    GSL

GSL has developed into a leading provider of integrated solutions to the public
and private sectors. The business has successfully leveraged its historically
strong position in the UK custodial market and now offers a broad range of
services in the UK, as well as having strong positions in custodial services in
Australia and South Africa. The services are provided in close collaboration
with, and subject to, continuous quality control by the relevant government
agencies. A majority of these contracts are long-term, many with terms of up to
30 years.

GSL has approximately 8,000 employees. GSL had turnover for the first nine
months of 2003 of DKK 2,309 million (£215 million) and EBITA of DKK 135 million
(£13 million), implying an EBITA margin of 5.8% (on a Danish GAAP basis, as at
30 September 2003). GSL has achieved an appropriate proportion of long-term
versus short-term turnover with 50% of operating income in any year derived
from contracts with more than 5 years remaining.

The strategic aim of GSL is to provide total solutions to customer
requirements, enabling them to focus on their core activities. This typically
involves management, development, administration and co-ordination of
logistics. Many of the activities involve Public Private Partnership ('PPP')
contracts and Private Finance Initiative ('PFI') contracts.

GSL will continue to focus on three prime business areas: custodial services,
business services and public services. It intends to maintain its strong
position in custodial services while expanding its operations in business
services and public services through a combination of organic growth and
acquisitions. Further development of services and market shares will continue
in the UK, Australia and South Africa, whilst new markets will be evaluated on
the basis of governments' intentions to create a long-term PPP market.

Principal activities

Custodial Services                         Business Services   Public Services 
                                                                               
Prison management                          Managed Services    Healthcare      
                                                               Services        
                                                                               
Prisoner escorting                         Office              Education       
                                           Accommodation       Services        
                                           Services                            
                                                                               
Immigration detention centre and escorting Financial Services  Local Authority 
logistics solutions                                            Services        
                                                                               
Secure training centre and escorting       Utility services                    
logistics solutions                        (AccuRead)                          
                                                                               
Police custody services                                                        
                                                                               

 

The custodial services business accounts forapproximately 65% of turnover,
whilst business services and public services accounts for 35% of turnover.

Custodial services forms the core element of GSL and comprises a series of
niche services, including prison services, immigration services and services
ancillary to the criminal justice system.

GSL has developed increasingly complementary areas of service delivery where
the potential for synergy and common approaches are present in both the public
and the private sector.  Business services cover office accommodation projects
and short-term business process outsourcing contracts in the public and private
sectors. Public services are typically longer-term management contracts for
integrated service delivery in the areas of healthcare, education and local
Authority Services. In addition, business services include the utility
operations of AccuRead, a 51% joint venture with Centrica involved in meter
reading services.

4)    Details of the proposed Demerger

Group 4 Falck will implement a statutory demerger under Danish law in order to
effect the separation of the security businesses from Rescue & Safety and GSL.
Shares in two newly incorporated Danish companies - Group 4 and Falck - will be
issued to Group 4 Falck shareholders pro rata to their existing holdings. 

The Demerger will require the approval at an extraordinary general meeting of
Group 4 Falck of shareholders representing both two thirds of the voting share
capital represented and two thirds of the share capital voted at the EGM. In
order to achieve a quorum at the EGM, shareholders representing at least 50% of
the share capital must be in attendance. If a quorum is not achieved, a new EGM
will be called, at which such a quorum is not required.

Implementation of the Demerger and the Merger will be inter-conditional.
Completion of the Demerger will also be conditional upon the receipt of certain
regulatory and tax clearances.

Further details of the proposed Demerger are set out in paragraph 13 of Part
II.

5)    Falck board and management team

Following the Demerger, Henrik Brandt, Jens Erik Christensen, Johannes Due, and
Jens Kampmann will be appointed to the board of Falck as non-executive
directors. Lars Nørby Johansen will be Chairman of the board of Falck. However,
post Completion, for so long as Falck owns GSL Lars Nørby Johansen will not be
involved in any matter which constitutes a conflict between GSL and Group 4
Securicor. In addition, a nominee of the Association of Countries in Denmark
will be appointed to the board as a non-voting representative. Employee
representatives will be appointed in accordance with Danish law.

Allan Søgaard Larsen (currently Senior Vice President of Group 4 Falck and
responsible for Rescue & Safety) will be appointed Chief Executive of Falck.
Morten R. Pedersen (currently Chief Financial Officer of Rescue & Safety) will
be appointed Chief Financial Officer of Falck.

Allan Søgaard Larsen and Stephen Brown will continue as Chief Executives for
Rescue & Safety and GSL respectively.

6)    Continuing arrangements between Group 4 and Falck

Following the Demerger, Group 4 and Falck will each operate as separate
publicly listed companies and neither Group 4 nor Falck will retain any
shareholding in the other.

The relationship between Group 4 and Falck after the Demerger is principally
regulated by a Demerger Agreement that will be entered into at the time of the
documentation relating to the Demerger being made available to the Group 4
Falck shareholders.

7)    GSL Pension Plans

It is envisaged that a member of the Group 4 Securicor group will acquire
the Group 4 Falck pension scheme (the 'Group 4 Falck Pension Scheme') by
changing the principal employer from GSL to a member of the Group 4 Securicor
group. It is intended that GSL will be entitled to continue to
participate in the Group 4 Falck Pension Scheme for up to twelve months after
Completion. GSL will be required to set up a new pension scheme for GSL
employees' future service with effect from the end of the participation period
and GSL employees will be given the opportunity to transfer their accrued
benefits from the Group 4 Falck Pension Scheme to the new GSL pension scheme
and be credited with year for year service. Implementation of these
arrangements is dependent on trustee approval. The cost of providing GSL
employees with year for year service in the new GSL scheme over the aggregate
amounts actually paid by the trustees of the Group 4 Falck Pension Scheme in
respect of the GSL employees who elect to transfer their past service benefits
to the new GSL Scheme will be calculated and paid for by GSL.

