David Taylor-Smith, Regional CEO – UK and Africa
Well the UK and Ireland highlights for the year was that we won a number of contracts in the sectors which were important to ourselves. Commercial sectors and government sectors and the businesses all performed well and strongly. We put in an organic growth of 4.3% - which I think is pretty exceptional in the circumstances.
Ireland, a slightly different story. 2010 was about restoring it back to profitability as a result of the economic recession there and we exit the year profitably, which is very pleasing. We've taken some early restructuring action in the business and that means the business is emerging much stronger.
The major contracts we won in 2010. We won a large piece of work for the Department of Work and Pensions, which is worth in excess of £80m a year, which places us in an extremely good position with that government department, which we now see as a major area of growth. We won a number of extensions to our care and justice contracts, including opening a major new wing of one of our prisons with a capacity of 450 places.
We won a number of hospital services. With provision to hospitals and a number of contracts in Iraq doing oil field services. We're also very pleased that just before Christmas we were appointed the security provider to the 2012 Olympics – which is a very significant opportunity.
Already the security provider on the construction site; we have over 500 people there and have been there for the last 2½ years. The new contract for the games time security will see us provide support and manpower to the department within the organising committee with responsibility for providing security and we'll do that at all the major venues. In addition we see a significant opportunity to provide support to visiting countries and visiting companies coming to the UK and as the preferred security provider, we'll be in 'pole' position to take that.
Just to talk a little bit about the 'comprehensive spending review'. To date it has worked out exactly as we anticipated, which, given the economic climate, the new UK government was faced with a need to reduce government spending and we assessed that, that would have an impact on our revenue, but that we should take steps to make sure that our margin was protected. So in effect getting the government to focus on lowering charges, not lowering our profit. So what we've been able to do was redesign some of our services to take out costs, therefore lowering charges to the government. So we're one of the first 20 companies to sign an MoU with the government, which has gone extremely well and we're on track to deliver the savings that we pledge during that and as a result of that, we're now sitting at the top table talking with government on what I think is a major area of expansion which is in delivering public service reform. It'll need engagement with the private sector to deliver a whole range of services which the government is committed to use the private sector to deliver and I see those coming on stream in 2011 onwards.
The commercial sector remains tough, but the truth is it's always tough and what's pleasing is that we grew that business in 2010 and we've performed extremely well particularly when compared to a number of key competitors. There's been consolidation in that market and I think that is a result of us doing well and other competitors needing to consolidate – given their financial performance.
We would see us continuing to focus on particular sectors and the reason to do that is that where we focus on sectors where security is important; then we make higher than average margin returns.
I'd just like to talk a little bit about Africa. We're at present in virtually every country in Africa and that really is our strength of offering. We've got a fantastic network and that network can be used to support local governments and companies in country. Or support governments or major multi-nationals in delivering services in Africa and we would see us particularly focusing on the telecommunications, oil and gas and extractive sectors to develop expertise to support them where they're working throughout Africa.
Generally the businesses perform very well. We had a few issues in a few countries; operational issues and what we've done is spend 2010 sorting those out, so I would see the message for 2011 is that we'll continue to build on those positions that we've got in each of those countries with a particular focus of making sure we've got market leadership in each of those countries and then using that infrastructure to exploit opportunities with companies or governments who need support delivering services throughout Africa.
I think the growth opportunities in Africa are excellent. Nearly all countries are experiencing positive GDP growth, which should provide us a good market opportunity. In addition to that, in 2011 we'll look at market entry into one of two new countries which will then virtually complete our coverage. We'll also look for capability and bolt-on acquisitions. We did one particularly good acquisition in 2010, which is a specialist high-end systems business in South Africa, which I think is a good example of the sort of acquisition that we'll be looking for.