Preliminary Results Announcement

  • 12 Mar 2014 06:00
Investing in sustainable, profitable growth, G4S Chief Executive Officer Ashley Almanza said, “This has been an extremely challenging year for G4S
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We have taken clear action to address longstanding issues and have introduced wide ranging changes to strengthen our business. We can now look to the future with increasing confidence, focusing on the growing demand for G4S services that underpins our plans to deliver sustainable, profitable growth.”

Financial highlights:

  • Underlying revenue growth of 5.8%, organic growth of 4.7%
    • Strong growth in emerging markets, revenues up 16%
    • Growth of 2% in the UK & Ireland unchanged in North America, down 2% in Europe
  • Total PBITA before specific items was 6% lower at £442m (2012: £470m), on an underlying basis, PBITA was up 2.8%.
  • Specific items of £386m comprised:
    • A global review of contracts, including a provision for the UK Electronic Monitoring contract, resulted in a £136m pre-tax charge 
    • A review of the group’s assets and liabilities at the half year resulted in a one-off charge of £132m to PBITA, completion of this review resulted in a full year charge of £182m 
    •  Accelerated restructuring programme for 2013/14 with related charge of £68m
  • Underlying EPS was 14.7p (2012: 15.8p) reflecting increased finance costs, higher effective tax rate and increased numbers of shares in issue
  • Cash generated by continuing operations rose by 36% to £460m (2012: £337m)
  • Financial position strengthened, net debt of £1.5bn at year end (2012: £1.8bn)
  • Portfolio management: proceeds of £124m: £35m to year end, £89m post year end
  • Final dividend unchanged at 5.54p DKK 0.4954, total dividend for the year of 8.96p (2012: 8.96p)

 

 

Underlying Results1

Total Results

 

12 months ended 31 December

12 months ended 31 December

 

 

2013

20122

Change

2013

20123

Change

Revenue

£7,428m

£7,024m

5.8%

 

£7,428m

£7,236m

2.7%

PBITA (before specific items)

£442m

£430m

2.8%

 

£442m

£470m

(6.0%)

PBITA (after specific items)

-

-

-

 

£56m

£364m

(84.6%)

Operating margin

6.0%

6.1%

(10bp)

 

0.8%

5.0%

(420bp)

EPS

14.7p

15.8p

(7.0%)

 

(24.9)p

2.9p

-

1 At constant exchange rates. To clearly present underlying performance, specific items have been excluded and separately disclosed – see page 3.
2 2012 results are presented at constant exchange rates and have been restated for the adoption of IAS19 (2011). 2012 PBITA has been re-presented to exclude PBITA from businesses subsequently classified as discontinued, one-off credits, profits on disposal and the prior year effect of the review of assets and liabilities in 2013 – see pages 3 and 4 for details.
3 At constant exchange rates, including specific items. See pages 3 and 4 for details.

Ashley Almanza, Chief Executive Officer, commented:

“Demand for our services remained strong, particularly in emerging markets where our revenues rose by 16%.

Underlying profit before interest, tax and amortisation of £4421 million was impacted by lower revenue in Europe and lower US federal government spending which affected our secure solutions and systems businesses.

Cash generated by operations increased by 36% to £460 million. We conducted a detailed business review in 2013 which confirmed the strength of our global market positions and identified a number of strategic priorities to drive sustainable, profitable growth. We also strengthened our balance sheet through improved cash flow, a successful share placing and asset sales.

We conducted a comprehensive financial review of our assets and liabilities and major contracts including an assessment of our potential liability for the UK Electronic Monitoring contracts. These reviews, together with our restructuring programme, resulted in a £386 million charge to profits during 2013.

Good progress has been made on our strategic priorities, including significant strengthening of our senior management with 28 new appointments to the global leadership team. We have also invested in sales and business development capacity and in extending our technology capability – both important catalysts for future growth.

We have established major restructuring programmes to strengthen our competitive position in a number of our key markets and we are actively managing our business portfolio, divesting a number of businesses which generated proceeds of £124 million to date.

A number of cost leadership programmes are underway applying systematic benchmarking with an early focus on direct labour efficiency, organisational efficiency, route planning, telematics, IT standardisation, procurement and shared services.

We have updated and reinforced awareness and understanding of our group values to ensure that we conduct our business to the highest standards and we are raising the profile and standards of health and safety across the group by standardising safety management systems and embedding health and safety in individual performance contracts.

We have also revised our performance measures and incentives so that they are more closely aligned with customer service and sustainable shareholder value creation.

In May 2013, the UK Ministry of Justice announced an investigation into billings made by G4S under electronic monitoring contracts since 2004. The company continues to engage in constructive discussions with the UK Government and we remain committed to resolving all matters relating to the electronic monitoring contracts.

Outlook

This has been an extremely challenging year for G4S. We have taken clear action to deal with longstanding issues, provided for all of our potential liabilities and have introduced wide ranging changes that will transform our business.

We can now look to the future with confidence, focusing on the growing demand for G4S’s services that underpins our plans to deliver sustainable, profitable growth. That confidence is reflected in the Board’s recommendation to maintain the dividend.”

You can download the full announcement here

You can download the presentation slides here

You can download the transcript of the results presentation here

Presentation of Results:

A presentation to investors and analysts is taking place today at 0900hrs at the London Stock Exchange. 

Webcast

To view a webcast of the presentation please visit: http://view-w.tv/p/707-803-13976/en

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