8)    Tax treatment of the Demerger for Group 4 Falck Shareholders

The Demerger will be conditional upon tax clearances being obtained under
sections 15(a) and 15(b) of the Danish Tax Act on Mergers for Danish tax
purposes. Group 4 Falck shareholders who are Danish residents will not be
treated for Danish tax purposes as having made a disposal of their shares
pursuant to the Demerger. 

Further details on the proposed transaction and tax treatment are set out in 
paragraph 13 of Part II.

9)    Documentation

Details of when the relevant documentation will be sent to shareholders are
outlined in paragraph 15 of Part II.

10)  Meetings

LondonBriefing

There will be a briefing for institutional investors and analysts at 11:00 GMT
today at the Ground Floor Conference centre, UBS, 1 Finsbury Avenue, London
EC2M 2PG. Investors can also participate in the briefing via telephone by
calling 0845 245 3471 in the UK or +44 (0) 1452 542 300 from outside the UK.
This briefing will also be webcast via www.group4falck.com and
www.securicor.com.

CopenhagenBriefing

There will be a briefing for the Danish press at 15:30 CET today at Group 4
Falck's head office, Falck-Huset, Polititorvet 1780 Copenhagen V. Allan Søgaard
Larsen will be present at this meeting and Lars Nørby Johansen will attend by
telephone.

 11) Financial advisers

Danske Markets, Corporate Finance and UBS Limited are acting as joint financial
advisers in connection with the listing of Falck.

 

Enquiries

Group 4 Falck                                                               
                                                                            
Lars Nørby       +45 70 13 43                                               
Johansen         43                                                         
                                                                            
                                                                            
                                                                            
UBS Limited                       Danske Markets, Corporate                 
                                  Finance                                   
                                                                            
Alistair Defriez +44 20 7568      Anders K. Bønding            +45 70 13 43 
                 1000                                          43           
                                                                            
Richard Gostling +44 20 7568                                                
                 1000                                                       
                                                                            
Ian Bonnor-Moris +44 20 7568                                                
                 1000                                                       
                                                                            

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Danske Markets, Corporate Finance, a division of Danske Bank A/S  is acting
exclusively for Group 4 Falck and for no one else as financial adviser in
connection with the listing of Group 4 Falck and will not be responsible to
anyone other than Group 4 Falck  for providing the protections afforded to
clients of Danske Markets nor for providing advice in relation to the matters
described herein

 

 

 

APPENDICES

 

A.     Source and Basis of Financial Information

B.    Group 4 Danish GAAP to UK GAAP unaudited restatement for year ending 30
September 2003

C.    Group 4 Historical unaudited Financial Information (Danish GAAP and DKK)

D.    Falck Historical unaudited Financial Information

E.    Group 4 Falck Historical Financial Information

F.     Securicor Historical Financial Information

G.    Additional Information Regarding Group 4 Falck 2003 Profit Estimate

H.    Terms and Conditions of the Merger

Appendix A: Source and Basis of Financial information

Neither Group 4 nor Falck has previously constituted separate legal entities
and therefore neither has previously produced standalone financial information.
The financial information presented in this announcement represents an
allocation of the previously reported results and balance sheets of Group 4
Falck between Group 4 and Falck based upon the Demerger proposals, which has
not been audited.

The historical interest and tax charge of Group 4 Falck is not necessarily
indicative of the interest and tax charges that the two demerged entities will
bear on a standalone basis in the future.

Group 4 Falck has historically reported its financial information in accordance
with Danish GAAP and in Danish Kroner (DKK). Adjustments have been made to
these Danish numbers to illustrate what the financial information of Group 4
may have been had the information been presented in UK GAAP. The UK GAAP
financial information and the information as at and for the year ended 30
September 2003is unaudited. The conversion from Danish Kroner to Pounds
Sterling has been performed at an average exchange rate of 11.0056 for the
profit and loss account for the year ended 30 September 2003, at an average
exchange rate of 10.7201 for the profit and loss account for nine months ended
30 September 2003, and at a rate of 10.6293 for the balance sheet at 30
September 2003 and 10.5807 for the balance sheet at 1 January 2004. The
conversion of other Danish Kroner amounts to Pounds Sterling (and vice versa)
are based on exchange rate published in The Financial Times on Monday 23
February 2004, being 11.0800.

The unaudited pro forma financial information for Group 4 for the year ended 30
September 2003is based on the unaudited management information for the quarter
ended 31 December 2002and the three quarters ended 30 September 2003.

On the basis that the Merger completes in the manner contemplated by this
announcement, it is expected that the Merger will be accounted for using
acquisition accounting on the basis that Group 4 is deemed to acquire
Securicor.

Appendix B: Group 4 Danish GAAP to UKGAAP unaudited restatement for year ending
30 September 2003

Pro forma unaudited income statement - Group 4  (12 months to 30 September    
2003)                                                                         
                                                                              
                                         DKKm                     £m          
                                                                              
                                           Group 4                   Group 4  
                                                                     adjusted 
                                           (Danish       GAAP                 
                                            GAAP)     adjustments    (UKGAAP) 
                                                                              
Turnover                                 27,940 2,539           -        2,539
                                                                              
Operating profit before goodwill                                              
amortisation and exceptional items                                            
(EBITA)                                   1,268   115         (8)          107
                                                                              
Operating margin                            4.5   4.5                      4.2
                                                                              
Exceptional items                         (120)  (11)         (7)         (18)
                                                                              
Profit before tax                           517    47        (10)           37
                                                                              
                                                                              
                                                                              

 

                                                                              
                                                                              
Pro forma unaudited balance sheet - Group 4 (as at 30 September 2003)         
                                                                              
                          DKKm    £m                                          
                                                                              
                             Group 4                                  Group 4 
                                                                      adjusted
                          (Danish GAAP)       GAAP           GAAP             
                                        reclassifications adjustments (UKGAAP)
                                                                              
