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| In 2008, the secure solutions business continued its strong performance with good organic growth of 8.6% and margins maintained at 6.7%. |
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| Organic growth in Europe was 8.3% compared to 6.5% in 2007. Margins were unchanged at 6.5%. |
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| Europe |
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There was good organic growth of 7.6% in the UK & Ireland compared to 6.0% in the same period last year. Margins strengthened further to 8.3%. Customer retention rates in the security business were high at around 95%. The care and justice, events, defence training and secure facilities management businesses all recorded strong growth and good margins. A number of new services were launched in the year including Gurkha services, lone worker protection and a vacant property protection service.
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 and integration of GSL, ArmorGroup and Rock Steady have all progressed well, adding expertise and delivering synergies ahead of expectations. Key contract wins include Brook House immigration detention centre, facilities management services for South Warwickshire and North West London Primary Care Trusts, the Olympic Delivery Authority, the Ministry of Defence and the first offender monitoring contract in Northern Ireland.
In Continental Europe, organic growth was 8.6% and margins were slightly below the prior year at 5.4% due mainly to a challenging environment in aviation security as a result of lower passenger numbers, the start up of the Oslo airport contract and lower installation growth in the smaller security systems businesses. Cost reduction measures are being implemented in these markets. Security systems is a relatively small part of the G4S portfolio and contracts are concentrated in Continental Europe. Overall contract retention in the region was high at over 95% with key contracts such as those for the European Parliament (Belgium and Luxembourg) and Schiphol airport being renewed in 2008.
Lithuania and Luxembourg had a strong year in all customer segments and Austria delivered good results assisted by completion of some systems projects, the Euro 2008 football championships and other major events. In Greece, the business won four new regional airports contracts and the Athens Metro contract in 2008, which contributed to excellent growth and helped improve margins.
In Romania, the business achieved excellent growth and margins, largely as a result of the outsourcing of a wide range of security-related services by the Romanian post office and the critical mass that this has created across the country. In the Baltics, growth slowed but margins were robust.
Norway achieved excellent organic growth of over 40% assisted by the Oslo airport contract which began early in the year. Finland had a good year and in Sweden, the business is now trading profitably under the new management team and following some good contract wins in 2007. There was good growth and solid margins in Denmark, aided by security systems growth across all segments and strong growth in manned security. |
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There was good organic growth of 7.6% in the UK & Ireland compared to 6.0% in the same period last year. Margins strengthened further to 8.3%. Customer retention rates in the security business were high at around 95%. The care and justice, events, defence training and secure facilities management businesses all recorded strong growth and good margins. A number of new services were launched in the year including Gurkha services, lone worker protection and a vacant property protection service. |
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| North America |
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Organic growth in North America was 3.6% and, excluding the US commercial nuclear sector which lost a large contract, organic growth was 7.0%. Margins were slightly lower at 5.8% as expected due to start up costs on some new contracts and contract renewals.
In the United States the commercial business was broadly flat. However excluding the commercial nuclear business, organic growth was 5%. The government business achieved organic growth of 11%, with the immigration and border control contract performing strongly.
New contract awards included those for the Department of Energy at its Hanford Site and commercial nuclear power sites for companies such as FPL and an international contract with Agilent. Contract renewals and extensions included Chrysler and Bank of America.
In Canada there was good organic growth and margins improved as a result of a programme to exit low yielding contracts and focus on higher margin businesses. |
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| New Markets |
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In New Markets, organic growth was excellent at 16.1% and margins were maintained at around 8%.
Organic growth in Asia was 15.6% and margins were 7.9%. Margins in Asia were slightly down due to the lower margin Australian prison contracts which were acquired with GSL. India continued to deliver excellent growth of over 20% and strong margin improvement.
Thailand also performed well with organic growth of over 20% with improved margins and won a major contract with SCB at the end of 2008. In Malaysia, organic growth was 10% due to improved operational performance and a significant increase in the number of ATMs and CDMs serviced.
In Hong Kong, the business grew slightly despite a challenging competitive environment and margins were maintained. In Macau, growth slowed but was still above 15% and margins remained strong. The Papua New Guinea business performed very well in its first year of operation.
In the Middle East, organic growth was impressive at 21.6% and margins were at 8.4%, driven by good performance in facilities management and improvement in the margins achieved in Iraq.
In UAE, organic growth was 18% and G4S has been granted contracts for a secure training centre and rehabilitation services in Abu Dhabi. Qatar achieved organic growth of 80% from mainly the education, military and energy sectors.
In Africa, organic growth was 10.8% and margins improved to 9.0%. Kenya performed very well with growth of 14% and continued strong profitability. Morocco had strong growth assisted by new contracts in the oil and banking sectors. In South Africa, growth continued but margins were lower due to a number of underperforming contracts and new management has been installed.
Elsewhere in Africa, DRC, Malawi, Mozambique, Nigeria, Namibia and Zambia all performed well with healthy organic growth and a significant increase in scale from the ArmorGroup acquisition in many of these markets.
In the Latin America & Caribbean region, organic growth was 16.5% and margins were 6.6%. The region has experienced a slight slow-down in economic growth and some smaller competitors in countries such as Peru and Ecuador have exited the market, which is currently providing an opportunity for the group as the labour market tightness has reduced.
Argentina continued to perform well with organic growth over 30% and improved margins helped by an improved business mix.
In Chile, improving margins were assisted by the acquisition of the largest marine security solution company and some higher margin mining contracts. Peru grew more than 20% helped by new regulation which favours professional security companies and margins improved due to new technology related contracts.
The various businesses within Colombia performed well in comparison to 2007 but overall results were impacted by the renegotiated tolls contract, as expected. |
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In New Markets, organic growth was excellent at 16.1% and margins were maintained at around 8%. |
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Overall contract retention in continental europe was high at over 95% with key contracts such as those for the European Parliament (Belgium and Luxembourg) and Schiphol airport being renewed in 2008. |
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IIn Romania, the business achieved excellent growth and margins, largely as a result of the outsourcing of a wide range of security-related services by the Romanian post office and the critical mass that this has created across the country. |
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There was good growth and solid margins in Denmark, aided by security systems growth across all segments and strong growth in manned security. |
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Organic growth in North America was 3.6% with margins of 5.8%. |
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New contract awards include the Department OF Energy at its Hanford Site and commercial nuclear power sites for companies such as FPL and an international contract with Agilent. |
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In the Middle East, organic growth was impressive at 21.6% and margins were at 8.4%, driven by good performance in facilities management and improvement in the margins achieved in Iraq. |
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IIn UAE, organic growth was 18% and G4S has been granted contracts for a secure training centre and rehabilitation services in Abu Dhabi. Qatar achieved organic growth of 80% from mainly the education, military and energy sectors. |
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In the Latin America & Caribbean region, growth was 16.5% with margins at 6.6%. |
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