G4S trading update
Overview of the financial performance for the three months to 31 March 2013
In the first three months of 2013, overall revenues compared to the same period last year, grew by 7.5% at constant exchange rates and by 7.7% at actual exchange rates. The group operating margin was around 0.6% lower compared to the same period in 2012.
Overall organic growth was encouraging at 6%, with 12% in developing markets and 4% in developed markets
▪ In secure solutions, organic growth was 6%, helped by a continued strong performance in developing markets and UK government
▪ In cash solutions, organic growth was 3% overall. Developed markets declined 1% and developing markets grew 14%.
Overall, the group margin was down around 0.6% due principally to continued challenging economic and trading conditions in Continental Europe, ongoing pricing pressure in the UK and Ireland cash solutions businesses, the mix effect of new contracts starting up in UK Government and the impact of a £6m charge in the African region relating mainly to the write-off of receivables.
The proposed closure of 30 prisons and other cost reductions by the Netherlands Ministry of Justice will have a significant negative impact on the group’s Dutch business which provides staff to the prisons. For all of these reasons, and despite ongoing business improvement plans, the first quarter margin trends are expected to continue for the full year.
Acquisitions & Divestments
During the first three months of the year, the group invested £5m in capability-building acquisitions such as the Deposita cash solutions business in South Africa. The process for the sale of the US Government Solutions business is underway and the group now intends to include its regulated secure solutions business, which provides services to regulated markets such as nuclear power, in the sale of the US Government Solutions business. RSS had revenues of around £100m and profits of around £6m in 2012.
The group had committed credit facilities of £1,100m, of which £760m was unutilised at 31 March.
The business has continued to achieve good underlying organic growth despite continuing challenging macro-economic conditions in Europe.
The North American commercial businesses had an exceptionally strong performance in 2012 and so, as expected, growth in the first quarter of 2013 was slightly lower. The UK government business continued to grow strongly, helped by contracts started in 2012.
The group’s developing markets businesses, which account for more than a third of group profits, continue to achieve strong results and their organic growth rates are expected to continue for 2013.
The macro-economic environment has affected developed markets margins and, despite active business improvement plans which are being implemented, group margins are expected to continue to be impacted adversely in the short term.
For further enquiries, please contact G4S plc:
Helen Parris – Director of Investor Relations +44 (0) 1293 554423
For Media enquiries, please contact
Adam Mynott – Director of Media Relations +44(0) 1293 554445
Piers Zangana – Media Relations Manager
David Allchurch/Ed Orlebar - Tulchan Group +44 (0) 207 353 4200
To listen to a replay of the call to analysts and investors, via the webcast or by telephone, please see below:
A replay of the call will be available for seven days after the event, details as follows;-
Standard International Access : +44 (0) 20 8196 1998
Denmark Toll Free : 8088 7109
UK Toll Free : 0800 633 8453
USA Toll Free : 1 866 583 1035
Access Pin : 7923041
AGM & Dividend
The AGM will take place on 6 June 2013 and the final dividend of 5.54 pence (DKK 0.473) per share is proposed for payment on 14 June 2013.
Capital Markets Day
On 25 June, G4S will be holding a Capital Markets Day in London for analysts and institutional investors.
Half year results
Results for the six months to 30 June 2013 will be published on 28 August 2013.