                                                                              
                                                                              
Goodwill                    6,322   595                         (121)      474
                                                                              
Development costs              25     2                             -        2
                                                                              
Tangible fixed assets       1,879   177                             -      177
                                                                              
Investments                 (289)  (27)                32           7       12
                                                                              
Total fixed assets          7,937   747                32       (114)      665
                                                                              
                                                                              
                                                                              
Stocks                        335    32                             -       32
                                                                              
Debtors                     5,103   480                42        (21)      501
                                                                              
Short term investments          -     -                51         (8)       43
                                                                              
Creditors                 (4,328) (408)              (27)           6    (429)
                                                                              
Net current assets          1,110   104                66        (23)      147
(liabilities) excluding                                                       
cash and borrowings                                                           
                                                                              
                                                                              
                                                                              
Net borrowings            (3,539) (333)              (51)           5    (379)
                                                                              
Provisions                  (855)  (80)              (47)         (5)    (132)
                                                                              
Net assets                  4,653   438                 -       (137)      301
                                                                              
                                                                              
                                                                              
Invested capital            4,399   414                         (137)      277
                                                                              
Minority Interests            254    24                             -       24
                                                                              
Total invested capital      4,653   438                 -       (137)      301
                                                                              
                                                                              
                                                                              

 

Pro forma unaudited operating cash flow - Group 4 (12 months to 30 September  
2003)                                                                         
                                                                              
                                          DKKm   £m                           
                                                                              
                                          Group 4                             
                                                                    Group 4   
                                          (Danish GAAP GAAP  adj adjusted  (UK
                                          )            ust ments      GAAP)   
                                                                              
                                                                              
                                                                              
Operating profit before goodwill                                              
amortisation and exceptional items                                            
(EBITA)                                    1,268   115       (8)           107
                                                                              
Depreciation                                 457    42         -            42
                                                                              
Operating profit before depreciation and                                      
amortisation and exceptional items                                            
(EBITDA)                                   1,725   157       (8)           149
                                                                              
Change in working capital and provisions     145    14         3            17
                                                                              
Net capital expenditure                    (676)  (64)         -          (64)
                                                                              
Free cash flow from operations before                                         
financial items, exceptional items, tax,                                      
etc.                                       1,194   107       (5)           102
                                                                              
                                                                              
                                                                              

The key differences between the Danish GAAP and UK GAAP presentations that have
been reflected in the above pro forma income statement are as follows:

Under Danish GAAP, purchased goodwill is capitalised and amortised, over
periods not exceeding 20 years. Under UK GAAP, goodwill on acquisitions before
1 January 1998 is written off against reserves, with goodwill relating to
acquisitions post 1 January 1998 being capitalised and amortised over periods
up to 20 years.

Under Danish GAAP, reorganisation and integration costs in relation to
acquisitions are treated as pre acquisition and form part of the goodwill
calculation.  Under UK GAAP such costs are treated as post acquisition charges.

Under Danish GAAP, marketable securities are held at market value, whereas
under UK GAAP securities are held at the lower of cost and net realisable
value.

There are certain differences in accounting for the insurance reserves
established by the captive insurance companies. Under UK GAAP certain reserves
have not been recorded as they do not meet the strict definitions of allowable
provisions.

Because of differences between Danish and UK GAAPs there are certain
presentational differences in the determination of which items of revenue and
expense should be recognised and reported as special or exceptional items.

Under UK GAAP, unrealised losses as open derivative positions not meeting the
criteria for hedge accounting are provided for in the profit and loss account.
Under Danish GAAP, the fair value of derivatives are recorded in equity and as
a liability in other creditors.

Short-term investments in marketable securities which are held by the captive
insurance companies, which under Danish GAAP are included in net debt, are
excluded from net debt under UK GAAP.

Appendix C: Group 4 Historical unaudited financial information (Danish GAAP)

Pro forma unaudited Income statement - Group 4 (Danish GAAP)              
                                                                          
                               12 months  12 months   9 months  12 months 
                                December   December  September  September 
Amounts in DKKm                   2001       2002       2003       2003   
                                                                          
                                                                          
                                                                          
Turnover                           14,872     25,704     20,639     27,940
                                                                          
Operating profit before                                                   
goodwill amortisation and                                                 
special items (EBITA)                 707      1,230        892      1,268
                                                                          
Operating margin (EBITA%)             4.8        4.8        4.3        4.5
                                                                          
Goodwill amortisation               (196)      (358)      (315)      (421)
                                                                          
Operating profit                      511        872        577        847
                                                                          
Net special items                      19          -      (120)      (120)
                                                                          
Profit before tax                     416        676        299        517
                                                                          
Net profit for the period             216        325         52        171
                                                                          

 

Pro forma unaudited Balance Sheet - Group 4 (Danish GAAP)                      
                                                                               
                                                                        30     
                                            31 December 31 December  September 
Amounts in DKKm                                2001        2002        2003    
                                                                               
                                                                               
                                                                               
Total current assets, excl. cash and                                           
securities, etc.                                  3,732       5,850       5,438
                                                                               
Total liabilities excl. credit                                                 
institutions, income taxes, etc.                (3,110)     (4,312)     (4,062)
                                                                               
Total fixed assets, excl. goodwill etc.           1,159       1,790       1,904
                                                                               
Total provisions                                  (367)     (1,349)     (1,126)
                                                                               
Net operating assets, excl. goodwill              1,414       1,979       2,154
                                                                               
Goodwill                                          2,894       7,448       6,322
                                                                               
Income taxes                                      (123)       (138)       (266)
                                                                               
Net operating assets incl. goodwill               4,185       9,289       8,210
                                                                               
Equity                                            2,542       4,307       4,399
                                                                               
Minority interests                                  105         225         254
                                                                               
Interest-bearing debt                             2,151       6,150       4,607
                                                                               
Interest-bearing assets (cash and                                              
securities)                                       (734)     (1,225)     (1,068)
                                                                               
