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WE ARE ONE OF THE LEADING GLOBAL PROVIDERS OF A RANGE OF CASH SERVICES SOLUTIONS, INCLUDING THE TRANSPORTATION AND MANAGEMENT OF CASH, ATM MANAGEMENT, ENGINEERING AND REPLENISHMENT AND FULLY OUTSOURCED CASH CENTRE MANAGEMENT. |
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Investment in technology is a key priority for us, as it enables us to enhance our security procedures, improve our efficiency and drive product development, all of which benefit our customers. We can utilise our leading-edge technology, our wealth of experience and our industry knowledge to support our customers around the world, as different markets progress through the various phases of development in cash services. This enables us to provide customers with innovative cash solutions including the management of ATM networks, ATM engineering services and fully outsourced cash processing.
In 2006, cash services produced strong organic growth of 7.6%, compared to 6.2% in the prior year, whilst margins increased to 10.1% from 9.8%.
Overall organic growth in Europe increased to 6.7%, from 5.8% in the prior year, with margins increasing to 10.4%, from 9.7% in 2005. The UK & Ireland saw continued good growth and further margin development, supported by several significant contract wins with major retailers and banks.
ATM and cash processing performed particularly well, and we continued to offer new services, such as helpdesk monitoring and cash forecasting to existing customers. Whilst attack levels increased on the prior year, good progress is being made in reducing attacks in certain regions and we continue to develop new technologies to reduce attack losses. We have commenced the pilot of our retail cash management solution, one of several significant growth opportunities going forward.
Good margins were maintained in the Netherlands and the business achieved some important contract renewals, winning 100% of all tendered existing contracts. During the year, we also supported two major existing customers with end-to-end ATM solutions, during an intensive roll-out of their ATM networks. In Sweden, we saw a decline in attacks, due to an increased investment in security, with all vehicles now using intelligent systems. Our business delivered further margin progression and we won a number of contracts during the year, the most significant being a major Swedish financial institution, which commenced in 2007. There were strong performances elsewhere in Europe during the year – in particular Belgium, the Baltics and Hungary saw robust organic growth with good margin improvements.
During December 2006, we reached agreement to divest our cash services business in Germany.
The market had become increasingly challenging and the situation had developed into a distraction for divisional management. Given the disadvantageous impact the business was having on our divisional results, we believe disposal was the most appropriate option.
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| * At constant exchange rates |
Turnover
£m |
PBITA
£m |
Margins |
Organic
Growth |
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2006 |
2005 |
2006 |
2005 |
2006 |
2005 |
2006 |
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| Europe* |
661.7 |
619.4 |
68.7 |
59.9 |
10.4% |
9.7% |
6.7% |
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| North America* |
85.3 |
80.5 |
1.8 |
3.0 |
2.1% |
3.7% |
1.7% |
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| New Markets* |
126.0 |
99.1 |
17.4 |
15.4 |
13.8% |
15.5% |
18.5% |
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| Total Cash Services* |
873.0 |
799.0 |
87.9 |
78.3 |
10.1% |
9.8% |
7.6% |
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| Exchange differences |
- |
(1.1) |
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0.0 |
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| At actual exchange rates |
873.0 |
797.9 |
87.9 |
78.3 |
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In North America, there was organic growth of 2% in Canada, compared to negative growth of 5% in the prior year, with margins decreasing to 2% from 3.7% in 2005. The market continued to be challenging due to aggressive pricing from some of our competitors and profitability was impacted by increased operating costs following a major robbery in 2005. Nevertheless, we were awarded some important contract renewals from major Canadian banks and we are optimistic about the medium term outlook.
New Markets delivered strong organic growth of 18.5%, compared to 19.8% in the prior year, with margins of 14%, compared to 15% in 2005. Asia saw good organic growth and margin progression. Our businesses continued to be successful in providing customers with enhanced product offerings as the market dynamics in various countries, including Malaysia and Indonesia, become further advanced. In Hong Kong, whilst the market is less developed, we continue to benefit from being the only major provider of a full range of cash services.
The Middle East delivered another outstanding performance. The region experienced double-digit organic growth and margins as a result of our market-leading position and the on-going favourable economic conditions in the region. In particular, UAE, Saudi Arabia and Qatar delivered exceptional results.
Africa achieved another excellent year of organic growth, buoyed by a particularly strong performance in Kenya. Morocco had a challenging year, partly as a result of new legislation surrounding the cash management market resulting in an asset write-down. In February 2007, we announced the acquisition of a majority stake in Fidelity Cash Management Services (PTY) Ltd. This acquisition provides the group with a cash services presence in South Africa for the first time, as well as growing our exposure to other markets, including Botswana, Namibia and Lesotho, thereby increasing the potential for cross-selling opportunities in these markets. |
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| Asia saw good organic growth and margin progression. |
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| The Middle East delivered an outstanding performance, while Africa achieved another excellent year of organic growth. |
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