How to find security in security

The security industry used to be a retirement home for policemen, but it is being transformed by the digital revolution. For firms like SNP Security, future growth lies in innovation.

When Telstra recently bought 51 per cent of SNP Security, the electronic division of SNP Group, the $50 million deal went almost entirely unnoticed. There were one or two mentions in the business media, mainly focused around why Telstra was doing it, and that was it.

But there’s a more interesting yarn in why SNP did it. This is one of Australia’s great family firms: a 90-year-old, $250m-a-year security operation that started life as Sydney Night Patrol, a private police force guarding Sydney’s streets and businesses. It’s still in the hands of a family that’s fiercely proud of its heritage.

Tom Roche, the fourth generation managing director, says the Telstra deal definitely does not represent the beginning of the sale of the whole company. He insisted on staying in as 49 per cent partner.

So why sell any of the business at all?

Two reasons: to build a war chest for acquisitions and to secure the business’ future by partnering with an innovation powerhouse.“It was the opportunity of a generation for us. Telstra is an incredibly innovative company, and it’s known internationally for that -- far more than it is in Australia.”

And these days, unlike when Tom’s great great grandfather retired policeman John Roche started the business in 1923, walking the beat, security is all about technology: whether it’s the electronics division that is now joint ventured with Telstra, or the traditional 'manpower' business that remains SNP’s core business.

In fact the Telstra connection is probably just as important for the part of SNP that wasn’t sold as it is for the part that was. Security services is a very competitive, low-margin business, whether you’re running the checks at Sydney airport (as SNP has been doing for 50 years) or providing concierges for city offices. If you’re not using the latest technology, you won’t win the contracts that matter.

As for acquisitions, well there are almost as many security businesses in Australia as there are retired policemen. Tom Roche is now looking to drive some consolidation.

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John Roche was an Irish soldier who became a professional boxer to buy his way out of the army. He joined the NSW Police and shot to prominence in 1894 by catching one of Australia’s first serial killers, Frank Butler, as he got off a boat in San Francisco.

Butler was responsible for the infamous Blue Mountain Murders of 1893 and he scarpered to America after killing six people. His dramatic arrest by John Roche as he got off the boat was a big story in the American newspapers at the time, and John was quickly promoted to Inspector, and then Superintendent.

But he obviously burned with an entrepreneurial spirit, and in 1923 he quit the cops to start a company to do the work of police. He created Sydney Night Patrol and Inquiry Company Ltd on June 23rd that year, and started out delivering court summons, doing payroll escorts and foot patrols.

He was then in his 50s and already had a son, Tom, who became his first employee. The two of them built the business steadily, including through the Great Depression. Ownership passed to Tom, who had seven children of his own, including four sons who worked in the business. When he died in 1959, ownership was split seven ways.

Two years later, the four brothers who worked in the business -- John, Tom, Kevin and Peter -- bought out the siblings who didn’t.

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Kevin ran SNP for 34 years from 1960. The managing director since 1994, Tom, is his son. There was a further ownership reshuffle in the 1990s, which left Tom Roche with 25.1 per cent, his mother Jacqueline with 25 per cent, uncle Peter with 39 per cent and his son David with 11 per cent.

So it’s essentially now a 50/50 partnership between two sides of the Roche family, with Tom and his mother having control with just a bit more than 50 per cent.

There are now three Roches working full time in the business: Tom, David and his younger brother Anthony. Tom’s brother Kevin, an investment banker, is the only non-executive director on the board.

Tom’s sons, Nick, 20, and Josh, 18, are also working at SNP, having deferred university, and David and Anthony have five younger kids between them. The fifth generation looks taken care of, although Tom is still in his early 50s with no plans to retire for a while.

He’s looking forward to the new partnership with Telstra, and using it to continue SNP’s record of double-digit annual growth. Not surprisingly, the business really started taking off after 9/11.

Now Tom wants to win the security contracts for Australia’s other capital city airports to add to the 50-year-old contract in Sydney. He’s already bid unsuccessfully for Melbourne and Adelaide, and will be fronting up again when next they go to tender.

But the big growth from here is likely to be in technology -- things like remote home security using smartphones, using drones instead of foot patrols and operating CCTV networks around cities. Tom Roche says the clarity of the images captured by drones and CCTV are getting better and better, along with the software that analyses them.

The security industry is no longer simply the retirement home for coppers. Like most industries it’s being transformed by the digital revolution, and the winners will be those who, like the Roche family, have access to money and technology.

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