Net interest-bearing debt                         1,417       4,925       3,539
                                                                               
Provision for deferred tax                          171         210       (271)
                                                                               
Net investments in Group enterprises, etc.         (50)       (378)         289
                                                                               
Financing                                         4,185       9,289       8,210
                                                                               
                                                                               
                                                                               

 

Pro forma unaudited Cashflow statement - Group 4 (Danish GAAP)
                                                              
                                12 months 9 months  12 months 
                                December  September September 
Amounts in DKKm                   2002      2003       2003   
                                                              
                                                              
                                                              
Operating profit before                                       
goodwill amortisation and                                     
special items (EBITA)               1,230       892      1,268
                                                              
Depreciation                          399       300        457
                                                              
Operating profit before                                       
depreciation and amortisation                                 
(EBITDA)                            1,629     1,192      1,725
                                                              
Change in working capital and                                 
provisions                           (57)     (133)        145
                                                              
Net capital expenditure             (552)     (430)      (676)
                                                              
Free cash flow from operations                                
before financial items, special                               
items, tax, etc.                    1,020       629      1,194
                                                              
                                                              
                                                              

Appendix D: Falck historical unaudited financial information (Danish GAAP)

Pro forma unaudited Income statement - Falck (Danish GAAP)     
                                                               
                              12 months  12 months   9 months  
                               December   December   September 
Amounts in DKKm                  2001       2002      30 2003  
                                                               
                                                               
                                                               
Turnover                           6,168      6,505       5,122
                                                               
Operating profit before                                        
goodwill amortisation and                                      
special items (EBITA)                434        445         295
                                                               
Operating margin (EBITA%)            7.0        6.8         5.7
                                                               
Goodwill amortisation                (5)        (5)         (4)
                                                               
Operating profit                     429        440         291
                                                               
Net special items                   (16)          -         (9)
                                                               
Profit before tax                    448        493         314
                                                               
Net profit for the period            295        322         209
                                                               
                                                               
                                                               

 

Pro forma unaudited Balance Sheet - Falck (Danish GAAP)          
                                                                 
                                    December  December  September
Amounts in DKKm                      31 2001   31 2002   30 2003 
                                                                 
                                                                 
                                                                 
Total current assets, excl. cash                                 
and securities, etc.                      621       763       903
                                                                 
Total liabilities excl. credit                                   
institutions, income taxes, etc.      (1,379)   (1,488)   (1,477)
                                                                 
Total fixed assets, excl. goodwill                               
etc.                                    1,250     1,289     1,278
                                                                 
Total provisions                         (13)      (16)      (12)
                                                                 
Net operating assets, excl.                                      
goodwill                                  479       548       692
                                                                 
Goodwill                                   57        65        70
                                                                 
Income taxes                             (26)      (43)      (25)
                                                                 
Net operating assets incl. goodwill       510       570       737
                                                                 
Equity                                    127       139       294
                                                                 
Minority interests                         49        58        61
                                                                 
Interest-bearing debt                     721       646       833
                                                                 
Interest-bearing assets (cash and                                
securities)                             (400)     (255)     (314)
                                                                 
Net interest-bearing debt*                321       391       519
                                                                 
Provision for deferred tax                 90        99       104
                                                                 
Net investments in Group                                         
enterprises, etc.                        (77)     (117)     (241)
                                                                 
Financing                                 510       570       737
                                                                 
                                                                 
                                                                 

* Falck will be Demerged on the basis that it would have had net cash on a
consolidated basis of £44 million (DKK 466 million) as at 1 January 2004.

Pro forma unaudited Cashflow statement - Falck (Danish GAAP)                   
                                                                               
                                                       December 31 September 30
Amounts in DKKm                                           2002         2003    
                                                                               
                                                                               
                                                                               
Operating profit before goodwill amortisation and                              
special items (EBITA)                                          445          295
                                                                               
Depreciation                                                   231          168
                                                                               
Operating profit before depreciation and amortisation                          
(EBITDA)                                                       676          463
                                                                               
Change in working capital and provisions                      (38)        (140)
                                                                               
Net capital expenditure                                      (272)        (173)
                                                                               
Free cash flow from operations before financial items,                         
special items, tax, etc.                                       366          150
                                                                               
                                                                               
                                                                               

Appendix E: Group 4 Falck Historical Financial Information 

Income statement - Group 4 Falck (Danish GAAP)                                  
                                                                                
                                     12 months    12 months                     
                                     December     December    9 months September
Amounts in DKKm                         2001         2002      2003 (unaudited) 
                                                                                
                                                                                
                                                                                
Turnover                                  21,040       32,209             25,761
                                                                                
Other operating income                        61           97                  8
                                                                                
Total turnover                            21,101       32,306             25,769
                                                                                
Total costs                             (19,960)     (30,631)           (24,582)
                                                                                
Operating profit before goodwill                                                
amortisation and special items                                                  
(EBITA)                                    1,141        1,675              1,187
                                                                                
Operating margin (EBITA%)                    5.4          5.2                4.6
                                                                                
Goodwill amortisation                      (201)        (363)              (319)
                                                                                
Operating profit                             940        1,312                868
                                                                                
Net special items                              3            -              (129)
                                                                                
Profit before financial items                943        1,312                739
                                                                                
Income before tax from associates                                               
and joint ventures                            72           87                 54
                                                                                
Net financial items                        (151)        (230)              (180)
                                                                                
Ordinary profit before tax                   864        1,169                613
                                                                                
Tax on ordinary profit                     (301)        (456)              (298)
                                                                                
Profit for the period                        563          713                315
                                                                                
Minority interests                          (52)         (83)               (62)
                                                                                
Income from discontinuing                                                       
operations                                     -           17                  8
                                                                                
Net profit for the period                    511          647                261
                                                                                
                                                                                
                                                                                

 

