Business Profile: Locking in growth at Securicor

Prisons offer promise for the chief executive taking group back to its roots
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Locking up people is a growth business. So what better time to be running a company which specialises in doing just that, what with the most authoritarian Home Secretary in years in charge of the prison system? Nick Buckles, chief executive of Securicor, drops his guard for a moment: "Let's just say present government policy presents us with opportunities."

It may seem mercenary to treat prisoners as another commodity, a bit like baked beans or widgets on a production line, but that is the way of the world these days. Securicor already operates one prison in south Wales under the Private Finance Initiative, which means the bigger the prisoner throughput, the more the income. Next year it will open a secure youth training centre in Milton Keynes and then there are more PFI prisons to bid for. After that, who knows? But the way David Blunkett is going there is unlikely to be any shortage of raw material for Securicor to process, from asylum seekers to terrorist suspects.

Then there is electronic tagging - up 100 per cent in the past year - and fine enforcement, and the private operation of what Mr Buckles calls "custodial suites" inside police stations. It's a dirty business keeping Britain safe and secure, but someone's got to do it.

And what better credentials for the job than to be called Securicor? Since Mr Buckles took over as chief executive nearly two years ago the company has been re-inventing itself. Or perhaps, to be more accurate, returning to its roots as a pure security business, which is how it started nearly 70 years ago.

Securicor's half-year results, due out on Thursday, should be virtually the last set of figures to be marred by the writedowns and one-off charges that have accompanied the sometimes painful restructuring process.

The group's 40 per cent stake in Cellnet was sold off long ago. More recently Securicor has quit the UK parcels business, closed its US aviation services division and sold its information services arm to management.

That leaves three core businesses which together still employ 100,000 people, 20,000 of them in Britain. The first is cash services, which basically means its fleet of security vans. The second is guard patrols and electronic security. The third is justice services - a posh description for running prisons and escorting prisoners. The first two account for 90 per cent of profits and 95 per cent of turnover, but the third is where the growth lies. "We've had a lot of cleaning up to do. But what's left is a much simpler business with good quality cash flow," says Mr Buckles.

Cash is indeed Securicor's bread and butter. It handles £1.2bn of the stuff every day - collecting it from shops, delivering it to companies so they can pay wages, supplying banks so they can re-stock their ATMs.

Despite Britain's love affair with credit, the amount of cash in circulation is still going up by 7 per cent a year and at any one time there is £30bn swilling around the system. "There is still a big black economy out there, which drives demand for cash," says Mr Buckles. "People still like using cash - it is portable and it is anonymous."

Unfortunately, those are also the two attributes which attract less law-abiding citizens. On average, a Securicor guard somewhere in the world is attacked every day. "Some are low-level opportunistic snatches, some are with weapons, and some are fully planned assaults on our branches," he says. "There are more assaults in Britain than in the rest of the world put together, largely because we are unarmed."

Securicor's cash services business has had a tough year, despite its commanding position with 60 per cent of the UK market. It is all down to interest rates. "When rates are high, retailers may bank their takings three or four times a week to maximise their interest. When rates are low there isn't the same incentive."

He also says the roll-out of ATMs has slowed down considerably now that banks are no longer able to charge customers to use them.

The economic slowdown has also affected Securicor's manned and electronic security business which provides guards and equipment to patrol company premises.

That means the group's expansion is being driven by justice services - mainly in the UK but also overseas. For instance, it also operates youth detention centres in Florida. With overcrowding in Britain's Victorian jails still a big problem and the PFI an established success in providing more capacity, this Securicor division is enjoying annual growth rates of 15 per cent.

Mr Buckles insists there is no difference in the way the private sector treats prisoners - if anything it sets the standard for the public sector. "There is a high cost per head because of the amount of effort put into education and training to try to ensure that young people particularly do not re-offend," he says.

Mr Buckles is on the lookout for a "transforming deal" which would enable Securicor to double in size in one bound, from turnover of £1.5bn now to £3bn. Chubb, which was snapped up by the US conglomerate United Technologies earlier this year, would have been a neat fit. "It would have been a good deal but the timing was all wrong," says Mr Buckles. He is hopeful, however, of picking up some of Chubb's cash handling and guarding businesses that UTC does not want.

A deal would certainly give Mr Buckles a wider platform on which to operate. It is a platform which has been home since he joined Securicor as an accountant in 1985 at 23, after a brief spell as a business analyst with Avon Cosmetics.

Now 42, Mr Buckles has been with Securicor for nearly two decades, working his way to the top through a variety of jobs, mostly within the UK.

Long service seems to go with the territory. "We find that if people stay with Securicor for more than a year then they tend to stay for a long time. Our human resources director has been with us for 27 years. The finance director is more of a newcomer; he's only been here for eight years. The culture is a family one."

That is no accident. The longer employees stay, the greater the company loyalty and the stronger the camaraderie - important virtues in business where an extra premium is placed on trust.

"You have to work on the basis that any employee could provide inside information to someone on the outside, which is why we spend a lot of time designing systems and processes to protect the cash we carry.

"But there is also a lot of camaraderie within the business. Very strong relationships build up and that can produce very heroic acts on the spur of the moment even though our advice to everyone who works for the company is always the same: if you are attacked, give them the money."

NICK BUCKLES

Position: Chief executive, Securicor

Age: 42

Pay: £574,000 (including £192,500 bonus) for year to September 2002

Education: Gable Hall Comprehensive, Corringham, Essex. Lanchester Polytechnic (now Coventry University), degree in business studies

Career history: One year as business analyst with Avon Cosmetics before joining Securicor in January 1985 as project accountant. Variety of positions. Joined board in 2000 and made chief executive in January 2002

Family/hobbies: Married with three children. Plays football every Saturday for East Grinstead United reserves.

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