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| The security services businesses continued to perform well in 2007 with good organic growth of 8.7% and margins improving to 6.7%. |
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| Europe |
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Organic growth in Europe was 6.3% compared to 5.0% in the same period last year. Margins were maintained at 6.6%.
There was good organic growth of 6.0% in the UK & Ireland and margins remained strong at 8.2%. Customer retention rates in the security business were high at around 95% and there were a number of significant contract wins in the year. A new contract to assist passengers with restricted mobility at London Gatwick Airport will commence in April 2008. Good growth continues in the electronic monitoring contract and Parc prison at Bridgend continues to expand.
A number of acquisitions were made in the region aimed at increasing the expertise of the group in key sectors in line with the group strategy. The acquisition of GSL was announced in December 2007 and this should complete within the first half of 2008.
The Netherlands had a strong year, increasing revenue and achieving very strong margins. The company successfully retained the Schiphol airport contract for a further 5 years. Capability-building acquisitions were made in the fire and safety training sector consolidating its market leading position as a safety and security solutions provider in the country.
In the Baltics, growth was over 20% and margins improved significantly on the prior year due to strong price increase programmes across all services and the completion of large systems installation projects at Tallinn airport, Riga port and for the Lithuanian customs service.
There was good growth and strong margins in Denmark despite the business incurring significant re-branding costs. Growth in Belgium was slow, but there was a significant improvement in margins from the systems business and through performance management improvements across the business.
In Sweden, margins were impacted negatively by restructuring and the loss of the Arlanda airport contract in February although there were some good contract wins in the second half of the year. 2007 was a consolidation year focusing upon strengthening the management team, right-sizing the company and developing a solid platform to execute the new strategy.
In Romania, the business achieved excellent growth, largely as a result of the outsourcing of a wide range of security-related services by the Romanian post office.
In Greece, business performance improved compared to the prior year as a result of improved control of labour costs. The difficult labour environment in the country has now stabilised. New contract wins in the security systems business in Israel early in 2008 will add to the good organic growth achieved in 2007.
In March 2008 we announced a process had commenced for the divestment of our security services businesses in France and Germany. These businesses are considered to be sub-scale and with our focus on delivering the new group strategy in 2008, the funds released will be used to bring additional capabilities into the group. |
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THERE WAS GOOD ORGANIC GROWTH OF 6.0%
in the UK & Ireland and margins remained strong at 8.2%. |
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IN THE BALTICS, GROWTH WAS OVER 20% and margins improved significantly on the prior year. |
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IN ROMANIA THE BUSINESS ACHIEVED EXCELLENT GROWTH, largely as a result of outsourcing by the Romanian post office. |
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IN MARCH 2008
we announced a process had commenced for the divestment of our security services businesses in France and Germany. |
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ORGANIC GROWTH IN ASIA WAS 17.0% and margins improved to 8.5%. |
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IN THE MIDDLE EAST, ORGANIC GROWTH WAS VERY STRONG
at 19.7% and margins were at 8.0%. |
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IN AFRICA ORGANIC GROWTH WAS 15.2%
and margins improved strongly to 8.7%. |
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IN THE LATIN AMERICA & CARIBBEAN REGION, GROWTH WAS STRONG
at 16.6% and margins improved to 6.5%. |
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North America |
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Organic growth in North America was strong at 7.3% overall and margins were 5.9%.
In the United States overall organic growth was solid at around 6%, with around 9% growth in the commercial sector, largely due to the start up and expansion of the Mexican border control contract which is performing well.
There were significant contract bidding and start up costs in the government sector in the last quarter of 2007, which meant that margins were held at prior year levels. The government business won significant contracts towards the end of the year which will flow through in 2008.
In Canada organic growth was strong and margins were maintained at prior year levels despite a difficult pricing environment and tight labour markets. |
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New Markets |
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In New Markets, organic growth was strong at 17.0% and margins increased by 0.3% to 8.0%.
Organic growth in Asia was 17.0% and margins improved to 8.5%. In Hong Kong the business performed strongly as a result of focusing on key market segments and improved opportunities from combined security systems and manned security contracts.
Macau continued to grow very strongly along with the region’s increasing reputation as a venue for conferences, events and exhibitions, resulting in increased security spend for both permanent contracts and event security services.
India continued to perform well with excellent growth of around 28% and strong margins. G4S is the second largest private employer in India and we have recently won contracts for security at four airports in Delhi, Mumbai, Hyderabad and Cochin.
In the Middle East, organic growth was very strong at 19.7% and margins were at 8.0%, driven by the continuing economic boom in the region coupled with a surge in tourism.
In Saudi Arabia the acquisition and integration of al Majal earlier in the year means that G4S is now the market leading security company in the Kingdom.
In Africa, organic growth was 15.2% and margins improved strongly to 8.7%. In South Africa the business is improving, largely as a result of increasing efficiency in the operations.
The business in Kenya performed very well this year with good growth and a strong profit performance. Despite the recent political turmoil in Kenya, the security services business has won significant new contracts in the first months of 2008.
Elsewhere in Africa, Botswana, DRC, Malawi, Mozambique and Namibia all performed well as a result of strong organic growth.
In the Latin America & Caribbean region, growth was strong at 16.6% and margins improved to 6.5%.
Argentina improved significantly from 2006 through a targeted effort to increase cost recovery from customers and from an expansion into the security of gas and oil facilities in the southernmost part of the country.
In Chile we reported our first full year of results from the acquisition made in late 2006 where the acquired company performed well. Guatemala continues to post strong margins despite increased competition and the continued shortage of labour.
The various businesses within Colombia performed extremely well in comparison to 2006. The improved security situation and increased market share within our various markets contributed to a strong result.
We entered seven new countries in new markets in 2007 – Mauritius, Mauritania, Guinea, Cambodia, Madagascar, Mali and Sri Lanka. |
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