Balance Sheet - Group 4 Falck (Danish GAAP)                                    
                                                                               
                                            31         31                      
                                        December   December   30 September 2003
Amounts in DKKm                            2001       2002       (unaudited)   
                                                                               
                                                                               
                                                                               
Net operating assets                                                           
                                                                               
Total current assets, excl. cash and                                           
securities, etc.                             4,353      6,613             6,341
                                                                               
Total liabilities excl. credit                                                 
institutions, income taxes, etc.           (4,489)    (5,800)           (5,539)
                                                                               
Total fixed assets, excl. goodwill etc.      2,409      3,079             3,182
                                                                               
Total provisions                             (380)    (1,365)           (1,138)
                                                                               
Net operating assets, excl. goodwill         1,893      2,527             2,846
                                                                               
Goodwill                                     2,951      7,513             6,392
                                                                               
Income taxes                                 (149)      (181)             (291)
                                                                               
Net operating assets incl. goodwill          4,695      9,859             8,947
                                                                               
Equity                                       2,669      4,446             4,693
                                                                               
Minority interests                             154        283               315
                                                                               
Interest-bearing debt                        2,872      6,796             5,440
                                                                               
Interest-bearing assets (cash and                                              
securities)                                (1,134)    (1,480)           (1,382)
                                                                               
Net interest-bearing debt                    1,738      5,316             4,058
                                                                               
Provision for deferred tax                     261        309             (167)
                                                                               
Net investments in Group enterprises,                                          
etc.                                         (127)      (495)                48
                                                                               
Financing                                    4,695      9,859             8,947
                                                                               
                                                                               
                                                                               

 

Cashflow statement - Group 4 Falck (Danish GAAP)                               
                                                                               
                                                12 months                      
                                                December                       
                                                            9 months September 
Amounts in DKKm                                   2002       2003 (unaudited)  
                                                                               
                                                                               
                                                                               
Operating profit before goodwill amortisation                                  
(EBITA)                                              1,675                1,187
                                                                               
Depreciation                                           630                  468
                                                                               
Operating profit before depreciation and                                       
amortisation (EBITDA)                                2,305                1,655
                                                                               
Change in working capital and provisions              (95)                (273)
                                                                               
Net capital expenditure                              (824)                (603)
                                                                               
Free cash flow from operations before                                          
financial items, special items, tax, etc.            1,386                  779
                                                                               
                                                                               
                                                                               

Appendix F: Securicor Historical Financial information

The following figures are as published in Securicor's audited statutory
accounts.  The figures include discontinued activities.

 

Securicor consolidated profit                                                
and loss account                                                             
                                                                             
£m, years to 30 September                 2001           2002           2003 
                                                                             
                                                                             
                                                                             
Group Turnover                   1,135.8        1,400.1        1,323.8       
                                                                             
                                                                             
                                                                             
Group operating profit/(loss)    33.4           (15.2)         54.2          
                                                                             
Share of operating profit in                                                 
joint ventures and associates    12.4           13.3           13.4          
                                                                             
                                                                             
                                                                             
                                 45.8           (1.9)          67.6          
                                                                             
Loss on sale or closure of                                                   
operations                       (44.1)         (4.3)          (0.8)         
                                                                             
Loss on sale of fixed assets     -              (0.7)          -             
                                                                             
                                                                             
                                                                             
Profit/(loss) on ordinary                                                    
activities before interest and                                               
taxation                         1.7            (6.9)          66.8          
                                                                             
Net interest                                                                 
                                                                             
- Group                          (9.0)          (13.0)         (13.2)        
                                                                             
- Joint ventures and associates  (5.5)          (4.7)          (4.1)         
                                                                             
                                                                             
                                                                             
Profit/(loss) on ordinary                                                    
activities before taxation       (12.8)         (24.6)         49.5          
                                                                             
Taxation                         (12.7)         (16.8)         (3.9)         
                                                                             
                                                                             
                                                                             
Profit/(loss) on ordinary                                                    
activities after taxation        (25.5)         (41.4)         45.6          
                                                                             
Minority interests               (2.1)          (1.4)          (1.1)         
                                                                             
                                                                             
                                                                             
Profit/(loss) for the year       (27.6)         (42.8)         44.5          
                                                                             
Ordinary dividend                (10.3)         (13.2)         (12.8)        
                                                                             
Special dividend                 -              -              (75.0)        
                                                                             
                                                                             
                                                                             
Retained earnings/(deficit)      (37.9)         (56.0)         (43.3)        
                                                                             
                                                                             
                                                                             
                                                                             
                                                                             

 

  Securicor consolidated cash                                                
  flow statement                                                             
                                                                             
  £m, years to 30 September               2001           2002           2003 
                                                                             
                                                                             
                                                                             
Net cash flow from operating              46.0          127.4           96.9 
activities                                                                   
                                                                             
Dividends from associates and              1.3            2.2            1.3 
joint ventures                                                               
                                                                             
Net cash flow from returns on             (9.5)         (13.5)         (13.8)
investments and servicing of                                                 
finance                                                                      
                                                                             
Taxation                                  (7.9)         (13.1)          (5.9)
                                                                             
Net cash flow from capital               (58.4)         (56.9)         (39.7)
expenditure                                                                  
                                                                             
Net cash flow from acquisitions         (198.4)         (47.7)         156.0 
and disposals                                                                
                                                                             
Ordinary dividends paid                   (9.6)         (10.7)         (12.9)
                                                                             
Special dividend paid                        -              -          (75.0)
                                                                             
                                                                             
                                                                             
Cash flow before use of liquid          (236.5)         (12.3)         106.9 
resources and financing:                                                     
                                                                             
                                                                             
                                                                             
- Share issue                              3.5            3.6              - 
                                                                             
- (Decrease)/increase in loans           212.2           42.6         (101.1)
                                                                             
- Capital element of finance              (0.8)          (0.7)          (1.3)
lease rental payments                                                        
                                                                             
