COMPANY PRESS RELEASE: Group turnover during the year rose to £1,136 million, an increase of 58% on the previous year. The profit before tax and amortisation from our ongoing businesses (before the development costs of our e-commerce venture) rose by 16% to £63.8 million (2000: £54.9 million).
Our results this year were affected by the disposal of Securicor Wireless, giving rise to discontinued and exceptional items. The details of these and other items included in our results before tax are shown after my statement.
Profit before interest, amortisation of goodwill and tax increased by 37.5% to £74.0 million on turnover of £1,093.7 million (2000: £620.4 million). £367.1 million of the increased turnover related to businesses acquired during the period. Organic turnover growth was a healthy 7.1%.
United Kingdom and Canada
UK Cash Services enjoyed a successful year, with good organic growth of above 8%. Almost 1,000 Securicor-branded ATMs are now in use and ATM servicing continued to grow at a rate of 20% a year. Significant new business with financial institutions was taken on by the company in the second half of the period.
UK Security Services, which comprises Securicor Guarding and the recently-acquired Securicor ADI, is now operating as an integrated unit. The guarding market remains highly competitive, constraining both the growth and profitability of this sector during the last year.
Custodial Services, which provides integrated justice services, achieved organic turnover growth of 9% and a good improvement in profitability.
Trading proved tough in Canada, where we have a major share in a relatively small cash services market and where our major competitor has kept prices unrealistically low. Union action, now resolved, caused temporary operational difficulties. We expect improved results in the current year.
Securicor International Valuables Transport, acquired at the beginning of the period, had a very good year. This company’s worldwide operations, previously run from locations in London, USA and Australia, have now been expanded to include offices in Hong Kong and South Africa.
Randon, the Dutch security business which we acquired in April, produced a very strong performance. We acquired three small to medium-sized cash services businesses in Germany, all of which were successfully integrated with our existing German business. We now have major positions in Germany and Holland, the largest security services markets in Continental Europe.
There were strong performances in Hungary, Ireland, Luxembourg and UAE, and from our offshore island operations in Jersey, Guernsey and Isle of Man.
In November 2000 we acquired the leading guarding company in South Africa, Gray Security, together with its various subsidiary companies on the African continent. The South African operation was successfully integrated with Securicor’s existing African investments. A legislative attempt to prohibit foreign ownership of security companies in South Africa was defeated. Excellent progress was made in the rest of Africa, with operations being set up in several new territories.
At the end of December 2000, we acquired Argenbright Security, Inc., the Atlanta-based operator of aviation-related and commercial security services throughout the United States. The terrorist attacks of 11 September 2001 have had a major impact upon the US aviation security industry. A new law was enacted last month, by virtue of which all aviation security screeners must become federal employees within one year. Argenbright’s US aviation-related business, which has an annualised turnover of less than £120 million, will thus be run down during the next few months. As announced on 16 November 2001, that portion of the goodwill attaching to the US aviation passenger screening business is unlikely to exceed £35 million.
Argenbright provided screening services for the flights from Newark and Washington on 11 September. We believe that those services were properly carried out in accordance with contractual requirements.
Argenbright’s commercial guarding business, which has an annualised turnover of some £130 million, performed soundly.
Our Florida-based provider of juvenile detention facilities, Securicor New Century, continued to perform well. Last month we acquired for US$7 million the business of EMS, Inc., a California-based provider of electronic monitoring equipment and services for the custodial sector. The equipment will be of particular benefit to our United Kingdom operations.
Our companies in Central America and the Caribbean had a very good year, with improvements in each of the businesses.
Performance showed good improvement, although profitability has not yet returned to its pre-1998 levels. The region as a whole benefited from operational improvements, good cost control and increased productivity.
Profitability improved in Indonesia, Macau, Taiwan and Thailand, territories in which we have leading market positions. A joint venture cash services business, opened in Changchun, Northern China, at the end of last year, will act as the business model for developing this service in other Chinese cities.
Profit before interest, amortisation of goodwill and tax from our 50% interest in Distribution was £6.1 million, compared with £6.0 million for the previous year. The group’s 50% share of the division’s turnover was £338.9 million, split between Omega Express (£209.9 million) and Omega Logistics (£129.0 million).
The results of the Nextday sector of the Express business, which alone represents more than 70% of the Express turnover, were affected both by lower volumes in the fourth quarter of the period and by IT investment costs. Whilst some sectors of Nextday’s customer base appeared stable, for example office products and luxury goods, there was a marked decline in the hi-tech, telecoms and electronics sectors.
Good progress was made with the European service although as yet it represents only about 5% of the Omega Express turnover.
A profit improvement programme was launched at the end of the period, combining carefully targeted price increases with reductions in overhead and operating expenses.
The Logistics business enjoyed an improved profit performance, particularly in the second half. Whilst turnover growth was constrained, particularly within Securicor Omega Container Logistics, the business benefited from tight cost control and a robust stance on price increases. Several major contracts were renewed and, at the same time, renegotiated on terms more favourable to Securicor.