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G4S annual profit rises

European revenue up, North American revenue down.

British security solutions group G4S has reported a profit from continuing operations of £198m for the year, compared to £245m last year.

The group, which undertook a number of acquisitions in the year, posted revenue from continuing operations of £7.52bn in 2011.

During 2011, the group’s European revenue surged to £3.54bn, while the North American revenue decreased to £1.76bn. There was strong organic revenue growth in Hong Kong, Indonesia, and double-digit growth in India.

Of the total revenue, secure solutions, and cash solutions contributed £6.22bn and £7.52bn respectively during the year.

Nick Buckles, CEO of G4S, said: “Today we have announced our seventh consecutive year of underlying revenue, PBITA and dividend growth since G4S was formed in 2004. The business has performed well despite continued global economic uncertainty and has good trading momentum. We have delivered further strong organic growth of 9 per cent in developing markets."

Total comprehensive income for the year was £77m compared to £305m previous year. Operating cash flow was £449m in 2011, compared to £455m in 2010.

Buckles added: “Looking forward, we are encouraged by the performance and outlook for our US commercial and the UK government and commercial businesses. However, the outlook for our developed markets cash solutions and Continental European secure solutions businesses remains muted and we continue to focus on cost base control. More generally, we won and mobilised a number of significant contracts in 2011 and expect outsourcing trends to continue.”

In 2012, the company anticipates an improved organic revenue growth performance whilst continuing to maintain its discipline on margins for the full year and on meeting our cash generation targets.

“Overall, we are confident about the outlook for 2012 when we expect to deliver organic revenue growth higher than 2011 together with the additional contribution from the London 2012 Olympic and Paralympic Games contract. This confidence is underlined by the 8 per cent increase in our dividend,” Buckles concluded.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.