Net cash flow from financing             214.9           45.5         (102.4)
                                                                             
                                                                             
                                                                             
Increase/(decrease) in cash in           (21.6)          33.2            4.5 
the year                                                                     
                                                                             
                                                                             
                                                                             
                                                                             
                                                                             

 

  Securicor consolidated balance                                             
  sheet                                                                      
                                                                             
  £m, years to 30 September               2001           2002       2003     
                                                                             
                                                                             
                                                                             
Fixed assets                                                                 
                                                                             
Intangible assets - goodwill             210.6          221.2          219.2 
                                                                             
                            -             55.4           26.4              - 
development expenditure                                                      
                                                                             
Tangible assets                          136.9          166.2          177.1 
                                                                             
Investment in joint ventures:                                                
                                                                             
  - Share of gross assets                144.2          172.2           42.9 
                                                                             
  - Share of gross liabilities           (93.7)        (116.4)         (36.1)
                                                                             
  - Net investment                        50.5           55.8            6.8 
                                                                             
Investment in associated                   9.9            3.5            8.6 
undertakings                                                                 
                                                                             
Investment in own shares                     -              -            2.4 
                                                                             
                                                                             
                                                                             
                                         463.3          473.1          414.1 
                                                                             
                                                                             
                                                                             
Current assets                                                               
                                                                             
Stocks                                    13.7           13.5            6.3 
                                                                             
Debtors                                  247.7          232.5          222.0 
                                                                             
Bank and deposit balances                 46.8           67.2           73.5 
                                                                             
                                                                             
                                                                             
                                         308.2          313.2          301.8 
                                                                             
                                                                             
                                                                             
Creditors: Amounts falling due                                               
within one year                                                              
                                                                             
Borrowings                                16.2           33.5           72.9 
                                                                             
Corporation tax                            2.5            7.7           10.9 
                                                                             
Proposed dividends                         6.2            8.7            8.6 
                                                                             
Other                                    196.1          223.5          234.7 
                                                                             
                                                                             
                                                                             
                                         221.0          273.4          327.1 
                                                                             
                                                                             
                                                                             
Net current assets/(liabilities)          87.2           39.8          (25.3)
                                                                             
                                                                             
                                                                             
Total assets less current                550.5          512.9          388.8 
liabilities                                                                  
                                                                             
                                                                             
                                                                             
Creditors: Amounts falling due                                               
after more than one year                                                     
                                                                             
Borrowings                               213.7          232.2          115.1 
                                                                             
Provision for liabilities and              4.3            8.4            4.0 
charges                                                                      
                                                                             
                                                                             
                                                                             
Net assets                               332.5          272.3          269.7 
                                                                             
                                                                             
                                                                             
                                                                             
                                                                             
Capital and reserves                                                         
                                                                             
Called up share capital                   31.1           31.3           31.3 
                                                                             
Reserves                                 297.6          235.6          232.0 
                                                                             
                                                                             
                                                                             
Equity shareholders' funds               328.7          266.9          263.3 
                                                                             
Equity minority interests                  3.8            5.4            6.4 
                                                                             
                                                                             
                                                                             
Capital employed                         332.5          272.3          269.7 
                                                                             
                                                                             
                                                                             
                                                                             
                                                                             

Appendix G: Additional Information Regarding Group 4 Falck 2003 Profit Estimate

Estimated 2003 results

1.     Directors' confirmation

The Directors confirm, subject to unforeseen circumstances and on the bases and
assumption set out below, the statement regarding the estimated results of 
Group 4 Falck under Danish GAAP for the year ended 31 December 2003 set out in
the section entitled 'Group 4 Falck 2003 Profit Estimate' in Section 8 of Part
II of this announcement (the 'Statement').

The Statement has been reported on by PricewaterhouseCoopers LLP (UK) and
PricewaterhouseCoopers (Denmark) and by UBS who have given and not withdrawn
their consent to the publication of their letters relating to the Statement in
this Appendix G.

2.     Basis and assumptions

(a)   Basis of preparation

The estimated 2003 results have been prepared applying consistent accounting
policies as are set out in the Group 4 Falck Report and Accounts for the year
ended 31 December 2002, and are based on the unaudited consolidated management
accounts for the year ended 31 December 2003.

(b)   Assumptions

The Statement is based on the assumption that no events will arise between the 
date of this announcement and the date on which Group 4 Falck approves its 
audited results for 2003 (expected to be 10 March 2004) which will have to be
reflected in the 2003 results in accordance with Danish Generally Accepted 
Accounting Principles.

3.     Letter from PricewaterhouseCoopers LLP (UK) and PricewaterhouseCoopers (
Denmark)

The Directors
Group 4 Falck A/S
Polititorvet
DK - 1780 CopenhagenV
Denmark

UBS Limited

1 Finsbury Avenue

London

EC2M 2PP

24 February 2004

Dear Sirs

We have reviewed the basis of compilation and the accounting policies for the
profit estimate of Group 4 Falck A/S (the 'Company') and its subsidiary
undertakings (the 'Group') for the year ended 31 December 2003 as set out in
the Group 4 Falck 2003 Profit Estimate in Section 8 of Part II and Appendix G
of the Company's announcement dated 24 February 2004.

We conducted our work in accordance with the Statements of Investment Circular
Reporting Standards issued by the United Kingdom Auditing Practices Board.

It is our responsibility to form an opinion on the estimates and to report our
opinion to the directors of the Company and to UBS Limited.  Our work has been
undertaken solely for the purposes of reporting under Rule 28.3(b) of the City
Code on Takeovers and Mergers.

The profit estimate, for which the directors of the Company are solely
responsible, includes the results shown by unaudited consolidated management
accounts for the twelve months ended 31 December 2003.

In our opinion the profit estimate has been properly compiled on the basis
stated and the basis of accounting is consistent with the accounting policies
of the Company.

