Chief Executive's Review Security Services Cash Services Financial Review Our People Corporate Citizenship  
  The security services business now comprises manned security, security systems and justice services.      
         
  WE PROVIDE SECURITY SOLUTIONS TO A WIDE RANGE OF MARKETS, SECTORS AND CUSTOMERS. THE SERVICES WE PROVIDE INCLUDE MANNED SECURITY, ELECTRONIC SECURITY, SECURITY CONSULTANCY, ELECTRONIC MONITORING AND SURVEILLANCE, EVENT SECURITY AND TRANSIT SECURITY.      
         
  Our security services model is built on our broad range of specialist services, which enables us to manage risk, security and safety for our customers. This combined security solutions offering, under one organisational structure and in tandem with our diverse geographic reach, allows us to provide customers with a unique approach.

In 2006, security services achieved organic growth of 6.9% and margins were maintained at 6.2%, despite tough comparatives in 2005 and some pressure in Europe in the first half of the year.

In Europe, we produced organic growth of 5.0%, with margins of 5.8%, compared to 5.9% in 2005.

There was modest organic growth in the UK & Ireland during the year, with negative growth at the half year, but growth in the last quarter of 2006 at over 6%. Margins improved to 8.2%, mainly as a result of good cost control. We saw strong demand in justice services, relating to increased volumes in our electronic monitoring contract and at HMP Parc. In addition, we won several contracts for higher margin project work during the fourth quarter, which is evidence of our high levels of customer service.

The management structures of UK security services and justice services were merged at the end of the year to create a market facing, customer focused business. Growth in the UK will be achieved by targeting specific market segments and customers. These target segments include retail, facilities management, events, aviation and rail & maritime. We will also use the public sector expertise of the justice services business as a platform for moving into the provision of services to new areas of government, for example defence, nuclear, the Foreign Office, the courts, the Department for International Development and UK embassies around the world.

The Netherlands had another exceptional year, supported by a recovering economic environment, despite the renegotiation of our justice services contract in the prior year. The business achieved double-digit organic growth and improved margins and won several important contracts with multi-national organisations, including a major international oil & gas company. The business was also successful in winning significant project work, including some training activity for the prison system and the transportation network.
  
In Europe, we produced organic growth of 5.0%, with margins of 5.8%.
 
In the UK & Ireland, margins improved to 8.2%, mainly as a result of good cost control.
 
The Netherlands had another exceptional year, supported by a recovering economic environment.
 
         
 
* At constant exchange rates
Turnover
£m
PBITA
£m
Margins
 Organic
Growth
  2006 2005 2006 2005 2006 2005 2006
               
Europe* 1,792.1 1,699.7 104.5 100.5 5.8% 5.9% 5.0%
North America* 1,049.9 993.2 62.7 59.2 6.0% 6.0% 5.4%
New Markets* 638.6 525.1 48.4 38.4 7.6% 7.3% 16.1%
Total Security Services* 3,480.6 3,218.0 215.6 198.1 6.2% 6.2% 6.9%
Exchange differences - 29.8 - 3.3      
At actual exchange rates 3,480.6 3,247.8 215.6 201.4      
     
         
  Belgium continued to perform well and the business was successful in increasing the scope and activities of several important existing contracts, in particular for some high profile political organisations. Denmark achieved good organic growth and margins, supported by another strong performance from its market-leading systems business which implemented the country’s largest ever systems project during the year. Sweden was impacted by some contract losses, but these were partially offset by several good contract wins during the year. A new management team is in place and we are well positioned to take advantage of our unique capability of offering customers combined security solutions. The Baltics had another strong year with double-digit organic growth and high margins, driven by some large contract wins with Finnish retailers and our wide range of services in the region.

France delivered good organic growth, but a restructuring programme and on-going wage pressures had some impact on margins. Nevertheless, with a new management team in place, a high quality customer base and a strong product offering, there is much potential for margin progression in the future. We are currently preparing for a national licensing programme, which we expect to be implemented at the end of 2007.

