G4S plc - 2018 Full Year Results

  • 12 Mar 2019 07:01

G4S today announces its Full Year Results for the twelve months ended 31 December 2018

G4S Chief Executive Officer Ashley Almanza commented:

“Our Secure Solutions business delivered underlying revenue growth of 3% and profit margins rose from 6.2% to 6.5% reflecting the benefits of commercial discipline, growth in the sale of technology-enabled security and productivity gains. As expected, this was offset by the effect of challenging trading conditions in a number of Cash Solutions markets and a strong comparative performance in Retail Cash Solutions in 2017. Overall, the Group delivered underlying earnings in line with the previous year”.

 “Our sales wins in the second half of 2018 have underpinned a good start to the year and this, together with growing technology-enabled services in both our cash and security businesses, supports a positive outlook for 2019”.

 Operational and financial highlights (Underlying resultsa unless otherwise noted):

  • New contract wins of £1.4 billion (annual contract value)
  • Secure Solutions revenues grew 3.1%; margin 6.5% (2017: 6.2%)
  • Cash Solutions revenues excluding RCS* grew 0.5%; including RCS declined 9.3%; margin 11.4% (2017: 12.5%)
  • Operating cash flow conversiona 95.6% (2017: 106.6%)
  • Net debt to EBITDAb 2.7x (2017: 2.4x); business plan supports 2.5x or below in medium term
  • EPSa,c 16.7p (2017: 16.7p)
  • Separation review progressing well
  • Statutory results include businesses sold or closed, specific items and exchange rate movements - see page 3
  • Statutory earnings of £82 million (2017: £237 million) includes £100 million provision for settlement of California class action and £35 million charge for UK guaranteed minimum pension equalisation (see page 11)
  • Final dividend: 6.11p per share (2017: 6.11p); full year 9.70p per share (2017: 9.70p)

* Retail Cash Solutions

Group results

 

Underlying Resultsa

Statutory Resultsd

 

In Constant Currency

Actual Rates

 

2018

2017

%

2018

2017

%

 

 

Restatede

 

 

Restatede

 

Revenue

£7,289m

£7,213m

+1.1

£7,512m

£7,826m

(4.0)

Adjusted PBITAb

£474m

£474m

-

£460m

£492m

(6.5)

Adjusted PBITAb margin

6.5%

6.6%

 

6.1%

6.3%

 

Earningsc

£259m

£258m

+0.4

£82m

£237m

(65.4)

Earnings Per Sharec

16.7p

16.7p

-

5.3p

15.3p

(65.4)

Operating Cash Flow

£453m

£516m

(12.2)

£413m

£488m

(15.4)

 a  Underlying results are Alternative Performance Measures as defined and explained on page 35. They are reconciled to the Group’s statutory results on page 3. The underlying results are presented at constant exchange rates other than operating cash flow which is presented at actual rates in both 2017 and 2018.
 b Adjusted PBITA and net debt to adjusted EBITDA are Alternative Performance Measures as defined and explained on page 36. The Net debt to adjusted EBITDA ratio is calculated as set out on page 38.
 c Earnings is defined as profit attributable to equity shareholders of G4S plc. Underlying earnings and underlying earnings per share (“EPS”) are adjusted to exclude specific and other separately disclosed items, as described on page 36, and are reconciled to statutory earnings and EPS on page 3.
d  See page 21 for the basis of preparation of statutory results.
e  Restated for the adoption of IFRS15 – Revenue from Contracts with Customers, see note 3.

G4S STRATEGY AND INVESTMENT PROPOSITION

G4S is the world’s leading, global security company, providing security and cash services across six continents.

Our strategy addresses the positive, long-term demand for security services. Our enduring strategic aim is to demonstrate the values and performance that make G4S the company of choice for customers, employees and shareholders. We aim to do this by delivering industry-leading, innovative solutions and outstanding service to our customers, by providing engaging and rewarding work for employees and by generating sustainable growth and returns for our shareholders.

Progress with the transformation of the Group

During 2018, we continued to make substantial progress in a number of important areas:

• Continued to embed values that build a culture based on Integrity, Respect, Safety, Security, Service, Innovation and Teamwork. Our employee engagement surveys show positive identification with these values

• Our health and safety goal is zero harm and we have achieved a material reduction in serious incidents

• Increased our technology-enabled* revenues to 45% of secure solutions, enhancing our customer proposition and reinforcing our margins

• Increased the deployment of cash technology to 23,300 customer locations (2017:19,800)

• Implemented end-to-end IT systems for manned security in the UK

• On track to deliver £90-100 million cost savings by 2020, to support investment and margin improvement

Separation Review

Following the establishment of our Global Cash Solutions division on 1 January 2018, the Board announced in December 2018 that the company is reviewing options for the separation of the Cash Solutions business from the Group. The company has appointed accounting, legal, tax, financial and other advisors and is evaluating a wide range of separation options, both public and private, with the aim of maximising shareholder value, having due regard for the interests of customers, employees, pensioners, partners and other key stakeholders.

In parallel with the review, the company is taking steps to enable it to commence the process of separation in the second half of the year. Depending on the nature of the separation, a final decision may be subject to shareholder approval following a recommendation by the Board. The date of a potential shareholder meeting is yet to be fixed and is subject to the timing of completion of a number of key work-streams. The company expects to provide a detailed update when it announces the half year results in August.

In the event of separation, we believe that the successor security and cash management businesses will be very well positioned to sustain their leading market positions by investing in the growth plans for their core product and services. The separation review will therefore include potential portfolio actions to further improve the focus and financial flexibility of the successor Groups in the event of separation.

Since announcing the separation review, the Group has received unsolicited expressions of interest to acquire the Global Cash Solutions and/or Retail Cash Solutions businesses. Whilst all credible proposals will be evaluated by the Board, no assurance can be provided at this stage that any of these expressions of interest will lead to a proposal or transaction and the Group will continue to vigorously pursue all strategic options.

Financial Outlook

G4S Group Chief Executive Officer, Ashley Almanza, commented:

“Our sales wins in the second half of 2018 have underpinned a good start to the year and this, together with growing technology-enabled services in both our cash and security businesses, supports a positive outlook for 2019”.

“We believe that the potential separation of the Cash Solutions business will provide G4S with the strategic, commercial and operational focus needed for the next stage of the successful development of both the Cash Solutions and Secure Solutions businesses.”

 

*Revenues from manned security contracts enhanced through G4S hardware, software and security systems

Read the full announcement here

You can download the presentation here

You can download the transcript here

You can watch the video from our presentation here

Here's a link to our results centre 


Presentation of Results:

A presentation to investors and analysts took place at the London Stock Exchange.

Register and watch the webcast on demand using the link below:

http://view-w.tv/707-803-21143/en

 

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