Yours faithfully

PricewaterhouseCoopers
LLP                                                                 
PricewaterhouseCoopers
United
Kingdom                                                                                          
Denmark
Chartered
Accountants                                                                              
Statsautoriseret revisionsinteressentskab

 

                                                                                                                        
Kim Füchsel
                                                                                                                        
State Authorised Public Accountant

4.     Letter from UBS Limited

The Directors
Group 4 Falck A/S
Polititorvet DK-1780
CopenhagenV
Denmark

24 February 2004

Dear Sirs

We have discussed with you and PricewaterhouseCoopers LLP (UK) and
PricewaterhouseCoopers (Denmark) the profit estimate for Group 4 Falck for the
year ended 31 December 2003 (the 'Profit Estimate'), together with the bases
and assumptions on which it has been made, as set out in Group 4 Falck Trading
Statement on pages 12 to 13 and Appendix G of the Company's announcement dated
24 February 2004. We have also considered the letter dated 24 February
2004addressed to you and us from PricewaterhouseCoopers LLP (UK) and
PricewaterhouseCoopers (Denmark) regarding the accounting policies and
calculations underlying the profit estimate.

As a result of these discussions, and having regard to that letter, we consider
that the Profit Estimate (for which the directors of Group 4 Falck are solely
responsible) has been compiled with due care and consideration by the directors
of Group 4 Falck.

This letter is provided to you solely in connection with Rule 28.3(b) of the
City Code on Takeovers and Mergers and for no other purpose. We accept no
responsibility in respect of this letter other than to you, in your capacity as
directors of Group 4 Falck.

Yours faithfully

UBS Limited

Appendix H: Terms and Conditions to the Merger 

1. Pre-conditions to Posting

1.1 The Merger is conditional upon the satisfaction or waiver (by both parties
acting together) of the conditions set out in the Merger Agreement. The Merger
Agreement contains the following conditions to the posting by Group 4 Falck and
Securicor to their respective shareholders of public documentation in
connection with the Demerger and the Merger: 

(a) the convening by the High Court of a meeting of Securicor shareholders to
approve the Scheme;

(b) the delivery of expert's unqualified valuer statements in the form set out
in the Merger Agreement in relation to the Demerger to Group 4 Falck for
publication by the Danish Commerce and Companies Agency;

(c) Copenhagen Stock Exchange approval of the Group 4 Falck prospectuses;

(d) UK Listing Authority approval of the Group 4 Securicor prospectus;

(e) new committed financing arrangements in respect of Group 4 Securicor and
Falck A/S having been obtained on terms reasonably satisfactory to respective
parties;

(f) the delivery to Securicor and Group 4 Securicor of a legal opinion from
each of Herbert Smith, Davis Polk & Wardwell, Simpson Thacher & Bartlett LLP
and Troutman Saunders LLP covering matters contained in opinions previously
provided by those parties and showing, in the reasonable opinion of Group 4
Falck, a position no less favourable to Securicor and Group 4 Securicor than as
set out in those previously provided opinions; and;

(g) no termination notice having been served by either party in accordance with
the provisions of the Merger Agreement.

2. Conditions to Completion

Completion shall be conditional on the following conditions having been
satisfied or waived (by both parties acting together) in accordance with the
provisions of the Merger Agreement:

(a) the approval of the Securicor shareholders of the resolutions to be
proposed at the Securicor EGM by a majority representing not less than
three-fourths in value of the Securicor Shares present and voting at such
meeting (whether in person or by proxy); 

(b) the approval of the Scheme at the Court Meeting by a majority in number of
the Securicor shareholders present and voting (whether in person or by proxy)
representing three-fourths in value of the Securicor shares voted at such
meeting;

(c) the sanction by the High Court of the Scheme and the reduction of capital
involved therein and the registration of the court order and the minute of
reduction with the Registrar of Companies in the UK;

(d) the approval of the Merger and the Demerger at the Group 4 Falck
shareholder meeting(s) by, in each case, at least two thirds of the number of
votes cast and the number of Group 4 Falck shares represented at the relevant
meetingsubject to the conditions set out in the Transaction Steps;

(e) the valid acceptance of the Offer by holders of more than 90% of the Group
4 Falck shares for which the Tender Offer is made, or such lower percentage as
either party may in its sole discretion require, provided that such percentage
shall not be less than 67%;

(f) the receipt from the relevant competition authorities of all clearances as
specified in the Merger Agreement (including under Council Regulation (EEC)
4064/89 as amended by Council Regulation (EC) 1310/97) without (unless
otherwise agreed by the parties) the imposition by such competition authorities
of any conditions;

(g) the receipt from the relevant tax authorities of tax clearances for
UKresident Securicor shareholders in relation to the Scheme under section 707
of the Income and Corporation Taxes Act 1988 and section 138 of the Taxation of
Chargeable Gains Act 1992;

(h) the receipt from the relevant tax authorities of the following tax
clearances for the Group 4 Falck shareholders (or Group 4 Falck group
companies) in respect of the Group 4 Falck pre–Demerger re–organisation (the
'Re–Organisation') , the transfer of Group 4's business to Joint OpCo (the
'Contribution'), and the Offer from the Danish tax authorities for exemption
of:

   (i) the Re–Organisation pursuant to paragraph 13 of the Capital Gains Tax
Act (Aktieavancebeskatningsloven) and paragraph 15c–15d of the merger act
(Fusionsskatteloven);

   (ii) the Demerger pursuant to paragraph 15a–15b of the Tax Act on Mergers
(Fusionsskatteloven) in respect of Danish tax–resident Group 4 Falck
Shareholders;

   (iii) the hive-down at the Group 4 Security business pursuant to paragraph
15c - 15d of the Tax Act of Mergers (Fusionsskatteloven)

   (iv) the Contribution pursuant to paragraph 13 of the Capital Gains Tax Act
(Aktieavancebeskatningsloven); and