Greece won several important contracts during the second half, partially offsetting some material contract reductions earlier in the year, one of which had a sizeable associated termination cost. We saw an increase in labour costs during the year, as a result of new social security laws, but a new collective bargaining agreement has been signed and is expected to benefit the industry going forward.		  
Belgium continued to perform well and the business was successful in increasing the scope and activities of several existing contracts.
 
The Baltics had another strong year with double-digit organic growth and high margins.
 
         
  Despite a challenging socio-political environment in Israel last year, good progress is being made in finalising a new collective bargaining agreement. In addition, our electronic monitoring contract continued to grow. Our systems business had an excellent year as we maintained our position as the sole supplier of integrated security solutions. In 2007, significant combined security services and cash services contracts have been won in Turkey and Romania, the latter for a key public sector institution.

North America delivered another year of good organic growth and margins in 2006. Excluding turnover related to high levels of short term response work after Hurricane Katrina during 2005 and early 2006, underlying organic growth was around 8% for the year as a whole, and particularly strong in the fourth quarter of 2006 at 10%, measured on the same basis. Margins were maintained at 6.0%, despite the tough comparable numbers in 2005.

In the United States, whilst the market continued to be very competitive, we won some large contracts during the second half in the commercial sector together with additional business from existing customers. We also achieved increased manning levels at a number of nuclear power plants. In the government sector, we won a contract to provide security and transit services at the Mexican border. Margins were maintained compared to the previous year despite stronger pressure on labour resources resulting in higher levels of un-billed overtime for much of 2006. Good management of risk, claims, incident losses and healthcare programmes mitigated these overtime cost increases.

Canada had a good year, supported by project work won during the year and some large national contract wins in the fourth quarter, including with a major car manufacturer and a multi-national IT services organisation.

We have had a presence in many developing markets for nearly 50 years ensuring that, as well as being a global organisation, we have an expertise suited to local markets and an understanding of local cultural and social issues. In these countries, where customers generally tend to buy an array of products and services, we are well placed to offer them a full range of security solutions to meet their requirements.

In New Markets, organic growth continued to be strong at 16.1%, with margins increasing to 7.6%.

The Middle East achieved 21% organic growth, with margins of nearly 9%, as our market-leading position in the region continued to have a positive impact. On-going investment in countries like the UAE and Saudi Arabia continues to benefit the group, as a growing number of companies rely on us as a key supplier of a range of security and cash services. Our contract in Iraq continued to perform in line with our expectations.		  
In the United States we won some large contracts in the commercial sector together with additional business from existing customers.
 
Canada had a good year, supported by project work and some large national contract wins.
 
In New Markets, organic growth continued to be strong at 16.1%, with margins increasing to 7.6%.
 
         
  Latin America saw 20% organic growth with margins improving to 5%. There was excellent organic growth in Argentina driven by several important contract wins, including a large systems installation, and solid margin progression, supported by an on-going focus on contract efficiency. Guatemala generated double-digit organic growth and margins, partly as a result of an acquisition which was completed and integrated during the year. Colombia had a good year due to a strong performance from its toll service business and as a result of increased corporate investment in the local economy by both domestic and international companies. The Caribbean region performed strongly as it continued to offer its services across an expanding geographic base.

Africa produced good organic growth of 9%, with margins of 8%. South Africa, our largest business in the region, had a challenging year due to a restructuring of the business, completed at the start of the year, and the indirect impact of industry-wide strike action, which was settled during the first half. A long term union agreement is now in place and the business is extremely well placed going forward. Kenya, Botswana and Namibia produced excellent organic growth with solid margin improvements due to the businesses’ unique offering of combined security solutions. Nigeria also had a strong year driven by our activities in the thriving local energy sector.

Asia achieved exceptional organic growth of 17% and good margin progression to 8%. Our market-leading position and prominent reputation, as well as our wide range of service offerings, continued to have a beneficial impact in India, where strong, double-digit growth and good margin improvements were achieved. In Hong Kong we continued to win a number of small to medium-sized contracts, ensuring the business is on a firm platform going forward. Macau performed extremely well as we continued to see the benefits of the country’s burgeoning tourist industry. 		 
Latin America saw 20% organic growth with margins improving to 5%.
 
Asia achieved exceptional organic growth of 17% and good margin progression to 8%.
 
         
  Back to top