   (v) the Tender Offer pursuant to paragraph 13 of the Tax Act on Mergers
(Aktieavancebeskatningsloven) in respect of Danish tax–resident Group 4 Falck
Shareholders;

(i) agreement having been reached with the US Government as to the terms on
which the proxy agreement currently operated by Wackenhut Services Incorporated
(a subsidiary of Group 4 Falck) and the related US Government security
clearance will continue to apply following Completion;

(j) in respect of all the new Group 4 Securicor shares to be issued in
connection with the Scheme and the Tender Offer:

   (i) admission to the Official List and admission to trading on the London
Stock Exchange becoming effective by the decision of the UKLA to admit such
shares to listing being announced in accordance with paragraph 7.1 of the
Listing Rules and by the decision of the London Stock Exchange to admit such
shares to trading being announced in accordance with the London Stock Exchange
admission standards; and

    (ii) admission to trading on the Copenhagen Stock Exchange becoming
effective by the decision of the Copenhagen Stock Exchange to admit such shares
to listing pursuant to Section 22 of the Danish Securities Trading Act on the
basis of the Group 4 Securicor listing particulars and by the Copenhagen Stock
Exchange pursuant to Section 25 of Executive Order No. 330 of 23 April 1996;

(k) confirmation from the Copenhagen Stock Exchange with respect to admission
to trading on the Copenhagen Stock Exchange of all the shares of Group 4 A/S
and Falck A/S to be issued in connection with the Demerger becoming effective
by the decision of the Copenhagen Stock Exchange to admit such shares to
listing in pursuance of Section 22 of the Danish Securities Trading Act and to
approve each of the Group 4 Falck prospectuses pursuant to the Danish Executive
order No. 330 of 23 April 1996;

(l) the delivery to Securicor and Group 4 Securicor of a legal opinion from
each of Herbert Smith, Davis Polk & Wardwell, Simpson Thacher & Bartlett LLP
and Troutman Saunders LLP covering matters contained in opinions previously
provided by those parties and showing, in the reasonable opinion of Group 4
Falck, a position no less favourable to Securicor and Group 4 Securicor than as
set out in those previously provided opinions;

(m) the delivery to Group 4 Securicor, Group 4 Falck, Group 4 A/S and Falck A/S
of a legal opinion from Herbert Smith and Freshfields Bruckhaus Deringer in
respect of the Scheme and the due issuance of shares pursuant to the Tender
Offer and by Joint OpCo pursuant to the Contribution in a form reasonably
satisfactory to Group 4 Falck;

(n) the delivery to Securicor and Group 4 Securicor of a legal opinion from
Kromann Reumert and Gorrissen Federspiel Kierkegaard in respect of the Demerger
in a form reasonably satisfactory to Securicor;

(o) all of the indebtedness made available to Group 4 Securicor and its
subsidiaries pursuant to the new committed financing arrangements in respect of
Group 4 Securicor being unconditionally available, subject only to Completion
having occurred (including any further new committed financing arrangements in
respect of the refinancing of the USPP Notes if applicable); 

(p) the delivery by each of Securicor and Group 4 Falck to the other of written
certifications on the business day prior to the hearing of the petition for the
Scheme, and on the date that the Scheme petition is made effective, that:

   (i) warranties given by it in relation to financial information were, when
given, true and accurate in all material respects;

   (ii) transaction steps performed by it and its group companies have been or
will be performed by it in all material respects in accordance with the Merger
Agreement; and;

   (iii) it has, in all material respects, complied with the provisions of the
Merger Agreement relating to the conduct of its and its group's business prior
to Completion; and;

(q) no termination notice having been served by either party in accordance with
the provisions of the Merger Agreement.

3. Termination

The Merger Agreement provides for termination in the following circumstances:

(i) where Group 4 Falck and Securicor so agree;

(ii) where the recommendation of the board of directors of either company is
withdrawn or materially modified;

(iii) where the board of directors of either company fails publicly to confirm
its recommendation at the request of the other;

(iv) in the case of Securicor only, where its board of directors determines
(except in certain specified circumstances) not to take such steps as are
required to make the Scheme effective;

(v) by Group 4 Falck if the Securicor shareholders fail to approve the
resolutions proposed at the Securicor EGM or the Court Meeting;

(vi) by Securicor if the Group 4 Falck shareholders fail to approve the
resolutions proposed at the Group 4 Falck EGM;

(vii) by either company if the other commits a material breach of the Merger
Agreement, or does any act which gives rise to a claim by the other for
indemnification;

(viii) by either company if an event, circumstance or liability occurs or
arises in relation to the other company, the effect of which would be to
materially prejudice the shareholders of the first company if the Merger were
to become effective (including, in the case of the Group 4 Falck shareholders,
a deterioration in the Argenbright litigation);

(ix) by Group 4 Falck if there is a breach by Securicor of the warranty it has
given to Group 4 Falck in respect of the Argenbright litigation or there is a
deterioration in respect of the Argenbright litigation or new information in
relation thereto comes to light, the effect of which would have been (had it
occurred or been available prior to announcement) to materially adversely
affect the Group 4 Falck board's assessment of the litigation for the purposes
of deciding whether to enter into the Merger Agreement;

(x) by either Group 4 Falck or Securicor if certain statements made by the
other with respect to, amongst other things, the filing of tax returns and
obtaining of tax clearances, are materially untrue; or;

(xi) by either Group 4 Falck or Securicor if the other has acquired shares in
it in a manner which is materially inconsistent with the implementation of the
Merger.

The right to terminate the Merger Agreement and the conditions to posting and
Completion can only be invoked by either Group 4 Falck or Securicor, as the
case may be, in circumstances in which the relevant party would have been
permitted to do so by the UK Panel on Takeovers and Mergers in accordance with
Rule 13 of the City Code on Takeovers and Mergers (and note 2 thereon), had
such invocation been subject to that Rule.

 


                                                                                                                                                                                                     

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